<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 29, 1997
REGISTRATION NO. 33-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
JITNEY-JUNGLE STORES OF AMERICA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
MISSISSIPPI 5411 64-0280539
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
1770 ELLIS AVENUE, SUITE 200
JACKSON, MISSISSIPPI 39204
(601) 965-8600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------------
SEE TABLE OF ADDITIONAL REGISTRANTS BELOW
------------------------
DAVID R. BLACK
SENIOR VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
JITNEY-JUNGLE STORES OF AMERICA, INC.
1770 ELLIS AVENUE, SUITE 200
JACKSON, MISSISSIPPI 39204
(601) 965-8600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------------
WITH COPIES TO:
BRUCE B. WOOD, ESQ.
DECHERT PRICE & RHOADS
30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10112
(212) 698-3500
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
10% Senior Subordinated Notes due 2007........... $200,000,000 100% $200,000,000 $60,607
Guarantees of Senior Subordinated Notes.......... $200,000,000 -- -- None
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for purposes of calculating the
registration fee.
------------------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC.
TABLE OF ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
STATE OR
OTHER PRIMARY STANDARD
JURISDICTION INDUSTRIAL IRS EMPLOYER
OF CLASSIFICATION IDENTIFICATION
NAME INCORPORATION CODE NUMBER NUMBER
- -------------------------------------------------------------- ----------- ---------------------- -------------
<S> <C> <C> <C>
Interstate Jitney-Jungle Stores, Inc.......................... Alabama 5411 64-0728553
McCarty-Holman Co., Inc....................................... Mississippi 5411 64-0294093
Southern Jitney-Jungle Company................................ Mississippi 5411 64-0280601
Pump And Save, Inc............................................ Mississippi 5411 64-0779730
Delta Acquisition Corporation................................. Alabama 5411 72-1394134
Supermarket Cigarette Sales, Inc.............................. Louisiana 5194 72-1029831
Jitney-Jungle Bakery, Inc..................................... Mississippi 2051 64-0462232
Delchamps, Inc................................................ Alabama 5411 63-0245434
</TABLE>
The address, including zip code, and telephone number, including area code,
for each of the additional registrants' principal executive offices, other than
Supermarket Cigarette Sales, Inc. and Delchamps, Inc., is 1770 Ellis Avenue,
Suite 200, Jackson, Mississippi 39204 (601) 965-8600, and the address, including
zip code, and telephone number, including area code, for the principal executive
offices of Supermarket Cigarette Sales, Inc. and Delchamps, Inc. is 305
Delchamps Drive, Mobile, Alabama 36602 (334) 433-0437.
ii
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 29, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. UNDER NO CIRCUMSTANCES SHALL THIS PROSPECTUS CONSTITUTE AN OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH JURISDICTION.
<PAGE>
PROSPECTUS
[LOGO]
OFFER TO EXCHANGE
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL OUTSTANDING
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
OF
JITNEY-JUNGLE STORES OF AMERICA, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997, UNLESS EXTENDED
Jitney-Jungle Stores of America, Inc., a Mississippi corporation
("Jitney-Jungle" or the "Company"), hereby offers to exchange an aggregate
principal amount of up to $200,000,000 of its 10 3/8% Senior Subordinated Notes
due 2007 (the "New Notes") for a like principal amount of its 10 3/8% Senior
Subordinated Notes due 2007 (the "Existing Notes") outstanding on the date
hereof upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying letter of transmittal (the "Letter of Transmittal" and,
together with this Prospectus, the "Exchange Offer"). The New Notes and the
Existing Notes are hereinafter collectively referred to as the "Notes." The
terms of the New Notes are identical in all material respects to those of the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes. The New Notes will be issued pursuant to, and be
entitled to the benefits of, the Indenture (as defined) governing the Existing
Notes.
The New Notes will bear interest from and including the date of consummation
of the Exchange Offer. Interest on the New Notes will be payable semi-annually
on March 15 and September 15 of each year, commencing March 15, 1998.
Additionally, interest on the New Notes will accrue from the last interest
payment date on which interest was paid on the Existing Notes surrendered in
exchange therefor or, if no interest has been paid on the Existing Notes, from
the date of original issue of the Existing Notes.
The New Notes will be general unsecured obligations of the Company,
subordinated in right of payment to all existing and future Senior Debt (as
defined) of the Company, including indebtedness pursuant to the 12% Senior Notes
due 2006 of the Company (the "Senior Notes") and the Senior Credit Facility (as
defined). The New Notes will be guaranteed (the "Subsidiary Guarantees"),
jointly and severally, on a senior subordinated basis by all of the Company's
Restricted Subsidiaries (as defined)(the "Subsidiary Guarantors"). The
Subsidiary Guarantees will be subordinated in right of payment to all existing
and future Senior Debt of the Subsidiary Guarantors, including the guarantees of
the Subsidiary Guarantors of the Company's obligations under the Senior Notes
and the Senior Credit Facility. At July 26, 1996, on a Pro Forma Basis (as
defined), the Company would have had approximately $348.1 million of Senior Debt
outstanding (exclusive of an unused commitment of up to $66.1 million under the
Senior Credit Facility) and the Subsidiary Guarantors would have had
approximately $10.4 million of Senior Debt outstanding (excluding guarantees by
the Subsidiary Guarantors of the Company's obligations under the Senior Notes
and the Senior Credit Facility).
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company contained in the Registration Rights Agreement dated
September 15, 1997 (the "Registration Rights Agreement") by and among the
Company, the Subsidiary Guarantors, Donaldson, Lufkin & Jenrette Securities
Corporation ("DLJ") and Credit Suisse First Boston (together with DLJ, the
"Initial Purchasers") with respect to the initial sale of the Existing Notes.
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Existing Notes pursuant to the Exchange Offer may be withdrawn at any time prior
to the Expiration Date (as defined) for the Exchange Offer. In the event the
Company terminates the Exchange Offer and does not accept for exchange any
Existing Notes with respect to the Exchange Offer, the Company will promptly
return such Existing Notes to the holders thereof. See "The Exchange Offer."
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivery of a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Existing Notes where such Existing Notes were acquired by such broker-dealer as
a result of market-making activities or other trading activities. The Company
has agreed that, for a period of 180 days after the Expiration Date, it will
make this Prospectus available to any broker-dealer for use in connection with
any such resale. See "Plan of Distribution."
Prior to the Exchange Offer, there has been no public market for the
Existing Notes. If a market for the New Notes should develop, such New Notes
could trade at a discount from their principal amount. The Company currently
does not intend to list the New Notes on any securities exchange or to seek
approval for quotation through any automated quotation system, and no active
public market for the New Notes is currently anticipated. There can be no
assurance that an active public market for the New Notes will develop.
The Exchange Offer is not conditioned upon any minimum principal amount of
Existing Notes being tendered for exchange pursuant to the Exchange Offer.
--------------------------
SEE "RISK FACTORS" COMMENCING ON PAGE 14 FOR A DISCUSSION OF CERTAIN FACTORS
THAT HOLDERS OF EXISTING NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE
OFFER.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------
The date of this Prospectus is , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission" or the "SEC") a Registration Statement on Form S-4 (the "Exchange
Offer Registration Statement," which term shall encompass all amendments,
exhibits, annexes and schedules thereto) pursuant to the Securities Act, and the
rules and regulations promulgated thereunder, covering the New Notes being
offered hereby. This Prospectus does not contain all the information set forth
in the Exchange Offer Registration Statement. For further information with
respect to the Company and the Exchange Offer, reference is made to the Exchange
Offer Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Commission. Such reports
and other information, including the Exchange Offer Registration Statement and
exhibits thereto, can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington
D.C. 20549, and at the Commission's regional offices in Suite 1400, Northwest
Atrium Center, West Madison Street, Chicago, Illinois 60661, and 7 World Trade
Center (13th floor), New York, New York 10048. Copies of such material can be
obtained from the Commission at prescribed rates through its Public Reference
Section at 450 Fifth Street. N.W., Washington, D.C. 20549. The Commission also
maintains a site on the World Wide Web, the address of which is
http://www.sec.gov, that contains reports, proxy and information statements and
other information regarding issuers, such as the Company, that file
electronically with the Commission. The obligation of the Company under the
Exchange Act to file reports with the Commission will be suspended if the Notes
are held of record by fewer than 300 holders at the beginning of any fiscal year
of the Company after the fiscal year commencing on April 30, 1995. In the event
the Company ceases to be subject to the informational requirements of the
Exchange Act, the Indenture provides that the Company will be required, for so
long as any of the Notes remain outstanding, to furnish to the Trustee (as
defined) and deliver or cause to be delivered to the holders of the Notes and
file with the Commission (provided that the Commission will accept such filing)
(i) all quarterly and annual financial information that would be required to be
contained in a filing with the Commission on Forms 10-Q and 10-K if the Company
were required to file such forms, including for each a "Management's Discussion
and Analysis of Financial Condition and Results of Operations" and, with respect
to the annual information only, a report thereon by the Company's certified
independent accountants, and (ii) all reports that would be required to be filed
with the Commission on Form 8-K if the Company were required to file such
reports.
This Prospectus includes forward-looking statements which involve risks and
uncertainties as to future events. Actual events or results may differ
materially from those discussed in the forward-looking statements as a result of
various factors, including, without limitation, those set forth under "Risk
Factors".
2
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING
ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT OTHERWISE REQUIRES, (I) THE
TERM "JITNEY-JUNGLE" REFERS TO JITNEY-JUNGLE STORES OF AMERICA, INC., (II) THE
TERM "DELCHAMPS" REFERS TO DELCHAMPS, INC., AN ALABAMA CORPORATION, (III) THE
TERM "THE COMPANY" REFERS TO JITNEY-JUNGLE AND ITS CONSOLIDATED SUBSIDIARIES
(INCLUDING DELCHAMPS) AS IF THE DELCHAMPS ACQUISITION (AS DEFINED) HAD BEEN
CONSUMMATED AND (IV) THE TERM "MANAGEMENT" REFERS TO THE MANAGEMENT TEAM OF
JITNEY-JUNGLE. REFERENCES HEREIN TO 'FISCAL YEARS' ARE TO THE FISCAL YEARS OF
JITNEY-JUNGLE AND DELCHAMPS, AS APPLICABLE, WHICH END ON THE SATURDAY NEAREST TO
APRIL 30 AND THE SATURDAY NEAREST TO JUNE 30, RESPECTIVELY, IN THE CALENDAR
YEAR. PRO FORMA DATA INCLUDED HEREIN FOR THE "LTM PERIOD" REFLECT THE RESULTS OF
OPERATIONS OF JITNEY-JUNGLE FOR THE 53 WEEKS ENDED JULY 26, 1997 AND THE RESULTS
OF OPERATIONS OF DELCHAMPS FOR THE FISCAL YEAR ENDED JUNE 28, 1997, AND INCLUDE
THE PRO FORMA ADJUSTMENTS DESCRIBED UNDER "PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS." REFERENCES HEREIN TO THE "SOUTHEAST" ARE TO THE STATES OF
ALABAMA, ARKANSAS, FLORIDA, LOUISIANA, MISSISSIPPI AND TENNESSEE, AND REFERENCES
HEREIN TO THE NUMBER OF SUPERMARKETS OPERATED BY THE COMPANY ARE TO THE ACTUAL
TOTALS AFTER GIVING EFFECT TO THE ANTICIPATED STORE DISPOSITIONS (AS DEFINED).
CERTAIN MARKET DATA USED IN THIS PROSPECTUS REFLECT MANAGEMENT ESTIMATES; WHILE
SUCH ESTIMATES ARE BELIEVED TO BE RELIABLE, NO ASSURANCE CAN BE GIVEN THAT SUCH
DATA IS ACCURATE IN ALL MATERIAL RESPECTS.
THE COMPANY
The Company is a leading operator of supermarkets in the Southeast. Upon
consummation of the Delchamps Acquisition, the Company will operate 199
supermarkets located throughout Mississippi and Alabama as well as in selected
markets in Tennessee, Arkansas, Louisiana and Florida. In addition, the Company
will be the largest supermarket operator in Mississippi and the second largest
supermarket operator in Alabama, with 81 supermarkets in Mississippi and 49
supermarkets in Alabama. The Company will account for an estimated 32% of the
grocery sales in Mississippi and an estimated 18% of the grocery sales in
Alabama. Jitney-Jungle currently has an estimated 50% of the grocery sales in
Jackson, Mississippi and Delchamps has an estimated 37% of the grocery sales in
Mobile, Alabama. Jitney-Jungle and Delchamps also have the number one, two or
three market share position in approximately 80% of the major markets in which
they operate. The Delchamps Acquisition is expected to increase the Company's
geographic diversification because the Delchamps stores are primarily located in
areas in which Jitney-Jungle currently has no stores. At the same time, the
Delchamps Acquisition is expected to result in valuable purchasing, distribution
and marketing synergies for the Company. On a Pro Forma Basis, the Company would
have had approximately $2.2 billion of net sales and approximately $127.8
million of EBITDA (as defined) for the LTM Period.
Management believes that the Company has significant competitive advantages,
which include:
STRONG FRANCHISE AND PRIME SITES. The Company has a strong consumer
franchise built around the "Jitney-Jungle" and "Delchamps" names. Management
believes that the Company's customers associate these names with quality, value,
convenience and superior service. In addition, Management believes that most of
the Company's urban supermarkets are in high-traffic locations that offer
significant competitive advantages, and that many of its supermarkets located in
smaller towns and rural areas are located on prime, non-replicable sites.
MODERN SUPERMARKET BASE. During the last five fiscal years, Jitney-Jungle
and Delchamps invested approximately $147.0 million and $111.0 million,
respectively, in capital expenditures, a substantial majority of which was for
building new supermarkets and expanding or remodeling existing supermarkets.
Approximately 81% of the Company's supermarket base has been built or remodeled
within the past five fiscal years.
3
<PAGE>
SUCCESSFUL PRIVATE LABEL PROGRAM. In addition to branded products, the
Company's supermarkets offer a selection of private label products bearing the
brand names of Topco Associates, Inc. ("Topco"), the largest cooperative grocery
products purchasing organization in the United States. The Company's affiliation
with Topco enables it to procure quality merchandise on a competitive basis with
larger, national food retailers. Pro forma net sales of private label products,
which generally have a lower unit sales price than national brands but provide a
higher gross margin due to lower unit costs, accounted for approximately 18.2%
of pro forma net non-perishable sales of the Company during the LTM Period.
CENTRALIZED AND EFFICIENT DISTRIBUTION FACILITIES. The Company's
distribution facility located in Jackson, Mississippi is conveniently located
close to major highways and provides a central delivery site for vendors. This
facility includes an aggregate of 814,000 square feet of warehouse space and can
efficiently supply the Company's 199 supermarkets, as well as potential new
markets contiguous to existing markets.
THE ACQUISITION AND EXPECTED BENEFITS
During fiscal 1997, Delchamps generated net sales and EBITDA of
approximately $1.1 billion and $44.1 million, respectively. In addition to the
incremental net sales, EBITDA and market share expected to result from the
Delchamps Acquisition, Management believes that it should be able to achieve
significant cash cost savings as a result of the elimination of certain
duplicative costs, increased operating efficiencies and increased purchasing
leverage in connection with the combined operation of the Jitney-Jungle and
Delchamps businesses following the Delchamps Acquisition. While the exact timing
and amount of such cash cost savings is inherently uncertain, Management
currently expects that the Company should begin to realize such cash cost
savings within three to nine months following the Delchamps Acquisition.
Specific anticipated benefits of the Delchamps Acquisition include:
- REDUCED GENERAL AND ADMINISTRATIVE EXPENSE. In connection with the
Delchamps Acquisition, Management expects to consolidate the corporate
headquarters of the Company's combined operations in the existing
corporate headquarters of Jitney-Jungle. Although a divisional office will
be opened in Mobile, Alabama, the Delchamps Mobile headquarters will be
closed and approximately 160 positions currently held by employees at the
Jitney-Jungle and Delchamps corporate headquarters will be eliminated.
Management estimates that such measures should result in approximately
$9.3 million of annualized cash cost savings, which the Company should
begin to realize within three to six months following the Delchamps
Acquisition.
- IMPROVED WAREHOUSING AND DISTRIBUTION EFFICIENCIES. Jitney-Jungle owns or
leases 814,000 square feet of warehouse space located in Jackson,
Mississippi which is central to, and can efficiently supply, all of the
Company's 199 supermarkets. In connection with the Delchamps Acquisition,
Management expects to close the Hammond, Louisiana warehouse owned by
Delchamps and to utilize Jitney-Jungle's Jackson facility as the Company's
central distribution center, thereby reducing headcount and general and
administrative expenses. In addition, in order to more efficiently utilize
the Jackson facility Jitney-Jungle has negotiated a long-term supply
agreement with a supplier to provide direct store delivery of frozen foods
and selected grocery products to the Company's supermarkets, which
Management believes should result in lower distribution costs and a
decrease of approximately 35% in inventory levels. Management believes
that, on an annualized basis, the combined effect of these warehousing and
distribution efficiencies should result in approximately $3.9 million of
cash cost savings, which the Company should to begin to realize within
three to six months following the Delchamps Acquisition.
- REDUCED ADVERTISING AND PRINTING EXPENSES. Jitney-Jungle and Delchamps
operate in contiguous and overlapping geographic areas, particularly in
south Mississippi and Florida. As a result, Management believes that it
will be able to consolidate the Company's advertising in these regions,
thus reducing advertising expenses. In addition, while Delchamps currently
outsources the printing of its advertising circulars, after the Delchamps
Acquisition approximately 50% of such printing will be
4
<PAGE>
performed at Jitney-Jungle's in-house printing facility. Management
estimates that moving a portion of Delchamps' printing in-house should
result in annualized cash cost savings of approximately $1.0 million,
which the Company should begin to realize within three to six months
following the Delchamps Acquisition.
- INCREASED PURCHASING LEVERAGE. Management expects that Jitney-Jungle's
merchandise purchases will approximately double following the Delchamps
Acquisition. As a result of this increase and the Company's leading market
position, Management believes that the Company should be able to negotiate
more favorable terms from vendors, including suppliers of products carried
on an exclusive or promoted basis, and to convert some less-than-truckload
shipping quantities to full truckload quantities. Management believes that
this increased purchasing leverage should result in approximately $3.4
million in annualized cash cost savings, which the Company should begin to
realize within six to nine months following the Delchamps Acquisition.
- INCREASED BACKHAUL INCOME. The expected increase in merchandise purchases
following the Delchamps Acquisition and the resulting improvements in the
Company's purchasing leverage are expected to create additional
opportunities to increase backhaul income, thereby reducing the Company's
operating costs. In particular, the Company's increased presence in the
Louisiana and Florida markets should result in a higher number of
deliveries to those areas, which have historically provided Jitney-Jungle
with backhaul opportunities. Management believes that increased backhaul
income should result in annualized cash cost savings of approximately $1.8
million, which the Company should begin to realize within three to six
months following the Delchamps Acquisition.
Of the aggregate potential $19.4 million in annualized cash cost savings
discussed above, approximately $14.2 million are reflected in the Pro Forma
Condensed Consolidated Financial Statements included elsewhere herein because
Management believes that they are factually supportable and directly related to
the Transactions (as defined) and the Delchamps Merger (as defined). Actual cash
cost savings achieved by the Company may vary considerably from the estimates
discussed above. See 'Risk Factors-- Integration of Delchamps.'
BUSINESS STRATEGY
The Company's business strategy is focused on enhancing the Company's
revenues and profitability by capitalizing on its leading market positions and
continuing its growth in certain attractive Southeast markets. Management
believes that the Company's leading perishables and grocery merchandising,
competitive pricing, range of specialty departments and reputation for quality
will help the Company continue its strong history of growth and profitability.
The Company's specific business strategies include:
- EXPAND SUPERMARKET BASE. Management believes there are a number of
attractive Southeast markets in which to continue to grow the Company's
supermarket base. Jitney-Jungle has a history of successfully making
supermarket acquisitions in both existing and contiguous markets. Since
fiscal l990, Jitney-Jungle has acquired 51 supermarkets in 41 markets,
excluding the 100 supermarkets to be acquired in the Delchamps
Acquisition. In addition, over the past five fiscal years the Company has
built or expanded 58 supermarkets in the Southeast. To continue expanding
its supermarket base, Management intends to open new supermarkets and make
strategic acquisitions in certain of the larger metropolitan areas where
it currently operates (including Memphis and Little Rock), as well as in
smaller cities and surrounding areas that are contiguous to areas where it
currently operates.
- CONTINUE TO IMPROVE OPERATING MARGINS. Jitney-Jungle and Delchamps have
improved their EBITDA margins from 5.5% and 2.9%, respectively, in fiscal
1992 to 5.7% and 4.0%, respectively, in fiscal 1997. The Company
continuously reviews its operations to identify initiatives designed to
reduce operating costs and increase EBITDA margins. As a result of the
following initiatives, Management
5
<PAGE>
believes that the Company can further improve its EBITDA margins during
fiscal 1998: (i) headcount reductions implemented by Jitney-Jungle in May
1997, which are expected to result in annualized cost savings of
approximately $0.9 million in fiscal 1998; and (ii) improved labor
scheduling currently being implemented at Jitney-Jungle supermarkets,
which is expected to result in annualized cost savings of approximately
$3.5 million in fiscal 1998 and which may also result in additional cost
savings when implemented during the next 12 to 18 months at the Delchamps
supermarkets. In addition, Management expects to implement programs at
Delchamps to reduce inventory shrink to levels comparable to those
achieved at Jitney-Jungle.
- DECREASE WORKING CAPITAL NEEDS. During fiscal 1997, Jitney-Jungle
successfully implemented programs to reduce inventories by eliminating
slow moving items, as well as renegotiating its payment terms to bring
them more in line with industry practice. As a result of these efforts,
Jitney-Jungle improved its ratio of accounts payable to inventory from
51.7% in fiscal 1996 to 77.3% in fiscal 1997. Jitney-Jungle believes that
these measures enabled it to decrease its working capital needs by
approximately $20.0 million. Management intends to implement similar
programs at Delchamps.
- CAPITALIZE ON MARKET SEGMENTATION OPPORTUNITIES. The Company attempts to
optimize operating results by selecting a format for each of its
supermarkets that is best suited to a site's demographics, local
preferences and competitive position. The Company's conventional
supermarkets offer a range of departments and high-quality services; the
Company's combination supermarkets offer a combined supermarket and drug
format with a wider variety of premium, full-service departments,
merchandise and services; and the Company's discount supermarkets offer
items throughout the supermarket at everyday low prices and generally
place greater emphasis on self-service. In general, the Company's
conventional and combination supermarkets generate higher operating
margins than its discount supermarkets. Management believes that there is
a growing consumer demand for higher service levels and convenience and,
as a result, expects that the Company will open combination supermarkets
in preference to conventional and discount supermarkets at all sites where
adequate space and consumer demand exist. Management also expects that a
significant number of conventional and discount formats will be converted
to combination formats. In addition, because the Company's discount
supermarkets attract a price sensitive customer who generally would not
shop at a combination or conventional supermarket, Management also
believes there will be opportunities to open new discount supermarkets in
areas where limited or no competing discount supermarkets operate
(including Mobile and New Orleans), with minimal risk of cannibalizing
sales of the Company's conventional and combination supermarkets located
in those areas.
- PURSUE INNOVATIVE MARKET INITIATIVES. The Company's goal is to utilize
innovative marketing and advertising programs to increase sales while
maintaining or increasing profitability. At its conventional and
combination stores, Jitney-Jungle has introduced a frequent shopper
program utilizing a "Gold Card" designed to increase customer traffic and
net sales by offering incentives to its most loyal customers. The
"Gold-Card" entitles holders to discounts on certain products every week
as well as check cashing privileges, and also serves as a base for market
basket analysis and customer-oriented direct marketing. Since the
introduction of the Gold Card, Management believes that the number of
customers and the amount of the average purchase at Jitney-Jungle
supermarkets has increased and, as a result, Management intends to
introduce a similar frequent shopper card at Delchamps supermarkets
following the Delchamps Acquisition. At its discount supermarkets, the
Company employs marketing campaigns designed to appeal to the value
conscious consumer, including "truckload sales," private label promotions
and bulk produce and similar purchasing incentives.
- FOCUS ON "PUMP AND SAVE" GASOLINE STATION OPPORTUNITIES. The Company
operates gasoline stations under the name "Pump And Save" at or near 53 of
its supermarkets that offer attractive gasoline retailing sites on heavily
traveled roads and highways. The Company entered the gasoline business
6
<PAGE>
to take advantage of (i) the low incremental capital costs of building
gasoline stations on its supermarket parking lots and (ii) the
efficiencies associated with operating gasoline stations with the same
management and labor as its supermarkets. The Company has opened 25 new
gasoline stations over the last five fiscal years and plans to continue
this growth with expansion at many of the 100 Delchamps supermarkets.
THE TRANSACTIONS
Pursuant to the terms of an Agreement and Plan of Merger dated as of July 8,
1997 (the "Merger Agreement") among the Company, Delchamps and Delta Acquisition
Corporation, an Alabama corporation and a wholly-owned subsidiary of
Jitney-Jungle ("DAC"), on July 14, 1997 DAC commenced a tender offer to purchase
all of the issued and outstanding shares of common stock and associated
preferred share purchase rights of Delchamps (the "Delchamps Tender Offer"). On
September 12, 1997, DAC accepted for payment pursuant to the Delchamps Tender
Offer an aggregate of 5,317,510 such shares and preferred share purchase rights.
Pursuant to the Merger Agreement and subject to certain conditions, DAC will be
merged with and into Delchamps (the "Delchamps Merger" and, together with the
Delchamps Tender Offer, the "Delchamps Acquisition"). It is anticipated that
Delchamps will continue as the surviving corporation in the Delchamps Merger and
will be a wholly-owned subsidiary of Jitney-Jungle. The aggregate consideration
expected to be paid in connection with the Delchamps Acquisition is
approximately $218.2 million (the "Delchamps Purchase Price"). The Existing
Notes were issued on September 12, 1997 concurrently with the consummation of
the Delchamps Tender Offer.
Upon consummation of the Delchamps Tender Offer, Jitney-Jungle's existing
revolving credit agreement with Fleet Capital Corporation, as successor agent to
Fleet Bank, N.A., and certain other banks was amended and restated to increase
the commitments thereunder from $100.0 million to $150.0 million (as so amended
and restated, the "Senior Credit Facility"), the Company borrowed approximately
$72.7 million thereunder and the Company repaid approximately $15.4 million of
Delchamps' outstanding indebtedness (collectively, the "Refinancing"). See "The
Transactions--The Refinancing."
In order to permit the Delchamps Acquisition and related financings,
Jitney-Jungle solicited and obtained consents (the "Consent Solicitation") from
the holders of a majority in principal amount of its 12% Senior Notes due 2006
(the "Senior Notes") to certain amendments to the indenture governing the Senior
Notes (the "Senior Note Indenture") that, among other things, permit the Company
to issue, and the Subsidiary Guarantors to guarantee, the Notes and increase the
amount of borrowings available under the Senior Credit Facility. In connection
with the Consent Solicitation, the Company has agreed to pay to the consenting
holders of Senior Notes a consent payment. See "The Transactions--The Consent
Solicitation."
In connection with the Delchamps Acquisition, Management has determined to
close 13 Delchamps supermarkets that are unprofitable or that in other respects
have not performed in accordance with expectations. In addition, Jitney-Jungle
and Delchamps reached a settlement agreement with the Federal Trade Commission
(the "FTC") in order to address FTC concerns about the proposed combination with
respect to certain markets in which Jitney-Jungle and Delchamps have stores, and
pursuant to which Jitney-Jungle and Delchamps have agreed to divest five
Jitney-Jungle stores and five Delchamps stores. These supermarket closings and
divestitures are collectively referred to herein as the "Anticipated Store
Dispositions." See "The Transactions--Expected Store Closures and Divestitures"
and "Pro Forma Condensed Consolidated Financial Statements."
The Delchamps Tender Offer, the Refinancing and the Consent Solicitation,
together with the issuance of the Existing Notes, the initial borrowing under
the Senior Credit Facility, the application of the proceeds thereof and the
payment of related fees and expenses (including fees and expenses relating to
the Consent Solicitation), are collectively referred to herein as the
"Transactions." Information provided herein on a "Pro Forma Basis" gives effect
to the Transactions, the Delchamps Merger and the Anticipated
7
<PAGE>
Store Dispositions. See the Pro Forma Condensed Consolidated Financial
Statements included elsewhere in this Prospectus.
USE OF PROCEEDS
The Company will not receive any proceeds from the Exchange Offer. The gross
proceeds to the Company from the sale of the Existing Notes, together with
initial borrowings by the Company of approximately $72.7 million under the
Senior Credit Facility, were used as follows: (i) approximately $218.2 million
was or will be applied to pay the Delchamps Purchase Price; (ii) approximately
$15.4 million was or will be applied to repay certain of Delchamps' outstanding
indebtedness; (iii) approximately $12.1 million was applied to make change of
control payments to certain Delchamps executives pursuant to the requirements of
existing contractual provisions; and (iv) approximately $27.0 million was or
will be applied to pay the fees and expenses incurred in connection with the
Transactions and the Delchamps Merger. Approximately $4.6 million of the
Delchamps indebtedness which was repaid had a maturity date of June 1998 and
bore interest at a rate equal to LIBOR plus 1.25% (currently 7.26%) and
approximately $10.8 million of the remaining Delchamps indebtedness had a
maturity date of July 2000 and bore interest at a rate of 5.51%.
The following table sets forth the sources and uses of funds in connection
with the Transactions.
<TABLE>
<CAPTION>
(DOLLARS IN
MILLIONS)
<S> <C>
SOURCES OF FUNDS:
10 3/8% Senior Subordinated Notes due 2007.............................. $ 200.0
Senior Credit Facility.................................................. 72.7
------
Total Sources of Funds................................................ $ 272.7
------
------
USES OF FUNDS:
Delchamps Purchase Price................................................ $ 218.2
Repayment of Delchamps' indebtedness.................................... 15.4
Change of control payments.............................................. 12.1
Transaction fees and expenses........................................... 27.0
------
Total Uses of Funds................................................... $ 272.7
------
------
</TABLE>
8
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<S> <C>
Securities Offered........ Up to $200,000,000 aggregate principal amount of 10 3/8% Senior
Subordinated Notes due 2007. The terms of the New Notes and
Existing Notes are identical in all material respects, except
for certain transfer restrictions and registration rights
relating to the Existing Notes.
The Exchange Offer........ The New Notes are being offered in exchange for a like principal
amount of Existing Notes. Existing Notes may be exchanged only
in integral multiples of $1,000. The issuance of the New Notes
is intended to satisfy obligations of the Company contained in
the Registration Rights Agreement.
Expiration Date;
Withdrawal of Tender.... The Exchange Offer will expire at 5:00 p.m., New York City time,
on , 1997, or such later date and time to which it may be
extended by the Company. The tender of Existing Notes pursuant
to the Exchange Offer may be withdrawn at any time prior to the
Expiration Date. Any Existing Notes not accepted for exchange
for any reason will be returned without expense to the tendering
holder thereof as promptly as practicable after the expiration
or termination of the Exchange Offer.
Certain Conditions to the
Exchange Offer.......... The Company's obligation to accept for exchange, or to issue New
Notes in exchange for, any Existing Notes is subject to certain
customary conditions relating to compliance with any applicable
law or any applicable interpretation by the staff of the
Commission, which may be waived by the Company in its reasonable
discretion. The Company currently expects that each of the
conditions will be satisfied and that no waivers will be
necessary. See "The Exchange Offer--Certain Conditions to the
Exchange Offer."
Procedures for Tendering
Existing Notes.......... Each holder of Existing Notes wishing to accept the Exchange
Offer must complete, sign and date the Letter of Transmittal, or
a facsimile thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise deliver such
Letter of Transmittal, or such facsimile, together with such
Existing Notes and any other required documentation, to the
Exchange Agent (as defined) at the address set forth herein. See
"The Exchange Offer--Procedures for Tendering Existing Notes."
Use of Proceeds........... The Company will not receive any proceeds from the Exchange
Offer.
Exchange Agent............ Marine Midland Bank (the "Exchange Agent") is serving as the
Exchange Agent in connection with the Exchange Offer.
Federal Income Tax
Consequences............ The exchange of Notes pursuant to the Exchange Offer should not
be a taxable event for federal income tax purposes. See "Certain
Federal Income Tax Considerations."
</TABLE>
9
<PAGE>
CONSEQUENCES OF EXCHANGING EXISTING NOTES PURSUANT TO THE EXCHANGE OFFER
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that
holders of Existing Notes (other than any holder who is an "affiliate" of the
Company within the meaning of Rule 405 under the Securities Act, who exchange
their Existing Notes for New Notes pursuant to the Exchange Offer generally may
offer such New Notes for resale, resell such New Notes and otherwise transfer
such New Notes without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided such New Notes are acquired in the
ordinary course of the holders' business and such holders have no arrangement
with any person to participate in a distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account in exchange for
Existing Notes must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution." In addition, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or in compliance with an available exemption from
registration or qualification. The Company has agreed, pursuant to the
Registration Rights Agreement and subject to certain specified limitations
therein, to register or qualify the New Notes for offer or sale under the
securities or blue sky laws of such jurisdictions as any holder of the Notes
reasonably requests in writing. If a holder of Existing Notes does not exchange
such Existing Notes for New Notes pursuant to the Exchange Offer, such Existing
Notes will continue to be subject to the restrictions on transfer contained in
the legend thereon. In general, the Existing Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. Holders of Existing Notes do not have any appraisal or
dissenters' rights under the Mississippi Business Corporation Act in connection
with the Exchange Offer. See "The Exchange Offer--Consequences of Failure to
Exchange; Resales of New Notes."
The Existing Notes are currently eligible for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market.
Following commencement of the Exchange Offer but prior to its consummation, the
Existing Notes may continue to be traded in the PORTAL market. Following
consummation of the Exchange Offer, the New Notes will not be eligible for
PORTAL trading.
THE NEW NOTES
The terms of the New Notes are identical in all material respects to the
Existing Notes, except for certain transfer restrictions and registration rights
relating to the Existing Notes.
<TABLE>
<S> <C>
Securities Offered.............. $200.0 million in aggregate principal amount of 10 3/8%
Senior Subordinated Notes due 2007.
Maturity........................ September 17, 2007.
Interest Payment Dates.......... March 15 and September 15 of each year, commencing March
15, 1998.
Mandatory Redemption............ The Company will not be required to make mandatory
redemption or sinking fund payments with respect to the
New Notes.
Optional Redemption............. The New Notes (and any outstanding Existing Notes) will be
redeemable at the option of the Company, in whole or in
part, at any time on or after September 15, 2002 at the
redemption prices set forth herein, plus accrued and
unpaid interest and Liquidated Damages (as defined), if
any, to the date of redemption. In addition, at any time
prior to September 15, 2000 the Company may, on one or
more occasions, redeem up to 33 1/3% of the then
outstanding Notes with any of the net proceeds of one or
more public offerings of common stock of the Company at a
redemption price of 110.375% of the principal amount
thereof plus accrued and unpaid interest and Liquidated
Damages, if any, to the applicable
</TABLE>
10
<PAGE>
<TABLE>
<S> <C>
date of redemption; PROVIDED that at least 66 2/3% of the
original principal amount of Notes remain outstanding
immediately after the occurrence of each such redemption.
Change of Control............... In the event of a Change of Control (as defined), each
holder of the Notes will have the right to require the
Company to purchase the Notes held by such holder at a
price equal to 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest and Liquidated
Damages, if any, to the date of purchase.
Ranking......................... The New Notes will be general unsecured obligations of the
Company subordinated in right of payment to all existing
and future Senior Debt of the Company, including
indebtedness pursuant to the Senior Notes and the Senior
Credit Facility. At July 26, 1997, on a Pro Forma Basis,
the aggregate principal amount of outstanding Senior Debt
of the Company would have been approximately $348.1
million (exclusive of an unused commitment of up to $66.1
million under the Senior Credit Facility).
Subsidiary Guarantees........... The New Notes will be guaranteed, jointly and severally,
on a senior subordinated basis by each of the Subsidiary
Guarantors. The Subsidiary Guarantees will be subordinated
in right of payment to all existing and future Senior Debt
of the Subsidiary Guarantors, including the guarantees of
the Subsidiary Guarantors of the Company's obligations
under the Senior Notes and the Senior Credit Facility. At
July 26, 1997, on a Pro Forma Basis, the aggregate
principal amount of outstanding Senior Debt of the
Subsidiary Guarantors would have been approximately $10.4
million (excluding guarantees by the Subsidiary Guarantors
of the Company's obligations under the Senior Notes and
the Senior Credit Facility).
Covenants....................... The Indenture (as defined) contains covenants that, among
other things; (i) limit the incurrence by the Company and
its Restricted Subsidiaries of additional indebtedness;
(ii) limit the issuance by the Company and the Subsidiary
Guarantors of Disqualified Stock (as defined); (iii)
restrict the ability of the Company and its Restricted
Subsidiaries to make dividends and other restricted
payments or investments; (iv) limit the ability of the
Company and its Restricted Subsidiaries to enter into
sale-leaseback transactions; (v) limit transactions by the
Company and its Restricted Subsidiaries with affiliates;
(vi) limit the ability of the Company and its Restricted
Subsidiaries to make asset sales; (vii) limit the ability
of the Company and its Restricted Subsidiaries to incur
certain liens; (viii) limit the ability of the Company to
consolidate or merge with or into, or to transfer all or
substantially all of its assets to, another person; and
(ix) prohibit the Company and the Subsidiary Guarantors
from incurring any indebtedness that is junior to Senior
Debt and senior to the Notes or the Subsidiary Guarantees,
as applicable.
</TABLE>
RISK FACTORS
Holders of Existing Notes should carefully consider all of the information
set forth in this Prospectus and, in particular, should evaluate the specific
factors under "Risk Factors" beginning on page 14 in connection with the
Exchange Offer.
11
<PAGE>
SUMMARY PRO FORMA CONDENSED CONSOLIDATED FINANCIAL AND OTHER DATA
The summary pro forma statement of operations and other data for the LTM
Period and balance sheet data at July 26, 1997 set forth below are calculated on
a Pro Forma Basis, and have been prepared on the basis set forth in, are
qualified in their entirety by reference to, and should be read in conjunction
with, the Pro Forma Condensed Consolidated Financial Statements included
elsewhere in this Prospectus. The summary pro forma statement of operations data
and other data do not purport to represent what the Company's results of
operations would have been if the Transactions, the Delchamps Merger and the
Anticipated Store Dispositions had actually occurred at the beginning of the
period specified nor does such data purport to represent the Company's results
of operations for any future period.
<TABLE>
<CAPTION>
LTM PERIOD
<S> <C>
(DOLLARS IN
THOUSANDS)
STATEMENT OF OPERATIONS DATA:
Net sales................................................................................... $ 2,166,461
Gross profit................................................................................ 564,903
Direct store expense........................................................................ 392,673
Warehouse, administrative and general expenses.............................................. 95,462
Special charges, net(1)..................................................................... 4,957
-----------
Operating income............................................................................ 71,811
Interest expense, net....................................................................... 67,484
-----------
Earnings before income taxes................................................................ 4,327
Income taxes................................................................................ 3,260
-----------
Net earnings................................................................................ $ 1,067
-----------
-----------
OTHER DATA:
EBITDA(2)................................................................................... $ 127,800
Depreciation and amortization............................................................... 51,632
LIFO benefit................................................................................ (600)
Capital expenditures........................................................................ 38,513
Supermarkets open at end of period.......................................................... 199
Remodels during period...................................................................... 17
Gross profit as a percentage of sales....................................................... 26.1%
EBITDA as a percentage of sales............................................................. 5.9%
Ratio of EBITDA to cash interest expense(3)................................................. 2.0x
Ratio of net debt to EBITDA(4).............................................................. 4.3x
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
AT JULY 26,
1997
<S> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................................................................ $ 14,761
Working capital.................................................................................. 38,829
Total assets..................................................................................... 698,054
Total debt....................................................................................... 558,461
Other long-term liabilities, including current portion........................................... 67,827
Stockholders' deficit............................................................................ (154,328)
</TABLE>
- ------------------------
(1) Includes (i) a $1.8 million non-cash charge accrued in fiscal 1997 relating
to future payments that will be made under an employment agreement with
Jitney-Jungle's former Chief Executive Officer; (ii) a $1.0 million charge
relating to termination benefits payable to employees of Jitney-Jungle whose
positions were eliminated in May 1997; (iii) a $4.3 million charge relating
to cash payments made by Delchamps in connection the settlement of a lawsuit
in March 1997; and (iv) a $2.1 million gain on the sale of certain assets of
Delchamps in fiscal 1997.
12
<PAGE>
SUMMARY PRO FORMA CONDENSED CONSOLIDATED FINANCIAL AND OTHER DATA
(2) EBITDA is defined as income from continuing operations before interest,
taxes, depreciation, amortization, LIFO expense (benefit) and special items,
net. EBITDA is presented because it is a widely accepted financial indicator
of a company's ability to service indebtedness. However, EBITDA should not
be considered as an alternative to income from operations or to cash flows
from operating activities (as determined in accordance with generally
accepted accounting principles) and should not be construed as an indication
of a company's operating performance or as a measure of liquidity. EBITDA
reflects $14.2 million of anticipated cash cost savings which Management has
identified related to the elimination of duplicative costs for functional
areas and facilities which are based on assumptions that Management believes
are factually supportable and directly related to the Delchamps Acquisition.
EBITDA does not include an additional $5.2 million of estimated cash cost
savings that Management believes may occur as a result of increased
purchasing leverage and backhaul income. The components of these estimated
cash cost savings are set forth in the notes to the Pro Forma Condensed
Consolidated Statements of Operations and Other Data included elsewhere in
this Prospectus and are summarized as follows (in millions):
<TABLE>
<S> <C>
ANTICIPATED CASH COST SAVINGS REFLECTED IN THE PRO FORMA STATEMENT OF
OPERATIONS AND OTHER DATA:
Reduced general and administrative expenses................................ $ 9.3
Improved warehousing and distribution efficiencies......................... 3.9
Reduced advertising and printing expenses.................................. 1.0
---------
Total.................................................................... $ 14.2
---------
---------
ADDITIONAL POTENTIAL CASH COST SAVINGS:
Increased purchasing leverage.............................................. $ 3.4
Increased backhaul income.................................................. 1.8
---------
Total.................................................................... $ 5.2
---------
---------
Total estimated cash cost savings............................................ $ 19.4
---------
---------
</TABLE>
(3) Cash interest expense excludes $2.8 million of amortization of deferred
financing fees.
(4) Represents the ratio of (i) pro forma indebtedness less pro forma cash as of
July 26, 1997 to (ii) pro forma EBITDA for the LTM Period.
13
<PAGE>
RISK FACTORS
Holders of Existing Notes should carefully consider the specific factors set
forth below as well as the other information included in this Prospectus in
connection with the Exchange Offer. The risk factors set forth below are
generally applicable to the Existing Notes as well as the New Notes.
THIS PROSPECTUS INCLUDES "FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT. ALTHOUGH
JITNEY-JUNGLE BELIEVES THAT ITS PLANS, INTENTIONS AND EXPECTATIONS REFLECTED IN
SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO ASSURANCE THAT
SUCH PLANS, INTENTIONS OR EXPECTATIONS WILL BE ACHIEVED. IMPORTANT FACTORS THAT
COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM JITNEY-JUNGLE'S FORWARD
LOOKING STATEMENTS ARE SET FORTH BELOW AND ELSEWHERE IN THIS PROSPECTUS. ALL
FORWARD-LOOKING STATEMENTS ATTRIBUTABLE TO JITNEY-JUNGLE OR PERSONS ACTING ON
ITS BEHALF ARE EXPRESSLY QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY
STATEMENTS SET FORTH BELOW.
INTEGRATION OF DELCHAMPS
The integration of the administrative, finance and other operations of
Delchamps with those of Jitney-Jungle, the coordination of Delchamps' sales and
marketing organizations with those of Jitney-Jungle and the implementation of
appropriate operational, financial and management systems and controls in
connection with the Delchamps Acquisition will require significant financial
resources and substantial attention from Management, and could result in the
diversion of such resources and attention from the core businesses of
Jitney-Jungle and Delchamps. Specifically, Jitney-Jungle's supermarket base will
nearly double as a result of the Delchamps Acquisition and Management expects
that the coordination of purchasing and distribution and warehousing for the
combined operations following the Delchamps Acquisition will be a significant
focus of Management. In addition, Jitney-Jungle's business plan with respect to
the combined operations of the Company following the Delchamps Acquisition
contemplates anticipated cash cost savings that are expected to result from (i)
reduced general and administrative expenses arising from the closure of the
corporate headquarters of Delchamps and associated headcount reductions, (ii)
improved warehouse and distribution efficiencies, (iii) reduced advertising and
printing expenses resulting from moving a portion of Delchamps' print
advertising needs to Jitney-Jungle's in-house printing facilities, (iv)
increased purchasing leverage that may enable the Company to negotiate more
favorable terms from its vendors, and (v) increased backhaul income. Of the
aggregate potential $19.4 million in such annualized cash cost savings,
approximately $14.2 million are reflected in the Pro Forma Condensed
Consolidated Financial Statements included elsewhere herein because Management
believes they are factually supportable and directly related to the Transactions
and the Delchamps Merger. In addition, certain marketing and cost saving
initiatives undertaken at Jitney-Jungle prior to the Delchamps Acquisition will
be extended to the Delchamps supermarkets, including introduction of a "frequent
shopper card" and implementation of improved labor scheduling, in each case, at
the acquired Delchamps supermarkets. The potential cash cost savings discussed
above are based on estimates prepared solely by members of Management based on
information available to them and have not been independently reviewed. The
estimates necessarily make assumptions as to future events, including general
industry, competitive and business conditions, many of which are beyond the
control of the Company. Actual cash cost savings achieved by the Company may
vary considerably from the estimates discussed above. Any inability of the
Company to integrate Delchamps successfully or to achieve the cash cost savings
described above in a timely and efficient manner could adversely affect the
Company's financial condition and results of operations.
SUBSTANTIAL LEVERAGE
The Company is highly leveraged and its debt instruments contain and will
continue to contain restrictions on its operations. See "Description of Certain
Indebtedness" and "Description of the Notes." At July 26, 1997, on a Pro Forma
Basis, the Company would have had approximately $558.5 million of total debt
(including capitalized leases and current installments) and a shareholders'
deficit of approximately
14
<PAGE>
$154.3 million. On a Pro Forma Basis, the Company's ratio of earnings to fixed
charges would have been 1.1 to 1 for the LTM Period.
The significant indebtedness of the Company will have several important
consequences to the holders of the Notes, including, but not limited to, the
following: (i) a substantial portion of the Company's cash flow from operations
must be dedicated to the payment of principal and interest with respect to the
indebtedness under the Senior Credit Facility, the Senior Notes and the Notes;
(ii) indebtedness under the Senior Credit Facility and the Senior Notes will
become due prior to the time the Notes will become due and may adversely affect
the Company's ability to pay principal of and interest when due on the Notes;
(iii) indebtedness under the Senior Credit Facility will bear interest at
fluctuating rates, and a substantial increase in interest rates could adversely
affect the Company's ability to meet its debt service obligations; (iv) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other purposes may be impaired;
(v) the Company's flexibility may be limited in responding to changes in the
industry and economic conditions generally; (vi) the Senior Credit Facility, the
Senior Note Indenture, the Indenture and other agreements of the Company related
to its indebtedness contain numerous financial and other restrictive covenants,
the failure to comply with which may result in an event of default, which, if
not cured or waived, could have a material adverse effect on the Company; and
(vii) the ability of the Company to satisfy its obligations pursuant to such
indebtedness will be dependent upon its future performance which, in turn, will
be subject to management, financial, competitive and other factors affecting the
business and operations of the Company, some of which are beyond the control of
the Company. See "Pro Forma Condensed Consolidated Financial Statements," "Pro
Forma Liquidity," "Selected Historical Financial Data of Jitney-Jungle,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Jitney-Jungle," "Selected Historical Financial Data of Delchamps"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations of Delchamps."
If the Company is unable to generate sufficient cash flow to meet its debt
obligations, the Company may be required to renegotiate the payment terms or to
refinance all or a portion of the Senior Credit Facility, the Senior Notes or
the Notes, to sell assets or to obtain additional financing. If the Company
could not successfully refinance its indebtedness, substantially all of the
Company's long-term debt would be in default and could be declared immediately
due and payable. Furthermore, the Senior Credit Facility, the Senior Note
Indenture and the Indenture contain numerous financial and operating covenants,
including, among others, covenants requiring the Company to maintain certain
leverage, interest coverage and fixed charge coverage ratios and restricting the
ability of the Company and its subsidiaries to incur indebtedness or to create
or suffer to exist certain liens. The ability of the Company to comply with such
provisions may be affected by events beyond its control. In the event the
Company fails to comply with these covenants, it could be in default under the
Senior Credit Facility, the Senior Note Indenture and/or the Indenture. In the
event of such default, substantially all of the Company's long-term debt could
be declared immediately due and payable. See "Description of Certain
Indebtedness" and "Description of the Notes."
SUBORDINATION AND RANKING OF THE NOTES
The New Notes, like the Existing Notes, will be general unsecured
obligations of the Company subordinated in right of payment to all existing and
future Senior Debt of the Company, including indebtedness pursuant to the Senior
Notes and the Senior Credit Facility. By reason of such subordination, in the
event of an insolvency, liquidation, reorganization, dissolution or other
winding-up of the Company, the Senior Debt must be paid in full before the
principal of, premium, if any, and interest or Liquidated Damages, if any, on
the Notes may be paid. At July 26, 1997, on a Pro Forma Basis, the aggregate
principal amount of outstanding Senior Debt of the Company would have been
approximately $348.1 million (exclusive of an unused commitment of up to $66.1
million under the Senior Credit Facility). If the Company incurs any additional
PARI PASSU DEBT, the holders of such debt would be entitled to share ratably
15
<PAGE>
with the holders of the Notes in any proceeds distributed in connection with any
insolvency, liquidation, reorganization, dissolution or other winding up of the
Company. This may have the effect of reducing the amount of proceeds paid to
holders of the Notes. The Indenture permits the Company to incur additional
Senior Debt or PARI PASSU debt if certain conditions are met. See "Pro Forma
Capitalization," "Description of Certain Indebtedness" and "Description of the
Notes--Certain Covenants."
In addition, certain holders of Senior Debt may prevent cash payments with
respect to the principal of, premium, if any, and interest or Liquidated
Damages, if any, on the Notes for a period of up to 179 days following a
non-payment default with respect to Senior Debt. In addition, the Indenture
permits the subsidiaries of the Company to incur debt under certain
circumstances. Any such debt incurred by a subsidiary of the Company that is not
a Subsidiary Guarantor would be structurally senior to the Notes. All of the
Company's subsidiaries are Subsidiary Guarantors with respect to the Notes. The
guarantee of the Notes by each Subsidiary Guarantor is subordinated in right of
payment to the Senior Debt of such Subsidiary Guarantor on substantially the
same terms as the Notes are subordinated to the Senior Debt of the Company. See
"Description of the Notes--Subordination."
COMPETITION
The supermarket industry is highly competitive and characterized by narrow
profit margins. The Company's competitors include national and regional
supermarket chains, independent and specialty grocers, drug and convenience
stores, and the newer "alternative format" food stores, including warehouse club
stores, deep discount drug stores and "Supercenters;" in certain areas, the
Company also competes with military commissaries. Supermarket chains generally
compete on the basis of location, quality of products, service, price, product
variety and store condition. During the past three years, an overall lack of
inflation in food prices and increasingly competitive markets have made it
difficult for the Company and other supermarket operators to achieve comparable
store sales gains. Because sales growth has been difficult to attain, many
operators, including the Company, have attempted to maintain market share
through increased levels of promotional activities and discount pricing,
creating a more difficult environment in which to increase year-over-year sales
gains consistently. In addition, because of the growth in the Southeast market,
where all of the Company's supermarkets are located, many existing operators,
including the Company, have opened new supermarkets in existing markets which
has resulted in declines in same store sales for the existing (comparable) store
base of these same grocery chains. The Company regularly monitors its
competitors' prices and adjusts its prices and marketing strategy as Management
deems appropriate in light of existing conditions. The Company faces increased
competitive pressure in all of its markets, including Jackson, Mississippi and
Mobile, Alabama where it has historically held leading market positions, from
existing competitors and from the threatened entry by one or more major new
competitors. Some of the Company's competitors have greater financial resources
and could use these resources to take measures which could adversely affect the
Company's competitive position. See "Business--Markets and Competition."
RISK OF INABILITY TO SATISFY CHANGE OF CONTROL OFFER
Upon the occurrence of a "Change of Control," the Company will be required
to make an offer to purchase all of the outstanding Notes at a purchase price in
cash equal to 101% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the date of purchase. See
"Description of the Notes--Repurchase at the Option of Holders--Change of
Control" for the definition of "Change of Control." There can be no assurance
that the Company will have the funds necessary to effect such a purchase if such
an event were to occur. In addition, the Senior Credit Facility would prohibit,
and the Senior Notes would restrict, the Company from purchasing any Notes. The
Senior Credit Facility also provides that certain changes in control of the
Company would constitute a default thereunder. Any future credit agreements or
other agreements relating to Senior Debt to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
16
<PAGE>
Control occurs at a time when the Company is prohibited from purchasing Notes,
the Company could seek the consent of its lenders to purchase the Notes or could
attempt to refinance the borrowings that contain such prohibition. If the
Company does not obtain such a consent or repay such borrowings, the Company
will remain prohibited from purchasing Notes. In such case, the Company's
failure to purchase tendered Notes would constitute an Event of Default under
the Indenture, which would cause a default under the Senior Credit Facility and
the Senior Notes. In such circumstances, the subordination provisions in the
Notes would likely restrict payments to the holders of the Notes. See
"Description of the Notes."
RISKS RELATING TO FUTURE ACQUISITIONS
The Company's future growth is dependent, in part, on its ability to
consummate additional supermarket acquisitions. There can be no assurance,
however, that the Company will be able to identify additional acquisitions or
that, if consummated, any anticipated benefits will be realized from such
acquisitions. Moreover, future acquisitions by the Company could result in the
incurrence of additional indebtedness, exposure to contingent liabilities and
the amortization of expenses related to goodwill and other intangible assets,
all of which could adversely affect the Company's financial condition and
results of operations.
SUBSIDIARY GUARANTEES
The holders of the Notes will have no direct claims against the subsidiaries
of the Company other than the claim created by the Subsidiary Guarantees. The
Subsidiary Guarantees are subordinated in right of payment to all existing and
future Senior Debt of the Subsidiary Guarantors, including the guarantees of the
Subsidiary Guarantors of the Company's obligations under the Senior Notes and
the Senior Credit Facility. At July 26, 1997, on a Pro Forma Basis, the
aggregate principal amount of outstanding Senior Debt of the Subsidiary
Guarantors would have been approximately $10.4 million (excluding guarantees by
the Subsidiary Guarantors of the Company's obligations under the Senior Notes
and the Senior Credit Facility). See "Description of Certain Indebtedness." In
addition, the Subsidiary Guarantees may be subject to legal challenge under
applicable provisions of the United States Bankruptcy Code or comparable
provisions of state fraudulent transfer or conveyance laws. If such a challenge
were upheld, the Subsidiary Guarantees would be invalidated and unenforceable
and it is possible that holders of the Notes would be ordered by a court to turn
over to other creditors of the Subsidiary Guarantors or to their trustees in
bankruptcy all or a portion of the payments made to them pursuant to the
Subsidiary Guarantees. To the extent that the Subsidiary Guarantees are not
enforceable in amounts sufficient to satisfy the claims of the holders of the
Notes, the rights of holders of the Notes to participate in any distribution of
assets of any Subsidiary Guarantors upon liquidation, bankruptcy, reorganization
or otherwise would be subject to prior claims of creditors of that Guarantor.
GEOGRAPHIC CONCENTRATION
All of the Company's supermarkets are located in the Southeast region, with
a strong concentration in Mississippi and Alabama, and thus the performance of
the Company will be particularly influenced by the economic and demographic
trends in this area. Although the Southeast region has experienced economic and
demographic growth over the past several years, a significant economic downturn
in the region could have a material adverse effect on the Company.
RELIANCE ON KEY MANAGEMENT
The Company's success depends to a significant degree upon the continued
contributions of Management as well as the Company's sales and marketing,
finance and manufacturing personnel, certain of whom would be difficult to
replace. The loss of the services of certain of these executives could have an
adverse effect on the Company. Although certain of these executives are
shareholders of Jitney-Jungle and have employment contracts with the Company,
there can be no assurance that the services of such personnel will continue to
be available to the Company. See "Management" and "Ownership of Capital Stock."
17
<PAGE>
ENVIRONMENTAL RISKS
The Company is subject to federal, state and local laws and regulations
including those relating to environmental protection, work place safety, public
health and community right-to-know. The Company's supermarkets are not highly
regulated under environmental laws since the Company does not engage in any
industrial activities at those locations. The Company's expenditures to comply
with such laws and regulations at its supermarkets primarily consist of those
related to retrofitting chlorofluorocarbon ("CFC") chiller units. In addition,
56 of the Company's facilities (including all 53 of the Pump And Save
facilities) and one former facility for which the Company has retained
responsibility, contain or contained underground tanks for the storage of
petroleum products, such as gasoline and diesel fuel. The Company maintains an
environmental compliance program that includes the implementation of required
technical and operational activities designed to minimize the potential for
leaks and spills, maintenance of records and the regular testing and monitoring
of tank systems for tightness. There can be no assurance, however, that these
tank systems will at all times remain free from leaks or that the use of these
tanks will not result in spills. Sixteen of the facilities have had leaks or
spills, 12 of which were related to underground or above-ground petroleum
storage tanks and four of which were unrelated to tank storage. All of such
leaks or spills have been or are being responded to in conjunction with the
appropriate regulatory agencies. Historically, none of the 16 locations which
have had leaks or spills have required expenditures that would have had a
material effect on the results of operations, liquidity or financial condition
of the Company. All significant required expenditures in connection with the
clean up of such leaks and spills have been made at these 16 sites, except at
three newly discovered locations which are still undergoing investigation and
one location awaiting state approval of its remediation plan. Any future leak or
spill, depending on such factors as the material involved, quantity,
environmental setting and availability of state clean-up funds, could result in
response activities that could interrupt the Company's operations and could
result in costs to the Company that could have a material adverse effect on the
Company. In addition, there can be no assurance that future environmental
legislation and regulation will not require material expenditures by the Company
or otherwise have a material adverse effect on the Company's operations. See
"Business-- Environmental Matters."
CONTROL BY BRS
Approximately 71%, on a fully diluted basis, of the outstanding shares of
Jitney-Jungle's common stock is held by Bruckmann, Rosser, Sherrill & Co., L.P.
(the "Fund") and certain related investors (collectively, the "Fund Entities").
As a result, the Fund controls Jitney-Jungle and has the power to elect a
majority of its directors, appoint new management and approve any action
requiring the approval of shareholders, including adopting certain amendments to
Jitney-Jungle's articles of incorporation and approving mergers or sales of
substantially all of Jitney-Jungle's assets. The directors elected by the Fund
will have the authority to effect decisions affecting the capital structure of
Jitney-Jungle including the issuance of additional capital stock, the
implementation of stock repurchase programs and the declaration of dividends.
See "Ownership of Capital Stock."
FRAUDULENT CONVEYANCE CONSIDERATIONS
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance law, if, at the
time it issued the Existing Notes, the Company (a) incurred such indebtedness
with intent to hinder, delay or defraud creditors, or (b)(i) received less than
reasonably equivalent value or fair consideration therefor and (ii)(A) was
insolvent at the time of the incurrence, (B) was rendered insolvent by reason of
such incurrence (and the application of the proceeds thereof), (C) was engaged
or was about to engage in a business or transaction for which the assets
remaining with the Company constituted unreasonably small capital to carry on
its business, or (D) intended to incur, or believed that it would incur, debts
beyond its ability to pay such debts as they mature, then, in each such case, a
court of competent jurisdiction could void, in whole or in part, the Notes
18
<PAGE>
or, in the alternative, subordinate the Notes to existing and future
indebtedness of the Company. The measure of insolvency for purposes of the
foregoing will vary depending upon the law applied in such case. Generally,
however, the Company would be considered insolvent if the sum of its debts,
taking contingent liabilities into account, was greater than all of its assets
at fair valuation or if the present fair saleable value of its assets was less
than the amount that would be required to pay the probable liability on its
existing debts, including contingent liabilities, as they become absolute and
matured. Under Mississippi fraudulent conveyance law, a transaction may be set
aside for lack of consideration, regardless of the solvency of the parties.
For purposes of the United States Bankruptcy Code and state fraudulent
transfer or conveyance laws, Management believes that, (i) indebtedness under
the Existing Notes was incurred without the intent to hinder, delay or defraud
creditors and for proper purposes and in good faith, (ii) the Company received
reasonably equivalent value or fair consideration, and (iii) based on forecasts,
asset valuations and other financial information, the Company, after
consummation of the Transactions and the Delchamps Merger, including the
incurrence of indebtedness under the Existing Notes and the application of the
proceeds thereof, will be solvent, did and will have sufficient capital for
carrying on its business and will be able to pay its debts as they mature. There
can be no assurance, however, that a court passing on such questions would agree
with Management's view.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The Existing Notes currently are eligible for trading in the PORTAL Market.
The New Notes are new securities for which there is currently no established
market. The Company does not intend to list the New Notes on any national
securities exchange or to seek the admission thereof to trading in the National
Association of Securities Dealers Automated Quotation System. The Initial
Purchasers have advised the Company that they currently intend to make a market
in the New Notes but that they are not obligated to do so and any such market
making may be discontinued at any time. There can be no assurance as to the
development of any market or the liquidity of any market that may develop for
the New Notes. If an active public market does not develop, the market, price
and liquidity of the New Notes may be adversely affected. Future trading prices
of the New Notes will depend on prevailing interest rates, the market for
similar securities and other factors, including general economic conditions and
the financial condition and performance of the Company. Holders of the New Notes
should be aware that they may be required to bear the financial risks of their
investment for an indefinite period of time. See "Description of the Notes."
19
<PAGE>
THE TRANSACTIONS
Concurrently with the Delchamps Tender Offer, Management consummated the
Transactions, including the sale of the Existing Notes, the amendment and
restatement of the Senior Credit Facility and the initial borrowing thereunder,
the repayment of approximately $15.4 million of indebtedness of Delchamps and
the Consent Solicitation pursuant to which certain amendments to the Senior Note
Indenture were approved by the holders of the Senior Notes.
THE DELCHAMPS ACQUISITION
The Delchamps Acquisition will be consummated pursuant to the Delchamps
Merger Agreement. The aggregate Delchamps Purchase Price will be approximately
$218.2 million. The Board of Directors of Delchamps has unanimously approved the
Delchamps Acquisition and the Delchamps Merger Agreement, has determined that
the Delchamps Purchase Price is fair to the shareholders of Delchamps and has
recommended that all shareholders of Delchamps vote in favor of the Delchamps
Merger.
In accordance with the Delchamps Merger Agreement, on July 14, 1997 DAC
commenced the Delchamps Tender Offer to purchase all of the issued and
outstanding shares of common stock, par value $.01 per share, and associated
preferred share purchase rights of Delchamps (collectively, "Shares"). On
September 12, 1997, DAC accepted for payment pursuant to the Delchamps Tender
Offer an aggregate of 5,317,510 Shares. Pursuant to the Merger Agreement and
subject to the satisfaction of the conditions set forth therein, DAC will be
merged with and into Delchamps in accordance with the relevant provisions of the
Alabama Business Corporation Act ("ABCA"), the separate corporate existence of
DAC will cease and Delchamps will become a wholly owned subsidiary of
Jitney-Jungle.
The Delchamps Merger Agreement contains customary representations,
warranties and covenants and provides for termination prior to closing under
certain circumstances. If (i) the Delchamps Merger Agreement is terminated by
either Jitney-Jungle or DAC because of a material willful breach of the
Delchamps Merger Agreement by Delchamps, or (ii) any Change of Control (as
defined in the Delchamps Merger Agreement) occurs during the term of the
Delchamps Merger Agreement or, under certain circumstances, within 180 days
following the termination thereof, then Delchamps will be required to pay
Jitney-Jungle a termination fee of $7.0 million and to reimburse Jitney-Jungle
and DAC for up to $3.0 million of their out-of-pocket fees and expenses.
THE REFINANCING
Upon consummation of the Delchamps Tender Offer, Jitney-Jungle's existing
revolving credit agreement with Fleet Capital Corporation, as successor agent to
Fleet Bank, N.A., and certain other banks was amended and restated to provide
for up to $150.0 million of revolving loans under the Senior Credit Facility,
the Company borrowed approximately $72.7 million thereunder and the Company
repaid approximately $15.4 million of Delchamps' outstanding indebtedness.
THE CONSENT SOLICITATION
In order to permit the Delchamps Acquisition and related financings,
Jitney-Jungle consummated the Consent Solicitation and obtained from holders of
its Senior Notes approval of certain amendments to the Senior Note Indenture
that, among other things, permit the Company to issue, and the Subsidiary
Guarantors to guarantee, the Notes and increase the amount of borrowings
available under the Senior Credit Facility. In connection with the Consent
Solicitation, the Company paid to the consenting holders of Senior Notes a
consent payment.
20
<PAGE>
EXPECTED STORE CLOSURES AND DIVESTITURES
In connection with the Delchamps Acquisition, Management has determined to
close 13 Delchamps supermarkets that are unprofitable or that in other respects
have not performed in accordance with expectations. Seven of such stores are
located in Alabama, four are located in Louisiana, one is located in Florida and
one is located in Mississippi.
In connection with the Delchamps Acquisition, Jitney-Jungle received a
request for additional information from the FTC under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act"). As a result of
negotiations with the staff of the FTC which addressed the FTC's concerns about
the proposed combination with respect to certain markets in which Jitney-Jungle
and Delchamps have stores, Jitney-Jungle and Delchamps reached a settlement
agreement with the FTC. Pursuant to the terms of the settlement agreement, the
FTC terminated the waiting period imposed by the HSR Act, and Jitney-Jungle and
Delchamps agreed under the terms of a proposed consent agreement to divest five
Jitney-Jungle stores and five Delchamps stores to SUPERVALU, Inc. ("SUPERVALU")
by February 12, 1998 or one month after the consent agreement becomes effective,
whichever is later. The consent agreement is subject to a final FTC approval
following a 60 day public notice period. The five Delchamps stores are located
in Hancock, Harrison, Lamar and Forrest Counties, Mississippi. The aggregate
proposed purchase price for the five Delchamps' stores will be the sum of the
purchase price for the merchandise as determined by a physical inventory and the
purchase price for the equipment of $725,000, subject to certain adjustments.
The proposed consent agreement would require Jitney-Jungle and Delchamps, for
ten years, to notify the FTC before acquiring any supermarkets in Hancock,
Jackson, Lamar, Forrest and Warren Counties, Mississippi and Escambia County in
Florida. Jitney-Jungle and Delchamps would also be prohibited from attempting to
restrict the ability of others to operate any supermarket they formerly owned in
those counties.
The Pro Forma Condensed Consolidated Financial Statements contained
elsewhere in this Prospectus contemplate, in connection with the settlement
agreement reached with the FTC, the sale by Jitney-Jungle of an aggregate of ten
stores currently operated by Jitney-Jungle and Delchamps. This pro forma
adjustment is solely for illustrative purposes and may not represent the actual
number of stores finally approved by the FTC for divestment pursuant to the
proposed consent agreement among Jitney-Jungle, Delchamps and SUPERVALU. See
"Pro Forma Condensed Consolidated Financial Statements."
21
<PAGE>
PRO FORMA CAPITALIZATION
The following table sets forth the unaudited pro forma cash and cash
equivalents and pro forma capitalization of the Company at July 26, 1997, on a
Pro Forma Basis. The pro forma data set forth in this table may not be
indicative of the actual cash and cash equivalents or capitalization that would
have occurred had the Transactions and the Delchamps Merger in fact occurred on
the date specified. This table should be read in conjunction with "Pro Forma
Condensed Consolidated Financial Statements" and the notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations of Jitney-Jungle," "Management's Discussion and Analysis of Financial
Condition and Results of Operations of Delchamps" and the historical financial
statements of Jitney-Jungle and Delchamps and the notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT JULY 26, 1997
(DOLLARS IN
THOUSANDS)
<S> <C>
Cash and cash equivalents................................................................... $ 14,761
----------
----------
Long-term debt, including current portion:
Senior Credit Facility(1)................................................................. $ 72,700
Senior Notes.............................................................................. 200,000
10 3/8% Senior Subordinated Notes due 2007................................................ 200,000
Capitalized lease obligations............................................................. 73,962
Other long-term debt...................................................................... 11,799
----------
Total debt.............................................................................. 558,461
Mandatorily redeemable preferred stock:
225,000 shares Class A Preferred Stock authorized, par value $.01 per share, 225,000
shares outstanding; 275,000 shares Class B Preferred Stock authorized, par value $.01
per share, 274,460.24 shares outstanding; 23,958.33 shares Class C Preferred Stock,
Series 2 authorized, par value $.01 per share, 23,958.33 shares outstanding............. 59,508
----------
Stockholders' deficit:
76,041.67 shares Class C Preferred Stock, Series 1 authorized, par value $.01 per share,
76,041.67 shares outstanding............................................................ 8,663
5,000,000 shares Common Stock authorized, par value $.01 per share, 425,000 shares
outstanding............................................................................. 4
Additional paid-in capital................................................................ (302,326)
Retained earnings......................................................................... 139,331
----------
Total stockholders' deficit............................................................. (154,328)
----------
Total capitalization........................................................................ $ 463,641
----------
----------
</TABLE>
- ------------------------
(1) Excludes $10.5 million of letters of credit issued under the Senior Credit
Facility and $0.7 million of letters of credit issued under the Senior
Credit Facility upon consummation of the Transactions.
22
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following Pro Forma Condensed Consolidated Balance Sheet is based on the
historical balance sheet of Jitney-Jungle at July 26, 1997 and of Delchamps at
June 28, 1997 and was prepared as if the Transactions, the Delchamps Merger and
the Anticipated Store Dispositions had occurred on July 26, 1997. The Delchamps
Acquisition will be accounted for as a purchase, and the total purchase price
will be allocated to Delchamps' tangible and intangible assets and liabilities
based on their estimated fair values at the closing date of the acquisition,
based on valuations and studies which have not yet been performed. Accordingly,
the excess of the purchase price over the historical book value of the net
assets to be acquired has not yet been allocated to individual assets and
liabilities other than the amounts described in the notes to the Pro Forma
Condensed Consolidated Financial Statements. Any variation between such amounts
and the final allocation will change the amount of goodwill recognized in
connection with the Delchamps Acquisition and the related amortization expense.
Management believes, however, that when the final valuation of the net assets
acquired is completed, the allocation of the purchase price will not differ
materially from the amounts shown herein.
The following Pro Forma Condensed Consolidated Statements of Operations and
Other Data for the fiscal year ended May 3, 1997, the 12 weeks ended July 20,
1996, the 12 weeks ended July 26, 1997 and the LTM Period include (i) the
historical results of Jitney-Jungle for the fiscal year ended May 3, 1997 and of
Delchamps for the fiscal year ended June 28, 1997, (ii) the historical results
of Jitney-Jungle for the 12 weeks ended July 20, 1996 and of Delchamps for the
13 weeks ended June 29, 1996, (iii) the historical results of Jitney-Jungle for
the 12 weeks ended July 26, 1997 and of Delchamps for the 13 weeks ended June
28, 1997, and (iv) the historical results of Jitney-Jungle for the 53 weeks
ended July 26, 1997 and of Delchamps for the fiscal year ended June 28, 1997.
Each of these pro forma statements was prepared as if the Transactions, the
Delchamps Merger and the Anticipated Store Dispositions had occurred on April
28, 1996. These pro forma statements reflect certain cost savings that
Management has identified related to the elimination of duplicative costs for
functional areas and facilities in connection with the Delchamps Acquisition
which are based on assumptions that Management believes are both factually
supportable and directly related to the Transactions and the Delchamps Merger.
However, these pro forma statements do not reflect certain additional potential
cost savings described in Note (D) to the Pro Forma Condensed Consolidated
Statements of Operations and Other Data that Management believes should arise as
a result of expected synergies from increased purchasing leverage and backhaul
income. Actual cost savings achieved by the Company may vary considerably from
the estimates discussed above. See "Risk Factors-- Integration of Delchamps."
These pro forma statements also do not reflect (i) a $2.0 million charge
relating to the write-off of commitment fees paid in connection with a bridge
commitment obtained to fund the Delchamps Purchase Price if the sale of the
Existing Notes was not consummated, (ii) approximately $1.4 million of deferred
financing fees relating to Jitney-Jungle's existing credit facility that was
written off in connection with the Transactions and (iii) the estimated loss of
$1.2 million relating to the expected divestiture of certain Jitney-Jungle
stores under an FTC consent decree. Such charges will be recognized by the
Company and reflected in its results of operations in the quarter in which the
Transactions are consummated.
The pro forma financial statements have been prepared by applying to the
historical financial statements of Jitney-Jungle and Delchamps the assumptions
and adjustments described in the accompanying notes. Such pro forma financial
statements are not necessarily indicative of either future results of operations
or results that might have occurred had the Transactions, the Delchamps Merger
and the Anticipated Store Dispositions been consummated as of the indicated
date. Such pro forma financial statements should be read in conjunction with the
Consolidated Financial Statements of Jitney-Jungle and Delchamps and the
respective accompanying notes thereto included elsewhere in this Prospectus.
23
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT JULY 26, 1997
------------------------------------------------------------------------------------------------
COMPANY PRO
HISTORICAL FORMA FOR FTC
-------------------------- PRO FORMA ADJUSTMENTS COMPANY PRO DIVESTITURES
ASSETS JITNEY-JUNGLE DELCHAMPS COMBINED FORMA (H)
------------- ----------- ----------- ---------------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....... $ 5,255 $ 5,670 $ 10,925 $ 67,840 (A) $ 10,886 $ 14,761
190,420 (B)
(2,000) (C)
(7,500) (D)
(233,360) (E)
(15,439) (F)
Receivables..................... 7,423 7,961 15,384 15,384 15,384
Inventories..................... 77,694 89,726 167,420 14,171 (E) 181,591 181,591
Prepaid expenses and other...... 6,507 2,094 8,601 8,601 8,601
Deferred income taxes........... 2,152 6,525 8,677 760 (C) 12,178 13,234
(3,517) (E)
44 (E)
5,665 (E)
549 (G)
------------- ----------- ----------- ----------- -------------- ---------------
Total current assets.......... 99,031 111,976 211,007 17,633 228,640 233,571
Property and equipment, net....... 169,168 129,319 298,487 (4,260) (E) 294,227 287,575
Goodwill.......................... 136,672 (E) 136,672 137,632
Other assets, net................. 16,732 2,166 18,898 4,860 (A) 39,276 39,276
9,580 (B)
7,500 (D)
(1,446) (G)
(116) (E)
------------- ----------- ----------- ----------- -------------- ---------------
Total assets...................... $ 284,931 $ 243,461 $ 528,392 $ 170,423 $ 698,815 $ 698,054
------------- ----------- ----------- ----------- -------------- ---------------
------------- ----------- ----------- ----------- -------------- ---------------
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Delchamps notes payable......... $ -- $ 4,600 $ 4,600 $ (4,600) (F) $ -- $ --
Current portion of long-term
debt.......................... 4,923 3,697 8,620 (3,697) (F) 4,923 4,923
Current portion of capitalized
leases........................ 4,899 844 5,743 5,743 5,743
Current portion of restructuring
obligation.................... 2,273 2,273 15,217 (E) 17,490 17,490
Accounts payable................ 60,940 41,571 102,511 102,511 102,511
Accrued expenses................ 34,224 28,996 63,220 63,220 63,220
Income taxes.................... 855 855 855 855
------------- ----------- ----------- ----------- -------------- ---------------
Total current liabilities..... 104,986 82,836 187,822 6,920 194,742 194,742
Senior Credit Facility............ -- 72,700 (A) 72,700 72,700
Senior Notes...................... 200,000 200,000 200,000 200,000
Senior Subordinated Notes offered
hereby.......................... 200,000 (B) 200,000 200,000
Obligations under capitalized
leases.......................... 58,663 9,556 68,219 68,219 68,219
Long term debt.................... 6,876 7,142 14,018 (7,142) (F) 6,876 6,876
Restructuring obligation.......... 13,453 13,453 31,807 (E) 45,260 45,260
Deferred income taxes............. 6,328 10,211 16,539 (13,706) (E) 2,833 2,833
Other long term liabilities....... 2,244 2,244 2,244 2,244
------------- ----------- ----------- ----------- -------------- ---------------
Total liabilities............. 376,853 125,442 502,295 290,579 792,874 792,874
Redeemable preferred stock........ 59,508 59,508 59,508 59,508
Stockholders' equity (deficit):
Preferred stock................. 8,663 8,663 8,663 8,663
Common stock.................... 4 71 75 (71) (E) 4 4
Additional paid in capital...... (302,326) 19,766 (282,560) (19,766) (E) (302,326) (302,326)
Retained earnings............... 142,229 98,182 240,411 (98,182) (E) 140,092 139,331
(897) (G)
(1,240) (C)
------------- ----------- ----------- ----------- -------------- ---------------
Total stockholders' equity
(deficit)................... (151,430) 118,019 (33,411) (120,156) (153,567) (154,328)
------------- ----------- ----------- ----------- -------------- ---------------
Total liabilities and
stockholders' equity
(deficit)....................... $ 284,931 $ 243,461 $ 528,392 $ 170,423 $ 698,815 $ 698,054
------------- ----------- ----------- ----------- -------------- ---------------
------------- ----------- ----------- ----------- -------------- ---------------
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet.
24
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) Reflects receipt of gross proceeds of $72,700 from the initial borrowing
under the Senior Credit Facility, net of financing fees of $4,860, which
have been included in other assets, net.
(B) Reflects receipt of gross proceeds of $200,000 from the issuance of the
Existing Notes, net of $9,580 of selling commissions and other offering
expenses, which have been reflected as debt issuance costs and included in
other assets, net.
(C) Reflects the payment and write-off of $2,000 of fees related to a commitment
to provide bridge financing, which terminated upon issuance of the Existing
Notes, as well as the related tax benefit of $760 and reduction to retained
earnings of $1,240.
(D) Reflects consent and related solicitation fees totaling $7,500, which have
been included in other assets, net, relating to the Consent Solicitation.
(E) Reflects (i) the preliminary calculation of the excess of the purchase price
in the Delchamps Acquisition over the book value of the net assets acquired
and (ii) the preliminary allocation of such excess, in each case, as set
forth below. The Delchamps Acquisition will be accounted for as a purchase,
and the total purchase price will be allocated to Delchamps' tangible and
intangible assets and liabilities based on their estimated fair values at
the closing date of the acquisition, based on valuations and studies which
have not yet been performed. Accordingly, the excess of the purchase price
over the historical book value of the net assets to be acquired has not yet
been allocated to individual assets and liabilities, other than as shown
below. Any variation between such amounts and the final allocation will
change the amount of goodwill recognized in connection with the Delchamps
Acquisition and the related amortization expense. Management believes,
however, that when the final valuation of the net assets acquired is
completed, the allocation of the purchase price will not differ materially
from the amounts shown herein.
25
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
The purchase price and preliminary pro forma calculation of the excess of
the purchase price over the book value of net assets acquired is as follows:
<TABLE>
<S> <C> <C>
Cash purchase price............................... $ 218,200
Estimated transaction fees in addition to debt
issuance costs.................................. 3,060
Change of control payments to Delchamps
management...................................... 12,100
---------
Total cash payments in connection with the
Delchamps Acquisition....................... 233,360
Delchamps stockholders' equity:
Common stock.................................. 71
Additional paid in capital.................... 19,766
Retained earnings............................. 98,182
---------
Total......................................... 118,019
Elimination of existing deferred financing
costs of $116, net of $44 tax benefit....... (72)
---------
Book value of net assets acquired............. 117,947
---------
Excess of purchase price over net book value.... $ 115,413
---------
---------
Preliminary allocation of excess of purchase price
over net book value:
Amount assigned to inventory...................... $ 14,171
Deferred tax liability - current(1)............... (3,517)
Deferred tax asset - current(2)................... 5,665
Deferred tax asset - non-current(1)............... 13,706
Adjustments related to Delchamps facilities to be
closed in connection with the Delchamps
Acquisition(3):
Write-off of property and equipment............. (4,260)
Current portion of restructuring obligation..... (15,217)
Long-term portion of restructuring obligation... (31,807)
Amount assigned to goodwill....................... 136,672
---------
Total......................................... $ 115,413
---------
---------
</TABLE>
- ------------------------
(1) Relates to differences between the book and tax basis of assets acquired
and liabilities assumed.
(2) Relates to change of control payments to Delchamps management and
accrued severance costs.
(3) Excludes any sales of stores to address FTC concerns. See Note (H)
below.
(F) Reflects the retirement of $15,439 of Delchamps current and long-term debt
obligations.
(G) Reflects the write-off of $1,446 of deferred financing costs relating to the
March 1996 execution of the Senior Credit Facility, as well as the related
tax benefit of $549 and reduction to retained earnings of $897.
26
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(H) As discussed under "The Transactions - Expected Store Closures and
Divestitures," Management expects that the Company will be required to
divest approximately ten stores under a consent decree with the FTC.
Adjustments reflected herein for such divestitures are estimated as follows:
Jitney-Jungle stores:
<TABLE>
<C> <S> <C>
Book value of property and equipment sold.................................... $ 3,201
Net proceeds from sale....................................................... (1,973)
---------
Loss on sale before tax benefit.............................................. 1,228
Tax benefit.................................................................. (467)
---------
Net loss (charged to retained earnings)...................................... $ 761
---------
---------
Delchamps stores:
Book value of property and equipment sold.................................... $ 3,451
Net proceeds from sale....................................................... (1,902)
---------
Loss on sale before tax benefit.............................................. 1,549
Tax benefit.................................................................. (589)
---------
Net loss (increase in goodwill).............................................. $ 960
---------
---------
</TABLE>
27
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED MAY 3, 1997
----------------------------------------------------------------------------------------------
HISTORICAL COMPANY PRO
---------------------------------------- CLOSED PRO FORMA COMPANY FORMA FOR FTC
JITNEY-JUNGLE DELCHAMPS(A) COMBINED STORES(B) ADJUSTMENTS PRO FORMA DIVESTITURES(C)
------------- -------------- --------- --------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ 1,228,533 $1,102,947 $2,331,480 $ (80,757) $2,250,723 $ 2,159,542
COSTS AND EXPENSES:
Cost of sales.................. 925,446 805,832 1,731,278 (62,671) 1,668,607 1,596,277
Direct store expense........... 199,956 231,835 431,791 (22,899) $ (998)(D) 407,894 390,119
Warehouse, administrative and
general expenses............. 63,094 45,273 108,367 (16,335)(D) 96,899 96,931
4,556(E)
750(F)
(439)(I)
Special charges, net(G)........ 2,737 2,220 4,957 4,957 4,957
------------- -------------- --------- --------- ----------- ----------- ---------------
Operating income............... 37,300 17,787 55,087 4,813 12,466 72,366 71,258
Interest expense, net.......... 36,215 4,982 41,197 -- 31,317(H) 67,492 67,492
(5,022)(I)
------------- -------------- --------- --------- ----------- ----------- ---------------
Earnings (loss) before taxes on
income....................... 1,085 12,805 13,890 4,813 (13,829) 4,874 3,766
Income tax expense (benefit)... 339 4,851 5,190 1,798 (3,524)(J) 3,464 3,050
------------- -------------- --------- --------- ----------- ----------- ---------------
NET EARNINGS (LOSS).............. $ 746 $ 7,954 $ 8,700 $ 3,015 $ (10,305) $ 1,410 $ 716
------------- -------------- --------- --------- ----------- ----------- ---------------
------------- -------------- --------- --------- ----------- ----------- ---------------
OTHER DATA:
EBITDA(K)........................ $ 70,344 $ 44,117 $ 114,461 $ 2,513 $ 13,435 $ 130,409 $ 127,235
Depreciation and amortization.... 31,319 23,719 55,038 (2,245) 969 53,762 51,670
LIFO expense (benefit)........... (1,012) 391 (621) (55) -- (676) (650)
Capital expenditures............. 24,099 15,551 39,650 -- -- 39,650 39,650
Gross profit as a percentage of
sales............................ 24.7% 26.9% 25.7% 25.9% 26.1%
EBITDA as a percentage of
sales............................ 5.7% 4.0% 4.9% 5.8% 5.9%
Ratio of earnings to fixed
charges(L)..................... 1.0x 1.6x 1.2x 1.1x 1.0x
Ratio of EBITDA to cash interest
expense(M)..................... 1.9x 8.9x 2.8x 2.0x 2.0x
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
28
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
12 WEEKS ENDED JULY 20, 1996
-----------------------------------------------------------------------------------------------
COMPANY PRO
HISTORICAL FORMA FOR FTC
---------------------------------------- CLOSED PRO FORMA COMPANY PRO DIVESTITURES
JITNEY-JUNGLE DELCHAMPS (A) COMBINED STORES (B) ADJUSTMENTS FORMA (C)
------------- -------------- --------- ---------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ 282,166 $ 284,662 $ 566,828 $ (21,964) $ 544,864 $ 522,745
COSTS AND EXPENSES:
Cost of sales.................. 211,627 210,158 421,785 (17,150) 404,635 387,010
Direct store expense........... 45,447 55,813 101,260 (5,880) $ (230)(D) 95,150 90,955
Warehouse, administrative and
general expenses............. 14,241 13,148 27,389 (3,769)(D) 24,742 24,749
1,051(E)
173(F)
(102)(I)
Special charges, net(G)........ (187) (187) (187) (187)
------------- -------------- --------- ---------- ----------- ----------- ---------------
Operating income............... 10,851 5,730 16,581 1,066 2,877 20,524 20,218
Interest expense, net.......... 8,378 1,494 9,872 -- 7,271(H) 15,580 15,580
(1,563)(I)
------------- -------------- --------- ---------- ----------- ----------- ---------------
Earnings (loss) before taxes on
income....................... 2,473 4,236 6,709 1,066 (2,831) 4,944 4,638
Income tax expense (benefit)... 921 1,583 2,504 398 (676)(J) 2,226 2,112
------------- -------------- --------- ---------- ----------- ----------- ---------------
NET EARNINGS (LOSS).............. $ 1,552 $ 2,653 $ 4,205 $ 668 $ (2,155) $ 2,718 $ 2,526
------------- -------------- --------- ---------- ----------- ----------- ---------------
------------- -------------- --------- ---------- ----------- ----------- ---------------
OTHER DATA:
EBITDA(K)........................ $ 17,813 $ 11,343 $ 29,156 $ 505 $ 3,100 $ 32,761 $ 31,986
Depreciation and amortization.... 7,062 5,486 12,548 (546) 223 12,225 11,750
LIFO expense (benefit)........... (100) 314 214 (15) -- 199 205
Capital expenditures............. 6,122 7,563 13,685 -- -- 13,685 13,685
Gross profit as a percentage of
sales............................ 25.0% 26.2% 25.6% 25.7% 26.0%
EBITDA as a percentage of
sales............................ 6.3% 4.0% 5.1% 6.0% 6.1%
Ratio of earnings to fixed
charges(L)..................... 1.3x 1.8x 1.5x 1.2x 1.2x
Ratio of EBITDA to cash interest
expense(M)..................... 2.1x 7.6x 3.0x 2.2x 2.1x
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
29
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
12 WEEKS ENDED JULY 26, 1997
-----------------------------------------------------------------------------------------------
COMPANY PRO
HISTORICAL FORMA FOR FTC
---------------------------------------- CLOSED PRO FORMA COMPANY PRO DIVESTITURES
JITNEY-JUNGLE DELCHAMPS (A) COMBINED STORES (B) ADJUSTMENTS FORMA (C)
------------- -------------- --------- ---------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ 288,978 $ 266,893 $ 555,871 $ (18,194) $ 537,677 $ 515,582
COSTS AND EXPENSES:
Cost of sales.................. 216,464 188,261 404,725 (13,359) 391,366 374,388
Direct store expense........... 48,058 57,272 105,330 (5,563) $ (230)(D) 99,537 95,089
Warehouse, administrative and
general expenses............. 12,772 12,643 25,415 (3,769)(D) 22,768 22,775
1,051(E)
173(F)
(102) (I)
Special charges, net(G)........ 5 5 5 5
------------- -------------- --------- ---------- ----------- ----------- ---------------
Operating income............... 11,684 8,712 20,396 728 2,877 24,001 23,325
Interest expense, net.......... 8,241 999 9,240 -- 6,797(H) 15,530 15,530
(507)(I)
------------- -------------- --------- ---------- ----------- ----------- ---------------
Earnings (loss) before taxes on
income....................... 3,443 7,713 11,156 728 (3,413) 8,471 7,795
Income tax expense (benefit)... 1,284 2,859 4,143 272 (897)(J) 3,518 3,265
------------- -------------- --------- ---------- ----------- ----------- ---------------
NET EARNINGS (LOSS).............. $ 2,159 $ 4,854 $ 7,013 $ 456 $ (2,516) $ 4,953 $ 4,530
------------- -------------- --------- ---------- ----------- ----------- ---------------
------------- -------------- --------- ---------- ----------- ----------- ---------------
OTHER DATA:
EBITDA(K)........................ $ 18,616 $ 14,778 $ 33,394 $ 193 $ 3,100 $ 36,687 $ 35,543
Depreciation and amortization.... 6,982 6,120 13,102 (523) 223 12,802 12,328
LIFO expense (benefit)........... (50) (59) (109) (12) -- (121) (115)
Capital expenditures............. 4,985 4,409 9,394 -- -- 9,394 9,394
Gross profit as a percentage of
sales............................ 25.1% 29.5% 27.2% 27.2% 27.4%
EBITDA as a percentage of
sales............................ 6.4% 5.5% 6.0% 6.8% 6.9%
Ratio of earnings to fixed
charges(L)..................... 1.4x 2.6x 1.8x 1.4x 1.4x
Ratio of EBITDA to cash interest
expense(M)..................... 2.3x 14.8x 3.6x 2.5x 2.4x
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
30
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
LTM PERIOD
----------------------------------------------------------------------------------------------
HISTORICAL COMPANY PRO
---------------------------------------- CLOSED PRO FORMA COMPANY FORMA FOR FTC
JITNEY-JUNGLE DELCHAMPS(A) COMBINED STORES(B) ADJUSTMENTS PRO FORMA DIVESTITURES(C)
------------- -------------- --------- --------- ----------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET SALES........................ $ 1,235,345 1,102,947 $2,338,292 $ (80,757) $2,257,535 $ 2,166,461
COSTS AND EXPENSES:
Cost of sales.................. 930,283 805,832 1,736,115 (62,671) 1,673,444 1,601,558
Direct store expense........... 202,567 231,835 434,402 (22,899) $ (998)(D) 410,505 392,673
Warehouse, administrative and
general expenses............. 61,625 45,273 106,898 (16,335)(D) 95,430 95,462
4,556(E)
750(F)
(439)(I)
Special charges, net(G)........ 2,737 2,220 4,957 4,957 4,957
------------- -------------- --------- --------- ----------- ----------- ---------------
Operating income............... 38,133 17,787 55,920 4,813 12,466 73,199 71,811
Interest expense, net.......... 36,078 4,982 41,060 -- 30,843(H) 67,484 67,484
(4,419)(I)
------------- -------------- --------- --------- ----------- ----------- ---------------
Earnings (loss) before taxes on
income....................... 2,055 12,805 14,860 4,813 (13,958) 5,715 4,327
Income tax expense (benefit)... 702 4,851 5,553 1,798 (3,573)(J) 3,778 3,260
------------- -------------- --------- --------- ----------- ----------- ---------------
NET EARNINGS (LOSS).............. $ 1,353 $ 7,954 $ 9,307 $ 3,015 $ (10,385) $ 1,937 $ 1,067
------------- -------------- --------- --------- ----------- ----------- ---------------
------------- -------------- --------- --------- ----------- ----------- ---------------
OTHER DATA:
EBITDA(K)........................ 71,147 $ 44,117 115,264 $ 2,513 $ 13,435 $ 131,212 $ 127,800
Depreciation and amortization.... 31,239 23,719 54,958 (2,245) 969 53,682 51,632
LIFO expense (benefit)........... (962) 391 (571) (55) -- (626) (600)
Capital expenditures............. 22,962 15,551 38,513 -- -- 38,513 38,513
Gross profit as a percentage of
sales.......................... 24.7% 26.9% 25.8% 25.9% 26.1%
EBITDA as a percentage of
sales............................ 5.8% 4.0% 4.9% 5.8% 5.9%
Ratio of earnings to fixed
charges(L)..................... 1.1x 1.6x 1.2x 1.1x 1.1x
Ratio of EBITDA to cash interest
expense(M)..................... 2.0x 8.9x 2.8x 2.0x 2.0x
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Statements of
Operations and Other Data.
31
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER DATA
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(A) Delchamps historically has accounted for warehouse costs as part of cost of
goods sold, while Jitney-Jungle has accounted for such costs as part of
warehouse, administrative and general expenses. The historical data for
Delchamps reflects a reclassification of gross profit and selling, general
and administrative expenses as though such warehouse costs had been
accounted for in accordance with the historical financial statements of
Jitney-Jungle.
(B) In connection with the Delchamps Acquisition, Management has identified 13
Delchamps stores which it intends to close due to unprofitability. Pro
forma adjustments have been made to eliminate the historical operating
results of these stores.
(C) As discussed under "The Transactions--Expected Store Closures and
Divestitures," Management expects that the Company will be required to
divest approximately ten stores under a consent decree with the FTC. Pro
forma adjustments have been made to eliminate the historical operating
results of these stores. In addition, the difference between the historical
carrying amount of the net assets of such stores and the estimated net
proceeds to be realized on their disposal (i) in the case of Jitney-Jungle
stores, will be recorded as a non-recurring charge or credit to income and
(ii) in the case of Delchamps stores, has been reflected herein as an
increase in the amount of goodwill recorded in connection with the
acquisition and the related goodwill amortization. Because the price at
which such stores will ultimately be divested is not yet certain, any
variation between the actual price and the price estimated herein (see Note
H to the Pro Forma Condensed Consolidated Balance Sheet) will change (i)
the non-recurring charge or credit to income in the case of Jitney-Jungle
stores and (ii) goodwill and related amortization expense in the case of
Delchamps stores.
(D) In connection with the Delchamps Acquisition, Management has performed a
review of operating activities of Jitney-Jungle and Delchamps and identified
duplicative costs of $17,333 (which includes $14,185 of cash costs and
$3,148 of depreciation and amortization) that it believes can be eliminated
in connection with the Delchamps Acquisition, as follows.
(i) Management has decided to consolidate the Mobile, Alabama headquarters
of Delchamps with Jitney-Jungle's existing Jackson, Mississippi
headquarters. Although a divisional office will be opened in Mobile, the
Delchamps headquarters will be closed. Cost savings associated with such
closing include savings resulting from headcount reductions at both
facilities of $5,951 for the year ended May 3, 1997 and the LTM Period
and $1,373 for the 12 weeks ended July 20, 1996 and the 12 weeks ended
July 26, 1997. Cost savings resulting from the elimination of other
operating costs are estimated at $4,281 (including $975 of reduced
depreciation and amortization) for the year ended May 3, 1997 and the
LTM Period and $988 (including $225 of reduced depreciation and
amortization) for the 12 weeks ended July 20, 1996 and the 12 weeks
ended July 26, 1997.
(ii) Management has decided to close Delchamps' Hammond, Louisiana warehouse
facility and consolidate such operations at the Company's existing
warehouse facilities. Total cost savings resulting from this facility
consolidation are estimated at $6,103 (including $2,173 of reduced
depreciation and amortization) for the year ended May 3, 1997 and the
LTM Period and $1,408 (including $501 of reduced depreciation and
amortization) for the 12 weeks ended July 20, 1996 and the 12 weeks
ended July 26, 1997.
(iii) It has been Delchamps' practice to outsource all of its advertising
printing to third parties, whereas Jitney-Jungle has utilized an
in-house advertising printing facility. Because of excess capacity at
Jitney-Jungle's facility, all Delchamps' advertising circulars will be
printed at Jitney-Jungle's facility. Annualized cost savings resulting
therefrom are estimated at $998 for the year ended May 3, 1997 and the
LTM Period and $230 for the 12 weeks ended July 20, 1996 and the 12
weeks ended July 26, 1997.
32
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER DATA (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
In addition to the cost savings identified above, Management has identified
certain other cost savings opportunities. As a result of the increase in
purchasing volume requirements resulting from the Delchamps Acquisition,
Management believes that the Company should be able to negotiate more
favorable terms from vendors. Management believes that this increased
purchasing leverage should result in approximately $3,352 in annualized cost
savings, which the Company should begin realizing within six to nine months
following the Delchamps Acquisition. Management also believes the increase
in purchasing volume will enable the Company to increase its backhaul income
by approximately $1,841 on an annualized basis. In addition, Management
plans to take certain steps to improve warehouse and distribution
efficiencies, including negotiation of a long-term agreement to supply slow
turning items to the Company's supermarkets and thereby reduce inventory
levels.
(E) Reflects amortization of goodwill using an estimated useful life of 30
years.
(F) Reflects a $750 increase in the annual BRS management fee pursuant to the
amendment of the BRS Management Agreement in connection with the Delchamps
Acquisition. See "Certain Relationships and Related Transactions--BRS
Management Agreement."
(G) Includes for the year ended May 3, 1997 and the LTM Period (i) a $1,779
non-cash charge accrued in fiscal 1997 relating to future payments that will
be made under an employment agreement with Jitney-Jungle's former Chief
Executive Officer; (ii) a $958 charge relating to termination benefits
payable to employees of Jitney-Jungle whose positions were eliminated in May
1997; (iii) a $4,300 charge relating to cash payments made by Delchamps in
connection the settlement of a lawsuit in March 1997; and (iv) a $2,080 gain
on the sale of certain assets of Delchamps in fiscal 1997. Includes a $187
gain and a $5 loss on the sale of certain assets of Delchamps for the 12
weeks ended July 20, 1996 and the 12 weeks ended July 26, 1997,
respectively.
(H) Reflects interest expense related to borrowings outstanding under (i) the
Senior Credit Facility upon consummation of the Delchamps Acquisition
(giving effect to the change in interest rate which occurred in connection
with the restatement thereof) and (ii) the Notes:
<TABLE>
<CAPTION>
12 WEEKS ENDED
YEAR ENDED ----------------------------
MAY 3, 1997 JULY 20, 1996 JULY 26, 1997 LTM PERIOD
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Senior Credit Facility (at a weighted average
interest rate of 7.65%):
Existing borrowings........................... $ 1,985 $ 507 $ -- $ 1,478
Borrowings in connection with the Delchamps
Acquisition................................. 5,562 1,283 1,283 5,562
Amortization of financing fees - Senior Credit
Facility(1)................................. 972 224 224 972
Commitment fee under Senior Credit Facility... 257 56 89 290
Notes (10.375%):
Cash interest expense......................... 20,750 4,788 4,788 20,750
Amortization of debt issuance costs(1)........ 958 221 221 958
Amortization of consent and related solicitation
fees pertaining to the Consent
Solicitation(1)............................... 833 192 192 833
----------- ------ ------ -----------
$ 31,317 $ 7,271 $ 6,797 $ 30,843
----------- ------ ------ -----------
----------- ------ ------ -----------
</TABLE>
- ------------------------
(1) Debt issuance costs associated with the Notes are amortized over ten
years on a straight-line basis. Deferred financing fees associated with
the Senior Credit Facility are amortized over five years on a
straight-line basis. The consent and related solicitation fees
pertaining to the Consent Solicitation are amortized over the remaining
life of the Senior Notes on a straight-line basis.
33
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS AND OTHER DATA (CONTINUED)
(UNAUDITED)
(DOLLARS IN THOUSANDS)
(I) Reflects elimination of interest expense, including amortization of debt
issuance costs, in connection with (i) the repayment of Delchamps debt and
(ii) existing borrowings under the Senior Credit Facility:
<TABLE>
<CAPTION>
12 WEEKS ENDED
YEAR ENDED ----------------------------
MAY 3, 1997 JULY 20, 1996 JULY 26, 1997 LTM PERIOD
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Delchamps debt:
Notes payable....................... $ 1,748 $ 691 $ 276 $ 1,748
Delchamps long-term debt............ 750 213 175 750
Senior Credit Facility:
Cash interest expense related to
existing borrowings............... 2,144 584 -- 1,560
Commitment fee under Senior Credit
Facility.......................... 380 75 56 361
----------- ------ ------ -----------
5,022 1,563 507 4,419
----------- ------ ------ -----------
Amortization of Delchamps debt
issuance costs...................... 39 10 10 39
Amortization of financing fees--
Senior Credit Facility.............. 400 92 92 400
----------- ------ ------ -----------
439 102 102 439
----------- ------ ------ -----------
$ 5,461 $ 1,665 $ 609 $ 4,858
----------- ------ ------ -----------
----------- ------ ------ -----------
</TABLE>
(J) Reflects the effect on income tax expense of pro forma adjustments
described in these footnotes, other than non-deductible goodwill
amortization, at an effective statutory tax rate of 38%.
(K) EBITDA is defined as income from continuing operations before interest,
taxes, depreciation, amortization, LIFO expense (benefit) and special items,
net. EBITDA is presented because it is a widely accepted financial indicator
of a company's ability to service indebtedness. However, EBITDA should not
be considered as an alternative to income from operations or to cash flows
from operating activities (as determined in accordance with generally
accepted accounting principles) and should not be construed as an indication
of a company's operating performance or as a measure of liquidity.
(L) The ratio of earnings to fixed charges is computed by adding fixed charges
to earnings (loss) before taxes on income and dividing that amount by fixed
charges. Fixed charges consist of interest (including amortization of debt
issuance costs) and a portion of rent expense that management considers to
be interest.
(M) Pro forma cash interest expense excludes amortization of deferred financing
fees of $2,763 for the year ended May 3, 1997 and the LTM Period and $637
for the 12 weeks ended July 20, 1996 and the 12 weeks ended July 26, 1997.
34
<PAGE>
PRO FORMA LIQUIDITY
It is anticipated that the Company's principal sources of liquidity will be
cash flow from operations and borrowings under the Senior Credit Facility and
its principal uses of cash will be to fund working capital and acquisitions and
to meet debt service requirements. The Company incurred significant indebtedness
in connection with the Transactions. At July 26, 1997, on a Pro Forma Basis, the
Company would have had approximately $558.5 million of total debt (including
capitalized leases and current installments) as compared to $275.4 million of
actual long-term indebtedness at July 26, 1997. In addition, on a Pro Forma
Basis, the Company would have had a shareholders' deficit of approximately
$154.3 million at July 26, 1997, as compared to an actual shareholders' deficit
of $151.4 million as of July 26, 1997. The Company's significant debt service
obligations following the Delchamps Acquisition could, under certain
circumstances, have material consequences to security holders of the Company.
See "Risk Factors."
In connection with the Transactions, the Company borrowed approximately
$72.7 million under the Senior Credit Facility. Following the consummation of
the Delchamps Merger, the Company will have approximately $11.2 million of
outstanding letters of credit under the Senior Credit Facility. Giving effect to
such letters of credit, Management expects that approximately $66.1 million of
additional borrowings will be available under the Senior Credit Facility
immediately following the Delchamps Acquisition to fund ongoing capital
requirements. See "Description of Certain Indebtedness--Senior Credit Facility."
As of July 26, 1997, the Company had no commitments for capital
expenditures. For fiscal 1998 and fiscal 1999, the Company has budgeted
approximately $50.0 million and $64.0 million, respectively, of capital
expenditures. Such planned capital expenditures primarily relate to new
supermarket openings and remodelings and expansions of existing supermarkets.
Capital expenditure plans of the Company are frequently reviewed and are
modified from time to time depending on cash availability and other economic
factors.
The Company's expenditures to comply with environmental laws and regulations
at its supermarkets primarily consist of those related to remediation of
underground storage tank leaks and spills and retrofitting chlorofluorocarbon
("CFC") chiller units. The Company's unreimbursed cost for remediation at the 16
facilities which have had leaks or spills from underground storage tanks has not
been material. All significant required expenditures in connection with the
clean up of such leaks and spills have been made at these 16 locations, except
at three newly discovered locations which are still undergoing investigation and
one location awaiting state approval of its remediation plan. Based on past
experience, the Company does not anticipate material expenditures at these
locations. In addition, the Company has obtained insurance coverage for bodily
injury, property damage and corrective action expenses resulting from releases
of petroleum products from underground storage tanks during the covered period
at 53 of its 57 underground storage tank locations, and an application for such
coverage is pending at one of the four remaining locations. The Company spent
$515,000, $468,000 and $914,000 retrofitting CFC containing chiller units and
upgrading tanks during fiscal 1995, fiscal 1996 and the LTM Period,
respectively. Between approximately $472,000 and $1,055,000 in expenditures are
contemplated for retrofitting the CFC units and between approximately $455,000
and $755,000 in expenditures are contemplated for tank upgrading to comply with
the 1998 tank standards or closure in fiscal 1998 and fiscal 1999. These
regulatory compliance costs are not covered by insurance.
The Company's ability to fund working capital and acquisitions, and to meet
its debt service requirements, will be dependent on its future performance
which, in turn, will be subject to management, financial, competitive and other
factors affecting the business and operations of the Company, some of which are
beyond the control of the Company. Specifically, the Company's future
performance will be dependent upon its ability to successfully integrate the
Delchamps business and to achieve estimated cost savings both in connection with
the Delchamps Acquisition and on an ongoing basis. If the Company is unable to
generate sufficient cash flow to meet its debt service obligations, the Company
may be required
35
<PAGE>
to renegotiate the payment terms or to refinance all or a portion of the Senior
Credit Facility, the Senior Notes or the Notes, to sell assets or to obtain
additional financing. If the Company could not successfully refinance its
indebtedness, substantially all of the Company's long-term debt would be in
default and could be declared immediately due and payable. See "Risk
Factors--Substantial Leverage."
During the fiscal year ended June 28, 1997, Delchamps generated
approximately $1.1 billion and $44.1 million, respectively, of net sales and
EBITDA. In addition to the incremental net sales, EBITDA and market share
expected to result from the Delchamps Acquisition, Management believes that it
should be able to achieve significant cash cost savings in connection with the
combined operation of the Jitney-Jungle and Delchamps businesses following the
Delchamps Acquisition. While the exact timing and amount of such cash cost
savings is inherently uncertain, Management currently expects that the Company
should begin to realize such cash cost savings within three to nine months after
the Delchamps Acquisition. Generally, such cash cost savings are expected to
result from (i) reduced general and administrative expenses arising from the
closure of the corporate headquarters of Delchamps and associated headcount
reductions, (ii) improved warehouse and distribution efficiencies, (iii) reduced
advertising and printing expenses resulting from moving a portion of Delchamps'
print advertising needs to Jitney-Jungle's in-house printing facilities, (iv)
increased purchasing leverage that may enable the Company to negotiate more
favorable terms from its vendors, and (v) increased backhaul income.
Of the aggregate potential $19.4 million in annualized cash cost savings
discussed above, approximately $14.2 million are reflected in the Pro Forma
Condensed Consolidated Financial Statements included elsewhere herein because
Management believes they are factually supportable and directly related to the
Transactions and the Delchamps Merger. The potential cash cost savings discussed
above are based on estimates prepared solely by members of Management based on
information available to them and have not been independently reviewed. The
estimates necessarily make assumptions as to future events, including general
industry, competitive and business conditions, many of which are beyond the
control of the Company. Actual cash cost savings achieved by the Company may
vary considerably from the estimates discussed above. See "Risk
Factors--Integration of Delchamps."
Jitney-Jungle and Delchamps have improved their EBITDA margins from 5.5% and
2.9%, respectively, in fiscal 1992 to 5.7% and 4.0%, respectively, in fiscal
1997. The Company continuously reviews its operations to identify initiatives
designed to reduce operating costs and increase EBITDA margins. As a result of
the following initiatives, Management believes that the Company can further
improve its EBITDA margins during fiscal 1998: (i) headcount reductions
implemented by Jitney-Jungle in May 1997 which are expected to result in
annualized cost savings of approximately $0.9 million in fiscal 1998; and (ii)
improved labor scheduling currently being implemented at Jitney-Jungle
supermarkets, which is expected to result in annualized cost savings of
approximately $3.5 million in fiscal 1998 and which may also result in
additional cost savings when implemented during the next 12 to 18 months at the
Delchamps supermarkets. In addition, Management expects to implement programs at
Delchamps to reduce inventory shrink to levels comparable to those achieved at
Jitney-Jungle. There can be no assurance, however, that the Company will be able
to implement such programs and other changes within the expected time periods,
or that such programs and changes, if implemented, will produce the expected
cost savings described above.
During fiscal 1997, Jitney-Jungle successfully implemented programs to
reduce inventories by eliminating slow moving items, as well as renegotiating
more favorable payment terms with certain of its vendors. Management believes
that these measures enabled Jitney-Jungle to decrease its working capital needs
by approximately $20.0 million. Management intends to implement similar programs
at Delchamps.
36
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF JITNEY-JUNGLE
The following table sets forth selected historical financial information of
Jitney-Jungle for the five years ended May 3, 1997 and for the 12 weeks ended
July 20, 1996 and July 26, 1997. The selected financial information for the
three years ended May 3, 1997 was derived from the audited consolidated
financial statements of Jitney-Jungle included elsewhere in this Prospectus. The
selected financial information for the two years ended April 30, 1994 was
derived from audited consolidated financial statements of Jitney-Jungle. The
selected financial information as of July 20, 1996 and July 26, 1997 and for the
12 weeks ended July 20, 1996 and July 26, 1997 was derived from unaudited
consolidated financial statements of Jitney-Jungle included elsewhere in this
Prospectus which, in the opinion of Management, include all adjustments
necessary for a fair presentation of the financial condition and results of
operations of Jitney-Jungle for such periods. The results of operations for
interim periods are not necessarily indicative of a full year's operations. The
following table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations of Jitney-Jungle" and
the historical consolidated financial statements of Jitney-Jungle included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
12 WEEKS
FISCAL YEAR ENDED ENDED
--------------------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
MAY 1, APRIL 30, APRIL 29, APRIL 27, MAY 3,
1993 1994 1995 1996 1997
(52 WEEKS) (52 WEEKS) (52 WEEKS) (52 WEEKS) (53 WEEKS)
JULY 20,
1996
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales......................................... $ 1,070,693 $ 1,152,333 $ 1,173,927 $ 1,179,318 $ 1,228,533 $ 282,166
Gross profit...................................... 250,999 276,546 288,188 292,063 303,087 70,539
Direct store expense.............................. 167,162 184,121 189,422 193,483 199,956 45,447
Warehouse, administrative and general expenses.... 47,446 53,664 57,723 60,603 63,094 14,241
Special charges, net(1)........................... -- -- -- -- 2,737 --
----------- ----------- ----------- ----------- ----------- -----------
Operating income.................................. 36,391 38,761 41,043 37,977 37,300 10,851
Interest expense, net............................. 9,920 11,626 10,823 13,000 36,215 8,378
----------- ----------- ----------- ----------- ----------- -----------
Income from continuing operations before provision
for income taxes................................ 26,471 27,135 30,220 24,977 1,085 2,473
Provision for income taxes........................ 9,354 9,956 11,417 9,062 339 921
Extraordinary item(2)............................. -- -- -- (1,456) -- --
----------- ----------- ----------- ----------- ----------- -----------
Net income........................................ $ 17,117 $ 17,179 $ 18,803 $ 14,459 $ 746 $ 1,552
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
OTHER DATA:
EBITDA(3)......................................... $ 57,232 $ 63,457 $ 65,207 $ 64,863 $ 70,344 $ 17,813
Depreciation and amortization..................... 20,119 23,428 25,444 27,323 31,319 7,062
LIFO expense (benefit)............................ 722 1,268 (1,280) (437) (1,012) (100)
Capital expenditures.............................. 38,686 30,225 23,921 30,111 24,099 6,122
Supermarkets open at end of period................ 100 106 106 103 105 104
Remodels during period............................ 12 22 40 33 19 7
Gross profit as a percentage of sales............. 23.4% 24.0% 24.5% 24.8% 24.7% 25.0%
EBITDA as a percentage of sales................... 5.3% 5.5% 5.6% 5.5% 5.7% 6.3%
Ratio of earnings to fixed charges(4)............. 3.1x 2.8x 3.1x 2.4x 1.0x 1.3x
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents......................... $ 13,031 $ 30,737 $ 20,159 $ 5,676 $ 14,426 $ 3,033
Working capital................................... 60,108 60,385 71,929 26,449 (92) 15,561
Total assets...................................... 269,798 296,803 312,415 279,003 267,845 274,011
Total debt........................................ 98,665 102,814 99,198 302,461 272,462 286,372
Redeemable preferred stock........................ -- -- -- 49,988 57,921 50,035
Stockholders' equity (deficit).................... 111,099 124,857 140,216 (144,815) (152,002) (143,280)
<CAPTION>
<S> <C>
JULY 26,
1997
<S> <C>
OPERATING DATA:
Net sales......................................... $ 288,978
Gross profit...................................... 72,514
Direct store expense.............................. 48,058
Warehouse, administrative and general expenses.... 12,772
Special charges, net(1)........................... --
-----------
Operating income.................................. 11,684
Interest expense, net............................. 8,241
-----------
Income from continuing operations before provision
for income taxes................................ 3,443
Provision for income taxes........................ 1,284
Extraordinary item(2)............................. --
-----------
Net income........................................ $ 2,159
-----------
-----------
OTHER DATA:
EBITDA(3)......................................... $ 18,616
Depreciation and amortization..................... 6,982
LIFO expense (benefit)............................ (50)
Capital expenditures.............................. 4,985
Supermarkets open at end of period................ 104
Remodels during period............................ 4
Gross profit as a percentage of sales............. 25.1%
EBITDA as a percentage of sales................... 6.4%
Ratio of earnings to fixed charges(4)............. 1.4x
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents......................... $ 5,255
Working capital................................... (5,955)
Total assets...................................... 284,931
Total debt........................................ 275,361
Redeemable preferred stock........................ 59,508
Stockholders' equity (deficit).................... (151,430)
</TABLE>
- ------------------------------
(1) Includes (i) a $1.8 million non-cash charge accrued in fiscal 1997 relating
to future payments that will be made under an employment agreement with
Jitney-Jungle's former Chief Executive Officer and (ii) a $1.0 million
charge relating to termination benefits payable to employees of
Jitney-Jungle whose positions were eliminated in May 1997.
(2) Reflects a loss on early retirement of debt, net of an income tax benefit of
$0.9 million.
(3) EBITDA is defined as income from continuing operations before interest,
taxes, depreciation, amortization, LIFO expense (benefit) and special items,
net. EBITDA is presented because it is a widely accepted financial indicator
of a company's ability to service indebtedness. However, EBITDA should not
be considered as an alternative to income from operations or to cash flows
from operating activities (as determined in accordance with generally
accepted accounting principles) and should not be construed as an indication
of a company's operating performance or as a measure of liquidity.
(4) The ratio of earnings to fixed charges is computed by adding fixed charges
to earnings (loss) before taxes on income and dividing that sum by the fixed
charges. Fixed charges consist of interest (including amortization costs)
and a portion of rent expense that management considers to be interest.
37
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF JITNEY-JUNGLE
The following discussion should be read in conjunction with the financial
statements and related notes, and the other financial information, included
elsewhere in this Prospectus. References in this discussion to fiscal years are
to Jitney-Jungle's fiscal years, which end on the Saturday nearest to April 30
in the calendar year. The consolidated statements of earnings for fiscal 1995
and 1996 include 52 weeks of operations and the consolidated statements of
earnings for fiscal 1997 include 53 weeks of operations. References to Interim
1997 are to the 12 weeks ended July 20, 1996 and references to Interim 1998 are
to the 12 weeks ended July 26, 1997.
GENERAL
Jitney-Jungle operates a chain of 104 supermarkets and 53 gasoline stations.
Net sales from gasoline stations during fiscal 1995, 1996 and 1997 were 4.0%,
5.2% and 6.9%, respectively, of Jitney-Jungle's net sales for such fiscal years.
Approximately 21.0% of Jitney-Jungle's net non-perishable sales result from its
private label program. Private label products generally have a lower unit sales
price than national brands, but provide a higher gross margin to Jitney-Jungle
due to lower unit costs.
Prior to fiscal 1995, Jitney-Jungle used a LIFO valuation method derived
from the Consumer Price Index (CPI). The CPI, a Federal government index that
measures changes in retail prices, is published by the Bureau of Labor
Statistics on a monthly basis. Due to a general absence of inflation in food
prices, Jitney-Jungle changed to an internally developed price index at the
beginning of fiscal 1995 to more accurately reflect price level changes that
were specific to Jitney-Jungle's actual experience. Jitney-Jungle does not
believe that the CPI index provides a satisfactory measure of its inventory.
After switching to its own internally generated price index, which measures over
20,000 different SKUs, Jitney-Jungle experienced a LIFO credit in fiscal 1995,
1996 and 1997.
During the past three years, an overall lack of inflation in food prices and
increasingly competitive markets have made it difficult for Jitney-Jungle and
other supermarket operators to achieve comparable store sales gains. Because
sales growth has been difficult to attain, many operators, including
Jitney-Jungle, have attempted to maintain market share through increased levels
of promotional activities and discount pricing, creating a more difficult
environment in which to increase year-over-year sales gains consistently. In
addition, because of the growth in the Southeast market, many existing
operators, including Jitney-Jungle, have opened new supermarkets in existing
markets which has resulted in declines in same store sales for the existing
(comparable) store base of these same grocery chains. In an effort to offset
this trend, Jitney-Jungle intends to focus future new supermarket openings on
its combination and conventional supermarket formats which, historically, have
achieved higher operating profit margins than its discount supermarkets.
THE RECAPITALIZATION
On March 5, 1996, Jitney-Jungle effected a recapitalization (the
"Recapitalization") pursuant to an Agreement and Plan of Exchange and of Merger
dated as of November 16, 1995 by and among Jitney-Jungle, certain of its
affiliates and JJ Acquisitions Corp., a Delaware corporation formed by BRS
("JJAC"). Prior to the Recapitalization, Jitney-Jungle had five affiliates
(Southern Jitney Jungle Company, McLemore's Wholesale & Retail Stores, Inc.,
McCarty-Holman Co., Inc., Pump And Save, Inc. and Jitney-Jungle Bakery, Inc.,
each of which was under common ownership and management with Jitney-Jungle) and
five subsidiaries (Florida Jitney-Jungle Stores, Inc., Jitney-Jungle Wholesale
Co., Inc., Jackson Jet Corporation, Interstate Jitney Jungle Stores, Inc. and
Foodway, Inc., each of which was wholly-owned by Jitney-Jungle). In connection
with the Recapitalization, the common stock of each of Southern Jitney Jungle
Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery, Inc. was exchanged
for newly-issued shares of common stock of Jitney-Jungle and certain existing
subsidiaries of Jitney-Jungle were merged with and into Jitney-Jungle or another
subsidiary of Jitney-Jungle; as a result, Jitney-Jungle had four direct,
38
<PAGE>
wholly-owned subsidiaries (Interstate Jitney-Jungle Stores, Inc., Southern
Jitney Jungle Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery, Inc.)
and one indirect wholly-owned subsidiary, Pump And Save, Inc. Immediately
thereafter, JJAC was merged with and into Jitney-Jungle and the separate
existence of JJAC ceased. The shareholders of Jitney-Jungle received
consideration of $272.5 million in cash and $27.5 million aggregate liquidation
preference of Class B Preferred Stock. Upon completion of the Recapitalization,
71.25%, on a fully diluted basis, of the outstanding shares of Jitney-Jungle's
Common Stock was held by the Fund Entities and 10.0%, on a fully diluted basis,
continued to be held by certain shareholders of Jitney-Jungle.
THE DELCHAMPS ACQUISITION
On July 8, 1997, Jitney-Jungle entered into the Delchamps Merger Agreement
pursuant to which the Delchamps Acquisition will be effected. In connection with
the Delchamps Acquisition, the Company issued and sold $200.0 million principal
amount of the Existing Notes and the Company amended and restated the Senior
Credit Facility to increase the commitments thereunder from $100.0 million to
$150.0 million. The Company used and will use the $200.0 million of gross
proceeds from the sale of the Existing Notes, together with approximately $72.7
million of borrowings under the Senior Credit Facility, to pay the $218.2
million Delchamps Purchase Price, to repay approximately $15.4 million of
Delchamps' outstanding indebtedness, to make approximately $12.1 million of
change of control payments to certain Delchamps executives and to pay
approximately $27.0 million of transaction fees and expenses. As a result of the
Transactions, Management anticipates that a one-time pre-tax charge of $4.7
million ($2.9 million after tax) will be recorded in the quarter in which the
Transactions are consummated.
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
financial information expressed as a percentage of net sales:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED 12 WEEKS ENDED
------------------------------------------- ------------------------
<S> <C> <C> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
(52 WEEKS) (52 WEEKS) (53 WEEKS)
JULY 20, JULY 26,
1996 1997
Net sales................................................ 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit............................................. 24.5 24.8 24.7 25.0 25.1
Direct store expense..................................... 16.1 16.4 16.3 16.1 16.6
Warehouse, administrative and general expenses........... 4.9 5.1 5.1 5.0 4.4
Special charges.......................................... -- -- 0.2 -- --
Operating income......................................... 3.5 3.2 3.0 3.9 4.1
Interest expense, net.................................... 0.9 1.1 2.9 3.0 2.9
Provision for income taxes............................... 1.0 0.8 -- 0.3 0.4
Net income before extraordinary item..................... 1.6 1.3 0.1 0.6 0.8
OTHER DATA:
EBITDA................................................... 5.6% 5.5% 5.7% 6.3% 6.4%
</TABLE>
INTERIM 1998 VS. INTERIM 1997
NET SALES. Net sales increased $6.8 million or 2.4% in Interim 1998 as
compared to Interim 1997. The net sales increase was primarily attributable to
the continued favorable results of the Jitney-Jungle Gold Card (a frequent
shopper program which was launched by Jitney-Jungle in January, 1997) and sales
improvements at five discount supermarkets that were converted during that
period (two to the conventional store format and three to the combination store
format). Same store sales increased approximately 2.3% in Interim 1998.
Jitney-Jungle's store count at the end of Interim 1998 was 104 supermarkets (22
discount stores, 77 conventional stores and five combination stores) and 53
gasoline stations as compared
39
<PAGE>
to 104 supermarkets (30 discount stores, 72 conventional stores and two
combination stores) and 49 gasoline stations at the end of Interim 1997.
GROSS PROFIT. Gross profit in Interim 1998 increased $2.0 million to $72.5
million, or 25.1% of net sales, compared to $70.5 million, or 25.0% of net
sales, during Interim 1997. Gross profit increased primarily due to an increase
in sales in Interim 1998.
DIRECT STORE EXPENSE. Direct store expense was $48.1 million, or 16.6% of
net sales, for Interim 1998 as compared to $45.4 million, or 16.1% of net sales,
for Interim 1997. Direct store expense increased primarily due to an increase in
net sales in Interim 1998. The increase in direct store expense as a percentage
of net sales in Interim 1998 was principally due to increases in labor costs and
advertising expense associated with the conversion of five discount stores
during that period.
WAREHOUSE, ADMINISTRATIVE AND GENERAL EXPENSES. Warehouse, administrative
and general expenses were $12.8 million, or 4.4% of net sales in Interim 1998
compared to $14.2 million, or 5.0% of net sales, in Interim 1997. The decrease
in warehouse, administrative and general expenses was primarily due to (i) a
decrease in administrative labor costs as a result of a headcount reduction
implemented during Interim 1998, (ii) a decrease in various expenses including
travel and supplies and (iii) an increase in backhaul income.
OPERATING INCOME. Operating income was $11.7 million, or 4.1% of net sales,
in Interim 1998 as compared to $10.9 million, or 3.9% of net sales, in Interim
1997. The increase in operating income was due to the factors discussed above.
EBITDA. EBITDA was $18.6 million, or 6.4% of net sales, in Interim 1998 as
compared to $17.8 million, or 6.3% of net sales, in Interim 1997. EBITDA
increased primarily due to an increase in sales in Interim 1998 and a reduction
in warehouse, administrative and general expenses.
INTEREST EXPENSE, NET. Interest expense, net was $8.2 million in Interim
1998 as compared to $8.4 million in Interim 1997. The decrease in interest
expense was primarily due to a reduction in indebtedness outstanding under the
existing Credit Facility.
INCOME TAXES. Income taxes were $1.3 million with an effective tax rate of
37.3% for Interim 1998 as compared to $0.9 million with an effective tax rate of
37.2% for Interim 1997. The increase in income taxes was principally due to
higher pretax earnings.
NET INCOME. Net income for Interim 1998 increased $0.6 million to $2.2
million, compared to $1.6 million in Interim 1997. The increase in net income
was due to the factors discussed above.
FISCAL 1997 VS. FISCAL 1996
NET SALES. Net sales for fiscal 1997 increased 4.2% to $1,228.5 million
compared to $1,179.3 million in fiscal 1996. The increase in net sales was
primarily due to the opening of two stores, the opening of seven new gasoline
stations and the addition of a "53rd" week in fiscal 1997. Without the
additional "53rd" week, net sales would have increased approximately 2.2%. In
addition, Jitney-Jungle launched its Gold Card, a frequent shopper card program,
in the fourth quarter of fiscal 1997 which increased customer count and, as a
result, increased net sales. Same store sales increased 0.2% in fiscal 1997 over
fiscal 1996.
GROSS PROFIT. Gross profit for fiscal 1997 increased $11.0 million to
$303.1 million, or 24.7% of net sales, compared to $292.1 million, or 24.8% of
net sales, for fiscal 1996. Gross profit increased primarily due to an increase
in net sales in fiscal 1997. The decrease in gross profit as a percentage of net
sales in fiscal 1997 was primarily due to the initial effect of the new
Jitney-Jungle Gold Card which entitles customers to discounts on certain
products.
DIRECT STORE EXPENSE. Direct store expense for fiscal 1997 increased $6.5
million to $200.0 million, or 16.3% of net sales, compared to $193.5 million, or
16.4% of net sales, for fiscal 1996. Direct store expenses
40
<PAGE>
increased primarily due to an increase in net sales in fiscal 1997. The decrease
in direct store expenses as a percentage of net sales in fiscal 1997 was
principally due to decreases in store supplies and advertising costs which were
partially offset by increases in group insurance expense due to an increase in
medical claims paid during the year by the self-insured plan and increases in
depreciation expense principally due to acquisitions of property and equipment
(including capital leases) associated with Jitney-Jungle's remodeling program
and the acquisition of new stores and gasoline stations.
WAREHOUSE, ADMINISTRATIVE AND GENERAL EXPENSES. Warehouse, administrative
and general expenses for fiscal 1997 increased $2.5 million to $63.1 million, or
5.1% of net sales, compared to $60.6 million, or 5.1% of net sales, for fiscal
1996. Warehouse, administrative and general expenses increased primarily due to
(i) an increase in net sales in fiscal 1997 and (ii) an increase in amortization
expense due to increased debt issuance costs related to the Recapitalization.
The increase in warehouse, administrative and general expenses was partially
offset by an increase in backhaul income during fiscal 1997.
SPECIAL CHARGES. Includes (i) a $1.8 million non-cash charge accrued in
fiscal 1997 relating to future payments that will be made under an employment
agreement with Jitney-Jungle's former Chief Executive Officer and (ii) a $1.0
million charge relating to termination benefits payable to employees of
Jitney-Jungle whose positions were eliminated in May 1997. There were no
comparable charges in fiscal 1996.
OPERATING INCOME. Operating income for fiscal 1997 decreased $0.7 million
to $37.3 million, or 3.0% of net sales, compared to $38.0 million, or 3.2% of
net sales for fiscal 1996. The decrease in operating income was due to the
factors discussed above.
EBITDA. EBITDA for fiscal 1997 increased $5.4 million to $70.3 million, or
5.7% of net sales, compared to $64.9 million, or 5.5% of net sales, for fiscal
1996. EBITDA increased primarily due to an increase in net sales in fiscal 1997.
The increase in EBITDA as a percentage of net sales in fiscal 1997 was primarily
due to the renegotiation of a supply agreement with a major supplier and to
decreases in direct store expense as discussed above which were offset in part
by a decrease in gross profit due primarily to the initial effect of the
introduction of the Gold Card.
INTEREST EXPENSE, NET. Interest expense, net for fiscal 1997 increased
$23.2 million to $36.2 million, compared to $13.0 million for fiscal 1996. The
increase in interest expense, net was due to interest expense on the Senior
Notes and the existing Credit Facility, which were in place all of fiscal 1997
and only for two months in fiscal 1996.
INCOME TAXES. The effective rate for income taxes for fiscal 1997 decreased
to 31.2% compared to 36.3% for fiscal 1996. The decrease in effective rate for
fiscal 1997 was primarily due to lower pretax earnings which qualified
Jitney-Jungle for a lower tax bracket.
NET INCOME. Net income for fiscal 1997 decreased $13.8 million to $0.7
million, compared to $14.5 million for fiscal 1996. The decrease in net income
was due to the factors discussed above.
FISCAL 1996 VS. FISCAL 1995
NET SALES. Net sales for fiscal 1996 increased 0.5% to $1,179.3 million
compared to $1,173.9 million in fiscal 1995. The increase in net sales was
primarily due to the opening of four supermarkets and the opening of eleven new
gasoline stations, partially offset by the effect of closing seven supermarkets
and two gasoline stations in fiscal 1996. Same store sales remained relatively
flat in fiscal 1996 as compared to fiscal 1995.
GROSS PROFIT. Gross profit for fiscal 1996 increased $3.9 million to $292.1
million, or 24.8% of net sales, compared to $288.2 million, or 24.5% of net
sales, for fiscal 1995. Gross profit increased primarily due to higher net
sales. Gross profit as a percentage of net sales increased primarily due to
improved procurement results due to (i) continued enhancements and improved
utilization of Jitney-Jungle's
41
<PAGE>
information systems, which resulted in better buying decisions at better prices
and (ii) the renegotiation of a supply contract of Fleming Companies, Inc.
DIRECT STORE EXPENSE. Direct store expense for fiscal 1996 increased $4.1
million to $193.5 million, or 16.4% of net sales, compared to $189.4 million, or
16.1% of net sales, for fiscal 1995. Direct store expense increased primarily
due to higher net sales. Direct store expense as a percentage of net sales
increased primarily due to increases in personnel costs, repairs and maintenance
and depreciation expense as a result of increased capital expenditures relating
to the remodeling of stores in fiscal 1995.
WAREHOUSE, ADMINISTRATIVE AND GENERAL EXPENSES. Warehouse, administrative
and general expenses for fiscal 1996 increased $2.9 million to $60.6 million, or
5.1% of net sales, compared to $57.7 million, or 4.9% of net sales, for fiscal
1995. Warehouse, administrative and general expenses increased primarily due to
higher net sales. Warehouse, administrative and general expenses as a percentage
of net sales increased primarily due to increases in personnel costs, insurance
expense as a result of a larger provision for workers compensation and general
liability insurance and amortization expenses as a result of increased debt
issuance costs related to the Recapitalization.
OPERATING INCOME. Operating income for fiscal 1996 decreased $3.1 million
to $38.0 million, or 3.2% of net sales, from $41.0 million, or 3.5% of net
sales, for fiscal 1995. The decrease in operating income was due to the factors
discussed above.
EBITDA. EBITDA for fiscal 1996 decreased $0.3 million to $64.9 million, or
5.5% of net sales, compared to $65.2 million, or 5.6% of net sales, for fiscal
1995. EBITDA decreased primarily due to higher direct store expenses and higher
warehouse, administrative and general expenses as discussed above.
INTEREST EXPENSE, NET. Interest expense, net for fiscal 1996 increased $2.2
million to $13.0 million, compared to $10.8 million for fiscal 1995. The
increase in interest expense, net was due to an increase in Jitney-Jungle's
outstanding indebtedness pursuant to the Senior Notes and the existing Credit
Facility as a result of the Recapitalization in February 1996, partially offset
by an increase in interest income.
INCOME TAXES. The effective rate for income taxes for fiscal 1996 decreased
to 36.3% compared to 37.8% for fiscal 1995. The decrease in effective rate for
fiscal 1996 was principally due to the elimination of inter-company profit of a
wholly owned subsidiary which previously was not included in the consolidated
tax return.
EXTRAORDINARY ITEM. In connection with the Recapitalization, Jitney-Jungle
retired $35.7 million in long-term debt prior to its scheduled maturity.
Prepayment penalties associated with early retirement of this debt resulted in
an extraordinary loss of $1.5 million, net of an income tax benefit of $0.9
million.
NET INCOME. Net income for fiscal 1996 decreased $4.3 million to $14.5
million, from $18.8 million for fiscal 1995. The decrease in net income was due
to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
Historically, Jitney-Jungle has funded its working capital requirements,
capital expenditures and other needs principally from operating cash flows. Due
to the Recapitalization, however, Jitney-Jungle has become highly leveraged and
its debt instruments contain restrictions on its operations. At July 26, 1997,
Jitney-Jungle had $275.4 million of total long-term debt (including capitalized
leases and current installments) and a shareholders deficit of $151.4 million.
Jitney-Jungle's principal uses of liquidity have been to fund working
capital, meet debt service requirements and finance Jitney-Jungle's strategic
plans. Jitney-Jungle's principal sources of liquidity have been cash flow from
operations and borrowings under the Senior Credit Facility. Jitney-Jungle has
outstanding letters of credit with a face amount of $10.5 million issued under
the Senior Credit Facility principally to secure obligations pursuant to a
capitalized lease and to secure obligations under an existing
42
<PAGE>
supply contract with Topco. At July 26, 1997, Jitney-Jungle had no outstanding
borrowings under the Senior Credit Facility.
The commitments under the Senior Credit Facility terminate, and all loans
outstanding thereunder are required to be repaid in full on March 5, 2001.
Borrowings under the Senior Credit Facility, including revolving loans and up to
$20.0 million in letters of credit, may not exceed the lesser of (i) the "Total
Commitment," which is currently $96.3 million, and (ii) an amount equal to the
sum of (A) up to 60% of eligible inventory (valued at the lessor of FIFO cost or
market value) of Jitney-Jungle and (B) the "Supplemental Availability", which is
currently $41.3 million. Each of the Total Commitment and the Supplemental
Availability decline by $1.25 million per quarter.
Cash provided by operating activities during fiscal 1995 was $45.7 million
compared to $55.5 million for fiscal 1996 and $66.5 million for fiscal 1997.
Cash provided by operating activities for Interim 1997 was $18.1 million
compared to $5.8 million for Interim 1998. In fiscal 1997, inventories decreased
due to an inventory reduction plan implemented by Management and accounts
payable increased due to improvement of customer terms to industry standards.
These working capital improvements were partially offset by the reduction in net
income due principally to the increase in cash interest expense during fiscal
1997 as a result of Jitney-Jungle's higher total indebtedness as discussed
above. The principal reason for the increase of cash provided by operating
activities for fiscal 1996 was a decrease in inventories due, in part, to store
closings and a decrease in receivables which reflects a reduction in the
uncollected billbacks due from vendors. In Interim 1998, accounts payable
increased due to improvement of customer terms to industry standards and
inventories increased due to (i) planned remodel sales associated with store
conversions, (ii) the improvement of service levels in Jitney-Jungle's warehouse
inventories and (iii) increased purchasing of deal merchandise at a lower cost.
Net cash used in investing activities was $46.0 million for fiscal 1995,
$12.4 million for fiscal 1996 and $22.3 million during fiscal 1997, and was $4.7
million for Interim 1997 and $4.9 million for Interim 1998. Such cash was
primarily used for capital expenditures. Capital expenditures were $23.9 million
for fiscal 1995, $30.1 million for fiscal 1996 and $24.1 million for fiscal
1997, and were $6.1 million for Interim 1997 and $5.0 million for Interim 1998.
In addition to capital expenditures related to new stores opened in fiscal 1995,
1996 and 1997, Jitney-Jungle converted two discount stores to conventional
stores, and expanded ten additional stores.
Net cash used in financing activities was $10.2 million for fiscal 1995,
$57.6 million for fiscal 1996 and $35.4 million for fiscal 1997, and was $16.1
million for Interim 1997 and $10.1 million for Interim 1998. The principal uses
of funds in financing activities for fiscal 1995 and fiscal 1997 were the
payment of long-term debt and capital lease obligations. The principal uses of
funds in financing activities in fiscal 1996 were the redemption of Common Stock
and related costs in connection with the Recapitalization, principal payments on
debt and capital lease obligations and payments of dividends to stockholders.
The principal uses of funds in financing activities for Interim 1998 were the
payment of principal on long-term debt and capital lease obligations.
Jitney-Jungle's expenditures to comply with environmental laws and
regulations at its grocery stores primarily consist of those related to
remediation of underground storage tank leaks and spills and retrofitting
chlorofluorocarbon ("CFC") chiller units and tank upgrading to meet 1998
standards. Jitney-Jungle's unreimbursed cost for remediation at the nine
Jitney-Jungle facilities which have had leaks or spills has not been material.
All significant required expenditures in connection with the cleanup of such
leaks and spills have been made at the nine locations. In addition,
Jitney-Jungle has obtained insurance coverage for bodily injury, property damage
and corrective action expenses resulting from releases of petroleum products
from underground storage tanks during the covered period at 53 of its 54
underground storage tank locations, and an application for such coverage is
pending at the remaining location. Jitney-Jungle spent $480,000, $246,000 and
$500,000 for retrofitting CFC-containing chiller units during fiscal 1995, 1996
and 1997, respectively. Jitney-Jungle spent $0, $130,000 and $220,000 for tank
upgrades during fiscal 1995, 1996 and 1997, respectively.
43
<PAGE>
SELECTED HISTORICAL FINANCIAL INFORMATION OF DELCHAMPS
The following table sets forth selected historical financial information of
Delchamps for the five years ended June 28, 1997. The operating and balance
sheet data for the three years ended June 28, 1997 were derived from the audited
consolidated financial statements of Delchamps included elsewhere in this
Prospectus. The operating and balance sheet data for the two years ended July 2,
1994 was derived from audited consolidated financial statements of Delchamps.
The following table should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations of Delchamps" and
the audited consolidated financial statements of Delchamps included elsewhere in
this Prospectus.
Delchamps historically has accounted for warehouse costs as part of cost of
goods sold, while Jitney-Jungle has accounted for such costs as part of
warehouse, administrative and general expenses. Following the Delchamps
Acquisition, the Company will include such costs in warehouse, administrative
and general expenses. The data set forth below under the heading "Reclassified
Data" reflect the reclassification of Delchamps' warehouse costs as though such
warehouse costs had been accounted for in accordance with the historical
financial statements of Jitney-Jungle.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JULY 3, JULY 2, JULY 1, JUNE 29, JUNE 28,
1993 1994 1995 1996 1997
<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Net sales........................................................... $1,034,531 $1,067,191 $1,054,088 $1,126,629 $1,102,947
Gross profit........................................................ 264,074 270,827 255,551 263,240 272,069
Selling, general and administrative expenses ("SG&A"):
Restructuring charge(1)........................................... -- -- 28,779 -- --
Other SG&A........................................................ 236,167 248,808 261,763 250,121 254,282
--------- --------- --------- --------- ----------
Operating income (loss)............................................. 27,907 22,019 (34,991) 13,119 17,787
Interest expense, net............................................... 5,169 4,161 5,275 6,820 4,982
--------- --------- --------- --------- ----------
Earnings (loss) before income taxes and cumulative effect of changes
in accounting principles.......................................... 22,738 17,858 (40,266) 6,299 12,805
Income tax expense.................................................. 8,365 6,207 (14,600) 2,447 4,851
--------- --------- --------- --------- ----------
Earnings (loss) before cumulative effect of change
in accounting principles.......................................... 14,373 11,651 (25,666) 3,852 7,954
Cumulative effect of change in accounting principles for:
Income taxes...................................................... -- 900 -- -- --
Post-employment benefits.......................................... -- (1,600) -- -- --
--------- --------- --------- --------- ----------
Net earnings (loss)................................................. $ 14,373 $ 10,951 $ (25,666) $ 3,852 $ 7,954
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
OTHER DATA:
EBITDA(2)........................................................... $ 46,228 $ 40,636 $ 19,077 $ 34,892 $ 44,117
Depreciation and amortization....................................... 18,099 18,770 19,472 21,771 23,719
LIFO expense (benefit).............................................. 210 (38) 536 422 391
Restructuring and other special charges(1).......................... 12 (115) 34,060 (420) 2,220
Capital expenditures................................................ 20,824 17,705 35,239 21,671 15,551
Supermarkets open at end of period.................................. 118 120 118 117 118
Remodels during period.............................................. 7 4 5 1 5
Gross profit as a percentage of sales 25.5% 25.4% 24.2% 23.4% 24.7%
EBITDA as a percentage of sales..................................... 4.5% 3.8% 1.8% 3.1% 4.0%
Ratio of earnings to fixed charges(3)............................... 2.4x 2.1x -- 1.3x 1.6x
BALANCE SHEET DATA (AT PERIOD END):
Cash and cash equivalents........................................... $ 12,070 $ 15,378 $ 15,906 $ 10,503 $ 5,670
Working capital..................................................... 49,511 54,926 22,920 22,067 29,140
Total assets........................................................ 252,052 263,269 269,412 255,183 243,461
Total debt.......................................................... 50,814 51,079 62,170 39,746 25,839
Long term portion of restructuring obligation(1).................... -- -- 19,219 15,668 13,453
Stockholders' equity................................................ 126,262 136,300 110,042 112,925 118,019
RECLASSIFIED DATA:
Gross profit........................................................ $ 288,761 $ 295,937 $ 279,689 $ 289,539 $ 297,115
Gross profit as a percentage of sales............................... 27.9% 27.7% 26.5% 25.7% 26.9%
Other SG&A.......................................................... $ 260,854 $ 273,918 $ 285,901 $ 276,420 $ 277,108
</TABLE>
44
<PAGE>
- ------------------------
(1) During fiscal 1995, Delchamps recorded a pretax restructuring charge of
$28,779. The charge reflected anticipated costs associated with a program to
close certain underperforming supermarkets which could not be subleased in
whole or in part and, to a lesser extent, severance costs related to the
termination of employment of former executives. In March 1997, Delchamps
incurred a charge of $4,300, resulting from the settlement of a lawsuit,
which was partially offset by a gain of $2,080 resulting from the sale of
real property in fiscal 1997.
(2) EBITDA is defined as income from continuing operations before interest,
taxes, depreciation, amortization, LIFO expense (benefit) and special items,
net. EBITDA is presented because it is a widely accepted financial indicator
of a company's ability to service indebtedness. However, EBITDA should not
be considered as an alternative to income from operations or to cash flows
from operating activities (as determined in accordance with generally
accepted accounting principles) and should not be construed as an indication
of a company's operating performance or as a measure of liquidity.
(3) The ratio of earnings to fixed charges is computed by adding fixed charges
to earnings (loss) before taxes on income and dividing that sum by the fixed
charges. Fixed charges consist of interest (including amortization costs)
and a portion of rent expense that management considers to be interest.
Earnings were insufficient to cover fixed charges in fiscal 1995 by $40,266.
45
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF DELCHAMPS
The following discussion should be read in conjunction with the audited
consolidated financial statements and related notes, and the other financial
information, included elsewhere in this Prospectus. References in this
discussion to fiscal years are to Delchamps' fiscal years, which end on the
Saturday nearest to June 30 in the calendar year.
GENERAL
Delchamps operates a chain of 118 supermarkets in the states of Alabama,
Florida, Mississippi and Louisiana, as well as ten liquor stores in the State of
Florida.
Delchamps historically has accounted for warehouse costs as part of cost of
goods sold, while Jitney-Jungle has accounted for such costs as part of
warehouse, administrative and general expenses. Following the Delchamps
Acquisition, the Company will account for such costs as part of warehouse,
administrative and general expenses. The data set forth below under the heading
"Reclassified Data" reflect the reclassification of Delchamps' warehouse costs
as though such warehouse costs had been accounted for in accordance with the
historical financial statements of Jitney-Jungle.
During the past three years, increasingly competitive markets have made it
difficult for Delchamps to achieve comparable store sales gains and improve
profitability. During Delchamps' last three fiscal years, competitors have
opened approximately 82 new supermarkets in Delchamps' operating regions,
approximately 21 of which were opened in fiscal 1997. In fiscal 1997, Delchamps
experienced a 2.1% decline in net sales and a 3.5% decline in same store sales.
Although net sales and same store sales declined, gross margin improved,
primarily as a result of selective retail price increases. Delchamps can give no
assurances that improvements in profitability can be achieved if net sales and
same store sales continue to decline as a result of competitive pressures.
On July 8, 1997, Delchamps announced that it had entered into the Delchamps
Merger Agreement pursuant to which it had agreed to be acquired by
Jitney-Jungle. The terms of the Delchamps Merger Agreement are described in
Delchamps' Schedule 14D-9, as amended, and in Jitney-Jungle's 14D-1, as amended,
both of which have been filed with the Commission. Pursuant to the Delchamps
Merger Agreement, DAC, a wholly-owned subsidiary of Jitney-Jungle, commenced the
Delchamps Tender Offer for all outstanding shares of Delchamps' common stock at
a price of $30 per share. On September 12, 1997 DAC accepted for payment
pursuant to the Delchamps Tender Offer an aggregate of 5,317,510 of such shares.
The Delchamps Merger Agreement provides, generally, that as soon as practicable
after the satisfaction or waiver of the conditions set forth in the Delchamps
Merger Agreement, DAC will be merged with and into Delchamps, with Delchamps
continuing as the surviving corporation and the remaining shareholders of
Delchamps receiving $30 per share.
Delchamps' Board of Directors has unanimously approved the Delchamps
Acquisition and the Delchamps Merger Agreement, and has determined that the
consideration to be paid for the shares of Delchamps' common stock is fair to
Delchamps' shareholders and that the Delchamps Acquisition is otherwise in the
best interests of Delchamps and its shareholders. Delchamps' Board of Directors
has unanimously recommended that Delchamps' shareholders vote in favor of the
Delchamps Merger.
46
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
financial information expressed as a percentage of net sales:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED
-------------------------------------
JULY 1, JUNE 29, JUNE 28,
1995 1996 1997
<S> <C> <C> <C>
Net sales............................................................................ 100.0% 100.0% 100.0%
Gross profit......................................................................... 24.2 23.4 24.7
SG&A:
Restructuring charge............................................................... 2.7 -- --
Other SG&A......................................................................... 24.8 22.2 23.1
Operating income..................................................................... (3.4) 1.2 1.6
Interest expense, net................................................................ 0.5 0.6 0.5
Earnings before income taxes......................................................... (3.8) 0.6 1.2
Provision for income taxes........................................................... (1.4) 0.2 0.4
Net income........................................................................... (2.4) 0.3 0.7
OTHER DATA:
EBITDA............................................................................... 1.8% 3.1% 4.0%
RECLASSIFIED DATA:
Gross profit......................................................................... 26.5% 25.7% 26.9%
Other SG&A........................................................................... 27.1 24.5 25.1
</TABLE>
FISCAL 1997 VS. FISCAL 1996
NET SALES. Net sales for fiscal 1997 decreased 2.1% to $1,103.0 million
compared to $1,127.0 million for fiscal 1996. The decrease in net sales during
fiscal 1997 occurred primarily because a significant number of new supermarkets
were opened by competitors (approximately 21 new supermarkets were opened by
competitors during fiscal 1997) and competitors increased levels of promotional
activity (which included the introduction of a frequent shopper card by a
competitor).
GROSS PROFIT. Gross profit for fiscal 1997 increased $8.8 million to $272.1
million, or 24.7% of net sales, compared to $263.2 million, or 23.4% of net
sales, for fiscal 1996. The increase in gross profit as a percentage of net
sales was primarily due to selective retail price adjustments and increased
levels of promotional and buying allowances from vendors which resulted in a
lower cost of merchandise and fewer promotional programs as compared to fiscal
1996. Assuming the reclassification of warehouse expenses from cost of sales to
SG&A, gross profit would have been $297.1 million, or 26.9% of net sales, for
fiscal 1997, compared to $289.5 million, or 25.7% of net sales, for fiscal 1996.
SG&A. SG&A expenses for fiscal 1997 increased $4.2 million to $254.3
million, or 23.1% of net sales, compared to $250.1 million, or 22.2% of net
sales, for fiscal 1996. SG&A expenses for fiscal 1997 included a $4.3 million
increase in legal expenses relating to the settlement of five related lawsuits
and a $1.7 million increase in incentive expenses which resulted from improved
pretax earnings. SG&A was favorably impacted by a $2.1 million gain on the sale
of certain real property (a former warehouse in Mobile, Alabama and land near
Birmingham, Alabama). Excluding the legal settlement and gain on sale of real
property, SG&A expenses for fiscal 1997 increased to 22.9% of net sales,
compared to 22.2% of net sales for fiscal 1996. Assuming the reclassification of
warehouse expenses from cost of sales to SG&A, SG&A would have been $277.1
million, or 25.1% of net sales, for fiscal 1997, compared to $276.4 million, or
24.5% of net sales, for fiscal 1996.
OPERATING INCOME. Operating income for fiscal 1997 increased $4.7 million
to $17.8 million, or 1.6% of net sales, compared to $13.1 million, or 1.1% of
net sales for fiscal 1996. Excluding the charge for the lawsuit settlement and
the gain from sale of certain real property, operating income for fiscal 1997
increased $6.9 million to $20.0 million, or 1.8% of net sales, compared to $13.1
million, or 1.1% of net sales for fiscal 1996. The increase in operating income
was due to an increase in gross profit partially offset by an increase in SG&A.
47
<PAGE>
INTEREST EXPENSE, NET. Interest expense, net for fiscal 1997 decreased $1.8
million to $5.0 million, compared to $6.8 million for fiscal 1996. The decrease
in interest expense, net was due to lower levels of indebtedness under
Delchamps' revolving credit line and lower levels of long-term indebtedness.
INCOME TAXES. The effective rate for income taxes for fiscal 1997 decreased
to 37.9% compared to 38.8% for fiscal 1996. The effective rate for fiscal 1997
approximates the combined federal and state statutory rates.
NET INCOME. Net income for fiscal 1997 increased $4.1 million to $8.0
million, compared to $3.9 million, for fiscal 1996. Excluding the effects of the
charge for the lawsuit settlement and gain from the sale of certain real
property, net income increased $5.6 million to $9.5 million for fiscal 1997,
compared to $3.9 million for fiscal 1996. The increase in net income was
primarily due to an increase in gross profit margins which resulted from
selected retail price adjustments and increased levels of promotional and buying
allowances and decreases in interest expense and effective rate for income taxes
as compared to fiscal 1996.
FISCAL 1996 VS. FISCAL 1995
NET SALES. Net sales for fiscal 1996 increased 6.9% to $1,126.6 million
compared to $1,054.1 million in fiscal 1995. The increase in net sales was
primarily due to the implementation of (i) a new merchandising program, (ii) a
new supermarket renovation program and (iii) new programs to improve customer
service. The new merchandising program (a) primarily reduced retail prices on
thousands of items, (b) increased the amount by which coupons are doubled from
$0.49 to $0.50 and (c) introduced a new advertising campaign to promote these
changes. The new supermarket renovation program affected 48 supermarkets and
included new decor packages, new in-store signage, painting, and for some
stores, new fixtures, cases, and shelving. New programs to improve customer
service included new training programs for all levels of store personnel, and
the enhancement of a field specialist program in which field specialists visit
perishable departments in all supermarkets to improve quality and freshness of
product, signage, and displays.
GROSS PROFIT. Gross profit for fiscal 1996 increased $7.6 million to $263.2
million, or 23.4% of net sales, compared to $255.6 million, or 24.2% of net
sales, for fiscal 1995. Gross profit increased primarily due to an increase in
net sales in fiscal 1996. The decrease in gross profit as a percentage of net
sales in fiscal 1996 was primarily due to the new merchandising program, in
which retail prices for thousands of items were reduced, which was implemented
for all of fiscal 1996 and was only in place for the last quarter of fiscal
1995. Assuming the reclassification of warehouse expenses from cost of sales to
SG&A, gross profit would have been $289.5 million, or 25.7% of net sales, for
fiscal 1996, compared to $279.7 million, or 26.5% of net sales, for fiscal 1995.
SG&A. SG&A expenses in fiscal 1995 included $28.8 million of restructuring
charges which were primarily due to leases for certain stores that were closed
in fiscal 1995 that could not be subleased in whole or in part, and a $5.1
million write-off of goodwill related to acquired assets which were consistently
producing negative results. Excluding such charges, SG&A expenses for fiscal
1996 decreased $6.6 million to $250.1 million, or 22.2% of net sales, compared
to $256.7 million, or 24.3% of net sales, for fiscal 1995. The decrease in SG&A
expenses was primarily due to a $5.4 million decrease in salaries and wages from
the implementation of a labor scheduling program. Assuming the reclassification
of warehouse expenses from cost of sales to SG&A, and excluding the
restructuring charge and write-off referred to above SG&A would have been $276.4
million, or 24.5% of net sales, for fiscal 1996, compared to $280.9 million, or
26.6% of net sales, for fiscal 1995.
OPERATING INCOME. Excluding the restructuring charges and write-off of
goodwill in fiscal 1995 described above, operating income for fiscal 1996
increased $14.3 million to $13.1 million, or 1.2% of net sales, compared to loss
of $1.2 million, or (0.9%) of net sales, for fiscal 1995. The increase in
operating income was due to an increase in gross profit and a reduction in SG&A
as described above.
INTEREST EXPENSE, NET. Interest expense, net for fiscal 1996 increased $1.5
million to $6.8 million, compared to $5.3 million for fiscal 1995. The increase
in interest expense, net was due to Delchamps' restructure obligation being
outstanding for all of fiscal 1996 compared to being outstanding for only the
fourth quarter of fiscal 1995.
48
<PAGE>
INCOME TAXES. The effective rate for income taxes for fiscal 1996 increased
to 38.8% compared to 36.3% for fiscal 1995. The increase in fiscal 1996 was due
to the expiration of the targeted jobs tax credit. The effective rate in fiscal
1996 approximates the combined federal and state statutory rates.
NET INCOME. Excluding the restructuring charges and write-off of goodwill
in fiscal 1995 described above, net income for fiscal 1996 increased $7.3
million to $3.9 million, compared to a net loss of $3.4 million, for fiscal
1995. The increase in net income was primarily due to an increase in gross
profit and decrease in SG&A partially offset by increases in interest expense,
net and effective rate for income taxes as compared to fiscal 1995.
LIQUIDITY AND CAPITAL RESOURCES
CAPITAL SPENDING
The following table shows capital expenditures during the last three fiscal
years, as well as the number of supermarkets that were opened, closed and
remodeled during that same period:
<TABLE>
<CAPTION>
1995 1996 1997
<S> <C> <C> <C>
Capital expenditures (millions).............................................................. $ 35.2 $ 21.7 $ 15.6
--------- --------- ---------
--------- --------- ---------
Supermarkets opened.......................................................................... 10 1 2
Supermarkets closed.......................................................................... 12 2 1
Remodels:
Expansions/remodels completed.......................................................... 5 1 5
Renovations completed.................................................................. -- 48 --
</TABLE>
FINANCING AND LIQUIDITY
Although Delchamps' supermarket locations are leased, Delchamps makes
substantial expenditures to equip new and expanded supermarkets. The cost to
equip a new supermarket is approximately $2.3 million while the additional cost
to equip an expanded supermarket is approximately $1.5 million. In addition,
Delchamps makes substantial expenditures for distribution center facilities and
equipment. Delchamps plans to finance its capital expenditures with funds
provided by operations. However, if an insufficient amount of funds in
generated, Delchamps may obtain long-term financing or draw on short-term credit
lines. Delchamps has a $75.0 million credit line from financial institutions of
which $70.4 million was available for future use at June 28, 1997. The credit
line is committed to Delchamps through June 1998.
Cash flow generated by operating activities was $25.2 million for fiscal
1995, $39.1 million for fiscal 1996 and $23.3 million for fiscal 1997. Cash
flows from operating activities decreased in fiscal 1997 as compared to fiscal
1996 primarily because of lower levels of accounts payable. Fiscal 1996
increased over fiscal 1995 because of improved earnings.
Cash used in investing activities was $34.6 million for fiscal 1995, $21.0
million for fiscal 1996 and $11.2 million for fiscal 1997. Cash was primarily
used for capital expenditures. Capital expenditures were $35.2 million for
fiscal 1995, $21.7 million for fiscal 1996 and $15.6 million for fiscal 1997.
During fiscal 1995, Delchamps purchased seven supermarkets from the Kroger Co.,
opened three supermarkets, remodeled five supermarkets, and purchased equipment
which had been previously leased at Delchamps' distribution facilities. During
fiscal 1996, Delchamps opened one supermarket, remodeled one supermarket,
renovated 42 supermarkets, purchased technology to enhance debit and credit
transactions, and purchased security systems for substantially all locations.
During fiscal 1997, Delchamps opened two new supermarkets and remodeled five
supermarkets.
Cash generated by financing activities was $10.0 million in fiscal 1995 and
cash used in financing activities was $23.5 million in fiscal 1996 and $17.0
million in fiscal 1997. The changes for all periods were the result of activity
under Delchamps' revolving loan agreement. At the end of fiscal 1997, the
Company was in compliance with all financial covenants under the revolving loan
agreement and its long-term debt agreement.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING EXISTING NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Existing Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m., New
York City time, on , 1997; provided, however, that if the Company has
extended the period of time for which the Exchange Offer is open, the term
"Expiration Date" means the latest time and date to which the Exchange Offer is
extended.
As of the date of this Prospectus, $200.0 million aggregate principal amount
of the Existing Notes are outstanding. This Prospectus, together with the Letter
of Transmittal, is first being sent on or about , 1997 to all holders of
Existing Notes known to the Company. The Company's obligation to accept Existing
Notes for exchange pursuant to the Exchange Offer is subject to certain
conditions as set forth under "--Certain Conditions to the Exchange Offer"
below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance for any exchange of any Existing Notes, by giving
notice of such extension to the holders thereof. During any such extension, all
Existing Notes previously tendered will remain subject to the Exchange Offer and
may be accepted for exchange by the Company. Any Existing Notes not accepted for
exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Existing Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified below under "--Certain Conditions to the Exchange
Offer." The Company will give notice of any extension, amendment, non-acceptance
or termination to the holders of the Existing Notes as promptly as practicable,
such notice in the case of any extension to be issued no later than 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
Expiration Date.
Holders of Existing Notes do not have any appraisal or dissenters' rights
under the Mississippi Business Corporation Act in connection with the Exchange
Offer.
PROCEDURES FOR TENDERING EXISTING NOTES
The tender to the Company of Existing Notes by a holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a holder who wishes to tender
Existing Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all other
documents required by such Letter of Transmittal, to Marine Midland Bank at the
address set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, either (i) certificates for such Existing Notes must be
received by the Exchange Agent along with the Letter of Transmittal, or (ii) a
timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of
such Existing Notes, if such procedure is available, into the Exchange Agent's
account at The Depository Trust Company (the "Book-Entry Transfer Facility")
pursuant to the procedure for book-entry transfer described below, must be
received by the Exchange Agent prior to the Expiration Date, or the holder must
comply with the guaranteed delivery procedure described below. THE METHOD OF
DELIVERY OF EXISTING NOTES, LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED
DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER. IF
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SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY
INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR
EXISTING NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Existing Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Existing Notes
who has not completed the box entitled "Special Issuance Instruction" or
"Special Delivery Instruction" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution (as defined below). In the event that
signatures on a Letter of Transmittal or a notice of withdrawal, as the case may
be, are required to be guaranteed, such guarantees must be by a firm which is a
member of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust company
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Existing Notes are registered in the name of a person other
than a signer of the Letter of Transmittal, the Existing Notes surrendered for
exchange must be endorsed by, or be accompanied by a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by the
Company in its sole discretion, duly executed by, the registered holder with the
signature thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Existing Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
tenders of any particular Existing Notes not properly tendered or to not accept
any particular Existing Notes which acceptance might, in the judgment of the
Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to any particular Existing Notes either before or after the Expiration Date
(including the right to waive the ineligibility of any holder who seeks to
tender Existing Notes in the Exchange Offer). The interpretation of the terms
and conditions of the Exchange Offer as to any particular Existing Notes either
before or after the Expiration Date (including the Letter of Transmittal and the
instructions thereto) by the Company shall be final and binding on all parties.
Unless waived, any defects or irregularities in connection with tenders of
Existing Notes for exchange must be cured within such reasonable period of time
as the Company shall determine. Neither the Company, the Exchange Agent nor any
other person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
If the Letter of Transmittal or any Existing Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
the Company, proper evidence satisfactory to the Company of their authority to
so act must be submitted.
By tendering, each holder of Existing Notes will represent to the Company
that, among other things, the New Notes acquired pursuant to the Exchange Offer
are being obtained in the ordinary course of business of the holder and any
beneficial holder, that neither the holder nor any such beneficial holder has an
arrangement or understanding with any person to participate in the distribution
of such New Notes and that neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 of the Securities Act, of the Company. If
the holder is not a broker-dealer, the holder must represent that it is not
engaged in nor does it intend to engage in a distribution of the New Notes.
ACCEPTANCE OF EXISTING NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
For each Existing Note accepted for exchange, the holder of such Existing
Note will receive a New Note having a principal amount equal to that of the
surrendered Existing Note. For purposes of the
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Exchange Offer, the Company shall be deemed to have accepted properly tendered
Existing Notes for exchange when, as and if the Company has given oral and
written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Existing Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Existing Notes or a timely
Book-Entry Confirmation of such Existing Notes into the Exchange Agent's account
at the Book-Entry Transfer Facility, a properly completed and duly executed
Letter of Transmittal and all other required documents. If any tendered Existing
Notes are not accepted for any reason set forth in the terms and conditions of
the Exchange Offer or if Existing Notes are submitted for a greater principal
amount than the holder desires to exchange, such unaccepted or non-exchanged
Existing Notes will be returned without expense to the tendering holder thereof
(or, in the case of Existing Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Existing
Notes will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration of the Exchange Offer.
BOOK-ENTRY TRANSFER
Any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Existing Notes by causing the
Book-Entry Transfer Facility to transfer such Existing Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Existing Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or facsimile thereof
with any required signature guarantees and any other required documents must, in
any case, be transmitted to and received by the Exchange Agent at the address
set forth below under "Exchange Agent" on or prior to the Expiration Date or the
guaranteed delivery procedures described below must be complied with.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Existing Notes desires to tender such Existing
Notes and the Existing Notes are not immediately available, or time will not
permit such holder's Existing Notes or other required documents to reach the
Exchange Agent before the Expiration Date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if (i)
the tender is made through an Eligible Institution, (ii) prior to the Expiration
Date, the Exchange Agent received from such Eligible Institution a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) and
Notice of Guaranteed Delivery, substantially in the form provided by the Company
(by telegram, telex, facsimile transmission, mail or hand delivery), setting
forth the name and address of the holder of Existing Notes and the amount of
Existing Notes tendered, stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange ("NYSE") trading days
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Existing Notes, in proper form for
transfer, or a Book-Entry Confirmation, as the case may be, and any other
documents required by the Letter of Transmittal will be deposited by the
Eligible Institution with the Exchange Agent and (iii) the certificates for all
physically tendered Existing Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal are received by the Exchange Agent within five NYSE trading days
after the date of execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Existing Notes may be withdrawn at any time prior to the
Expiration Date. For a withdrawal to be effective, a written notice of
withdrawal must be received by the Exchange Agent at the address set forth below
under "Exchange Agent." Any such notice of withdrawal must specify the name of
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the person having tendered the Existing Notes to be withdrawn, identify the
Existing Notes to be withdrawn (including the principal amount of such Existing
Notes), and (where certificates for Existing Notes have been transmitted)
specify the name in which such Existing Notes are registered, if different from
that of the withdrawing holder. If certificates for Existing Notes have been
delivered or otherwise identified to the Exchange Agent then, prior to the
release of such certificates, the withdrawing holder must also submit the serial
numbers of the particular certificates to be withdrawn and a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution unless such
holder is an Eligible Institution. If Existing Notes have been tendered pursuant
to the procedure for book-entry transfer described above, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Existing Notes and otherwise
comply with the procedures of such facility. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by the Company, whose determination shall be final and binding on all
parties. Any Existing Notes so withdrawn will be deemed not to have been validly
tendered for exchange for purposes of the Exchange Offer. Any Existing Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Existing Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Existing Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Existing Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Existing Notes may be retendered by following
one of the procedures described under "--Procedures for Tendering Existing
Notes" above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue New Notes in exchange for,
any Existing Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Existing Notes for exchange or the exchange of New
Notes for such Existing Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its reasonable discretion. The failure by the Company at
any time to exercise any of the foregoing rights shall not be deemed a waiver of
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Existing Notes
tendered, and no New Notes will be issued in exchange for any such Existing
Notes, if at such time any stop order shall be threatened or in effect with
respect to the Registration Statement of which this Prospectus constitutes a
part or the qualification of the Indenture under the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"). In any such event the Company is
required to use every reasonable effort to obtain the withdrawal of any stop
order at the earliest possible time.
EXCHANGE AGENT
Marine Midland Bank has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
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BY MAIL, OVERNIGHT COURIER OR HAND:
Marine Midland Bank
140 Broadway, Level A
New York, New York 10005-1180
Attention: Corporate Trust Operations
BY FACSIMILE:
(212) 658-2292
CONFIRM BY TELEPHONE:
(212) 658-5931
Delivery other than as set forth above will not constitute a valid delivery.
FEES AND EXPENSES
The Company will not make any payments to brokers, dealers or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Existing
Notes, which is the principal amount as reflected in the Company's accounting
records on the date of the exchange. Accordingly, no gain or loss for accounting
purposes will be recognized. The debt issuance costs will be capitalized for
accounting purposes.
TRANSFER TAXES
Holders who tender their Existing Notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct the Company to register New Notes in the name of, or request that
Existing Notes not tendered or not accepted in the Exchange Offer be returned
to, a person other than the registered tendering holder will be responsible for
the payment of any applicable transfer tax thereon.
CONSEQUENCES OF FAILURE TO EXCHANGE; RESALES OF NEW NOTES
Holders of Existing Notes who do not exchange their Existing Notes for New
Notes pursuant to the Exchange Offer will continue to be subject to the
restrictions on transfer of such Existing Notes as set forth in the legend
thereon as a consequence of the issuance of the Existing Notes pursuant to the
exemptions from, or in transactions not subject to, the registration
requirements of, the Securities Act and applicable state securities laws.
Existing Notes not exchanged pursuant to the Exchange Offer will continue to
accrue interest at 10 3/8% per annum and will otherwise remain outstanding in
accordance with their terms. Holders of Existing Notes do not have any appraisal
or dissenters' rights under the Mississippi Business Corporation Act in
connection with the Exchange Offer. In general, the Existing Notes may not be
offered or sold unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Existing Notes under the Securities Act. However, (i) the
Company is not required to file the Exchange Offer Registration Statement or
permitted to consummate the Exchange Offer because the Exchange Offer is not
permitted by applicable law or Commission policy
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or (ii) any holder of Transfer Restricted Securities notifies the Company within
the specified time period that (A) it is prohibited by law or Commission policy
from participating in the Exchange Offer or (B) that it may not resell the New
Notes acquired by it in the Exchange Offer to the public without delivering a
prospectus and the prospectus contained in the Exchange Offer Registration
Statement is not appropriate or available for such resales or (C) that it is a
broker-dealer and owns Existing Notes acquired directly from the Company or an
affiliate of the Company, the Company will file with the Commission a shelf
registration statement to cover resales of the Notes by the Holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the shelf registration statement. For purposes of the foregoing,
"Transfer Restricted Securities" means each Existing Note until the earlier of
(i) the date on which such Existing Note has been exchanged by a person other
than a broker-dealer for a New Note in the Exchange Offer, (ii) following the
exchange by a broker-dealer in the Exchange Offer of an Existing Note for a New
Note, the date on which such New Note is sold to a purchaser who receives from
such broker-dealer on or prior to the date of such sale a copy of this
Prospectus, (iii) the date on which such Existing Note has been effectively
registered under the Securities Act and disposed of in accordance with the shelf
registration statement or (iv) the date on which such Existing Note is
distributed to the public pursuant to Rule 144 under the Act.
Based on certain interpretive letters issued by the staff of the Commission
to third parties in unrelated transactions, the Company is of the view that New
Notes issued pursuant to the Exchange Offer may be offered for resale, resold or
otherwise transferred by holders thereof (other than (i) any such holder which
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act or (ii) any broker-dealer that purchases Notes from the Company
to resell pursuant to Rule 144A or any other available exemption) without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement or understanding
with any person to participate in the distribution of such New Notes. If any
holder has any arrangement or understanding with respect to the distribution of
the New Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the Commission
and (ii) must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction. A
broker-dealer who holds Existing Notes that were acquired for its own account as
a result of market-making or other trading activities may be deemed to be an
"underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of New Notes. Each such broker-dealer that receives
New Notes for its own account in exchange for Existing Notes, where such
Existing Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge in the Letter of
Transmittal that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
In addition, to comply with the securities laws of certain jurisdictions, if
applicable, the New Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with. The Company has
agreed, pursuant to the Registration Rights Agreement and subject to certain
specified limitations therein, to register or qualify the New Notes for offer or
sale under the securities or blue sky laws of such jurisdictions as any holder
of the Notes reasonably requests in writing.
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BUSINESS
GENERAL
The Company is a leading operator of supermarkets in the Southeast. Upon
consummation of the Delchamps Acquisition, the Company will operate 199
supermarkets located throughout Mississippi and Alabama as well as in selected
markets in Tennessee, Arkansas, Louisiana and Florida. In addition, the Company
will be the largest supermarket operator in Mississippi and the second largest
supermarket operator in Alabama, with 81 supermarkets in Mississippi and 49
supermarkets in Alabama. The Company will account for an estimated 32% of the
grocery sales in Mississippi and an estimated 18% of the grocery sales in
Alabama. Jitney-Jungle currently has an estimated 50% of the grocery sales in
Jackson, Mississippi and Delchamps has an estimated 37% of the grocery sales in
Mobile, Alabama. Jitney-Jungle and Delchamps also have the number one, two or
three market share position in approximately 80% of the major markets in which
they operate. The Delchamps Acquisition is expected to increase the Company's
geographic diversification because the Delchamps stores are primarily located in
areas in which Jitney-Jungle currently has no stores. At the same time, the
Delchamps Acquisition is expected to result in valuable purchasing, distribution
and marketing synergies for the Company. On a Pro Forma Basis, the Company would
have had approximately $2.2 billion of net sales and approximately $127.8
million of EBITDA for the LTM Period.
Management believes that the Company has significant competitive advantages,
which include:
STRONG FRANCHISE AND PRIME SITES. The Company has a strong consumer
franchise built around the "Jitney-Jungle" and "Delchamps" names. Management
believes that the Company's customers associate these names with quality, value,
convenience and superior service. In addition, Management believes that most of
the Company's urban supermarkets are in high-traffic locations that offer
significant competitive advantages, and that many of its supermarkets located in
smaller towns and rural areas are located on prime, non-replicable sites.
MODERN SUPERMARKET BASE. During the last five fiscal years, Jitney-Jungle
and Delchamps invested approximately $147.0 million and $111.0 million,
respectively, in capital expenditures, a substantial majority of which was for
building new supermarkets and expanding or remodeling existing supermarkets.
Approximately 81% of the Company's supermarket base has been built or remodeled
within the past five fiscal years.
SUCCESSFUL PRIVATE LABEL PROGRAM. In addition to branded products, the
Company's supermarkets offer a selection of private label products bearing the
brand names of Topco, the largest cooperative grocery products purchasing
organization in the United States. The Company's affiliation with Topco enables
it to procure quality merchandise on a competitive basis with larger, national
food retailers. Pro forma net sales of private label products, which generally
have a lower unit sales price than national brands but provide a higher gross
margin due to lower unit costs, accounted for approximately 18.2% of pro forma
net non-perishable sales of the Company during the LTM Period.
CENTRALIZED AND EFFICIENT DISTRIBUTION FACILITIES. The Company's
distribution facility located in Jackson, Mississippi is conveniently located
close to major highways and provides a central delivery site for vendors. This
facility includes an aggregate of 814,000 square feet of warehouse space and can
efficiently supply the Company's 199 supermarkets, as well as potential new
markets contiguous to existing markets.
ANTICIPATED COST SAVINGS
During fiscal 1997, Delchamps generated net sales and EBITDA of
approximately $1.1 billion and $44.1 million, respectively. In addition to the
incremental net sales, EBITDA and market share expected to result from the
Delchamps Acquisition, Management believes that it should be able to achieve
significant
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cash cost savings as a result of the elimination of certain duplicative costs,
increased operating efficiencies and increased purchasing leverage in connection
with the combined operation of the Jitney-Jungle and Delchamps businesses
following the Delchamps Acquisition. While the exact timing and amount of such
cash cost savings is inherently uncertain, Management currently expects that the
Company should begin to realize such cash cost savings within three to nine
months after the Delchamps Acquisition. Specific anticipated benefits of the
Delchamps Acquisition include:
REDUCED GENERAL AND ADMINISTRATIVE EXPENSE. In connection with the
Delchamps Acquisition, Management expects to consolidate the corporate
headquarters of the Company's combined operations in the existing corporate
headquarters of Jitney-Jungle. Although divisional offices will be opened in
Mobile, Alabama, the Delchamps Mobile headquarters will be closed and
approximately 160 positions currently held by employees at the Jitney-Jungle and
Delchamps corporate headquarters will be eliminated. Management estimates that
such measures should result in approximately $9.3 million of annualized cash
cost savings, which the Company should begin to realize within three to six
months following the Delchamps Acquisition.
IMPROVED WAREHOUSING AND DISTRIBUTION EFFICIENCIES. Jitney-Jungle owns or
leases 814,000 square feet of warehouse space located in Jackson, Mississippi
which is central to, and can efficiently supply, all of the Company's 199
supermarkets. In connection with the Delchamps Acquisition, Management expects
to close the Hammond, Louisiana warehouse owned by Delchamps and to utilize
Jitney-Jungle's Jackson facility as the Company's central distribution center,
thereby reducing headcount and general and administrative expenses. In addition,
in order to more efficiently utilize the Jackson facility Jitney-Jungle has
negotiated a long-term supply agreement with a supplier to provide direct store
delivery of slow moving items to the Company's supermarkets, which Management
believes should result in lower distribution costs and a decrease of
approximately 35% in inventory levels. Management believes that, on an
annualized basis, the combined effect of these warehousing and distribution
efficiencies should result in approximately $3.9 million of cash cost savings,
which the Company should begin to realize within three to six months following
the Delchamps Acquisition.
REDUCED ADVERTISING AND PRINTING EXPENSES. Jitney-Jungle and Delchamps
operate in contiguous and overlapping geographic areas, particularly in south
Mississippi and Florida. As a result, Management believes that it will be able
to consolidate the Company's advertising in these regions, thus reducing
advertising expenses. In addition, while Delchamps currently outsources the
printing of its advertising circulars, after the Delchamps Acquisition
approximately 50% of such printing will be performed at Jitney-Jungle's in-house
printing facility. Management estimates that moving a portion of Delchamps'
printing in-house should result in annualized cash cost savings of approximately
$1.0 million, which the Company should begin to realize within three to six
months following the Delchamps Acquisition.
INCREASED PURCHASING LEVERAGE. Management expects that Jitney-Jungle's
merchandise purchases will approximately double following the Delchamps
Acquisition. As a result of this increase and the Company's leading market
position, Management believes that the Company should be able to negotiate more
favorable terms from vendors, including suppliers of products carried on an
exclusive or promoted basis, and to convert some less-than-truckload shipping
quantities to full truckload quantities. Management believes that this increased
purchasing leverage should result in approximately $3.4 million in annualized
cash cost savings, which the Company should begin to realize within six to nine
months following the Delchamps Acquisition.
INCREASED BACKHAUL INCOME. The expected increase in merchandise purchases
following the Delchamps Acquisition and the resulting improvements in the
Company's purchasing leverage are expected to create additional opportunities to
increase backhaul income, thereby reducing the Company's operating costs. In
particular, the Company's increased presence in the Louisiana and Florida
markets should result in a higher number of deliveries to those areas, which
have historically provided Jitney-Jungle with backhaul opportunities. Management
believes that increased backhaul income should result in
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annualized cash cost savings of approximately $1.8 million, which the Company
should begin to realize within three to six months following the Delchamps
Acquisition.
Of the aggregate potential $19.4 million in annualized cash cost savings
discussed above, approximately $14.2 million are reflected in the Pro Forma
Condensed Consolidated Financial Statements included elsewhere herein because
Management believes that they are factually supportable and directly related to
the Transactions and the Delchamps Merger. Actual cash cost savings achieved by
the Company may vary considerably from the estimates discussed above. See 'Risk
Factors--Integration of Delchamps.'
BUSINESS STRATEGY
The Company's business strategy is focused on enhancing the Company's
revenues and profitability by capitalizing on its leading market positions and
continuing its growth in certain attractive Southeast markets. Management
believes that the Company's leading perishables and grocery merchandising,
competitive pricing, range of specialty departments and reputation for quality
will help the Company continue its strong history of growth and profitability.
The Company's specific business strategies include:
EXPAND SUPERMARKET BASE. Management believes there are a number of
attractive Southeast markets in which to continue to grow the Company's
supermarket base. Jitney-Jungle has a history of successfully making supermarket
acquisitions in both existing and contiguous markets. Since fiscal l990,
Jitney-Jungle has acquired 51 supermarkets in 41 markets, excluding the 100
supermarkets to be acquired in the Delchamps Acquisition. In addition, over the
past five fiscal years the Company has built or expanded 58 supermarkets in the
Southeast. To continue expanding its supermarket base, Management intends to
open new supermarkets and make strategic acquisitions in certain of the larger
metropolitan areas where it currently operates (including Memphis and Little
Rock), as well as in smaller cities and surrounding areas that are contiguous to
areas where it currently operates.
CONTINUE TO IMPROVE OPERATING MARGINS. Jitney-Jungle and Delchamps have
improved their EBITDA margins from 5.5% and 2.9%, respectively, in fiscal 1992
to 5.7% and 4.0%, respectively, in fiscal 1997. The Company continuously reviews
its operations to identify initiatives designed to reduce operating costs and
increase EBITDA margins. As a result of the following initiatives, Management
believes that the Company can further improve its EBITDA margins during fiscal
1998: (i) headcount reductions implemented by Jitney-Jungle in May 1997, which
are expected to result in annualized cost savings of approximately $0.9 million
in fiscal 1998; and (ii) improved labor scheduling currently being implemented
at Jitney-Jungle supermarkets, which is expected to result in annualized cost
savings of approximately $3.5 million in fiscal 1998 and which may also result
in additional cost savings when implemented during the next 12 to 18 months at
the Delchamps supermarkets. In addition, Management expects to implement
programs at Delchamps to reduce inventory shrink to levels comparable to those
achieved at Jitney-Jungle.
DECREASE WORKING CAPITAL NEEDS. During fiscal 1997, Jitney-Jungle
successfully implemented programs to reduce inventories by eliminating slow
moving items, as well as renegotiating its payment terms to bring them more in
line with industry practice. As a result of these efforts, Jitney-Jungle
improved its ratio of accounts payable to inventory from 51.7% in fiscal 1996 to
77.3% in fiscal 1997. Jitney-Jungle believes that these measures enabled it to
decrease its working capital needs by approximately $20.0 million. Management
intends to implement similar programs at Delchamps.
CAPITALIZE ON MARKET SEGMENTATION OPPORTUNITIES. The Company attempts to
optimize operating results by selecting a format for each of its supermarkets
that is best suited to a site's demographics, local preferences and competitive
position. The Company's conventional supermarkets offer a range of departments
and high-quality services; the Company's combination supermarkets offer a
combined supermarket and drug format with a wider variety of premium,
full-service departments, merchandise and services; and the Company's discount
supermarkets offer items throughout the supermarket at everyday low prices and
generally place greater emphasis on self-service. In general, the Company's
conventional and combination
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supermarkets generate higher operating margins than its discount supermarkets.
Management believes that there is a growing consumer demand for higher service
levels and convenience and, as a result, expects that the Company will open
combination supermarkets in preference to conventional and discount supermarkets
at all sites where adequate space and consumer demand exist. Management also
expects that a significant number of conventional and discount formats will be
converted to combination formats. In addition, because the Company's discount
supermarkets attract a price sensitive customer who generally would not shop at
a combination or conventional supermarket, Management also believes there will
be opportunities to open new discount supermarkets in areas where limited or no
competing discount supermarkets operate (including Mobile and New Orleans), with
minimal risk of cannibalizing sales of the Company's conventional and
combination supermarkets located in those areas.
PURSUE INNOVATIVE MARKET INITIATIVES. The Company's goal is to utilize
innovative marketing and advertising programs to increase sales while
maintaining or increasing profitability. At its conventional and combination
stores, Jitney-Jungle has introduced a frequent shopper program utilizing a
"Gold Card" designed to increase customer traffic and net sales by offering
incentives to its most loyal customers. The "Gold-Card" entitles holders to
discounts on certain products every week as well as check cashing privileges,
and also serves as a base for market basket analysis and customer-oriented
direct marketing. Since the introduction of the Gold Card, Management believes
that the number of customers and the amount of the average purchase at
Jitney-Jungle supermarkets has increased and, as a result, Management intends to
introduce a similar frequent shopper card at Delchamps supermarkets following
the Delchamps Acquisition. At its discount supermarkets, the Company employs
marketing campaigns designed to appeal to the value conscious consumer,
including "truckload sales," private label promotions and bulk produce and
similar purchasing incentives.
FOCUS ON "PUMP AND SAVE" GASOLINE STATION OPPORTUNITIES. The Company
operates gasoline stations under the name "Pump And Save" at or near 53 of its
supermarkets that offer attractive gasoline retailing sites on heavily traveled
roads and highways. The Company entered the gasoline business to take advantage
of (i) the low incremental capital costs of building gasoline stations on its
supermarket parking lots and (ii) the efficiencies associated with operating
gasoline stations with the same management and labor as its supermarkets. The
Company has opened 25 new gasoline stations over the last five fiscal years and
plans to continue this growth with expansion at many of the 100 Delchamps
supermarkets.
GROWING SOUTHEAST MARKET AREA
The Southeast is one of the fastest growing regions in the United States in
terms of population, income and employment. According to the Bureau of the
Census, the population of the Southeast has increased at an annual rate of 1.6%
since 1990, compared to the national average of 1.2% over the same period.
Furthermore, the Southeast has experienced faster growth than the United States
since 1990 in terms of per capita income (4.9% versus 4.1%) and overall
employment (2.3% versus 1.4%). Since all of the Company's existing supermarkets
and planned new supermarkets will be in the Southeast, the Company believes that
it will continue to benefit from the economic strength of this region.
Nevertheless, individual markets or regions within the Southeast where the
Company operates may experience economic and demographic trends which differ
from those of the region as a whole. Notwithstanding growth in these markets,
during the past three years an overall lack of inflation in food prices and
increasingly competitive markets have made it difficult for supermarket
operators to achieve comparable store sales gains. Because sales growth has been
difficult to attain, many operators, including the Company, have attempted to
maintain market share through increased levels of promotional activities and
discount pricing, creating a more difficult environment in which to increase
year-over-year sales gains consistently. In addition, because of growth in the
Southeast, where all of the Company's supermarkets are located, many existing
operators, including the Company, have opened new supermarkets in existing
markets. This has resulted in declines in some same store sales for the existing
(comparable) store base of the Company as well as other grocery chains.
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SUPERMARKET FORMATS
The Company attempts to optimize operating results by selecting a format for
each supermarket that is best suited to a locality's demographics, local
preferences and competitive positioning. In this respect, Management believes
that its local market knowledge and community awareness are major competitive
advantages. Each district manager and supermarket manager will have significant
responsibility for merchandising each individual supermarket in a manner that
caters specifically to its local customer base. In recent years, the Company has
devoted a greater proportion of its new or remodeled supermarket space to fresh,
high-quality perishables such as produce, delicatessen items, baked goods,
prepared foods, fresh seafood and floral items, and to convenience-oriented
services such as pharmacies and video and carpet-cleaning equipment rentals.
Management believes that the Company's fresh produce presentation and its
delicatessens which serve over 100,000 hot meals weekly, in particular, are
competitive advantages and represent important attractions for customers.
The Company currently operates its supermarkets in three supermarket format
categories: (i) the combination food and drug format, which offers a wide
variety of premium, full-service departments, merchandise and services as well
as a broad range of non-perishable products; (ii) the conventional format, which
offers a range of departments and high-quality services; and (iii) the discount
supermarket format, which offers items throughout the supermarket at every day
low prices and generally places greater emphasis on self-service. While the
combination and conventional formats use a higher margin pricing strategy
appropriate for a more service-oriented customer base, the discount format uses
a higher volume, lower margin strategy appropriate for a more price-conscious
customer base.
COMBINATION SUPERMARKETS. In 1993, the Company opened its first combination
supermarket, a 57,276 square foot "Jitney-Premier" in Jackson which features
enhanced specialty departments and perishables presentations as well as a food
court. This supermarket was named "Supermarket of the Year" by Chain Store Age
Executive. The Company currently operates seven combination supermarkets,
averaging approximately 56,000 square feet. Pro forma net sales from combination
supermarkets were approximately $121.8 million in the LTM Period, which
represented approximately 5.6% of the Company's pro forma net sales for that
period.
The Company's combination supermarkets utilize a "Hi-Lo" pricing strategy
(featuring competitive prices on all product offerings as well as a selection of
items that are promoted at lower prices to generate increased customer traffic),
and are open 24-hours a day, seven days a week. Management believes that its
combination supermarkets will enable the Company to increase customer loyalty by
offering competitively priced merchandise, including expanded general and
specialty merchandise, a wider range of full-service departments such as branch
banking facilities, expanded beauty care and pharmacy departments, and superior
customer service.
In light of the perceived growth in consumer demand for higher service
levels and convenience, Management has adopted the combination food and drug
format as its primary base supermarket for the future at sites where adequate
space and consumer demand exist. Management plans to convert three conventional
stores and one discount store to combination stores by the end of calendar year
1997. Management also will consider strategic conversions of up to 20
Jitney-Jungle conventional and discount stores to the combination format, and
has identified approximately 30 Delchamps' supermarkets as potentially
convertible to the combination supermarket format because of their size and
location in high traffic, metropolitan areas where customers are generally more
receptive to the combination format.
CONVENTIONAL SUPERMARKETS. The Company operates 171 conventional
supermarkets. Pro Forma net sales from these supermarkets were approximately
$1.5 billion in the LTM Period, which represented approximately 69.8% of the
Company's pro forma net sales for that period. All of the Company's conventional
supermarkets utilize the "Hi-Lo" pricing strategy and are market leaders in many
of their trade areas. The average size of the conventional supermarket is
approximately 35,000 square feet.
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DISCOUNT SUPERMARKETS. The Company currently operates 21 discount
supermarkets primarily under the name "Sack and Save." Pro Forma net sales from
these supermarkets were approximately $429.8 million in the LTM Period, which
represented approximately 19.8% of the Company's pro forma net sales for that
period. The average size of the discount supermarket is approximately 60,000
square feet.
The Company's discount supermarkets utilize an everyday low price strategy
(featuring consistently low prices aimed at the value-conscious shopper). These
supermarkets use the slogan "Lowest Food Prices in the South" and provide
national brand and private label items at everyday low prices. Merchandising
programs carried on by those supermarkets include: (i) "Made in the South"
sales; (ii) truckload sales of paper products, detergents and similar volume
items; (iii) canned meat sales; (iv) private label merchandise promotions; and
(v) bulk produce merchandising in pallet quantities. The discount supermarkets
have lower operating costs than the combination and conventional supermarkets
due to fewer service departments, lower customer service levels and enhanced
productivity methods.
Approximately half of the Company's discount supermarkets are located in the
metropolitan areas of Jackson, Memphis and Little Rock. Management believes that
these discount supermarkets attract a price sensitive customer who generally
would not shop the combination or conventional supermarket, thereby minimizing
the cannibalizing of sales in the Company's nearby combination and conventional
supermarkets. In those discount locations where the Company has perceived
relatively higher demand for service among its customers, it has made strategic
conversions from the discount format to the conventional or combination format,
as appropriate, given the size of a particular market. Since the end of fiscal
1997, the Company has converted five supermarkets formerly operated as discount
supermarkets; two were converted to conventional supermarkets and three were
converted to combination supermarkets. Another conversion is planned for the end
of calendar year 1997. By contrast, Management believes that there are discount
supermarket expansion opportunities in areas where limited or no competing
discount supermarkets operate, including Mobile, New Orleans and Birmingham.
GASOLINE STATIONS
Through a subsidiary, the Company operates 53 gasoline stations under the
"Pump And Save" name. The stations are generally located on parking lots in
front of the Company's supermarkets and provide an additional service for its
customers. Because the gasoline stations are in close proximity to the
supermarkets, they benefit from the high volume supermarket traffic and can be
operated with the same management and labor as the Company's supermarkets. In
the LTM Period, gasoline station sales were approximately $86.5 million, which
represented approximately 4.0% of the Company's pro forma net sales for that
period. Management believes that there will be similar opportunities to open
gasoline stations in the proximity of many Delchamps supermarkets, which
currently do not have gasoline station operations.
LIQUOR STORES AND CIGARETTE SALES
The Company operates ten liquor stores in the state of Florida, which are
located adjacent to the Company's supermarkets. In the LTM Period, liquor store
sales were approximately $17.3 million, which represented approximately 0.8% of
the Company's pro forma net sales for that period. In addition, a wholly-owned
subsidiary of the Company functions as the purchasing agent and distributor for
cigarettes sold by certain of the Company's supermarkets.
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MARKETS AND COMPETITION
The Company holds the number one, two or three market share position in
approximately 80% of the major markets in which it operates. The Company
attributes this success to: (i) its strong franchise and prime sites; (ii) its
modern supermarket base; (iii) its successful private label program; and (iv)
its centralized and efficient distribution facilities. Given these strengths,
Management believes the Company is well positioned to retain its market
leadership.
The supermarket business is intensely competitive. The number of competitors
and the amount of competition experienced by the Company's supermarkets vary by
location. Principal competitive factors include supermarket location, price,
service, convenience, cleanliness and product quality and variety. Because the
supermarket business is characterized by narrow profit margins, the Company's
earnings depend primarily on the efficiency of its operations and its ability to
maintain a large sales volume. Management believes that the Delchamps
Acquisition should enhance the Company's ability to compete with its largest
competitors, and will result in opportunities to increase market share in
Memphis, Little Rock, Birmingham, Mobile and New Orleans.
The Company's primary markets are Jackson, Mississippi and Mobile, Alabama.
During the LTM Period, Jitney-Jungle's three combination supermarkets, 17
conventional supermarkets and three discount supermarkets located in Jackson
represented a market share of approximately 50% in that area, and Delchamps' two
combination supermarkets and 17 conventional supermarkets located in Mobile
represented a share of approximately 37% in that market. The Company also has
growing market share in the metropolitan markets of Little Rock, Memphis and New
Orleans, which in the LTM Period was approximately 13%, 8% and 9%, respectively.
The Company's principal competitors are Kroger's (in Alabama, Mississippi,
Tennessee and Arkansas), Food World/Bruno's (in Alabama, Florida and
Mississippi), Wal-Mart Supercenters (in Alabama, Arkansas, Florida, Louisiana,
Mississippi and Tennessee), Winn Dixie (in Alabama, Florida, Louisiana and
Mississippi) and Albertson's (in Alabama, Florida, Louisiana and Mississippi).
The Company's supermarkets also compete with other regional and national
supermarket chains as well as local chains and independent, specialty and
convenience food stores that have significant market shares in limited areas,
such as the Schwegmann Giant Supermarkets chain in Southeastern Louisiana and
Seessels/Bruno's in Tennessee. In addition, the Company's principal competitors
in the Florida pandhandle region and the Mississippi Gulf Coast include the
commissaries at the U.S. military bases in Pensacola, Florida and Biloxi,
Mississippi.
PURCHASING AND MERCHANDISING
The Company's principal merchandising strategies are to promote an "overall
value" image and to achieve high sales volume by offering quality products and
services at competitive prices. The Company's supermarkets carry fresh meat and
produce, frozen and other convenience foods, dairy products, specialty and
gourmet products, and general grocery products, as well as selected lines of
non-grocery merchandise. Most supermarkets opened and remodeled during the last
several years contain bakeries and delicatessens, which offer prepared
ready-to-eat foods, service meat departments, seafood departments and video
departments. The Company also operates pharmacies at selected locations.
The Company has established strong relationships with a variety of major
manufacturers over many years, none of which represents a major source of supply
to the Company. Since the Company's supermarkets carry many of the same
products, centralized purchasing and distribution facilities are essential. All
purchases are made under central buying procedures, rather than on a
store-by-store basis, which allows the Company to maintain quality control of
its products and to take advantage of volume discounts, more favorable payment
terms and more frequent inventory turns. Following the Delchamps Acquisition,
Management expects that the Company's merchandise purchases will approximately
double. As a result of this increase in the Company's combined volume
requirements and its leading market
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position, Management believes that the Company should be able to negotiate more
favorable terms from vendors.
PRIVATE LABEL PROGRAM
The Company's supermarkets offer a selection of national and regional
brand-name products, generic products and products bearing brand names of Topco,
a cooperative purchasing organization of which both Jitney-Jungle and Delchamps
are shareholding members. The Company's affiliation with Topco, the largest
cooperative grocery products purchasing organization in the United States,
enables it to procure quality merchandise on a competitive basis with larger,
national food retailers. Topco's membership of 30 retail grocery chains and
wholesalers located throughout the United States enables it to employ large
volume buying techniques on behalf of its members. Topco products are sold under
its own brand names, such as "Food Club," "Topco," "Top Fresh" and "Top Frost,"
or under generic labels. The Company also recently began using a "Delchamps"
label to replace the Topco labels on certain products.
Private label products generally have a lower unit sales price than national
brands but provide a higher gross margin due to lower unit costs. Pro forma net
sales of private label products accounted for approximately 18.2% of pro forma
net non-perishable sales of the Company during the LTM Period.
ADVERTISING AND MARKETING
The Company features nationally advertised and distributed merchandise, and
also markets both food and non-food products under a private label program. The
Company's advertising programs are designed to reinforce for the customer its
low prices, high-quality selection and convenience. In each of its major
markets, the Company advertises through various media including circulars,
newspapers, radio and television. Prior to July 1997, print media was the
primary form of advertising and was used extensively on a weekly basis to
advertise featured items; however, in July 1997 the Company began shifting a
significant portion of its total advertising expenditures to television and
radio media, focusing on a quality and service image, in order to reach a wider
target audience. The Company's in-house capabilities include an advertising
department, which handles most creative work, and the printing of over 1.7
million pieces of print media per week in the Company's full-line print shop.
Management intends to print approximately 0.9 million pieces of print media per
week for the Delchamps stores after the Delchamps Acquisition. Advertising
costs, net of advertising allowances, constituted less than 1.0% of net sales in
the LTM Period.
Various sales enhancement promotional activities, including coupons and
special pricing discounts, are currently conducted under the Company's frequent
shopper program. At its conventional and combination stores, the Company has
introduced (or, in the case of the Delchamps supermarkets, expects to introduce)
a frequent shopper program utilizing a "Gold Card" designed to increase customer
traffic and net sales by offering incentives to the Company's most loyal
customers. The "Gold Card" entitles holders to discounts on certain products
every week as well as check cashing privileges, and also serves as a base for
market basket analysis and customer-oriented direct marketing. Since the
introduction of the Gold Card, Management believes that the number of customers
and the amount of the average purchase has increased at Jitney-Jungle
supermarkets and, as a result, Management intends to introduce a similar
frequent shopper card at Delchamps supermarkets following the Delchamps
Acquisition. At its discount supermarkets, the Company employs marketing
campaigns designed to appeal to the value-conscious consumer including truckload
sales, private label promotions and similar purchasing incentives.
WAREHOUSING AND DISTRIBUTION
Jitney-Jungle owns or leases 814,000 square feet of warehouse space located
in Jackson, Mississippi which is central to, and can efficiently supply, all of
the Company's 199 supermarkets. In connection with the Delchamps Acquisition,
Management expects to close the Hammond, Louisiana warehouse owned by Delchamps
and to utilize Jitney-Jungle's Jackson facility as the Company's central
distribution center, thereby reducing headcount and general and administrative
expenses. In addition, in order to more efficiently utilize the Jackson
facility, Jitney-Jungle has negotiated a long-term supply agreement with
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SUPERVALU under which SUPERVALU will become the primary supplier of frozen foods
to the combined Jitney-Jungle and Delchamps group of companies and a secondary
supplier of selected grocery products to a number of stores within the group.
Management believes that the agreement reached with SUPERVALU should result in
lower distribution costs and a decrease of approximately 35% in inventory
levels. The agreement takes effect in January 1998.
The Company leases and maintains a fleet of 143 tractors and 332 trailers
with full-time, non-unionized drivers to handle distribution and ensure the
timely delivery of products to all of its supermarkets. The Company's trucks
also backhaul goods from suppliers to its warehouses, which reduces the
Company's overall cost of transportation.
SUPERMARKET OPERATIONS
Supermarket operations are the responsibility of three regional operating
executives who supervise the Company's 14 district managers. Each district
manager is responsible for nine to 15 supermarkets in his area. District
managers regularly visit the supermarkets under their jurisdiction, thereby
providing continuous, direct supervision of day-to-day supermarket operations,
including such matters as quality of merchandise, adequacy of staffing levels
and adherence to Company policies. Each supermarket is individually supervised
by a supermarket manager, assistant supermarket manager and department managers.
Management monitors the results of operations of each supermarket through the
close and direct supervision of the regional operating executives and the
district managers.
EMPLOYEES AND LABOR RELATIONS
As of May 3, 1997, Jitney-Jungle had 10,600 employees and Delchamps had
7,900 employees. Management believes that the Company enjoys good relations with
its employees.
Employees at the Hammond, Louisiana distribution facility recently voted to
establish a union; however, certification of the election results is currently
pending. With the possible exception of the employees at the Hammond
distribution facility, none of the Company's employees are subject to a
collective bargaining agreement.
In connection with the Delchamps Acquisition, Management expects to
consolidate the corporate headquarters of the combined operations in the
existing corporate headquarters of Jitney-Jungle. Although a divisional office
will be opened in Mobile, Alabama, the Delchamps Mobile headquarters will be
closed and approximately 160 positions currently held by employees at the
Jitney-Jungle and Delchamps corporate headquarters will be eliminated.
Management currently expects that the Delchamps headquarters will be closed
within three to six months after the Delchamps Acquisition. In addition, in
connection with the Delchamps Acquisition, Management expects to close the
Hammond, Louisiana warehouse owned by Delchamps and to close 13 supermarkets.
INFORMATION SERVICES
The Company's Information Services Department provides the software
applications, hardware systems and telecommunications technologies necessary to
support the Company's operations. The supermarket-based systems are fully
integrated via an in-store network and include the following: (i) point-of-sale
("POS") store front-end systems with integrated scanner/scale capability; (ii)
Unix-based, In-Store Processors ("ISP") which support business functions such as
direct store delivery, inventory management, video rental and pharmacy; (iii)
personal computers which support labor scheduling; (iv) an on-line procurement
system which supports the purchasing department with a sophisticated forecasting
algorithm that assists buying decisions and inventory control; (v) an advanced
forecasting module that forecasts product movement and recommends purchases to
replenish inventories; (vi) Electronic Data Interchange ("EDI") communication
which transmits purchase orders and receives invoices with about 70.0% of the
Company's high volume vendors; and (vii) a complete business recovery plan to
prevent a data center
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disaster, which includes mainframe applications, client-server applications and
network telecommunications.
In addition, the Company's procurement system is interfaced into an
extensive warehousing system that controls facets of merchandise receiving and
shipping to the supermarkets. The warehousing system utilizes radio
frequency-based technology to accomplish merchandise storage at a minimum cost
by reducing labor cost and improving warehouse flow. This system also utilizes a
complete transportation module for the loading of trailers based upon delivery
routes. Additionally, the system has been improved with the implementation of
hand-held scanners in the supermarkets for routine processing of supermarket
orders.
Advances in technology are important to the Company's ability to improve
productivity and keep costs in line, and emphasis will continue to be placed on
innovations in this area.
PROPERTIES
Management believes that the Company's retail supermarkets are well situated
in high-traffic locations. With the exception of one owned supermarket, all of
the Company's supermarket properties are leased pursuant to long-term contracts
at market rates. Certain parties affiliated with Jitney-Jungle hold 18 leases,
representing 21% of the dollar amount of the Company's capital leases.
Management believes that each of these leases is on an arm's length basis and is
on terms that are no less favorable to the Company than could have been obtained
with non-affiliated parties at the time each was entered into. See "Certain
Relationships and Related Transactions". Two other landlords each lease seven
supermarkets to Jitney-Jungle. No other landlords hold a significant number of
supermarket leases with the Company. With the exception of one lease, which will
expire in 2001, all leases for supermarkets operated under the names
"Jitney-Jungle", "Sack and Save" and "Jitney-Premier" will expire between 2005
and 2036 if the Company exercises all its options to renew. Five Delchamps
supermarket leases expired during the LTM Period, and no more than five
Delchamps leases will expire in any one year until the year 2005.
The Company has a real estate department the functions of which include (i)
negotiation and preparation of legal documents, (ii) the screening of
preliminary sites and the disposition of property, and (iii) the management of
properties. Management believes that a vital factor in a successful supermarket
expansion program is the careful selection of supermarket locations. Management
analyzes prospective locations on a continuous basis, both internally and with
assistance of outside consultants. The Company regularly enlarges, modernizes,
relocates or closes supermarkets in light of their past performance and
Management's assessment of their future potential.
Except for approximately $3.2 million of supermarket "POS" equipment which
is leased, the Company owns the furnishings and fixtures in all supermarkets and
has made various leasehold improvements to these supermarket sites. It is
anticipated that the Company will own the furnishings and fixtures in all
supermarkets presently under construction.
The Company owns all of its warehouse and distribution facilities except for
a 120,000 square foot dry grocery and health and beauty care facility. The lease
for that facility expires on July 31, 2004 (including all renewal options). The
table below sets forth the Company's warehouse and distribution capacity in its
Jackson and Hammond facilities:
<TABLE>
<CAPTION>
FUNCTION JACKSON HAMMOND
<S> <C> <C>
(SQUARE FEET IN THOUSANDS)
Dry Grocery and Health and Beauty Care.............................. 578 470
Perishables......................................................... 157 101
Frozen.............................................................. 79 63
--- ---
Total........................................................... 814 634
</TABLE>
Upon consummation of the Delchamps Acquisition, the Company will own the
65,000 square foot building which houses the corporate headquarters of Delchamps
in Mobile, Alabama (including a 2.7 acre
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parcel adjacent to such headquarters), the Hammond warehouse (including a 165
acre parcel adjacent to such warehouse) and interests in six additional parcels,
some of which are undeveloped. In connection with the Delchamps Acquisition,
Management expects to consolidate the corporate headquarters of the Company's
combined operations in the existing corporate headquarters of Jitney-Jungle.
Although a divisional office will be opened in Mobile, Alabama, the Delchamps
Mobile headquarters will be closed. Management also expects to close the Hammond
warehouse, and the Company may determine to sell, or develop for sale, certain
of such parcels of real estate.
In the first quarter of fiscal 1997, the Company sold the operating assets
of Jitney-Jungle's 24,000 square foot bakery for $750,000. The Company purchases
bakery products from the new owner of the bakery and additional bread products
from outside suppliers.
ENVIRONMENTAL MATTERS
The Company is subject to federal, state and local laws and regulations
including those relating to environmental protection, workplace safety, public
health and community right-to-know. The Company's supermarkets are not highly
regulated under environmental laws since the Company does not engage in any
industrial activities at these locations. The principal environmental
requirements applicable to Jitney-Jungle's operations relate to the ownership or
use of tanks for the storage of petroleum products, such as gasoline and diesel
fuel, the operation of on-site paper trash incinerators, and the operation of an
on-site printing facility. The Company operates 56 locations (including all 53
of the Pump And Save locations), and has retained responsibility for one former
facility, at which petroleum products are stored in underground tanks. The
Company has instituted an environmental compliance program designed to insure
that these tanks are in compliance with applicable technical, operational and
regulatory requirements, including periodic inventory reconciliation and
integrity testing. Jitney-Jungle also operates small incinerators at 21
locations which burn paper trash and has air permits for these facilities. In
addition, the Company's printing facility is subject to air and hazardous waste
regulations. In addition, the Company's locations may have asbestos-containing
materials which must be managed in accordance with environmental laws and
regulations. However, the Company does not believe that the cost of such
management will be material. The Company believes that the locations where it
currently operates are in substantial compliance with regulatory requirements.
The Company has undertaken programs to comply with upcoming regulatory
obligations. First, at five locations, the Company must comply with petroleum
tank upgrade or closure requirements under the Resource Conservation and
Recovery Act of 1980, as amended, ("RCRA") (including all applicable
requirements of state regulatory agencies) which must be met by 1998. Second,
over the next several years, the Company is planning to complete retrofitting of
its chloroflurocarbon ("CFC") chiller units to utilize non-CFC based
refrigerants pursuant to the phase-out of CFCs under the Clean Air Act. Future
events, such as changes in existing laws and regulations or their interpretation
and the approach of other compliance deadlines may or will give rise to
additional compliance costs or liabilities. Compliance with more stringent laws
or regulations, as well as different interpretations of existing laws, may
require additional expenditures by the Company which may be material.
The Company may also be subject to requirements related to the remediation
of, or the liability for remediation of, substances that have been released to
the environment at properties owned or operated by the Company or at properties
to which Jitney-Jungle sends substances for treatment or disposal. Such
remediation requirements may be imposed without regard to fault and liability
for environmental rernediation can be substantial. Other than one previously
owned property for which the Company retained responsibility for a clean-up in
progress at the time of the sale, the Company has not been notified of any such
releases relating to off-site treatment or disposal or to previously owned
properties. However, 16 of the Company's locations have been or currently are
the subject of environmental investigation or remediation, 12 as a consequence
of known or suspected petroluem-related leaks or spills from storage tanks and
four for minor spills or releases unrelated to tank usage. See "Risk
Factors--Environmental
66
<PAGE>
Risks." Four other properties have undergone investigation or remediation for
minor spills unrelated to tank usage.
The Company may be eligible for reimbursement or payment for remediation
costs associated with future releases from its regulated underground storage
tanks and has obtained such reimbursement in the past. The states in which the
Company operates each maintain a fund to assist in the payment of remediation
costs and injury or damage to third parties from releases from certain
registered underground tanks. Subject to certain deductibles, the availability
of funds, compliance status of the tanks and the nature of the release, these
funds have been and may be available to Jitney-Jungle for use in remediating
releases from its tank systems. Due to the availability of such funds, the
Company's unreimbursed cost for remediation at all of the facilities which have
had leaks or spills from underground storage tanks has not been material. All
significant required expenditures in connection with the clean up of such leaks
and spills have been made at such locations, except at three newly discovered
locations which are still undergoing investigation and one location awaiting
state approval of its remediation plan. Remediation expenses at all the
locations which are currently the subject of environmental investigation or
remediation are anticipated to cost up to $240,000 in fiscal 1998 and
approximately $125,000 per year thereafter, substantially all of which is
subject to reimbursement as described above. In addition, the Company has
obtained insurance coverage for bodily injury, property damage and corrective
action expenses resulting from releases of petroleum products from underground
storage tanks during the covered period at 53 of its 57 underground storage tank
locations, and an application for such coverage is pending at one of the four
remaining locations.
Other than expenditures relating to the remediation of tank leaks and spills
described above, the Company's expenditures to comply with environmental laws
and regulations have primarily consisted of those related to tank upgrading and
retrofitting CFC chiller units. The Company spent $515,000, $468,000 and
$914,000 for such activities during fiscal 1995, fiscal 1996 and the LTM Period,
respectively. Between approximately $472,000 and $1,055,000 in expenditures are
contemplated for retrofitting the CFC units and between approximately $455,000
and $755,000 in expenditures are contemplated for tank upgrading to comply with
the 1998 tank standards or closure in fiscal 1998 and fiscal 1999. These
regulatory compliance costs are not covered by insurance.
INTELLECTUAL PROPERTY
The Company uses a variety of trade names, service marks and trademarks.
Except for "Jitney-Jungle," "Jitney-Premier," "Delchamps," "Sack and Save" and
"Pump And Save," Management does not believe any of such trade names, service
marks or trademarks are material to its business.
GOVERNMENT REGULATION
The Company is subject to regulation by a variety of governmental agencies,
including but not limited to the United States Food and Drug Administration, the
United States Department of Agriculture and other federal, state and local
agencies.
LEGAL PROCEEDINGS
The Company is subject to periodic litigation in the ordinary course of its
business, including lawsuits brought by employees and former employees alleging
discriminatory termination and promotion practices. Delchamps recently settled a
claim of alleged race discrimination for approximately $4.3 million in which a
potential class of plaintiffs was denied certification of the class on
procedural grounds, and Delchamps is reviewing, revising and improving its
termination and promotion policies as part of the related settlement agreement.
There can be no assurance that future litigation alleging discrimination in the
Company's termination or promotion practices would not have an adverse effect on
the Company's financial condition or results of operation.
Other than with respect to the foregoing matters, the Company is not a party
to any to any material pending legal proceedings except ordinary litigation
incidental to the conduct of its business and the ownership of its properties.
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<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF JITNEY-JUNGLE
The following table sets forth the directors and senior executive officers
of Jitney-Jungle. Directors of Jitney-Jungle hold their offices for a term of
one year or until their successors are elected and qualified; executive officers
of Jitney-Jungle serve at the discretion of the Board of Directors. For
information concerning certain arrangements with respect to the election of
directors, see "Certain Relationships and Related Transactions--Shareholders
Agreement."
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
W.H. Holman, Jr....................................... 67 Chairman
Michael E. Julian..................................... 46 Director, Chief Executive Officer and President
David K. Essary....................................... 47 Executive Vice President
David R. Black........................................ 44 Senior Vice President--Finance, Chief Financial
Officer
Harold D. Evans....................................... 52 Senior Vice President--Store Operations
J.R. Hansbrough....................................... 41 Senior Vice President--Information Services
Jerry L. Jones........................................ 45 Senior Vice President--Retail Operations
James P. Riley........................................ 47 Senior Vice President--Engineering
Clyde D. Staley....................................... 60 Senior Vice President--Real Estate
W.H. Holman, III...................................... 33 Secretary
Bernard E. Ebbers..................................... 55 Director
Roger P. Friou........................................ 62 Director
Ronald E. Johnson..................................... 47 Director
John M. Moriarty, Jr.................................. 40 Director
Bruce C. Bruckmann.................................... 43 Director
Harold O. Rosser II................................... 48 Director
Stephen C. Sherrill................................... 44 Director
</TABLE>
W.H. HOLMAN, JR., CHAIRMAN, has been Chairman of the Board of Jitney-Jungle
since 1967 and served as Chief Executive Officer from 1967 until January 1997.
Mr. Holman is a director of two private companies.
MICHAEL E. JULIAN, DIRECTOR, CHIEF EXECUTIVE OFFICER AND PRESIDENT, was
appointed as Chief Executive Officer in January 1997 and as President in May
1997. He has served as a director since April 1996. Prior to January 1997, he
was Chairman, President and Chief Executive Officer of Farm Fresh, Inc. Mr.
Julian is a director of Jackson Hewitt Inc. and one private company.
DAVID K. ESSARY, EXECUTIVE VICE PRESIDENT, has spent 21 of his 25 years in
the industry with Jitney-Jungle, and has been Executive Vice President since
March 1996. Other positions previously held by Mr. Essary within Jitney-Jungle
include Executive Vice President--Retail Operations, Senior Vice
President--Marketing, Vice President--Perishables and Vice President--Meat
Operations.
DAVID R. BLACK, SENIOR VICE PRESIDENT--FINANCE, CHIEF FINANCIAL OFFICER
since 1996, joined the Company in 1976. During his Jitney-Jungle career, Mr.
Black has held various other positions with the Company including Treasurer,
Controller and Assistant Controller.
HAROLD D. EVANS, SENIOR VICE PRESIDENT--STORE OPERATIONS since 1993, began
his retail food career when he joined the Company in 1970. He has also served as
Vice President--Store Operations.
J.R. HANSBROUGH, SENIOR VICE PRESIDENT--INFORMATION SERVICES, has held that
position since 1996. He previously served as Vice President--Information
Services from 1994. Prior to 1994, he was a Consulting and Marketing
Representative with IBM Corporation.
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<PAGE>
JERRY L. JONES, SENIOR VICE PRESIDENT--RETAIL OPERATIONS, has held that
position since March 1996. Prior to that time, he served as Senior Vice
President--Human Resources since 1991, having joined the Company in 1986 as
District Manager. Mr. Jones was employed with a large regional supermarket chain
from 1968 to 1986 and was a District Manager at the time he left the company.
JAMES P. RILEY, SENIOR VICE PRESIDENT--ENGINEERING since 1996, previously
served as Vice President-- Engineering from 1991. He served as Director of
Engineering Services from 1985 to 1991.
CLYDE D. STALEY, SENIOR VICE PRESIDENT--REAL ESTATE, has held that position
since 1996. He previously served as Vice President--Real Estate from 1985.
W.H. HOLMAN, III, SECRETARY, since 1996, is also President of Pump And Save,
the Company's petroleum subsidiary. He has 13 years of industry experience, and
previously served as Senior Vice President--Sales and Marketing. Mr. Holman is
the son of W.H. Holman, Jr.
BERNARD E. EBBERS, DIRECTOR, has been President, Chief Executive Officer and
a director of WorldCom, Inc. since 1983.
ROGER P. FRIOU, DIRECTOR, has 24 years of industry experience having
originally joined Jitney-Jungle in 1966. Between March 1996 and May 1997 he
served as President of Jitney-Jungle, and between 1991 and 1996 he served as
Vice Chairman, Chief Financial Officer and Secretary. Other positions previously
held by Mr. Friou at Jitney-Jungle include President, Executive Vice President
and Vice President--Finance and Controller. Mr. Friou is a director of The
Parkway Properties, Inc.
RONALD E. JOHNSON, DIRECTOR, has been President, Chief Executive Officer and
a director of Farm Fresh, Inc. since January 1997. Previously, he served as
Chairman, President and Chief Executive Officer of Kash n' Karry and as
Executive Vice President and Chief Operating Officer of Farm Fresh, Inc.
JOHN M. MORIARTY, JR., DIRECTOR, has been a Managing Director of Donaldson,
Lufkin & Jenrette Securities Corporation since 1989 and a Managing Director of
DLJ Merchant Banking, Inc. since 1996. Mr. Moriarty is a director of a private
company.
BRUCE C. BRUCKMANN, DIRECTOR, has been a principal of BRS since its
formation in 1995. Mr. Bruckmann was an officer and subsequently a Managing
Director of Citicorp Venture Capital from 1983 through 1994. Previously, Mr.
Bruckmann was an associate at the New York law firm of Patterson, Belknap, Webb
& Tyler. Mr. Bruckmann is a director of Mohawk Industries, Inc., AmeriSource
Distribution Corporation, Chromcraft Revington Corporation, Anvil Knitwear,
Inc., CORT Business Services Corporation and of several private companies.
HAROLD O. ROSSER II, DIRECTOR, has been a principal of BRS since its
formation in 1995. Mr. Rosser was an officer and subsequently a Managing
Director of Citicorp Venture Capital from 1987 through 1994. Previously, he
spent 12 years with Citicorp/Citibank in various management and corporate
finance positions. Mr. Rosser is a director of DavCo Restaurants, Inc. and of
several private companies.
STEPHEN C. SHERRILL, DIRECTOR, has been a principal of BRS since its
formation in 1995. Mr. Sherrill was an officer and subsequently a Managing
Director of Citicorp Venture Capital from 1983 through 1994. Previously, he was
an associate at the New York law firm of Paul, Weiss, Rifkind, Wharton &
Garrison. Mr. Sherrill is a director of Galey & Lord, Inc., Windy Hill Pet Food
Company, Inc. and of several private companies.
DIRECTOR COMPENSATION AND COMMITTEE INTERLOCKS
Each non-employee director of Jitney-Jungle is currently paid an annual
retainer of $12,000 plus fees of $1,000 for each board meeting attended and $500
for each committee meeting attended. Directors who are employees of the Company
do not receive additional compensation as directors. The Board of
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<PAGE>
Directors held four regular meetings during fiscal 1997 and all directors
attended at least 75% of the total meetings of the Board of Directors and the
committees of which they were members.
Jitney-Jungle has a Compensation Committee of the Board of Directors which
is responsible for reviewing annual salaries and bonuses paid to senior
management and administering Jitney-Jungle's stock option programs. The members
of the Compensation Committee are Harold O. Rosser II, Chairman, Michael E.
Julian, Roger P. Friou and Bernard E. Ebbers. Robert R. Onstead was also a
member of the Compensation Committee but resigned from the Board in March 1997.
The Compensation Committee held one meeting during fiscal 1997.
Jitney-Jungle has an Audit Committee which reviews external and internal
auditing matters and recommends the selection of Jitney-Jungle's independent
auditors for approval by the Board of Directors. The members of the Audit
Committee are Steven C. Sherrill, Chairman, John M. Moriarty, Jr., and Ronald E.
Johnson. The Audit Committee held one meeting during fiscal 1997.
In fiscal 1997, Messrs. Julian, Ebbers and Johnson each received fees of
$16,000 for serving on the Board of Directors.
EXECUTIVE COMPENSATION
The following table summarizes the compensation paid or accrued for fiscal
1997, 1996 and 1995 to the Chief Executive Officer of Jitney-Jungle and to each
of the four other most highly compensated executive officers of Jitney-Jungle
(each such person being referred to as a "Named Executive Officer").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
<S> <C> <C> <C> <C> <C> <C>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL LTIP ALL OTHER
PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) PAYOUTS(3) COMPENSATION
W.H. Holman, Jr.,............. 1997 $ 331,182 $ 162,920 $ 2,633 $ -- $ 15,795(5)
Chairman(4) 1996 315,100 121,193 2,216 1,894,039 15,840
1995 315,100 121,193 2,100 439,147 10,094
Michael E. Julian,............ 1997 57,692 75,000 -- -- --
Chief Executive Officer(4) 1996 -- -- -- -- --
1995 -- -- -- -- --
Roger P. Friou,............... 1997 223,637 96,537 2,356 -- 106,736(6)
President(4) 1996 182,600 68,461 1,807 2,247,911 106,578
1995 172,800 65,230 1,800 444,040 6,594
David K. Essary,.............. 1997 192,463 89,653 2,251 -- 103,485(7)
Executive Vice 1996 176,700 67,307 1,745 110,229 103,425
President 1995 145,800 53,422 1,700 -- 3,294
Jerry L. Jones,............... 1997 133,000 33,250 1,790 -- 3,149(8)
Senior Vice 1996 125,200 23,654 1,727 -- 3,141
President--Retail 1995 115,000 22,116 1,700 -- 2,907
Operations
Harold D. Evans,.............. 1997 121,500 30,376 1,978 -- 3,444(9)
Senior Vice 1996 114,000 21,923 1,863 -- 3,394
President--Store 1995 108,100 20,693 1,900 -- 3,330
Operations
</TABLE>
70
<PAGE>
- ------------------------
(1) The amounts shown in this column include amounts contributed as salary
deferral contributions in fiscal 1997, 1996 and 1995, respectively, under
the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan
and Trust (the "401(k) Plan"), as follows: $8,236, $9,407 and $9,405 for Mr.
Holman; $0, $0 and $0 for Mr. Julian; $9,043, $9,288 and $9,287 for Mr.
Friou; $8,490, $9,500 and $8,715 for Mr. Essary; $7,507, $7,340 and $6,825
for Mr. Jones; and $6,835, $6,772 and $6,388 for Mr. Evans.
(2) Other annual compensation includes the annual estimated value of an
automobile furnished by the Company.
(3) Includes distributions from the Phantom Stock Plan.
(4) W.H. Holman, Jr. served as the Chief Executive Officer of the Company until
January 1997. Michael E. Julian became the Chief Executive Officer of the
Company in January 1997, and his salary reflects approximately 2/12ths of
his annual compensation. In May 1997, Mr. Friou resigned as President of the
Company, and Mr. Julian was appointed to serve in that position.
(5) Includes for fiscal 1997 $3,000 of Company matching contributions under the
401(k) Plan, $150 of Company profit sharing contributions under the 401(k)
Plan, and approximately $12,645 of premiums for group term life insurance.
(6) Includes for fiscal 1997 $3,000 of Company matching contributions under the
401(k) Plan, $150 of Company profit sharing contributions under the 401(k)
Plan, approximately $3,586 of premiums for group term life insurance, and
$100,000 as the second of three annual installments per an employment
agreement with Mr. Friou; subsequent to fiscal 1997, Mr. Friou retired and
forfeited the third payment.
(7) Includes for fiscal 1997 $3,000 of Company matching contributions under the
401(k) Plan, $150 of Company profit sharing contributions under the 401(k)
Plan, approximately $335 of premiums for group term life insurance, and
$100,000 as the second of three annual installments per an employment
agreement with Mr. Essary.
(8) Includes for fiscal 1997 $3,000 of Company matching contributions under the
401(k) Plan and $149 of Company profit sharing contributions under the
401(k) Plan.
(9) Includes for fiscal 1997 $2,746 of Company matching contributions under the
401(k) Plan, $135 of Company profit sharing contributions under the 401(k)
Plan, and approximately $563 of premiums for group term life insurance.
EMPLOYMENT AGREEMENTS
W.H. Holman, Jr. has an employment contract with Jitney-Jungle covering the
period through February 28, 2001. The agreement provides that Mr. Holman, Jr.
will serve as Chairman of the Board at the discretion of the Board of Directors.
If Mr. Holman, Jr. ceases to be Chairman of the Board prior to March 1, 2001, he
will continue to serve on the Board of Directors as Chairman Emeritus until
March 1, 2001, with a salary equal to his base salary then in effect until
February 28, 1999, and 50% of such base salary thereafter. Mr. Holman, Jr. is
also eligible for a bonus through February 28, 1999.
David K. Essary has an employment contract with Jitney-Jungle providing for
a base salary of approximately $186,000 per year for the period from March 1,
1995 through February 28, 1998. Mr. Essary is eligible to receive a bonus of up
to 50% of his base salary less $11,000. A provision in the employment contract
states that upon a change of control of Jitney-Jungle, Mr. Essary will be
awarded a payment of up to $300,000 to be paid in three annual installments of
$100,000. Because the Recapitalization constituted a change of control under
such employment agreement, Mr. Essary became entitled to receive such payment;
the first two $100,000 installments thereof were paid in March 1996 and March
1997, respectively. Provided he is still employed by Jitney-Jungle when the
final installment is due or his employment has been terminated by Jitney-Jungle
without cause or terminated by the employee for good reason, Jitney-Jungle will
pay Mr. Essary the last annual installment in 1998. No further payments are
required under the employment agreement upon any subsequent change of control.
In addition, Mr. Essary is entitled to his base salary plus anticipated bonus
for the remainder of the term of the agreement if his employment with
Jitney-Jungle is terminated by Jitney-Jungle without cause, he resigns his
employment at Jitney-Jungle's request without cause, or he terminates his
employment for good reason.
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<PAGE>
W.H. Holman, III has an employment contract with Jitney-Jungle covering the
period through February 28, 1998 and will serve at the discretion of the Board
of Directors as Secretary of Jitney-Jungle and as President of Pump And Save.
Mr. Holman, III will receive a base salary of no less than $110,000 per year
through February 28, 1998 subject to periodic increases as determined by the
Board of Directors. Mr. Holman, III is also entitled to a bonus of up to 50% of
his base salary less $11,000.
Until his retirement in May 1997, Roger P. Friou had an employment contract
with Jitney-Jungle. The terms of such employment contract were substantially
identical to those of Mr. Essary's contract, except that Mr. Friou was entitled
to receive a base salary of approximately $201,000 per year and a bonus of up to
50% of his base salary less $23,000. Mr. Friou's employment contract terminated
upon his retirement.
PHANTOM STOCK PLAN
On April 17, 1991 the Board of Directors of Jitney-Jungle adopted, and the
shareholders approved, the Amended and Restated Consolidated Phantom Stock Plan
of Jitney-Jungle (the "Phantom Stock Plan"). The Phantom Stock Plan provided
that phantom stock units could be awarded if combined net earnings exceed 15% of
stockholders' equity (as defined in the plan) at the beginning of the applicable
fiscal year; if earnings exceeded 15% of this base amount, awards could be made
equal to 10% of that excess to each participant. W.H. Holman, Jr., Roger P.
Friou and David K. Essary are the only three participants who currently have
units credited to them under this plan. Effective with the Recapitalization, the
Phantom Stock Plan was amended, restated and renamed "the Deferred Compensation
Plan for Jitney-Jungle Stores of America, Inc." Under this amended plan, no
further awards may be made and no other individuals may become participants. The
units credited to each of the three participants effectively have been divided
into two component amounts: a cash amount that will be payable in accordance
with the terms of the Phantom Stock Plan as in effect before its amendment, and
an amount that will continue to be credited under the terms of the plan to an
account, the value of which will be equal to the value of the number of shares
of Class C Preferred Stock of Jitney-Jungle that could be acquired with that
amount.
The accrued amounts payable in accordance with the pre-amendment provisions
of the Phantom Stock Plan became fully vested and payable in a single lump sum
effective with the Recapitalization on March 5, 1996. The amounts paid to
Messrs. Holman, Jr., Friou and Essary on March 7, 1996 were approximately
$1,894,000, $2,248,000 and $110,000, respectively, and Messrs. Holman, Jr.,
Friou and Essary applied an additional $474,000, $125,000 and $112,500,
respectively, toward the purchase price for shares of Class C Preferred Stock of
Jitney-Jungle in connection with the Recapitalization.
The Phantom Stock Plan is an unfunded deferred compensation arrangement with
an associated rabbi trust. The rabbi trust provides that the initial
contributions to the trust will be invested in shares of Class C Preferred
Stock. The initial contributions to the rabbi trust should equal the amounts
that will continue to be credited under the plan described above.
With respect to the amounts that continue to be credited under the plan as
amended, an amount equal to the amount of any cash dividends that would have
been paid on the number of shares of preferred stock credited to each
participant's account will be paid to the participant at the same time as any
cash dividends actually are paid on the preferred stock. Payment otherwise will
be made under the amended plan at the same time as the preferred stock is
redeemed, in an amount equal to the redemption price times the number (or
proportionate number, in the event of a partial redemption) of shares of
preferred stock credited to the participant's account.
401(K) PLAN
Jitney-Jungle maintains a Profit Sharing Plan and Trust (the "401(k) Plan")
for the benefit of its employees who have satisfied the plan's eligibility
requirements. Participants are permitted to make pre-tax salary reduction
contributions, up to the amount permitted under applicable tax law.
Jitney-Jungle makes a matching contribution equal to 50% of each participant's
salary reduction contribution, up to a maximum
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<PAGE>
of 2% of the participant's compensation. In addition, Jitney-Jungle may make
additional profit sharing contributions in its discretion. Although in prior
years Jitney-Jungle has made discretionary profit sharing contributions, it has
no obligation or present intention to do so in the future. Jitney-Jungle's
contributions become vested when the participant has been credited with five
years of service. Shares of Common Stock of Jitney-Jungle held under the 401(k)
Plan were surrendered in connection with the Recapitalization and exchanged for
cash and Class B Preferred Stock in accordance with the Recapitalization
documentation.
DELCHAMPS PLANS
Delchamps currently provides welfare and retirement benefits to its eligible
employees under various plans and arrangements, including an employee stock
option plan and a 401(k) plan. Following the Delchamps Acquisition, Management
intends to terminate the employee stock option plan and the 401(k) plan and
provide ongoing welfare and retirement benefits to such employees under the
existing plans of Jitney-Jungle.
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<PAGE>
OWNERSHIP OF CAPITAL STOCK
PRINCIPAL SHAREHOLDERS
The authorized capital stock of Jitney-Jungle consists of 5,000,000 shares
of common stock, par value $0.01 per share (the "Common Stock"), and 600,000
shares of preferred stock, par value $0.01 per share (the "Preferred Stock").
The Preferred Stock is issuable in one or more classes.
The following table sets forth certain information with respect to (i) the
beneficial ownership of Common Stock of Jitney-Jungle by each person or entity
who owns five percent or more thereof and (ii) the beneficial ownership of each
class of equity securities of Jitney-Jungle by each director of Jitney-Jungle
who is a shareholder, the Chief Executive Officer of Jitney-Jungle and the other
executive officers named in the "Summary Compensation Table" above who are
shareholders and all directors and officers of Jitney-Jungle as a group. Unless
otherwise specified, all shares are directly held.
<TABLE>
<CAPTION>
NUMBER AND PERCENT OF SHARES
<S> <C> <C> <C>
CLASS B CLASS C
PREFERRED PREFERRED
NAME OF BENEFICIAL OWNER COMMON STOCK STOCK STOCK
Bruckmann, Rosser, Sherrill &
Co., L.P.(1)........................................ 331,732/78.05% -- 70,808/70.81%
Two Greenwich Plaza
Suite 100
Greenwich, CT 06830
DLJ Merchant Banking Partners,
L.P. and related investors.......................... 75,000/15.00 (2) -- 15,000/15.00%
277 Park Avenue
New York, NY 10172
W.H. Holman, Jr....................................... 29,699/6.99 (3) 21,516/7.84%(4) 4,742/4.72%
Jitney-Jungle Stores of
America, Inc.
P.O. Box 3409
Jackson, MS 39207
Michael E. Julian..................................... 2,500* -- 534*
Roger E. Friou........................................ 12,510/2.94% 14(4) 1,252/1.25%
David K. Essary....................................... 11,250/2.65% -- 1,125/1.13%
Jerry L. Jones........................................ 1,200* -- 120*
Harold D. Evans....................................... 850* -- 85*
Bruce C. Bruckmann(5)................................. 353,750/83.24% -- 75,508/75.51%
Harold O. Rosser II(5)................................ 353,750/83.24% -- 75,508/75.51%
Stephen C. Sherrill(5)................................ 353,750/83.24% -- 75,508/75.51%
Stephen F. Edwards(5)................................. 332,663/78.27% -- 71,007/71.01%
All directors and officers as a group
(18 persons)........................................ 421,359/99.14% 26,729/9.74%(4) 92,207/92.21%
</TABLE>
- ------------------------
* Less than one percent of total outstanding Common Stock, Class B Preferred
Stock and Class C Preferred Stock.
(1) The Fund is a limited partnership, the sole general partner of which is BRS
Partners, Limited Partnership ("BRS Partners") and the manager of which is
BRS. The sole general partner of BRS Partners is BRSE Associates, Inc.
("BRSE Associates"). Bruce C. Bruckmann, Harold O. Rosser II, Stephen C.
Sherrill and Stephen F. Edwards are the only stockholders of BRS and BRSE
Associates and may be deemed to share beneficial ownership of the shares
shown as beneficially owned by the Fund. Such individuals disclaim
beneficial ownership of any such shares.
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<PAGE>
(2) Represents warrants to acquire 15%, on a fully diluted basis, of the Common
Stock.
(3) Includes 19,699 shares held by Performance Partnership, L.P. W.H. Holman,
Jr. is the general partner of such partnership and possesses voting power
with respect to such shares.
(4) All outstanding shares of Class B Preferred Stock are held by Trustmark
National Bank ("Trustmark") pursuant to an escrow agreement by and among
Trustmark, Jitney-Jungle and the persons who were shareholders of
Jitney-Jungle prior to the Recapitalization. Messrs. Holman, Jr. and Friou
own an interest in the escrow account through which they have a beneficial
interest in the shares of Class B Preferred Stock listed in this table.
(5) Includes shares of Common Stock and Class C Preferred Stock which are owned
by the Fund and certain other entities and individuals affiliated with BRS.
Although Messrs. Bruckmann, Rosser, Sherrill and Edwards may be deemed to
share beneficial ownership of such shares, such individuals disclaim
beneficial ownership thereof. See Note 1 above.
CLASS A PREFERRED STOCK
An aggregate of $22.5 million in liquidation preference of the Class A
Preferred Stock is outstanding. The Class A Preferred Stock ranks senior in
right of payment of cash dividends, liquidation preference and redemption (both
mandatory and optional as described below) to the Class B Preferred Stock and
the Class C Preferred Stock.
Dividends on the Class A Preferred Stock are payable quarterly at an annual
rate of 15%. Dividends for the first five years following the Recapitalization
are payable, at Jitney-Jungle's option, either by cumulation to liquidation
preference or in cash and, thereafter, dividends will be payable in cash. The
Senior Credit Facility, the Senior Note Indenture and the Indenture will
restrict Jitney-Jungle's ability to pay cash dividends on the Class A Preferred
Stock.
The Class A Preferred Stock is redeemable at Jitney-Jungle's option, (i) at
any time after March 1, 2001 at a price per share equal to the then applicable
liquidation preference plus accrued and unpaid dividends and a prepayment
premium or (ii) on or prior to March 1, 1999 with the proceeds of a public
offering of Common Stock at a price per share equal to 114% of the then
applicable liquidation preference plus accrued and unpaid dividends thereon. All
of the Class A Preferred Stock is required to be redeemed on or before the
twelfth anniversary of issuance at a price per share equal to the then
applicable liquidation preference plus accrued and unpaid dividends.
Jitney-Jungle is required to offer to repurchase (to the extent permitted by the
terms of the Senior Credit Facility) all shares of Class A Preferred Stock upon
a Change of Control (as defined in the certificate of designations with respect
to the Class A Preferred Stock) at a price per share equal to 101% of the then
applicable liquidation preference, plus accrued and unpaid dividends thereon.
The Senior Credit Facility will restrict Jitney-Jungle's ability to redeem or
repurchase the Class A Preferred Stock.
The Class A Preferred Stock does not have any voting rights, except (i) as
required by law and (ii) with respect to the issuance of pari passu and senior
securities, certain mergers and certain amendments to the Articles of
Incorporation of Jitney-Jungle or the Exchange Debenture Indenture.
Additionally, in the event of certain defaults, including the failure to pay
dividends when required, then the number of directors constituting the Board of
Directors will be increased by two, and the holders of Class A Preferred Stock
will be entitled to elect two directors to the Board of Directors. The Class A
Preferred Stock is exchangeable (with cumulated dividends) at Jitney-Jungle's
option, in whole but not in part, for subordinated exchange debentures (the
"Exchange Debentures") of Jitney-Jungle. The Exchange Debentures will pay
interest from the date of exchange at the rate of 15% per annum, consisting of,
at Jitney-Jungle's option, additional Exchange Debentures or cash on or prior to
March 1, 2001 and cash thereafter. The Exchange Debentures will mature on March
1, 2008. The Senior Credit Facility, the Senior Note Indenture
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and the Indenture will restrict Jitney-Jungle's ability to exchange the Class A
Preferred Stock for Exchange Debentures and Jitney-Jungle's ability to redeem or
repurchase the Exchange Debentures.
CLASS B PREFERRED STOCK
An aggregate of $27.5 million in liquidation preference of the Class B
Preferred Stock is outstanding. The Class B Preferred Stock ranks junior in
right of payment of cash dividends, liquidation preference and redemption (both
mandatory and optional as described below) to the Class A Preferred Stock and
senior in right of payment of cash dividends, liquidation preference and
redemption (both mandatory and optional as described below) to the Class C
Preferred Stock.
Dividends on the Class B Preferred Stock are payable annually when and as
declared by the Board of Directors of Jitney-Jungle at a rate of 10.0% per
annum. Dividends cumulate on a compounding basis until paid. The Senior Credit
Facility, the Senior Note Indenture, the Indenture and the Class A Preferred
Stock restrict Jitney-Jungle's ability to pay cash dividends on the Class B
Preferred Stock.
The Class B Preferred Stock is redeemable at Jitney-Jungle's option at any
time, in whole or in part, at a price per share equal to the then applicable
liquidation preference plus accrued and unpaid dividends. All of the Class B
Preferred Stock is required to be redeemed on the fourteenth anniversary of
issuance at a price per share equal to the then applicable liquidation
preference plus accrued and unpaid dividends. Jitney-Jungle will also be
required to offer to repurchase (to the extent permitted by the terms of the
Class A Preferred Stock and any indebtedness to which Jitney-Jungle is a party)
all shares upon a Change in Control (as defined in the certificate of
designations with respect to the Class B Preferred Stock) at a price in cash
equal to 100.0% of the liquidation preference thereof plus accrued and unpaid
dividends.
Jitney-Jungle is required to offer to repurchase (to the extent permitted by
the terms of the Class A Preferred Stock and any indebtedness to which
Jitney-Jungle is a party) all shares of Class B Preferred Stock upon the sale by
the Fund (or its affiliates) of more than 10.0% of the outstanding shares of the
Common Stock of Jitney-Jungle, except that the Fund (or its affiliates) may (i)
sell up to 5.0% of the outstanding shares to original shareholders, officers,
directors, consultants or employees of Jitney-Jungle; (ii) sell outstanding
shares to certain affiliates and principals of the Fund and persons related
thereto; or (iii) exchange Common Stock or Class C Preferred Stock for
securities which rank junior to the Class B Preferred Stock. Jitney-Jungle is
also required to offer to repurchase (to the extent permitted by the terms of
the Class A Preferred Stock and any indebtedness to which Jitney-Jungle is a
party) all shares of Class B Preferred Stock if Jitney-Jungle changes its state
of incorporation.
In addition, Jitney-Jungle is required to offer to apply (to the extent
permitted by the terms of the Class A Preferred Stock and any indebtedness to
which Jitney-Jungle is a party) Net Proceeds (as defined) raised through any
primary issuance of securities junior to Class B Preferred Stock to repurchase
shares of Class B Preferred Stock. "Net Proceeds" means the net cash proceeds
received by Jitney-Jungle from the issuance of such junior securities after
payment of expenses of issuance of such securities and application of such funds
to repay or redeem senior securities (to the extent required) and the repayment
of indebtedness (to the extent required).
The Senior Credit Facility, the Senior Note Indenture, the Indenture and the
Class A Preferred Stock restrict Jitney-Jungle's ability to redeem or repurchase
shares of the Class B Preferred Stock.
The Class B Preferred Stock does not have any voting rights except as
required by Mississippi law, as in effect on the date of issuance.
CLASS C PREFERRED STOCK
An aggregate of $10.0 million in liquidation preference of the Class C
Preferred Stock, Series 1 and Series 2, is outstanding. The Series 1 is not
redeemable by Jitney-Jungle at any time; the Series 2 is redeemable, as
described below. The Class C Preferred Stock ranks junior in right of payment of
cash
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dividends, liquidation preference and redemption (both mandatory and optional as
described below) to the Class A Preferred Stock and the Class B Preferred Stock.
Dividends on the Class C Preferred Stock are payable annually when and as
declared by the Board of Directors of Jitney-Jungle at a rate of up to 10.0% per
annum. Dividends cumulate on a compounding basis until paid. The Senior Credit
Facility, the Senior Note Indenture, the Indenture, the Class A Preferred Stock
and the Class B Preferred Stock restrict Jitney-Jungle's ability to pay cash
dividends on the Class C Preferred Stock.
The Class C Preferred Stock, Series 2, is redeemable at Jitney-Jungle's
option at any time, in whole or in part, at a price per share equal to the
liquidation preference plus accrued and unpaid dividends (including cumulated
dividends). The Class C Preferred Stock, Series 2, is required to be redeemed on
the fifteenth anniversary of issuance at a price per share equal to the
liquidation preference plus accrued and unpaid dividends (including cumulated
dividends). Jitney-Jungle is required to offer to repurchase (to the extent
permitted by the terms of the Class A Preferred Stock, the Class B Preferred
Stock and any indebtedness to which Jitney-Jungle is a party) all shares of
Series C Preferred Stock, Series 1 and Series 2, upon a Change of Control (as
defined in the certificate of designations with respect to the Class C Preferred
Stock) at a price in cash equal to 100% of the then applicable liquidation
preference, plus accrued and unpaid dividends thereon. The Senior Credit
Facility, the Senior Note Indenture, the Indenture, the Class A Preferred Stock,
the Exchange Debentures and the Class B Preferred Stock restrict Jitney-Jungle's
ability to redeem or repurchase the Class C Preferred Stock.
The Class C Preferred Stock does not have any voting rights, except as
required by law.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record and all matters submitted to a vote of shareholders. The holders of
Common Stock have no preemptive rights, rights to maintain their respective
percentage ownership interests in Jitney-Jungle or other rights to subscribe for
additional shares of Jitney-Jungle other than as set forth in the Shareholders
Agreement.
WARRANTS
In connection with the Recapitalization, warrants to purchase 75,000 shares
of Common Stock (the "Warrants"), representing 15.0% of the Common Stock of
Jitney-Jungle (on a fully diluted basis) outstanding immediately following the
Recapitalization, were issued to DLJ Merchant Banking Partners, L.P. and related
investors. The Warrants have an exercise price of $0.01 per share and expire 12
years after issuance.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
LEASING AGENT AGREEMENT
Pursuant to an agreement with Jitney-Jungle, McCarty-Holman Co., L.P. (the
"Partnership") is the exclusive agent for Jitney-Jungle to rent, lease, operate
and manage all locations where Jitney-Jungle has sublet space to various tenants
and where it has space vacant and available for subleasing. W.H. Holman, Jr.
owns a noncontrolling interest in the Partnership. Under the agreement, the
Partnership is entitled to fees as follows: (i) for management, 4% of all
rental/lease collections; (ii) for leasing, 6% of the annual rent (for a
month-to-month tenancy, one-half of the first month's rent); and (iii) for
services other than those delineated above, fees are negotiated. In fiscal 1997,
the Partnership received approximately $41,000 in fees pursuant to this
agreement. Management believes that the agreement is on an arm's length basis
and is on terms that are no less favorable to Jitney-Jungle than could have been
obtained with non-affiliated parties at the time the agreement was entered into.
LEASES OF CERTAIN SUPERMARKETS AND FACILITIES
W.H. Holman, Jr., W.H. Holman, III and Roger P. Friou own in the aggregate
noncontrolling interests in certain partnerships that are landlords under 18
leases for supermarkets or other facilities where Jitney-Jungle and its
affiliates are the tenants. In fiscal 1997 and 1996, Jitney-Jungle paid a
combined total rent under these 18 leases of approximately $3.6 million and $3.6
million, respectively. Management believes that each of these leases is on an
arm's length basis and is on terms that are no less favorable to Jitney-Jungle
than could have been obtained with non-affiliated parties at the time each lease
was entered into.
MANAGEMENT LOANS
David K. Essary, Executive Vice President of Jitney-Jungle has an
outstanding loan for the purchase of Common Stock from Jitney-Jungle in an
amount of $79,906 as of May 3, 1997. The loan is evidenced by an unsecured note
which bears interest at the rate of 8.25% per annum and is payable in three
annual installments, the first of which was paid in March 1997. Eight other
executive officers of Jitney-Jungle have borrowed an aggregate of $69,824 for
the purchase of Common Stock and Class C Preferred Stock from Jitney-Jungle.
SHAREHOLDERS AGREEMENT
Certain shareholders of Jitney-Jungle, including the Fund Entities, the DLJ
Entities and Messrs. Holman, Jr., Holman III and Friou (the "Management
Shareholders") are parties to a Shareholders Agreement which contains certain
agreements among such shareholders with respect to the capital stock and
corporate governance of Jitney-Jungle. The following is a summary of the
material terms of the Shareholders Agreement.
Pursuant to the Shareholders Agreement, the maximum number of members of the
Board of Directors of Jitney-Jungle is 12 (plus any additional directors who may
be elected in accordance with the terms of Jitney-Jungle's preferred stock). The
DLJ Entities and the Management Shareholders each have the right to appoint one
member to the Board of Directors. In addition, the approval of the director
appointed by the DLJ Entities is required in order for Jitney-Jungle to enter
into certain transactions. The DLJ Entities' rights to appoint a director and to
approve of such transactions will terminate upon certain reductions in the DLJ
Entities' ownership of the Warrants or upon a person or persons (other than the
Fund Entities, DLJ Entities or Management Shareholders) acquiring a majority of
the then outstanding Common Stock.
The Shareholders Agreement contains certain provisions which with certain
exceptions (i) restrict the ability of the Fund Entities, the DLJ Entities and
the Management Shareholders from transferring any shares of Common Stock or
Warrants until the earlier to occur of the initial public offering of Common
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Stock of Jitney-Jungle and the second anniversary of the consummation of the
Recapitalization, (ii) restrict the ability of the Fund Entities from
transferring any shares of Class C Preferred Stock until the earlier to occur of
the initial public offering of Common Stock of Jitney-Jungle and the fourth
anniversary of the consummation of the Recapitalization and (iii) restrict the
ability of the DLJ Entities and the Management Shareholders from transferring
any shares of Class C Preferred Stock until the earlier to occur of the initial
public offering of Common Stock of Jitney-Jungle and the second anniversary of
the consummation of the Recapitalization. The foregoing will not restrict the
ability of the DLJ Entities to transfer shares of Common Stock, Class C
Preferred Stock or Warrants in connection with a transfer of Class A Preferred
Stock or of any shareholder to transfer securities in connection with any public
offering of Common Stock of Jitney-Jungle pursuant to certain registration
rights set forth in the Shareholders Agreement. Prior to sales of Common Stock
by the Fund Entities, the DLJ Entities have the right to negotiate with such
Fund Entity for the purchase of any and all shares that Fund Entity desires to
sell. With respect to proposed dispositions by the Fund Entities of their
securities, the DLJ Entities have the right to require the proposed transferee
to purchase, on the same terms and conditions as given to the Fund Entities, a
pro rata portion of like securities (or Warrants therefor) held by the DLJ
Entities. Subject to certain exceptions, if Jitney-Jungle proposes to issue
Common Stock or rights to purchase Common Stock, the Fund Entities and the DLJ
Entities have the right, on the same terms and conditions of the proposed
issuance, to purchase pro rata portions of the securities to be issued.
Jitney-Jungle has granted the Fund Entities three separate demand registration
rights with respect to their securities. Jitney-Jungle has granted the DLJ
Entities (i) three demand registration rights with respect to their shares of
Common Stock, Class C Preferred Stock and Warrants, in the aggregate, which
demand rights are not exercisable prior to the earlier to occur of the initial
public offering of Common Stock of Jitney-Jungle and the fifth anniversary of
the consummation of the Recapitalization and (ii) three demand registration
rights with respect to their shares of Class A Preferred Stock. All of the
shareholders party to the Shareholders Agreement have the right to participate,
or "piggyback," in certain registrations initiated by Jitney-Jungle or pursuant
to a demand.
DEALER-MANAGER; SOLICITATION AGENT; UNDERWRITER
Donaldson, Lufkin & Jenrette Securities Corporation, one of the Initial
Purchasers and an affiliate of DLJ Merchant Banking Partners, L.P., acted as
Dealer-Manager in connection with the Delchamps Tender Offer and as Solicitation
Agent in connection with the Consent Solicitation, and it received customary
fees and reimbursement of expenses in connection with the services rendered by
it in the latter capacity. Donaldson, Lufkin & Jenrette Securities Corporation
also acted as underwriter in connection with the offering of the Senior Notes by
the Company, for which it received customary fees and reimbursement of expenses.
BRS MANAGEMENT AGREEMENT; CLOSING FEE
Pursuant to a management agreement between Jitney-Jungle and BRS, BRS is
entitled to receive an annual management fee from Jitney-Jungle for the
performance of strategic and financial planning services. The amount of the fee
ranges from $250,000 to $1.0 million per year and is based on certain
performance criterion. In connection with the Consent Solicitation,
Jitney-Jungle solicited and obtained consents to an amendment to the Senior Note
Indenture to permit the amendment of the management agreement to eliminate the
performance criteria set forth therein and permit the payment of fees to BRS
after the end of each fiscal quarter of the greater of (i) $250,000 or (ii) 1.0%
of the Company's EBITDA for such quarter (provided that the total amount of all
such payments in any fiscal year may not exceed the greater of (x) $1.0 million
or (y) one percent of EBITDA for such fiscal year). The amendment of the
management agreement occurred simultaneously with the consummation of the
Transactions. In addition, upon consummation of the Transactions the Company
paid BRS a closing fee of $4.0 million.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
The following is a summary of certain indebtedness of the Company which will
remain outstanding following consummation of the Delchamps Merger. See
"Summary--Use of Proceeds." To the extent such summary contains descriptions of
the Senior Credit Facility, the Senior Note Indenture and other loan documents,
such descriptions do not purport to be complete and are qualified in their
entirety by reference to such documents, which are available upon request from
the Company.
SENIOR CREDIT FACILITY
In connection with the Delchamps Acquisition, Jitney-Jungle's existing
revolving credit facility with Fleet Capital Corporation (as successor agent to
Fleet Bank, N.A.) and certain other lenders (collectively, the "Lender") was
amended and restated to provide for a $150.0 million Senior Credit Facility.
Borrowings by the Company and its subsidiaries (including Delchamps following
the consummation of the Delchamps Tender Offer) of $72.7 million under the
Senior Credit Facility were used to finance a portion of the Delchamps Purchase
Price, to repay certain indebtedness of Delchamps and to pay fees and expenses
incurred in connection with the Transactions and the Delchamps Merger. The
Senior Credit Facility will also be available to provide for the ongoing working
capital requirements of the Company and its subsidiaries.
The commitments under the Senior Credit Facility will terminate, and all
loans outstanding thereunder will be required to be repaid in full, six and
one-half years following the consummation of the Delchamps Tender Offer (the
"Closing Date"). Borrowings under the Senior Credit Facility, including
revolving loans and up to $30.0 million in letters of credit, will not exceed
the lesser of (i) the "Total Commitment," which initially will be $150.0 million
and (ii) an amount equal to the sum of (A) up to 65% of eligible inventory
(valued at the lesser of FIFO cost or current market value) of the Company and
its subsidiaries and (B) the "Supplemental Availability," which initially will
be $53.0 million. The maximum amount available for borrowing under the Senior
Credit Facility and the Supplemental Availability will be reduced in quarterly
installments during each year in the aggregate annual amounts set forth below:
<TABLE>
<CAPTION>
SENIOR CREDIT
FACILITY
YEAR FOLLOWING CLOSING DATE REDUCTION
<S> <C>
1....................................................................................... $ 0
2....................................................................................... $ 5,000,000
3....................................................................................... $ 7,000,000
4....................................................................................... $ 8,000,000
5....................................................................................... $ 9,000,000
6....................................................................................... $ 11,000,000
First quarter year 7............................................................................ $ 6,500,000
Second quarter year 7........................................................................... $ 6,500,000
</TABLE>
The Senior Credit Facility is guaranteed by all subsidiaries of the Company
who, except for Supermarket Cigarette Sales, Inc., are also borrowers under the
Senior Credit Facility. Obligations under the Senior Credit Facility are secured
by a first priority lien on all of the Company's and the guarantors' existing
and after-acquired tangible and intangible assets, including but not limited to
accounts and notes receivable, inventory, machinery, equipment and other fixed
assets (including, but not limited to, fixtures and leasehold improvements),
real property (including leasehold interests but excluding real property already
subject to liens), all related documents, instruments, chattel paper, subsidiary
stock, and general intangibles (including, but not limited to, patents,
trademarks, trade names and tax refunds) and all proceeds and products thereof.
Loans under the Senior Credit Facility, at the Company's option, may be
either Base Rate Loans or Eurodollar Loans, provided that not more than six
Eurodollar Loans may be outstanding at any one time. Base Rate Loans will bear
interest at a Base Rate plus the Applicable Margin and Eurodollar Loans will
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bear interest at the LIBO Rate (as adjusted pursuant to the terms of the Senior
Credit Facility) plus the Applicable Margin for 1-, 2-, 3- or 6-month interest
periods. The Base Rate is defined as the higher of (i) the announced prime rate
of Fleet Bank, N.A. and (ii) the federal funds rate plus 1/2%, with changes
effective as of the date of change in such prime rate or federal funds rate. The
Company may convert all or any portion of the Base Rate Loans into Eurodollar
Loans, and all or any portion of the Eurodollar Loans into Base Rate Loans
provided no event of default has occurred or is continuing.
At all times on and after the Closing Date until the date the Company
delivers to the agent under the Senior Credit Facility its financial statements
for the Company's fiscal quarter ending on or about January 10, 1998 (the "First
Adjustment Date"), the Applicable Margin will be 0.75% for Base Rate Loans and
2.0% for Eurodollar Loans.
At the Closing Date, the Senior Credit Facility bore interest at
approximately 7.65% based on the LIBO Rate plus the Applicable Margin. Beginning
on the First Adjustment Date, interest rates will fluctuate based on the
Company's ratio of Indebtedness to EBITDA (each as defined in the Senior Credit
Facility) for the four most recently concluded fiscal quarters, based upon the
following table:
<TABLE>
<CAPTION>
APPLICABLE MARGIN
BASE RATE/EURODOLLAR
INDEBTEDNESS/EBITDA RATE
<S> <C>
Greater Than or Equal to 5.............................................................. 1.00%/2.25%
Greater Than 4.25 but Less Than 5....................................................... 0.75%/2.00%
Greater Than 3.75 but Less Than 4.25.................................................... 0.50%/1.75%
Greater Than 3.25 but Less Than 3.75.................................................... 0.25%/1.50%
Less Than 3.25.......................................................................... 0%/1.25%
</TABLE>
Notwithstanding the foregoing, on and after a default or event of default
under the Senior Credit Facility which is continuing, there will be no reduction
in the Applicable Margin. After and during the continuance of any such event of
default, the interest rate will be 2% above the otherwise applicable rate.
The Senior Credit Facility contains numerous restrictive financial and other
covenants, including, but not limited to (i) limitations on the incurrence of
liens and indebtedness, (ii) restrictions on sale and lease-back transactions,
consolidations, mergers and sales of assets, investments (including the purchase
of stock or assets), loans, capital expenditures, changes in business,
prepayment of indebtedness, including the Senior Notes and the Notes, affiliate
transactions, consulting fees and creation of subsidiaries, (iii) a prohibition
(with certain limited exceptions) on dividends, distributions and payments on
shares of capital stock, and (iv) a requirement to meet certain identified
financial targets, based generally on rolling four fiscal quarter periods, such
as a maximum leverage ratio, a minimum interest coverage ratio, a minimum cash
flow and, under certain circumstances, a minimum fixed charge coverage ratio.
Events of default under the Senior Credit Facility include, among others,
(i) false representations and warranties, (ii) nonpayment of interest, fees or
principal when due under the Senior Credit Facility, (iii) breach in the
observance or performance of any covenant, condition or agreement, (iv)
voluntary or involuntary bankruptcy proceedings, (v) default in any other
indebtedness that permits acceleration of such indebtedness, (vi) any events or
conditions which would result in the termination of a pension plan or the
creation of certain liabilities under ERISA, (vii) judgments or decrees that
remain undischarged or unbonded for 30 consecutive days, (viii) the invalidity
of the Senior Credit Facility, the other security documents, security interests
or guarantees and (ix) the occurrence of a Change of Control. Change of Control
is defined as (A) the failure of the Fund to own, beneficially and all voting
rights with respect to, at least 35% of each class of issued and outstanding
shares of voting stock of the Company, (B) the failure of the Fund to own
capital stock of the Company entitling it to cast the votes required to elect a
majority of members of the Board of Directors of the Company, (C) the failure of
the Company to own, beneficially and all voting rights with respect to, 100% of
all the issued and outstanding shares of each class of capital stock of each of
its subsidiaries (other than Delchamps, following the Delchamps Tender Offer and
prior to the Delchamps Merger) or (D) the occurrence of a "Change of Control"
under the Senior Note Indenture.
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Upon the occurrence of any event of default under the Senior Credit Facility,
the Lender may accelerate the maturity of the loans made thereunder and
terminate the commitments under the Senior Credit Facility.
SENIOR NOTES
Jitney-Jungle is the primary obligor on $200,000,000 in aggregate principal
amount of Senior Notes. The Senior Notes bear interest at a rate of 12% per
annum, payable semi-annually on March 1 and September 1 of each year.
Jitney-Jungle is not required to make any mandatory redemption or sinking
fund payment with respect to the Senior Notes prior to maturity. The Senior
Notes are redeemable, at the option of Jitney-Jungle, in whole or in part, at
any time after March 1, 2001 at the redemption prices set forth in the Senior
Note Indenture. In addition, at any time prior to March 1, 1999, Jitney-Jungle
may redeem up to 33 1/3% of the aggregate principal amount of the Senior Notes
with the net proceeds of one or more public offerings of equity securities;
provided that at least 66 2/3% of the original aggregate principal amount of
Senior Notes remains outstanding following each such redemption.
Upon the occurrence of a "Change of Control" under the Senior Note
Indenture, Jitney-Jungle will be required to make an offer to purchase all of
the outstanding Senior Notes at 101% of the principal amount thereof, plus
accrued and unpaid interest to the date of purchase.
The Senior Notes are unsecured senior obligations of Jitney-Jungle and rank
pari passu in right of payment with all existing and future Senior Debt of
Jitney-Jungle, including indebtedness under the Senior Credit Facility.
Jitney-Jungle's obligations under certain outstanding Senior Debt, including its
obligations under the Senior Credit Facility, are secured by liens on all of the
assets of Jitney-Jungle and, accordingly, such indebtedness ranks prior to the
Senior Notes with respect to such assets. The Senior Notes rank senior in right
of payment to all future subordinated indebtedness of Jitney-Jungle, including
the Notes.
The payment of principal, premium, if any, and interest on the Senior Notes
has been guaranteed on a full, unconditional, joint and several, unsecured
senior basis (the "Senior Note Guarantees") by all of the Subsidiary Guarantors,
and Delchamps will execute a Senior Note Guarantee within three business days
following the consummation of the Delchamps Tender Offer. The Senior Note
Guarantees rank pari passu in right of payment with all Senior Debt of the
Subsidiary Guarantors. The Subsidiary Guarantors' obligations under certain
outstanding Senior Debt, including their obligations under the Senior Credit
Facility, are secured by liens on substantially all of the assets of the
Subsidiary Guarantors and, accordingly, rank prior to the Senior Notes with
respect to such assets. The guarantee of a Subsidiary Guarantor may be released
upon a sale of such Subsidiary Guarantor or upon repayment or defeasance of the
Senior Notes, in each case as permitted by the Senior Note Indenture.
The Senior Note Indenture contains restrictive covenants substantially
identical to those contained in the Indenture governing the Notes (except with
respect to the subordination provisions of the Indenture), including covenants
that limit, among other things, (i) the ability of Jitney-Jungle and its
Restricted Subsidiaries to pay dividends or make certain other restricted
payments or investments, incur additional indebtedness or issue preferred stock,
in each case, unless specified financial targets are met, (ii) the ability of
Jitney-Jungle to merge, consolidate or sell all or substantially all of its
assets, (iii) the ability of Jitney-Jungle and its Restricted Subsidiaries to
create liens on assets, (iv) the ability of Jitney-Jungle and its Restricted
Subsidiaries to enter into transactions with affiliates and (v) the ability of
Jitney-Jungle and its Restricted Subsidiaries to engage in other lines of
business. See "Description of the Notes" for a more complete description of such
provisions.
The Senior Note Indenture would prohibit the issuance of the Notes. The
Company has obtained consents from the holders of a majority in principal amount
of the outstanding Senior Notes to such issuance. See "Summary--The
Transactions" and "The Transactions--The Consent Solicitation."
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DESCRIPTION OF THE NOTES
GENERAL
The Existing Notes were issued pursuant to an Indenture (the "Indenture") by
and among the Company, each Subsidiary of the Company as Subsidiary Guarantors
and Marine Midland Bank, as trustee (the "Trustee") in a private transaction
that was not subject to the registration requirements of the Securities Act. The
terms of the Indenture apply to the Existing Notes and to the New Notes to be
issued in exchange therefor pursuant to the Exchange Offer (all such Notes being
referred to herein collectively as the "Notes"). The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"). The
Notes are subject to all such terms, and Holders of Notes are referred to the
Indenture and the Trust Indenture Act for a statement thereof. The following
summary of certain provisions of the Indenture is qualified by reference to the
Indenture, including the definitions therein of certain terms used below. Copies
of the proposed form of Indenture and Registration Rights Agreement are
available as set forth under "--Additional Information." The definitions of
certain terms used in the following summary are set forth below under "Certain
Definitions."
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all current and future Senior Debt. At July
26, 1997, on a Pro Forma Basis, the Company would have had Senior Debt of
approximately $348.1 million (exclusive of an unused commitment of up to $66.1
million under the Senior Credit Facility). The Indenture permits the incurrence
of additional Senior Debt in the future. See "Certain Covenants--Incurrence of
Indebtedness and Issuance of Disqualified Stock."
PRINCIPAL, MATURITY AND INTEREST
The Notes are limited in aggregate principal amount to $200.0 million and
will mature on September 15, 2007. Interest on the Notes will accrue at the rate
of 10 3/8% per annum and will be payable semi-annually in arrears on March 15
and September 15 of each year, commencing on March 15, 1998 to Holders of record
on the immediately preceding March 1 and September 1. Interest on the Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the date of original issuance. Interest will be
computed on the basis of a 360-day year comprised of twelve 30-day months.
Principal, premium, if any, and interest and Liquidated Damages, if any, on the
Notes will be payable at the office or agency of the Company maintained for such
purpose within the City and State of New York or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by check mailed
to the Holders of the Notes at their respective addresses set forth in the
register of Holders of Notes; provided that all payments of principal, premium,
if any, and interest with respect to the Notes the Holders of which have given
wire transfer instructions to the Company will be required to be made by wire
transfer of immediately available funds to the accounts specified by the Holders
thereof. Until otherwise designated by the Company, the Company's office or
agency in New York will be the office of the Trustee maintained for such
purpose. The Notes will be issued in denominations of $1,000 and integral
multiples thereof.
SUBORDINATION
The payment of principal of, premium, if any, and interest and Liquidated
Damages, if any, on the Notes will be subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full of all Senior Debt, whether
outstanding on the date of the Indenture or thereafter incurred.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt will be entitled to receive
payment in full in cash of all Obligations due in respect of such Senior Debt
(including interest after the commencement of any such proceeding at
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the rate specified in the applicable Senior Debt) before the Holders will be
entitled to receive any payment with respect to the Notes, and until all
Obligations with respect to Senior Debt are paid in full in cash, any
distribution to which the Holders would be entitled shall be made to the holders
of Senior Debt (except that Holders may receive Permitted Junior Securities and
payments made from the trust described under "--Legal Defeasance and Covenant
Defeasance").
The Company also may not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under
"--Legal Defeasance and Covenant Defeasance") if (i) a default in the payment of
the principal of, premium, if any, or interest on Designated Senior Debt occurs
and is continuing beyond any applicable period of grace or (ii) any other
default occurs and is continuing with respect to Designated Senior Debt that
permits holders of such Designated Senior Debt to accelerate its maturity and
the Trustee receives a notice of such default (a "Payment Blockage Notice") from
the Company or the representative of the holders of such Designated Senior Debt.
Payments on the Notes may and shall be resumed (a) in the case of a payment
default, upon the date on which such default is cured or waived and (b) in case
of a nonpayment default, the earlier of (x) the date on which such nonpayment
default is cured or waived, (y) 179 days after the date on which the applicable
Payment Blockage Notice is received, in each case, unless the maturity of any
Designated Senior Debt has been accelerated or (z) the date on which such
Payment Blockage Period (as defined below) shall have been terminated by written
notice to the Trustee from the representative of the holders of Designated
Senior Debt initiating such Payment Blockage Period. During any consecutive
360-day period, the aggregate number of days in which payments due on the Notes
may not be made as a result of nonpayment defaults on Designated Senior Debt (a
"Payment Blockage Period") shall not exceed 179 days, and there shall be a
period of at least 181 consecutive days in each consecutive 360-day period
during which no Payment Blockage Period is in effect. No nonpayment default that
existed or was continuing on the date of delivery of any Payment Blockage Notice
to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice unless such default shall have been cured or waived for a period of not
less than 90 days.
The Indenture further requires that the Company promptly notify holders of
Senior Debt if payment of the Notes is accelerated because of an Event of
Default.
As a result of the subordination provisions described above, in the event of
a liquidation or insolvency, Holders of the Notes may recover less ratably than
creditors of the Company who are holders of Senior Debt. See "Risk
Factors--Subordination."
SUBSIDIARY GUARANTEES
The Company's payment obligations under the Notes are guaranteed on a full,
unconditional, joint and several, general unsecured basis (the "Subsidiary
Guarantees") by the Subsidiary Guarantors. The obligations of each Subsidiary
Guarantor under its Subsidiary Guarantee is limited to the lesser of (i) the
aggregate amount of the Obligations of the Company under the Notes and the
Indenture and (ii) the amount, if any, which would not have (A) rendered such
Subsidiary Guarantor "insolvent" (as such term is defined in the United States
Bankruptcy Code and in the Debtor and Creditor Law of the State of New York) or
(B) left such Subsidiary Guarantor with unreasonably small capital at the time
its Subsidiary Guarantee of the Notes was entered into; provided that it will be
a presumption in any lawsuit or other proceeding in which a Subsidiary Guarantor
is a party that the amount guaranteed pursuant to the Subsidiary Guarantee is
the amount set forth in clause (i) above unless any creditor, or representative
of creditors of such Subsidiary Guarantor, or debtor in possession or trustee in
bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that
the aggregate liability of the Subsidiary Guarantor is the amount set forth in
clause (ii) above. The Indenture provides that, in making any determination as
to solvency or sufficiency of capital of a Subsidiary Guarantor in accordance
with the previous sentence, the right of such Subsidiary Guarantor to
contribution from other Subsidiary Guarantors, and any other rights such
Subsidiary Guarantor may have, will be taken into account. See, however, "Risk
Factors--Fraudulent Conveyance Considerations."
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The Subsidiary Guarantee of each Subsidiary Guarantor is subordinated to the
prior payment in full of all existing and future Senior Debt of such Subsidiary
Guarantor, including the guarantee of such Subsidiary Guarantor of the Company's
obligations under the Senior Notes and the Senior Credit Facility. At July 26,
1997, on a Pro Forma Basis, the Subsidiary Guarantors would have had an
aggregate of approximately $10.4 million of Senior Debt outstanding (excluding
guarantees by the Subsidiary Guarantors of the Company's obligations under the
Senior Notes and the Senior Credit Facility). The Indenture permits the
Subsidiary Guarantors to incur additional Senior Debt, subject to certain
limitations.
The Indenture provides that, except as may be prohibited by the terms of the
Indenture described herein under "Certain Covenants" and "Repurchase at the
Option of Holders--Change of Control" and "--Asset Sales," nothing contained in
the Indenture or in any of the Notes will prevent any consolidation or merger of
a Subsidiary Guarantor with or into a corporation or corporations other than the
Company or any other Subsidiary Guarantor (in each case, whether or not
affiliated with the Subsidiary Guarantor), or successive consolidations or
mergers in which a Subsidiary Guarantor or its successor or successors will be a
party or parties, or will prevent any sale or conveyance of the property of a
Subsidiary Guarantor as an entirety or substantially as an entirety, to a
corporation other than the Company or any other Subsidiary Guarantor (in each
case, whether or not affiliated with the Subsidiary Guarantor) authorized to
acquire and operate the same; PROVIDED, however, that each Subsidiary Guarantor
covenants and agrees that: (i) upon any such consolidation, merger, sale or
conveyance, the Subsidiary Guarantee endorsed on the Notes, and the due and
punctual performance and observance of all of the covenants and conditions of
the Indenture to be performed by such Subsidiary Guarantor, will be expressly
assumed (in the event that the Subsidiary Guarantor is not the surviving
corporation in the merger), by a supplemental indenture substantially in the
form provided for in the Indenture, executed and delivered to the Trustee, by
the corporation formed by such consolidation, or into which the Subsidiary
Guarantor shall have been merged, or by the corporation which shall have
acquired such property; (ii) immediately after giving effect to such
transaction, no Default or Event of Default exists; and (iii) the Company would
be permitted, immediately after giving effect to such transaction, to incur at
least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage
Ratio test set forth in the covenant described below under the caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock." The
foregoing will not prohibit (i) any consolidation or merger of a Subsidiary
Guarantor with or into the Company or any other Subsidiary Guarantor or (ii) any
sale or conveyance of the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety, to the Company or any other Subsidiary Guarantor.
The Indenture provides that concurrently with any sale of assets (including,
if applicable, all of the Capital Stock of any Subsidiary Guarantor), any Liens
in favor of the Trustee in the assets sold thereby will be released; PROVIDED
that, in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of the covenant
described herein under the caption "Repurchase at the Option of Holders--Asset
Sales." The Indenture further provides that if the assets sold in such sale or
other disposition include all or substantially all of the assets of any
Subsidiary Guarantor or all of the Capital Stock of any Subsidiary Guarantor,
then such Subsidiary Guarantor (in the event of a sale or other disposition of
all of the Capital Stock of such Subsidiary Guarantor) or the corporation
acquiring the property (in the event of a sale or other disposition of all or
substantially all of the assets of a Subsidiary Guarantor) will be released from
and relieved of its Obligations under its Subsidiary Guarantee; PROVIDED that
(i) in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of the covenant
described herein under the caption "Repurchase at the Option of Holders--Asset
Sales" and (ii) the Company is in compliance with all other provisions of the
Indenture applicable to such disposition.
OPTIONAL REDEMPTION
Except as provided in the following paragraph, the Notes are not redeemable
at the Company's option prior to September 15, 2002. Thereafter, the Notes are
subject to redemption at the option of the
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Company, in whole or in part, upon not less than 30 nor more than 60 days'
notice, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest and Liquidated Damages, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on September 15 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2002.......................................................... 105.188%
2003.......................................................... 103.458%
2004.......................................................... 101.729%
2005 and thereafter........................................... 100.000%
</TABLE>
Notwithstanding the foregoing, at any time prior to September 15, 2000 the
Company may on any one or more occasions redeem up to 33 1/3% of the aggregate
principal amount of Notes originally issued in the Offering at a redemption
price of 110.375% of the principal amount thereof, plus accrued and unpaid
interest and Liquidated Damages, if any, thereon to the redemption date, with
the net proceeds of one or more Public Equity Offerings; PROVIDED that at least
66 2/3% of the original aggregate principal amount of Notes remains outstanding
immediately after the occurrence of each such redemption; and PROVIDED, further,
that each such redemption shall occur within 120 days of the date of the closing
of the Public Equity Offering to which it relates.
MANDATORY REDEMPTION
Except as set forth below under "Repurchase at the Option of Holders," the
Company is not required to make mandatory redemption or sinking fund payments
with respect to the Notes.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
The Indenture provides that upon the occurrence of a Change of Control, each
Holder will have the right to require the Company to repurchase all or any part
(equal to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer") at a price
in cash equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of purchase
(the "Change of Control Payment"). Within 30 days following any Change of
Control, the Company will mail or cause to be mailed a notice to each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Notes pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of the Indenture, the Company will
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations described in the Indenture by virtue
thereof.
The Indenture provides that, prior to complying with the provisions of this
covenant, but in any event within 30 days following a Change of Control, the
Company will either repay all outstanding Senior Debt, or offer to repay in full
all outstanding Senior Debt and repay the Senior Debt with respect to which such
offer has been accepted, or obtain the requisite consents, if any, under all
outstanding Senior Debt to permit the repurchase of the Notes required by this
covenant.
The Indenture provides that on the payment date set forth in the Change of
Control Offer (the "Change of Control Payment Date"), the Company will, to the
extent lawful, (1) accept for payment all Notes or portions thereof properly
tendered pursuant to the Change of Control Offer, (2) deposit with the Trustee
or with the Paying Agent (or, if the Company or any of its subsidiaries is the
Paying Agent,
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separate and hold in trust) an amount in same-day funds equal to the Change of
Control Payment in respect of all Notes or portions thereof so tendered and (3)
deliver or cause to be delivered to the Trustee for cancellation the Notes so
accepted together with an Officers' Certificate stating that such Notes or
portions thereof have been tendered to and purchased by the Company. The
Indenture provides that the Paying Agent will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; PROVIDED that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
Except as described above with respect to a Change of Control, the Indenture
does not contain provisions that permit the Holders of the Notes to require that
the Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar restructuring.
The existence of a Holder's right to require the Company to repurchase such
Holder's Notes upon the occurrence of a Change of Control may deter a third
party from seeking to acquire the Company in a transaction that would constitute
a Change of Control.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principals, their Related Parties, the DLJ
Entities or their Affiliates, (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the Company consolidates with,
or merges with or into, another "person" (as defined above) in a transaction or
series of related transactions in which the voting stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any transaction where (A) the outstanding voting stock of the Company is
converted into or exchanged for voting stock (other than Disqualified Stock) of
the surviving or transferee corporation and (B) either (1) the "beneficial
owners" (as such term is defined in Rule 13d-3 and 13d-5 under the Exchange Act)
of the voting power of the voting stock of the Company immediately prior to such
transaction own, directly or indirectly through one or more Subsidiaries, not
less than a majority of the total voting power of the voting stock of the
surviving or transferee corporation immediately after such transaction or (2) if
immediately prior to such transaction the Company is a direct or indirect
Subsidiary of any other Person (the "Holding Company"), then the "beneficial
owners" (as defined above) of the voting stock of such Holding Company
immediately prior to such transaction own, directly or indirectly through one or
more Subsidiaries, not less than a majority of the voting power of the voting
stock of the surviving or transferee corporation immediately after such
transaction, (iv) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that (A) the
Principals, their Related Parties, the DLJ Entities or their Affiliates cease to
be the "beneficial owners" (as defined above), directly or indirectly, of at
least 35% of the voting power of the voting stock of the Company and (B) any
"person" (as defined above) becomes the "beneficial owner" (as defined above;
PROVIDED that at any time following the occurrence of a Public Equity Offering,
the term "beneficial owner" shall exclude for such purpose the effect of Rule
13d-3(d)(1), other than any such effect with respect to the Warrants) directly
or indirectly, of more of the voting power of the voting stock of the Company
than is at the time "beneficially owned" (as defined above) by the Principals,
their Related Parties, the DLJ Entities and their Affiliates in the aggregate,
or (v) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors. For purposes of this
definition, any transfer of an equity interest of an entity that was formed for
the purpose of acquiring voting stock of the Company will be deemed to be a
transfer of such portion of such voting stock as corresponds to the portion of
the equity of such entity that has been so transferred.
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The definition of Change of Control includes a phrase relating to the sale,
lease, transfer, conveyance or other disposition of "all or substantially all"
of the assets of the Company and its Restricted Subsidiaries taken as a whole.
Although there is a developing body of case law interpreting the phrase
"substantially all," there is no precise established definition of the phrase
under applicable law. Accordingly, the ability of a Holder of Notes to require
the Company to repurchase such Notes as a result of a sale, lease, transfer,
conveyance or other disposition of less than all of the assets of the Company
and its Restricted Subsidiaries taken as a whole to another Person or group may
be uncertain.
"CONTINUING DIRECTORS" means, as of any date of determination, any member of
the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date of the Indenture or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"DLJ ENTITIES" means DLJ Merchant Banking Partners, L.P., DLJ Offshore
Partners, C.V. and DLJ Merchant Banking Funding, Inc.
"PRINCIPALS" means (i) the Fund and any of its Affiliates and (ii) Messrs.
W. H. Holman, Jr., W. H. Holman III, Essary, Friou, Bruckmann, Rosser, Sherrill
and Edwards.
"RELATED PARTY" means (i) any controlling stockholder, general partner, 80%
(or more) owned Subsidiary, or spouse or immediate family member (in the case of
an individual) of any Principal or (ii) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
holding an 80% or more controlling interest of which consist solely of one or
more Principals and/or such other Persons referred to in the immediately
preceding clause (i).
ASSET SALES
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, engage in an Asset Sale unless (i) the Company
(or the Restricted Subsidiary, as the case may be) receives consideration at the
time of such Asset Sale at least equal to the fair market value (evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee) of the assets or Equity Interests issued or sold or
otherwise disposed of; and (ii) at least 75% of the consideration therefor
received by the Company or such Restricted Subsidiary is in the form of cash or
Cash Equivalents; PROVIDED that the amount of (x) any liabilities (as shown on
the Company's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets and (y) any notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision and PROVIDED further that (1)
the 75% limitation referred to above shall not apply to any Asset Sale in which
the cash or Cash Equivalents portion of the consideration received therefor,
determined in accordance with the foregoing proviso, is equal to or greater than
what the net after-tax proceeds would have been had such Asset Sale complied
with the aforementioned 75% limitation and (2) the provisions of clauses (i) and
(ii) above shall not apply to any sale or other disposition of assets required
pursuant to a consent order or other agreement entered into by the Company with
the Federal Trade Commission or the Department of Justice in connection with the
Delchamps Acquisition.
Within 435 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or its Restricted Subsidiary, as the case may be, may apply such Net
Proceeds by (i) permanently reducing Indebtedness under the Senior Credit
Facility (and correspondingly reducing commitments with respect thereto) or
other Senior Debt, (ii) investing (or entering into a binding commitment to
invest) in any one or more business, capital expenditure or other tangible
asset, in each case in the same line of business as the Company or its
Restricted Subsidiaries was engaged in on the date of the Indenture or a line of
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business reasonably related thereto, (iii) investing (or entering into a binding
commitment to invest) in properties or assets that replace the properties and
assets that are the subject of such Asset Sale and (iv) in the case of a sale of
a store or stores, deeming such Net Proceeds to have been applied to the extent
of any capital expenditures made to acquire or construct another store within
435 days preceding the date of the Asset Sale; PROVIDED that if such Net
Proceeds are applied by entering into a binding commitment under clause (ii) or
(iii) above, then the investment contemplated by such commitment shall be made
no later than 45 days following the end of such 435 day period. Pending the
final application of any such Net Proceeds, the Company or its Restricted
Subsidiary, as the case may be, may temporarily reduce Indebtedness under the
Senior Credit Facility or otherwise invest such Net Proceeds in any manner that
is not prohibited by the Indenture. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Company will be required to make an offer to
all Holders (an "Asset Sale Offer") to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at a price in cash equal
to 100% of the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase, in accordance with
the procedures set forth in the Indenture. To the extent that the aggregate
amount of Notes tendered pursuant to an Asset Sale Offer is less than the
aggregate amount of Excess Proceeds, the Company or its Restricted Subsidiary,
as the case may be, may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Notes surrendered by Holders
thereof exceeds the aggregate amount of Excess Proceeds, the Trustee shall
select the Notes to be purchased in accordance with the terms of the Indenture.
Upon completion of each Asset Sale Offer, the amount of Excess Proceeds shall be
reset at zero.
CERTAIN RESTRICTIONS ON REPURCHASES
Certain of the Company's Senior Debt, including Indebtedness under the
Senior Credit Facility and the Senior Notes, currently prohibits or restricts
the Company from purchasing any Notes, and also provides that certain changes in
control of the Company and certain dispositions of Company assets would
constitute a default thereunder. Any future credit agreements or other
agreements relating to Senior Debt to which the Company becomes a party may
contain similar restrictions and provisions. In the event a Change of Control
occurs, or an Asset Sale Offer is required to be made, at a time when the
Company is prohibited from purchasing Notes, the Company could seek the consent
of its lenders to the purchase of Notes or could attempt to refinance the
borrowings that contain such prohibition. If the Company does not obtain such a
consent or repay such borrowings, the Company will remain prohibited from
purchasing Notes. In such case, the Company's failure to purchase tendered Notes
would constitute an Event of Default under the Indenture.
SELECTION AND NOTICE
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such other method as the Trustee shall deem fair and appropriate; PROVIDED
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions thereof called for redemption.
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CERTAIN COVENANTS
RESTRICTED PAYMENTS
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any distribution (other than dividends or distributions payable
in Equity Interests (other than Disqualified Stock) of the Company or dividends
or distributions payable to the Company or any Restricted Subsidiary of the
Company that is a Subsidiary Guarantor) on account of the Company's or any of
its Restricted Subsidiaries' Equity Interests (including in connection with a
merger or consolidation); (ii) purchase, redeem or otherwise acquire or retire
for value any outstanding Equity Interests of the Company or any Affiliate of
the Company (other than any such Equity Interests owned by the Company or any
Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor); (iii) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value, prior to any scheduled principal payment,
any sinking fund date or its scheduled maturity date, any Indebtedness that is
subordinated to the Notes or the Subsidiary Guarantees; (iv) make any Restricted
Investment or (v) make any payment pursuant to the BRS Management Agreement (all
such payments and other actions set forth in clauses (i) through (v) above being
collectively referred to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted Payment,
no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made
at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Fixed
Charge Coverage Ratio test set forth in the first paragraph of the covenant
described below under the caption "Certain Covenants--Incurrence of
Indebtedness and Issuance of Disqualified Stock"; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of the Indenture (excluding Restricted Payments permitted by
clauses (o), (s)(ii), (x) and (y) of the next succeeding paragraph), is less
than the sum of (i) 50% of the Consolidated Net Income of the Company for
the period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date of the Indenture to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, 100% of such deficit),
plus (ii) 100% of the aggregate net cash proceeds (or non-cash proceeds when
converted into cash) received by the Company in the form of capital
contributions or from the issue, sale or exercise since the date of the
Indenture of Equity Interests of the Company or of debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date of the Indenture is sold
for cash or otherwise liquidated or repaid for cash, the lesser of (A) the
cash return of capital with respect to such Restricted Investment (less the
cost of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) 50% of the excess, if any, of the cash received upon
the sale or other disposition of a Restricted Investment over the amount
described in clause (iii) above.
The foregoing provisions do not prohibit: (o) any repurchase, redemption or
retirement for value of capital stock of a Restricted Subsidiary of the Company
deemed to occur upon the merger of such Restricted Subsidiary with or into the
Company or another Wholly Owned Restricted Subsidiary of the Company within one
year following the date on which such merged Restricted Subsidiary became a
Restricted Subsidiary of the Company; (p) acquisition and retirement by the
Company of any Class B Preferred Stock in satisfaction of any claim by the
Company for indemnity pursuant to the 1996 Merger
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Agreement; (q) retirement of the Class A Preferred Stock in connection with the
issuance by the Company of the Exchange Debentures; (r) the payment of cash in
lieu of the issuance of (A) fractional shares of common stock upon exercise of
the Warrants and (B) any Exchange Debenture that is not an integral multiple of
$1,000 upon any exchange of Class A Preferred Stock for Exchange Debentures; (s)
the amendment of the BRS Management Agreement to permit the payment of, and the
payment of, fees to BRS or any Affiliate of BRS (i) under the BRS Management
Agreement after the end of each fiscal quarter in an amount not to exceed the
greater of (a) $250,000 or (b) 1.0% of the Company's EBITDA for such fiscal
quarter (PROVIDED, that the total amount of all such payments shall not exceed
in any fiscal year the greater of (x) $1.0 million or (y) one percent of the
Company's EBITDA for such fiscal year) and (ii) in connection with the Delchamps
Acquisition in an amount not to exceed $5.0 million in the aggregate; (t) the
payment of dividends on the Company's capital stock, following the first Public
Equity Offering after the date of the Indenture, of up to 6.0% of the aggregate
proceeds to the Company in such Public Equity Offering, other than a public
offering with respect to the Company's common stock registered on Form S-8; (u)
the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of the Indenture; (v) the repurchase of the Class A Preferred
Stock in accordance with the terms thereof upon the occurrence of a Change of
Control; (w) the redemption of Exchange Debentures in accordance with the terms
thereof upon the occurrence of a Change of Control; (x) the redemption,
repurchase, retirement or other acquisition of any Equity Interests of the
Company in exchange for, or out of the proceeds of, the substantially concurrent
sale (other than to a Restricted Subsidiary of the Company) of other Equity
Interests of the Company (other than any Disqualified Stock); PROVIDED that the
amount of any such net cash proceeds that are utilized for any such redemption,
repurchase, retirement or other acquisition shall be excluded from clause (c)
(ii) of the preceding paragraph; (y) the defeasance, redemption, repurchase,
retirement or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness or the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of Equity Interests of the Company (other than Disqualified Stock);
PROVIDED that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, defeasance, retirement or other acquisition shall
be excluded from clause (c) (ii) of the preceding paragraph; and (z) the
repurchase, redemption, defeasance or other acquisition or retirement for value
of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement in effect as of the date of the Indenture or
any other option plan adopted by the Board of Directors of the Company; PROVIDED
that the aggregate price paid for all such repurchased, redeemed, defeased,
acquired or retired Equity Interests shall not exceed $2.0 million in any
twelve-month period plus (i) the aggregate cash proceeds received by the Company
during such twelve-month period from any issuance of Equity Interests by the
Company to members of management of the Company and its Restricted Subsidiaries
and (ii) the proceeds of any insurance policy to the extent applied toward such
repurchase, redemption, defeasance or other acquisition or retirement for value
of such Equity Interests; PROVIDED, that with respect to clause (z) above, no
Default or Event of Default shall have occurred and be continuing immediately
after such transaction.
As of the date of the Indenture, all of the Company's Subsidiaries are
Restricted Subsidiaries. The Board of Directors may designate any Restricted
Subsidiary (other than Interstate Jitney Jungle Stores, Inc., McCarty-Holman
Co., Inc., Southern Jitney Jungle Company, Pump And Save, Inc., DAC, Supermarket
Cigarette Sales, Inc. ("SCSI") and Delchamps, Inc.) to be an Unrestricted
Subsidiary if such designation would not cause a Default. For purposes of making
such determination, all outstanding Investments by the Company and its
Restricted Subsidiaries (except to the extent repaid in cash) in the Subsidiary
so designated will be deemed to be Restricted Payments at the time of such
designation and will reduce the amount available for Restricted Payments under
the first paragraph of this covenant. All such outstanding Investments will be
deemed to constitute Investments in an amount equal to the greatest of (x) the
net book value of such Investments at the time of such designation and (y) the
fair market value of
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such Investments at the time of such designation. Such designation will only be
permitted if such Restricted Payment would be permitted at such time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a resolution of the Board of Directors set forth in
an Officers' Certificate delivered to the Trustee) on the date of the Restricted
Payment of the asset(s) proposed to be transferred by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
Not later than the date of making any Restricted Payment, the Company shall
deliver to the Trustee an Officers' Certificate stating that such Restricted
Payment is permitted and setting forth the basis upon which the calculations
required by the covenant "Restricted Payments" were computed, which calculations
may be based upon the Company's latest available internal financial statements.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED STOCK
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, Guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness) and that the Company will not
issue and will not permit any of its Restricted Subsidiaries to issue any
Disqualified Stock (other than the Preferred Stock); PROVIDED, however, that the
Company or its Restricted Subsidiaries may incur Indebtedness (including
Acquired Indebtedness) or issue shares of Disqualified Stock if the Fixed Charge
Coverage Ratio for the Company's most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding the
date on which such additional Indebtedness is incurred or such Disqualified
Stock is issued would have been (A) at least 2.25 to 1.0 if such date is prior
to September 15, 2000 and (B) 2.50 to 1.0 if such date is on or after September
15, 2000, in each case determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period.
The foregoing provisions do not apply to:
(i) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness and reimbursement obligations in respect of letters of
credit pursuant to the Senior Credit Facility (with letters of credit being
deemed to have a principal amount equal to the maximum potential liability
of the Company and its Restricted Subsidiaries thereunder) in an aggregate
principal amount not to exceed an amount equal to (x) the greater of (1) the
amount of the Borrowing Base and (2) $150.0 million less the aggregate
amount of all Net Proceeds of Asset Sales applied to permanently reduce the
total commitments with respect to such Indebtedness pursuant to the covenant
described above under the caption "Repurchase at Option of Holders--Asset
Sales" plus (y) $50.0 million less any outstanding Indebtedness incurred
pursuant to clause (viii) below;
(ii) the incurrence by the Company or any of its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by the Notes, the New Notes and the Subsidiary
Guarantees;
(iv) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness represented by Capital Lease Obligations, mortgage or
construction financing or purchase money obligations, in each case incurred
for the purpose of financing all or any part of the purchase price or cost
of construction or improvement of property used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount not
to exceed $30.0 million in any fiscal year; PROVIDED that the principal
amount (or, in the case of a Capital Lease Obligation, the amount required
to be capitalized on a balance sheet under GAAP) of such Indebtedness when
incurred shall not
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exceed the purchase price and/or actual cost of construction or improvement,
as the case may be, to which such incurrence relates;
(v) the incurrence by the Company or any of its Restricted Subsidiaries
of Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by the Indenture to be incurred;
(vi) the incurrence by the Company or any of its Restricted Subsidiaries
of intercompany Indebtedness between or among the Company and any of its
Wholly Owned Restricted Subsidiaries; PROVIDED, however, that (i) any
subsequent issuance or transfer (other than for security purposes) of Equity
Interests that results in any such Indebtedness being held by a Person other
than a Wholly Owned Restricted Subsidiary and (ii) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company
or a Wholly Owned Restricted Subsidiary shall be deemed, in each case, to
constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted Subsidiaries
of Hedging Obligations that are incurred for the purpose of fixing or
hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of the Indenture to be outstanding;
(viii) the incurrence by the Company or any of its Restricted Subsidiaries
of Indebtedness (in addition to Indebtedness permitted by any other clause
of this paragraph) in an aggregate principal amount at any time outstanding
not to exceed $50.0 million less the amount of any Indebtedness incurred
pursuant to clause (i)(y) of this paragraph;
(ix) the incurrence by the Company or any of its Restricted Subsidiaries
of Acquired Indebtedness, PROVIDED that such Indebtedness (A) is not
incurred in contemplation of the acquisition to which it relates and (B) is
nonrecourse to the Company and its Restricted Subsidiaries, or to any of
their respective assets (other than the acquired Subsidiary and its
Subsidiaries, or the acquired assets, as applicable);
(x) the incurrence by the Company of Indebtedness pursuant to Exchange
Debentures described under clause (2) of the definition of Exchange
Debentures;
(xi) the Guarantee of any Indebtedness otherwise permitted to be
incurred pursuant to the Indenture; and
(xii) Obligations in respect of performance and surety bonds.
LIENS
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or
suffer to exist any Lien securing Pari Passu Indebtedness or Subordinated
Indebtedness on any asset now owned or hereafter acquired by the Company or any
of its Restricted Subsidiaries, or any income or profits therefrom, or assign or
convey any right to receive income therefrom; PROVIDED, however that the Company
and its Restricted Subsidiaries may create, incur, assume or suffer to exist a
Lien securing Pari Passu Indebtedness if the Notes are equally and ratably
secured with the obligations so secured until such time as such obligations are
no longer secured by a Lien.
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DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or suffer to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to:
(i)(a) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or (b) pay any
indebtedness owed to the Company or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company or any of
its Restricted Subsidiaries, except (in each case) for such encumbrances or
restrictions existing under or by reason of:
(a) the Existing Indebtedness as in effect on the date of the
Indenture;
(b) the Senior Credit Facility, as in effect as of the date of the
Indenture, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings thereof;
PROVIDED that such amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings are no
more restrictive in the aggregate than those contained in the Senior
Credit Facility, as in effect on the date of the Indenture;
(c) the Indenture, the Subsidiary Guarantees and the Notes;
(d) applicable law;
(e) any instrument governing Capital Stock or Indebtedness of any
Person acquired by the Company or any of its Restricted Subsidiaries, as
in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with, or in contemplation of,
such acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the
Person, or the properties or assets of the Person, so acquired;
(f) customary non-assignment and subletting provisions in leases and
other contracts entered into in the ordinary course of business and
consistent with past practices;
(g) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in
clause (iii) above on the property so acquired;
(h) Permitted Refinancing Indebtedness, PROVIDED that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more restrictive in the aggregate than
those contained in the agreements governing the Indebtedness being
refinanced;
(i) contractual encumbrances or restrictions in effect on the date of
the Indenture;
(j) mortgage or construction financing that imposes restrictions on
the real property acquired or improved;
(k) contracts for the sale of assets that include customary
restrictions concerning the disposition of property;
(l) secured indebtedness permitted by the Indenture that limits the
right to dispose of the assets securing the indebtedness; and
(m) encumbrances or restrictions imposed by any amendments to the
contracts, agreements or obligations referred to in clauses (a) through
(l) above if not more restrictive in the aggregate than under existing
contracts.
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ADDITIONAL GUARANTEES
The Indenture provides that if the Company or any of its Restricted
Subsidiaries shall, after the date of the Indenture, transfer or cause to be
transferred, in one transaction or a series of related transactions, any assets,
businesses, divisions, real property or equipment having an aggregate fair
market value (as determined in good faith by the Board of Directors) in excess
of $1.0 million to any Subsidiary that is not a Subsidiary Guarantor, or if the
Company or any of its Restricted Subsidiaries shall acquire another Subsidiary
having total assets with a fair market value (as determined in good faith by the
Board of Directors) in excess of $1.0 million, then such transferee or acquired
Subsidiary shall execute a Subsidiary Guarantee and a supplemental indenture and
deliver to the Trustee an opinion of counsel in accordance with the terms of the
Indenture. Notwithstanding the foregoing, if such transferee or acquired
Subsidiary has been properly designated as an Unrestricted Subsidiary in
accordance with the Indenture, then for so long as it continues to constitute an
Unrestricted Subsidiary that transferee or acquired Subsidiary shall not be
required to execute a Subsidiary Guarantee or deliver to the Trustee an opinion
of counsel in accordance with the terms of the Indenture.
MERGER, CONSOLIDATION, OR SALE OF ASSETS
The Indenture provides that the Company may not consolidate or merge with or
into (whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to, another Person
unless (i) the Company is the surviving corporation or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation organized or existing under the laws of
the United States, any state thereof, the District of Columbia or a territory
thereof; (ii) the Person formed by or surviving any such consolidation or merger
(if other than the Company) or the Person to which such sale, assignment,
transfer, lease, conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Notes and the Indenture pursuant to
a supplemental indenture in a form reasonably satisfactory to the Trustee; (iii)
immediately after such transaction no Default or Event of Default exists; and
(iv) the Company or the Person formed by or surviving any such consolidation or
merger (if other than the Company), or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made will, at the time of
such transaction and after giving pro forma effect thereto as if such
transaction had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the covenant described above under
the caption "Certain Covenants--Incurrence of Indebtedness and Issuance of
Disqualified Stock." The foregoing will not prohibit any consolidation or merger
of, or transfer of all or part of the property and assets of, any Restricted
Subsidiary with or to the Company or any Subsidiary Guarantor.
TRANSACTIONS WITH AFFILIATES
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, sell, lease, transfer or otherwise dispose of
any of its properties or assets to, or purchase any property or assets from, or
enter into or make any contract, agreement, understanding, loan, advance or
Guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Restricted Subsidiary than
those that would have been obtained in a comparable transaction by the Company
or such Restricted Subsidiary with an unrelated Person and (ii) the Company
delivers to the Trustee (a) with respect to any Affiliate Transaction or series
of related Affiliate Transactions involving aggregate consideration in excess of
$1.0 million, a resolution of the Board of Directors set forth in an Officers'
Certificate certifying that such Affiliate Transaction or series of related
Affiliate Transactions complies with clause (i) above and that such Affiliate
Transaction or series of related Affiliate Transactions
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has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $5.0
million (other than Affiliate Transactions in the ordinary course of business of
the Company and its Restricted Subsidiaries between or among the Company or any
Restricted Subsidiary of the Company and any Person providing goods and/or
services to the Company or any Restricted Subsidiary in the ordinary course of
business that is an Affiliate of the Company or such Restricted Subsidiary
solely by virtue of the fact that the Fund, or any Person controlling the Fund,
directly or indirectly controls both the Company or such Restricted Subsidiary
and such Affiliate; PROVIDED, however, that such Affiliate Transaction shall
comply with clause (i) above), an opinion as to the fairness to the Company or
such Restricted Subsidiary of such Affiliate Transaction from a financial point
of view issued by an independent nationally recognized investment banking or
appraisal firm experienced in the appraisal or similar review of similar types
of transactions (or if an opinion is unavailable as to the fairness from a
financial point of view of any transaction for which a fairness opinion is not
customarily rendered then an opinion that such transaction meets the
requirements of clause (i) above); PROVIDED that (u) payments by Delchamps
pursuant to change of control agreements with certain employees of Delchamps in
an amount not to exceed $13.0 million, (v) payments to McCarty-Holman Co., L.P.
in accordance with the terms of the Management Agreement in an amount not to
exceed $100,000 in each fiscal year, (w) the 18 leases described elsewhere in
this Offering Memorandum under the caption "Certain Transactions--Leases of
Certain Stores and Facilities," (x)(1) any employment agreement entered into by
the Company or any of its Restricted Subsidiaries and (2) payment of employee
benefits, including bonuses, retirement plans and stock options, in each case,
in the ordinary course of business and consistent with the past practice of the
Company or such Restricted Subsidiary, (y) transactions between or among the
Company and/or its Restricted Subsidiaries and (z) transactions permitted by the
provisions of the Indenture described above under the caption "Certain
Covenants--Restricted Payments," in each case, shall not be deemed Affiliate
Transactions.
SALE AND LEASEBACK TRANSACTIONS
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, enter into any sale and leaseback transaction
(other than the sale and leaseback of newly constructed grocery stores as part
of the development of grocery store sites); PROVIDED that the Company and its
Restricted Subsidiaries may enter into a sale and leaseback transaction if (i)
the Company or such Restricted Subsidiary could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of the covenant described above under the caption "Certain
Covenants--Incurrence of Additional Indebtedness and Issuance of Disqualified
Stock" and (b) incurred a Lien to secure such Indebtedness pursuant to the
covenant described above under the caption "Certain Covenants--Liens," (ii) the
gross cash proceeds of such sale and leaseback transaction are at least equal to
the fair market value (as determined in good faith by the Company's Board of
Directors and set forth in an Officers' Certificate delivered to the Trustee) of
the property that is the subject of such sale and leaseback transaction and
(iii) the transfer of assets in such sale and leaseback transaction is permitted
by, and the Company or such Restricted Subsidiary applies the proceeds of such
transaction in compliance with, the covenant described above under the caption
"Repurchase at Option of Holders--Asset Sales."
LIMITATION ON ISSUANCES AND SALES OF CAPITAL STOCK OF GUARANTORS
The Indenture provides that, except with respect to the pledge of Capital
Stock of its Subsidiaries pursuant to the Senior Credit Facility, the Company
(i) will not, and will not permit any Wholly Owned Restricted Subsidiary of the
Company to, transfer, convey, sell, lease or otherwise dispose of any Capital
Stock of any Subsidiary Guarantor to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary of the Company that is a Subsidiary
Guarantor), unless (a) such transfer, conveyance, sale, lease or other
disposition is of all the Capital Stock of such Subsidiary Guarantor and (b) the
cash Net Proceeds
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from such transfer, conveyance, sale, lease or other disposition are applied in
accordance with the covenant described above under the caption "Repurchase at
Option of Holders--Asset Sales," and (ii) will not permit any Subsidiary
Guarantor to issue any of its Equity Interests (other than, if necessary, shares
of its Capital Stock constituting directors' qualifying shares) to any Person
other than to the Company or another Subsidiary Guarantor.
NO SENIOR SUBORDINATED DEBT
The Indenture provides that (i) the Company will not incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Subsidiary Guarantor will
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to the Senior
Debt of such Subsidiary Guarantor and senior in any respect in right of payment
to the Subsidiary Guarantees. For purposes of this provision, no Indebtedness
shall be deemed to be subordinated in right of payment to any other Indebtedness
solely by reason of the fact that such other Indebtedness is secured by a Lien
or is subject to a Guarantee.
BUSINESS ACTIVITIES
The Company will not, and will not permit any Restricted Subsidiary to,
engage in any business other than (i) the retail and wholesale grocery business
and such business activities as are incidental or reasonably related thereto,
including the sale of liquor and the retail gasoline business, and (ii) such
other businesses as the Company or its Restricted Subsidiaries are engaged in on
the date of the Indenture.
NO RESTRICTIONS ON CONSUMMATION OF DELCHAMPS ACQUISITION
The Indenture provides that, notwithstanding any provision contained herein
to the contrary, the Indenture will not prohibit the consummation of the
Delchamps Acquisition and the transactions related thereto in accordance with
the terms set forth in this Prospectus and in the tender offer statement on
Schedule 14D-1, as filed with the Securities and Exchange Commission (the
"Commission") on July 14, 1997 and as subsequently amended or supplemented,
naming Delchamps, Inc. as the subject company.
REPORTS
The Indenture provides that so long as required to do so under the Exchange
Act, the Company shall file with the Commission and distribute to the Holders
copies of the quarterly and annual financial information required to be filed
with the Commission pursuant to the Exchange Act. All such financial information
shall include consolidated financial statements (including footnotes) prepared
in accordance with GAAP. Such annual financial information shall also include an
opinion thereon expressed by an independent accounting firm of established
national reputation. All such consolidated financial statements shall be
accompanied by a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" that describes the financial condition and results of
operations of the Company and its Restricted Subsidiaries. In addition, the
Indenture provides that, whether or not required by the rules and regulations of
the Commission, so long as any Notes are outstanding, the Company will furnish
to the Holders (i) all quarterly and annual financial information that would be
required to be contained in a filing with the Commission on Forms 10-Q and 10-K
if the Company were required to file such Forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" that
complies with the rules and regulations of the Commission and that describes the
financial condition and results of operations of the Company and its Restricted
Subsidiaries and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all current reports
that would be required to be filed with the Commission on Form 8-K if the
Company were required to file such reports. In addition, whether or not required
by the rules and regulations of the Commission, the Company will submit a copy
of all such information and reports to the Commission for
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public availability (unless the Commission will not accept such materials) and
make such information available to prospective investors upon written request.
In addition, the Company has agreed that, during any period in which the Company
is not subject to the reporting requirements of the Exchange Act, it will
furnish to holders and prospective purchasers of the Notes the information
required by Rule 144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
The Indenture provides that each of the following constitutes an Event of
Default: (i) default for 30 days in the payment when due, upon redemption,
acceleration or otherwise, of interest on, or Liquidated Damages with respect
to, the Notes; (ii) default in payment when due of the principal of or premium,
if any, on the Notes; (iii) failure by the Company for 30 days after receipt of
written notice from the Trustee or from Holders of at least 25% of the aggregate
principal amount of the Notes then outstanding to comply with the provisions
described under the captions "Repurchase at Option of Holders--Change of
Control" and "--Asset Sales," and under the captions "Certain
Covenants--Restricted Payments" and "-- Incurrence of Indebtedness and Issuance
of Disqualified Stock"; (iv) failure by the Company for 60 days after receipt of
written notice from the Trustee or from Holders of at least 25% of the aggregate
principal amount of the Notes then outstanding to comply with any of its other
agreements in the Indenture or the Notes; (v) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries or the payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries (other than Indebtedness owed to
the Company or its Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date of the Indenture, if both (a)
such default either (1) results from the failure to pay any such Indebtedness at
its stated final maturity (after giving effect to any applicable grace periods)
or (2) relates to an obligation other than the obligation to pay principal of
any such Indebtedness at its stated maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due prior to
its stated maturity and (b) the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness in default for failure
to pay principal at stated final maturity (after giving effect to any applicable
grace periods), or the maturity of which has been so accelerated, aggregate
$15.0 million or more; (vi) failure by the Company or any of its Restricted
Subsidiaries to pay final judgments (other than any judgments as to which a
reputable insurance company has accepted liability) aggregating in excess of
$15.0 million, which judgments are not paid, discharged, bonded or stayed for a
period of 60 days after their entry; (vii) except as permitted by the Indenture,
any Subsidiary Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any Subsidiary
Guarantor, shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and (viii) certain events of bankruptcy or insolvency with respect to
the Company, any of its Significant Restricted Subsidiaries or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Restricted Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the Holders
of at least 25% in aggregate principal amount of the then outstanding Notes may
declare all the Notes to be due and payable immediately; PROVIDED, however,
that, so long as any Designated Senior Debt shall be outstanding, no such
acceleration shall be effective until the earlier of (i) acceleration of any
such Designated Senior Debt or (ii) five business days after the giving of
written notice to the Company and the representatives under the Designated
Senior Debt of such acceleration. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or insolvency with
respect to the Company, any Significant Restricted Subsidiary or any group of
Restricted Subsidiaries that, taken together, would constitute a Significant
Restricted Subsidiary, all outstanding Notes will become due and payable without
further action or notice. Holders of the Notes may not enforce the Indenture or
the Notes except as provided in the Indenture. In the event of any Event of
Default specified in clause (v) above, such Event of Default and all
consequences thereof (including, without limitation, any acceleration or
resulting payment
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default) shall be annulled, waived and rescinded, automatically and without any
action by the Trustee or the Holders of the Notes, if within 20 days after such
Event of Default arose (x) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged in a manner that does not violate the
terms of the Indenture or (y) the holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such Event of
Default. Subject to certain limitations, Holders of a majority in principal
amount of the then outstanding Notes may direct the Trustee in its exercise of
any trust or power. The Trustee may withhold from Holders of the Notes notice of
any continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal, interest or Liquidated Damages) if it
determines that withholding notice is in their interest. In addition, the
Trustee shall have no obligation to accelerate the Notes if, in the best
judgment of the Trustee, acceleration is not in the best interests of the
Holders.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
September 15, 2002 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to September 15, 2002, then the
premium specified in the Indenture shall also become immediately due and payable
to the extent permitted by law upon the acceleration of the Notes.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences under
the Indenture except a continuing Default or Event of Default in the payment of
interest on, or Liquidated Damages with respect to, or the principal of, any
such Note held by a non-consenting Holder.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture, and the Company is required upon
becoming aware of any Default or Event of Default, to deliver to the Trustee a
statement specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company under the Notes, any Subsidiary Guarantee or the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Subsidiary Guarantees. Such
waiver may not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is against public
policy.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Company may, at its option and at any time, elect to have all
obligations of the Company and the Subsidiary Guarantors discharged with respect
to the outstanding Notes and the Subsidiary Guarantees ("Legal Defeasance")
except for (i) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages, if any, on such Notes when such payments are due from the trust
referred to below, (ii) the Company's obligations with respect to the Notes
concerning issuing temporary Notes, registration of Notes, mutilated, destroyed,
lost or stolen Notes and the maintenance of an office or agency for payment and
money for security payments held in trust, (iii) the rights, powers, trusts,
duties and immunities of the Trustee, and the Company's obligations in
connection therewith and (iv) the Legal Defeasance provisions of the Indenture.
In addition, the Company
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may, at its option and at any time, elect to have the obligations of the Company
and the Subsidiary Guarantors released with respect to certain covenants that
are described in the Indenture ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a Default or Event
of Default with respect to the Notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "Events of Default" will
no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit of
the Holders of the Notes, cash in U.S. dollars, non-callable Government
Securities, or a combination thereof, in such amounts as will be sufficient, in
the opinion of a nationally recognized firm of independent public accountants,
to pay the principal of, premium, if any, and interest and Liquidated Damages,
if any, on the outstanding Notes on the stated maturity date or on the
applicable redemption date, as the case may be, and the Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, subject to customary assumptions and exclusions, the Holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred; (iii) in the
case of Covenant Defeasance, the Company shall have delivered to the Trustee an
opinion of counsel in the United States reasonably acceptable to the Trustee
confirming that, subject to customary assumptions and exclusions, the Holders of
the outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same times
as would have been the case if such Covenant Defeasance had not occurred; (iv)
no Default or Event of Default shall have occurred and be continuing on the date
of such deposit (other than a Default or Event of Default resulting from the
borrowing of funds to be applied to such deposit) or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day after the date of deposit; (v) such Legal
Defeasance or Covenant Defeasance will not result in a breach or violation of,
or constitute a default under any material agreement or instrument (other than
the Indenture) to which the Company or any of the Subsidiary Guarantors is a
party or by which the Company or any of the Subsidiary Guarantors is bound; (vi)
on or prior to the 91st day following the deposit, the Company must have
delivered to the Trustee an opinion of counsel to the effect that, subject to
customary assumptions and exclusions, after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (vii) the Company must have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company; and (viii) the Company must have delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that, subject to
customary assumptions and exclusions, all conditions precedent provided for in
the Indenture relating to the Legal Defeasance or the Covenant Defeasance have
been complied with.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange Notes in accordance with the Indenture.
The Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption. Also,
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the Registrar is not required to transfer or exchange any Note for a period of
15 days before a selection of Notes to be redeemed.
The registered Holder of a Note will be treated as the owner of it for all
purposes.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the Indenture, the
Subsidiary Guarantees or the Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the Notes
then outstanding (including consents obtained in connection with a tender offer
or exchange offer for Notes), and any existing default or compliance with any
provision of the Indenture, the Subsidiary Guarantees or the Notes may be waived
with the consent of the Holders of a majority in principal amount of the then
outstanding Notes (including consents obtained in connection with a tender offer
or exchange offer for Notes).
Without the consent of each Holder affected, an amendment or waiver may not
(with respect to any Notes held by a non-consenting Holder): (i) reduce the
principal amount of Notes whose Holders must consent to an amendment, supplement
or waiver, (ii) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other than
provisions relating to the covenants described above under the caption
"--Repurchase at the Option of Holders"), (iii) reduce the rate of or change the
time for payment of interest or Liquidated Damages on any Note, (iv) waive a
Default or Event of Default in the payment of principal of or premium, if any,
or interest or Liquidated Damages on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the Notes and a waiver of the payment default that resulted
from such acceleration), (v) make any Note payable in money other than that
stated in the Notes, (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders to receive
payments of principal of or premium, if any, or interest on the Notes, (vii)
waive a redemption payment with respect to any Note (other than a payment
required by one of the covenants described above under the caption "--Repurchase
at the Option of Holders") or (viii) make any change in the foregoing amendment
and waiver provisions. In addition, any amendment to the subordination
provisions of the Indenture will require the consent of the Holders of at least
75% in aggregate principal amount of the Notes then outstanding if such
amendment would adversely affect the legal rights of Holders.
Notwithstanding the foregoing, without the consent of any Holder, the
Company, the Subsidiary Guarantors and the Trustee may amend or supplement the
Indenture, the Subsidiary Guarantees or the Notes to cure any ambiguity, defect
or inconsistency, to provide for uncertificated Notes in addition to or in place
of certificated Notes, to provide for the assumption of the Company's
obligations to Holders in the case of a merger, consolidation or sale of assets
in accordance with the terms of the Indenture, to make any change that would
provide any additional rights or benefits to the Holders or that does not
adversely affect the legal rights under the Indenture of any such Holder, or to
comply with requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act.
The consent of the Holders is not necessary under the Indenture to approve
the particular form of any proposed amendment. It is sufficient if such consent
approves the substance of the proposed amendment.
GOVERNING LAW
The Indenture, the Subsidiary Guarantees and the Notes are, subject to
certain exceptions, governed by and construed in accordance with the internal
laws of the State of New York, without regard to the choice of law rules
thereof.
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CONCERNING THE TRUSTEE
The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee is permitted to engage in other
transactions; however, if it acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the Commission for permission to continue
or resign.
The Holders of a majority in principal amount of the then outstanding Notes
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy available to the Trustee, subject to certain
exceptions. The Indenture provides that in case an Event of Default shall occur
(which shall not be cured), the Trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
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CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture. Reference
is made to the Indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"1996 MERGER" means the transactions contemplated by the 1996 Merger
Agreement.
"1996 MERGER AGREEMENT" means the Merger Agreement and Plan of Exchange and
Merger, dated as of November 16, 1995, by and among BRS No. 1, Inc. (renamed JJ
Acquisitions Corp.) and Jitney-Jungle Stores of America, Inc., Southern Jitney
Jungle Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery, Inc., as
amended.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Notwithstanding the foregoing, in no event will the
holders of Indebtedness under or in respect of the Senior Credit Facility (by
reason of holding such Indebtedness) or Donaldson, Lufkin & Jenrette Securities
Corporation or any of their respective Affiliates be deemed Affiliates of the
Company or any of its Affiliates.
"ASSET SALE" means: (i) the sale, conveyance, transfer or other disposition
of any assets (including, without limitation, by way of a sale and leaseback)
other than sales of inventory in the ordinary course of business (provided that
the sale, conveyance, transfer or other disposition of all or substantially all
of the assets of the Company and its Restricted Subsidiaries taken as a whole
will be governed by the provisions of the Indenture described above under the
caption "Repurchase at Option of Holders--Change of Control" and/or the
provisions described above under the caption "Merger, Consolidation or Sale of
Assets" and not by the provisions of the Asset Sale covenant) or (ii) the
issuance or sale by the Company or any of its Restricted Subsidiaries of Equity
Interests of any of the Company's Restricted Subsidiaries, in the case of
clauses (i) and (ii) above, whether in a single transaction or a series of
related transactions for net proceeds in excess of $1.0 million. Notwithstanding
the foregoing: (i) a sale, conveyance, transfer or other disposition of assets
by the Company to a Wholly Owned Restricted Subsidiary or by a Wholly Owned
Restricted Subsidiary to the Company or to another Wholly Owned Restricted
Subsidiary; (ii) an issuance of Equity Interests by a Wholly Owned Restricted
Subsidiary to the Company or to another Wholly Owned Restricted Subsidiary and
(iii) a Restricted Payment that is permitted by the covenant described above
under the caption "Certain Covenants--Restricted Payments," in each case, shall
not be deemed to be Asset Sales.
"ATTRIBUTABLE DEBT" means, in respect of a sale and leaseback transaction,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
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"BRS MANAGEMENT AGREEMENT" means that certain management agreement, dated
September 8, 1995 between BRS and the Company, as amended on February 29, 1996
and on the date of the Indenture, and as it may be further amended from time to
time.
"BORROWING BASE" means 60% of the net book value of all inventory of the
Company and its Restricted Subsidiaries.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any lender party to the Senior Credit Facility or
with any domestic commercial bank having capital and surplus in excess of $500
million and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii) above
and (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Corporation and in each case
maturing within one year after the date of acquisition.
"CLASS A PREFERRED STOCK" means the Class A Senior Exchangeable Preferred
Stock, par value $0.01 per share, of the Company.
"CLASS B PREFERRED STOCK" means the Class B Compounding Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of the Company.
"CLASS C PREFERRED STOCK" means the Class C Compounding Cumulative Preferred
Stock, Series 1 and Series 2, par value $0.01 per share, of the Company.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included to the extent of the amount of dividends or
distributions paid in cash (or converted into cash) to the referent Person or a
Wholly Owned Restricted Subsidiary thereof that is a Subsidiary Guarantor, (ii)
the Net Income of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would become an Event of Default.
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"DELCHAMPS ACQUISITION" means the Delchamps Merger and the Delchamps Tender
Offer.
"DELCHAMPS MERGER" means the merger contemplated by the Delchamps Merger
Agreement.
"DELCHAMPS MERGER AGREEMENT" means the Agreement and Plan of Merger, dated
July 8, 1997, by and among the Company, Delta Acquisition Corporation and
Delchamps, Inc.
"DELCHAMPS TENDER OFFER" means the tender offer contemplated by the
Delchamps Merger Agreement.
"DESIGNATED SENIOR DEBT" means (i) for so long as any Indebtedness is
outstanding under the Senior Credit Facility or the Senior Notes, any such
Indebtedness, and (ii) any other Senior Debt permitted under the Indenture the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Notes mature.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period plus (i) an amount equal to any
extraordinary or non-recurring loss plus any net loss realized in connection
with (a) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (b) the dispositions of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries (in the case
of clauses (a) and (b) above, to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
original issue discount, non- cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financing, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) non-cash LIFO charges (credits) of such person and its
Restricted Subsidiaries for such period, plus (v) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such Consolidated Net Income, plus (vi) non-recurring severance and transaction
costs incurred in connection with any acquisition, in each case, on a
consolidated basis and determined in accordance with GAAP. Notwithstanding the
foregoing, the provision for taxes on the income or profits of, and the
depreciation and amortization and other non-cash charges of, a Restricted
Subsidiary of the referent Person shall be added to Consolidated Net Income to
compute EBITDA only to the extent (and in the same proportion) that the Net
Income of such Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE DEBENTURES" means the Company's Class A Exchange Debentures due
2008 issuable (1) in exchange for outstanding shares of Class A Preferred Stock
at the Company's option on the date of any scheduled dividend payment with
respect to the Class A Preferred Stock and (2) as payment of interest
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with respect to outstanding Class A Exchange Debentures due 2008, in each case,
pursuant to the indenture related thereto in the form as in effect on the date
of the Indenture.
"EXISTING INDEBTEDNESS" means (i) up to $75.0 million of Indebtedness under
Capital Lease Obligations of the Company and its Restricted Subsidiaries in
existence on the date of the Indenture, (ii) up to $200.0 million in aggregate
principal amount of Indebtedness of the Company and its Restricted Subsidiaries
under the Senior Notes, (iii) up to $13.0 million in aggregate principal amount
of other Indebtedness of the Company and its Restricted Subsidiaries (excluding
Indebtedness under the Senior Credit Facility) in existence on the date of the
Indenture until such amounts are repaid and (iv) up to $16.0 million of Acquired
Indebtedness in connection with the Delchamps Acquisition.
"FIXED CHARGES" means, with respect to any Person for any period, the sum of
(i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was included in computing Consolidated Net Income (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financing, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period, (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash
(other than dividend payments to the Company or any Restricted Subsidiary and
other than dividend payments on Equity Interests of the Company and its
Restricted Subsidiaries that are paid solely in additional shares, or by
accretion to the liquidation preference, of such Equity Interests) on any series
of preferred stock of such Person and its Restricted Subsidiaries, times (b) a
fraction, the numerator of which is one and the denominator of which is one
minus the then current combined federal, state and local statutory tax rate of
such Person and its Restricted Subsidiaries, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the EBITDA of such Person and its Restricted Subsidiaries
for such period to the Fixed Charges of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness
(other than revolving credit borrowings) or issues preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. For purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period, and (ii) the EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
"INDEBTEDNESS" means, with respect to any Person and without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
banker's acceptances or representing Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property or representing any
Hedging Obligations, except any such balance that constitutes an accrued expense
or trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP; PROVIDED that an acquisition of assets, Equity
Interests or other securities by the Company for consideration consisting of
common equity securities of the Company shall not be deemed to be an Investment.
"IRB INDEBTEDNESS" means that certain Indebtedness of McCarty-Holman Co.,
Inc. pursuant to the Industrial Revenue Bond Issue with the City of Jackson,
Mississippi, dated December 1, 1985, evidenced by the Lease recorded in Book
3166 at Page 443 of the Land Records of Hinds County, First Judicial District,
Mississippi, including all agreements and documents related thereto.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge, charge,
security interest or encumbrance of any kind in respect of such asset, whether
or not filed, recorded or otherwise perfected under applicable law (including
any conditional sale or other title retention agreement, any lease in the nature
thereof, any option or other agreement to sell or give a security interest in
and any filing of or agreement to give any financing statement (other than with
respect to a lease that does not create a Capital Lease Obligation) under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"MANAGEMENT AGREEMENT" means that certain Management Agreement, dated March
19, 1980, between McCarty-Holman Co., L.P. and the Company, concerning the
management of leased properties.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any
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securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness described in clause (i) of the second paragraph under
"--Asset Sales") secured by a Lien on the asset or assets that were the subject
of such Asset Sale and any reserve for adjustment in respect of the sale price
of such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) and (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"PARI PASSU INDEBTEDNESS" means Indebtedness of the Company or any of its
Restricted Subsidiaries that ranks PARI PASSU in right of payment to the Notes
or any Guarantee thereof.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company or in a
Restricted Subsidiary of the Company that is a Subsidiary Guarantor; (b) any
Investments in Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary of the Company and a
Subsidiary Guarantor or (ii) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is a
Subsidiary Guarantor; (d) Restricted Investments made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption "Repurchase at
the Option of Holders--Asset Sales"; and (e) other Investments in any Person
that do not exceed $1.5 million at any time outstanding.
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the Company and debt
securities of the Company or any Subsidiary Guarantor that are subordinated to
all Senior Debt (and any debt securities issued in exchange for Senior Debt of
the Company or such Subsidiary Guarantor) to substantially the same extent as,
or to a greater extent than, the Notes or Subsidiary Guarantees, as applicable,
are subordinated to Senior Debt pursuant to the subordination provisions of the
Indenture.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
that is permitted to be incurred by the provisions of the Indenture; PROVIDED,
that, except with respect to Capital Lease Obligations, (i) the principal amount
(or accreted value, as applicable) of, or (with respect to
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revolving credit Indebtedness) maximum commitment under, such Permitted
Refinancing Indebtedness does not exceed the principal amount (or accreted
value, as applicable) of, or (with respect to revolving credit Indebtedness)
maximum commitment under, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of premiums and reasonable
expenses incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and (other than with respect to revolving credit Indebtedness) has a Weighted
Average Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity date
later than the final maturity date of, and is subordinated in right of payment
to, the Notes on terms at least as favorable to the Holders as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded; and (iv) such Indebtedness is incurred
either by the Company and/or by a Subsidiary Guarantor.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PREFERRED STOCK" means the Class A Preferred Stock, the Class B Preferred
Stock and the Class C Preferred Stock.
"PUBLIC EQUITY OFFERING" means a public offering of common stock of the
Company.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"SENIOR CREDIT FACILITY" means that certain revolving credit agreement,
dated as of March 5, 1996, as amended and restated on or prior to the date of
the Indenture, by and among the Company, each of the Subsidiary Guarantors and
the lenders named therein, and Fleet Capital Corporation, as successor agent to
Fleet Bank, N.A., including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as it may from time
to time be amended, renewed, supplemented or otherwise modified at the option of
the parties thereto and any other agreement pursuant to which any of the
Indebtedness, commitments, Obligations, costs, expenses, fees, reimbursements
and other indemnities payable or owing thereunder may be refinanced,
restructured, renewed, extended, increased, replaced or refunded, as any such
other agreements may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified, in each case, whether or
not with the same group of lenders.
"SENIOR DEBT" means (i) Indebtedness pursuant to the Senior Credit Facility,
(ii) Indebtedness pursuant to the Senior Notes or guarantees thereof, as
applicable, (iii) the IRB Indebtedness, (iv) any other Indebtedness permitted to
be incurred by the Company or a Restricted Subsidiary under the terms of the
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees, as applicable, and (v) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company or any
Subsidiary Guarantor, (x) any Indebtedness of the Company or any Subsidiary
Guarantor to any of their respective Subsidiaries or other Affiliates, (y) any
trade payables or (z) any Indebtedness that is incurred in violation of the
Indenture.
"SENIOR NOTES" means the 12% Senior Notes of the Company due 2006.
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"SIGNIFICANT RESTRICTED SUBSIDIARY" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Act, as such Regulation is in effect
on the date hereof.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company or any of
its Restricted Subsidiaries which is by its terms expressly subordinated in
right of payment to the Notes, any Subsidiary Guarantee or any other
Indebtedness that is subordinated in right of payment to the Notes or any
Subsidiary Guarantee.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means each of (i) Interstate Jitney-Jungle Stores,
Inc., an Alabama corporation; (b) McCarty-Holman Co., Inc., a Mississippi
corporation; (c) Southern Jitney Jungle Company, a Mississippi Corporation; (d)
Pump And Save, Inc., a Mississippi corporation; (e) DAC; (f) SCSI and (g)
Delchamps and (ii) any other Subsidiary that executes a Subsidiary Guarantee in
accordance with the provisions of the Indenture, and their respective successors
and assigns.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company (other
than Interstate Jitney-Jungle Stores, Inc., McCarty-Holman Co., Inc., Southern
Jitney Jungle Company, Pump And Save, Inc. DAC, SCSI and Delchamps or any
successor to any of them) that is designated by the Board of Directors as an
Unrestricted Subsidiary pursuant to a Board Resolution and (ii) any Subsidiary
of an Unrestricted Subsidiary; but, in each case, only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
a certified copy of the Board Resolution giving effect to such designation and
an officers' certificate indicating that such designation complied with the
foregoing conditions and was permitted by the covenant described above under the
caption "Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of the Company as of
such date (and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "Certain
Covenants--Incurrence of Indebtedness and Issuance of Disqualified Stock," the
Company shall be in default of such covenant). The Board of Directors of the
Company may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall
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only be permitted if (i) such Indebtedness is permitted under the covenant
described under the caption "Certain Covenants--Incurrence of Indebtedness and
Issuance of Disqualified Stock," (ii) no Default or Event of Default would be in
existence immediately following such designation and (iii) the Company shall
have delivered to the Trustee an officers' certificate indicating that such
designation complied with the foregoing conditions.
"WARRANTS" means the warrants to purchase up to 15% (on a fully diluted
basis) of the common stock, par value $0.01 per share, of the Company dated
March 5, 1996.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
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BOOK-ENTRY; DELIVERY AND FORM
Except as set forth below, the New Notes will initially be issued in the
form of one registered note in global form without coupons (the "Global Note").
Upon issuance, the Global Note will be deposited with, or on behalf of, the
Depository Trust Company (the "Depositary") and registered in the name of Cede &
Co., as nominee of the Depository.
If a holder tendering Existing Notes so requests, such holder's New Notes
will be issued as described below under "Certificated Securities" in registered
form without coupons (the "Certificated Securities").
The Depository has advised the Company that it is (i) a limited purpose
trust company organized under the laws of the State of New York, (ii) a member
of the Federal Reserve System, (iii) a "clearing corporation" within the meaning
of the Uniform Commercial Code, as amended, and (iv) a "Clearing Agency"
registered pursuant to Section 17A of the Exchange Act. The Depository was
created to hold securities for its participants (collectively, the
"Participants") and facilitates the clearance and settlement of securities
transactions between Participants through electronic book-entry changes to the
accounts of its Participants, thereby eliminating the need for physical transfer
and delivery of certificates. The Depository's Participants include securities
brokers and dealers (including the Initial Purchaser), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, the "Indirect Participants") that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly.
The Company expects that pursuant to procedures established by the
Depository (i) upon deposit of the Global Notes, the Depository will credit the
accounts of Participants who elect to exchange Existing Notes with an interest
in the Global Note and (ii) ownership of the New Notes will be shown on, and the
transfer of ownership thereof will be effected only through, records maintained
by the Depository (with respect to the interest of Participants), the
Participants and the Indirect Participants. The laws of some states require that
certain persons take physical delivery in definitive form of securities that
they own and that securities interests in negotiable instruments can only be
perfected by delivery of certificates representing the instruments.
So long as the Depository or its nominee is the registered owner of the
Global Note, the Depository or such nominee, as the case may be, will be
considered the sole owner or holder of the New Notes represented by the Global
Note for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in the Global Note will not be entitled to have New Notes
represented by such Global Note registered in their names, will not receive or
be entitled to receive physical delivery of Certificated Securities, and will
not be considered the owners or holders thereof under the Indenture for any
purpose, including with respect to the giving of any directions, instruction or
approval to the Trustee thereunder. As a result, the ability of a person having
a beneficial interest in New Notes represented by the Global Note to pledge such
interest to persons or entities that do not participate in the Depository's
system, or to otherwise take action with respect to such interest, may be
affected by the lack of a physical certificate evidencing such interest.
The Company understands that under existing industry practice, in the event
the Company requests any action of holders or an owner of a beneficial interest
in the Global Note desires to take any action that the Depository, as the holder
of such Global Note, is entitled to take, the Depository would authorize the
Participants to take such action and the Participant would authorize persons
owning through such Participants to take such action or would otherwise act upon
the instruction of such persons. Neither the Company nor the Trustee will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of New Notes by the Depository, or for maintaining,
supervising or reviewing any records of the Depository relating to such New
Notes.
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Payments with respect to the principal of, premium, if any, and interest on
any New Notes represented by the Global Note registered in the name of the
Depository or its nominee on the applicable record date will be payable by the
Trustee to or at the direction of the Depository or its nominee in its capacity
as the registered holder of the Global Note representing such New Notes under
the Indenture. Under the terms of the Indenture, the Company and the Trustee may
treat the persons in whose names the New Notes, including the Global Note, are
registered as the owners thereof for the purpose of receiving such payment and
for any and all other purposes whatsoever. Consequently, neither the Company nor
the Trustee has or will have any responsibility for liability for the payment of
such amounts to beneficial owners of New Notes (including principal, premium, if
any, and interest), or to immediately credit the accounts of the relevant
Participants with such payment, in amounts proportionate to their respective
holdings in principal amount of beneficial interest in the Global Note as shown
on the records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of New Notes will be governed by standing
instructions and customary practice and will be the responsibility of the
Participants or the Indirect Participants.
CERTIFIED SECURITIES
If (i) the Company notifies the Trustee in writing that the Depository is no
longer willing or able to act as a depository and the Company is unable to
locate a qualified successor within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes in
definitive form under the Indenture, then, upon surrender by the Depository of
its Global Note, Certificated Securities will be issued to each person that the
Depository identifies as the beneficial owner of the New Notes represented by
the Global Note. In addition, any person having a beneficial interest in the
Global Note or any holder of Exiting Notes whose Existing Notes have been
accepted for exchange may, upon request to the Trustee or the Exchange Agent, as
the case may be, exchange such beneficial interest or Existing Notes for
Certificated Securities. Upon any such issuance, the Trustee is required to
register such Certificated Securities in the name of such person or persons (or
the nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the related New Notes and each such person may conclusively
rely on, and shall be protected in relying on, instructions from the Depository
for all purposes (including with respect to the registration and delivery, and
the respective principal amounts, of the New Notes to the issued).
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion summarizes the material United States federal
income tax consequences of the Exchange Offer to a holder of Existing Notes that
is an individual citizen or resident of the United States or a United States
corporation that purchased the Existing Notes pursuant to their original issue
(a "U.S. Holder"). It is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), existing and proposed Treasury regulations, and
judicial and administrative determinations, all of which are subject to change
at any time, possibly on a retroactive basis. The following relates only to the
Existing Notes, and the New Notes received therefor, that are held as "capital
assets" within the meaning of Section 1221 of the Code by U.S. Holders. It does
not discuss state, local, or foreign tax consequences, nor does it discuss tax
consequences to subsequent purchasers (persons who did not purchase the Existing
Notes pursuant to their original issue), or to categories of holders that are
subject to special rules, such as foreign persons, tax-exempt organizations,
insurance companies, banks, and dealers in stocks and securities. Tax
consequences may vary depending on the particular status of an investor. No
rulings will be sought from the Internal Revenue Service with respect to the
federal income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO AN INVESTOR'S DECISION TO EXCHANGE EXISTING
NOTES FOR NEW NOTES. EACH INVESTOR SHOULD CONSULT WITH ITS OWN TAX ADVISOR
CONCERNING THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO
ITS PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO EXCHANGE EXISTING NOTES
FOR NEW NOTES.
THE EXCHANGE OFFER
The exchange of Existing Notes pursuant to the Exchange Offer should be
treated as a continuation of the corresponding Existing Notes because the terms
of the New Notes are not materially different from the terms of the Existing
Notes. Accordingly, such exchange should not constitute a taxable event to U.S.
Holders and, therefore, (i) no gain or loss should be realized by a U.S. Holder
upon receipt of a New Note, (ii) the holding period of the New Note should
include the holding period of the Existing Note exchanged therefor and (iii) the
adjusted tax basis of the New Note should be the same as the adjusted tax basis
of the Existing Note exchanged therefor immediately before the exchange.
STATED INTEREST
Stated interest on a Note will be taxable to a U.S. Holder as ordinary
interest income at the time that such interest accrues or is received, in
accordance with the U.S. Holder's regular method of accounting for federal
income tax purposes. The Notes are not considered to have been issued with
original issue discount for federal income tax purposes.
SALE, EXCHANGE OR RETIREMENT OF THE NOTES
A U.S. Holder's tax basis in a Note generally will be its cost. A U.S.
Holder generally will recognize gain or loss on the sale, exchange or retirement
of a Note in an amount equal to the difference between the amount realized on
the sale, exchange or retirement and the tax basis of the Note. Gain or loss
recognized on the sale, exchange or retirement of a Note (excluding amounts
received in respect of accrued interest, which will be taxable as ordinary
interest income) generally will be capital gain or loss. In the case of a U.S.
Holder who is an individual, such capital gain may be taxed at a maximum rate of
28% if the holding period of the New Notes exceeds one year or a maximum rate of
20% if the holding period of the New Notes exceeds eighteen months.
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BACKUP WITHHOLDING
Under certain circumstances, a U.S. Holder of a Note may be subject to
"backup withholding" at a 31% rate with respect to payments of interest thereon
or the gross proceeds from the disposition thereof. This withholding generally
applies if the U.S. Holder fails to furnish his or her social security number or
other taxpayer identification number in the specified manner and in certain
other circumstances. Any amount withheld from a payment to a U.S. Holder under
the backup withholding rules is allowable as a credit against such U.S. Holder's
federal income tax liability, provided that the required information is
furnished to the IRS. Corporations and certain other entities described in the
Code and Treasury regulations are exempt from backup withholding if their exempt
status is properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Existing Notes
where such Existing Notes were acquired as a result of market-making activities
or other trading activities. The Company has agreed that, for a period of 180
days after the Exchange Offer Registration Statement is declared effective, it
will make this Prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
, 1998 (90 days after the date of this Prospectus), all dealers
effecting transactions in the New Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that, by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Existing Notes) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Existing Notes
(including any broker-dealers) against certain liabilities, including
liabilities under the Securities Act.
115
<PAGE>
LEGAL MATTERS
The validity of the New Notes offered hereby will be passed upon for the
Company by Dechert Price & Rhoads, New York, New York.
EXPERTS
The consolidated financial statements of Jitney-Jungle included in this
Prospectus and Registration Statement have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report thereon appearing elsewhere
herein, and are included in reliance upon such firm given upon their authority
as experts in accounting and auditing. The consolidated financial statements of
Delchamps Inc., and subsidiary as of June 28, 1997 and June 29, 1996 and for
each of the years in the three-year period ended June 28, 1997 have been
included in this Prospectus and in the Registration Statement in reliance on the
report of KPMG Peat Marwick L.L.P., independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
116
<PAGE>
INDEX TO FINANCIAL STATEMENTS
JITNEY-JUNGLE STORES OF AMERICA, INC.
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-3
Consolidated Balance Sheets as of April 27, 1996, May 3, 1997 and July 26, 1997 (unaudited)................ F-4
Consolidated Statements of Earnings for the Years Ended April 29, 1995, April 27, 1996 and May 3, 1997 and
the 12 weeks Ended July 20, 1996 (unaudited) and July 26, 1997 (unaudited)............................... F-6
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended April 29, 1995, April 27,
1996 and May 3, 1997 and the 12 weeks Ended July 20, 1996 (unaudited) and July 26, 1997 (unaudited)...... F-7
Consolidated Statements of Cash Flows for the Years Ended April 29, 1995, April 27, 1996 and and May 3,
1997 and the 12 weeks Ended July 20, 1996 (unaudited) and July 26, 1997 (unaudited)...................... F-8
Notes to Consolidated Financial Statements................................................................. F-9
</TABLE>
DELCHAMPS, INC.
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Independent Auditors' Report............................................................................... F-22
Consolidated Balance Sheets as of June 29, 1996 and June 28, 1997.......................................... F-23
Consolidated Statements of Earnings for the Years Ended
July 1, 1995, June 29, 1996 and June 28, 1997............................................................ F-24
Consolidated Statements of Stockholders' Equity for the Years Ended July 1, 1995, June 29, 1996 and June
28, 1997................................................................................................. F-25
Consolidated Statements of Cash Flows for the Years Ended July 1, 1995,
June 29, 1996 and June 28, 1997.......................................................................... F-26
Notes to Consolidated Financial Statements................................................................. F-27
</TABLE>
F-1
<PAGE>
(This page has been left blank intentionally.)
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Jitney-Jungle Stores of America, Inc.:
We have audited the accompanying consolidated balance sheets of Jitney-Jungle
Stores of America, Inc. and subsidiaries (the "Company") as of May 3, 1997 and
April 27, 1996, and the related consolidated statements of earnings, changes in
stockholders' equity, and cash flows for each of the three fiscal years in the
period ended May 3, 1997. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Jitney-Jungle Stores of America,
Inc. and subsidiaries as of May 3, 1997 and April 27, 1996, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended May 3, 1997, in conformity with generally accepted accounting
principles.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
July 10, 1997
Jackson, Mississippi
F-3
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 27, MAY 3, JULY 26,
1996 1997 1997
---------- ---------- -----------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................. $ 5,676 $ 14,426 $ 5,255
Investments in debt securities............................................ 337 -- --
Receivables............................................................... 4,892 5,463 7,423
Inventories:
Stores.................................................................. 48,907 43,462 47,328
Warehouses.............................................................. 28,538 21,157 30,366
Prepaid expenses and other................................................ 5,155 1,213 6,507
Deferred income taxes..................................................... 376 2,152 2,152
---------- ---------- -----------
Total current assets.................................................... 93,881 87,873 99,031
PROPERTY AND EQUIPMENT, at cost:
Land...................................................................... 2,782 2,648 2,573
Buildings................................................................. 22,537 26,370 26,568
Fixtures and equipment.................................................... 165,202 167,241 170,186
Property under capitalized leases......................................... 76,371 74,089 74,089
Leasehold improvements.................................................... 39,003 41,518 43,014
---------- ---------- -----------
Total................................................................... 305,895 311,866 316,430
Less accumulated depreciation and amortization............................ 130,480 140,378 147,262
Net property and equipment.............................................. 175,415 171,488 169,168
---------- ---------- -----------
OTHER ASSETS................................................................ 9,707 8,484 16,732
---------- ---------- -----------
TOTAL ASSETS................................................................ $ 279,003 $ 267,845 $ 284,931
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
APRIL 27, MAY 3, JULY 26,
1996 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable......................................................... $ 40,008 $ 49,978 $ 60,940
Accrued expenses:
Personnel costs........................................................ 6,042 9,350 7,548
Taxes, other than income taxes......................................... 6,738 8,436 8,148
Insurance claims....................................................... 4,110 5,972 7,006
Interest............................................................... 3,742 4,298 9,679
Other.................................................................. 2,533 5,032 1,843
Current portion of capitalized leases.................................... 4,259 4,899 4,899
Current portion of long-term debt........................................ -- -- 4,923
----------- ----------- -----------
Total current liabilities............................................ 67,432 87,965 104,986
LONG-TERM DEBT............................................................. 239,059 208,000 206,876
OBLIGATIONS UNDER CAPITALIZED LEASES,
less current installments................................................ 59,143 59,563 58,663
DEFERRED INCOME TAXES...................................................... 8,196 6,398 6,328
----------- ----------- -----------
Total liabilities...................................................... 373,830 361,926 376,853
COMMITMENTS AND CONTINGENCIES (Notes 6, 7, 9 and 14)
REDEEMABLE PREFERRED STOCK (aggregate liquidation
preference value of $52,342 at April 27, 1996, $60,086 at
May 3, 1997 and $61,624 at July 26, 1997)................................ 49,988 57,921 59,508
STOCKHOLDERS' EQUITY (DEFICIT):
Class C Preferred Stock--Series 1 (at liquidation preference value)...... 7,604 8,502 8,663
Common Stock ($.01 par value, authorized 5,000,000 shares, issued and
outstanding 425,000 shares)............................................ 4 4 4
Additional paid-in capital............................................... (302,326) (302,326) (302,326)
Retained earnings........................................................ 149,903 141,818 142,229
----------- ----------- -----------
Total stockholders' equity (deficit)................................... (144,815) (152,002) (151,430)
----------- ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)................................................................ $ 279,003 $ 267,845 $ 284,931
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED 12 WEEKS ENDED
---------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3, JULY 20, JULY 26,
1995 1996 1997 1996 1997
------------ ------------ ------------ ---------- ----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET SALES...................................... $ 1,173,927 $ 1,179,318 $ 1,228,533 $ 282,166 $ 288,978
COSTS AND EXPENSES:
Cost of sales................................ 885,739 887,255 925,446 211,627 216,464
Direct store expenses........................ 189,422 193,483 199,956 45,447 48,058
Warehouse, administrative and general........ 57,723 60,603 63,094 14,241 12,772
Interest expense, net........................ 10,823 13,000 36,215 8,378 8,241
Special charges.............................. -- -- 2,737 -- --
------------ ------------ ------------ ---------- ----------
Total costs and expenses................... 1,143,707 1,154,341 1,227,448 279,693 285,535
------------ ------------ ------------ ---------- ----------
Earnings before taxes on income and
extraordinary item........................... 30,220 24,977 1,085 2,473 3,443
TAXES ON INCOME................................ 11,417 9,062 339 921 1,284
------------ ------------ ------------ ---------- ----------
Earnings before extraordinary item............. $ 18,803 $ 15,915 $ 746 $ 1,552 $ 2,159
EXTRAORDINARY ITEM, NET OF INCOME TAX BENEFIT
OF $866...................................... -- (1,456) -- -- --
------------ ------------ ------------ ---------- ----------
NET EARNINGS................................... $ 18,803 $ 14,459 $ 746 $ 1,552 $ 2,159
------------ ------------ ------------ ---------- ----------
------------ ------------ ------------ ---------- ----------
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE:
Earnings (loss) before extraordinary item...... $ 923.15 $ 162.88 $ (16.26) $ (0.12) $ 0.92
Extraordinary item............................. -- (15.96) -- -- --
------------ ------------ ------------ ---------- ----------
Net earnings (loss)............................ $ 923.15 $ 146.92 $ (16.26) $ (0.12) $ 0.92
------------ ------------ ------------ ---------- ----------
------------ ------------ ------------ ---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CLASS C
PREFERRED STOCK
SERIES 1 COMMON STOCK
---------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER NUMBER ADDITIONAL
OF OF PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS
----------- --------- --------- --------- ----------- ----------
BALANCE, APRIL 30, 1994.................................. -- -- 20,368 $ 1,061 $ 1,807 $ 121,989
Cash dividends ($169.09 per share)....................... -- -- -- -- -- (3,444)
Net earnings............................................. -- -- -- -- -- 18,803
----------- --------- --------- --------- ----------- ----------
BALANCE, APRIL 29, 1995.................................. -- -- 20,368 1,061 1,807 137,348
Cash dividends ($92.15 per share)........................ -- -- -- -- -- (1,877)
Net earnings............................................. -- -- -- -- -- 14,459
Issuance of shares and warrants.......................... 76,042 $ 7,604 425,000 4 7,377 --
Redemption of common stock and related merger costs...... -- -- (20,368) (1,061) (311,510) --
Accretion of discount on Class A Preferred
Stock.................................................. -- -- -- -- -- (27)
----------- --------- --------- --------- ----------- ----------
BALANCE, APRIL 27, 1996.................................. 76,042 7,604 425,000 4 (302,326) 149,903
Net earnings............................................. -- -- -- -- -- 1,552
Accretion of discount on Class A Preferred
Stock.................................................. -- -- -- -- -- (47)
Cumulation of dividends on Preferred Stock............... -- 898 -- -- -- (8,642)
----------- --------- --------- --------- ----------- ----------
BALANCE, MAY 3, 1997..................................... 76,042 8,502 425,000 4 (302,326) 141,818
Net earnings............................................. -- -- -- -- -- 2,159
Accretion of discount on Class A Preferred
Stock.................................................. -- -- -- -- -- (48)
Cumulation of dividends on Preferred Stock............... -- 161 -- -- -- (1,700)
----------- --------- --------- --------- ----------- ----------
BALANCE, JULY 26, 1997 (UNAUDITED)....................... 76,042 $ 8,663 425,000 $ 4 $ (302,326) $ 142,229
----------- --------- --------- --------- ----------- ----------
----------- --------- --------- --------- ----------- ----------
</TABLE>
See notes to consolidated financial statements.
F-7
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
12 WEEKS
YEAR ENDED ENDED
--------------------------------- -----------
<S> <C> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3, JULY 20,
1995 1996 1997 1996
----------- --------- --------- -----------
<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net earnings.............................................................. $ 18,803 $ 14,459 $ 746 $ 1,552
Adjustment to reconcile net earnings to net cash
provided by operating activities:
Extraordinary Item...................................................... -- 1,456 -- --
Depreciation and amortization........................................... 25,444 27,323 31,319 7,062
Loss on disposition of property and other
assets.................................................................. 1,037 817 1,899 (46)
Deferred income tax expense (benefit)................................... 2,260 2,577 (3,574) --
Changes in assets and liabilities:
Receivables........................................................... 43 5,866 (571) (707)
Store and warehouse inventories....................................... (3,621) 5,826 12,826 (2,034)
Prepaid expenses and other............................................ (1,630) (2,011) 3,941 1,064
Accounts payable...................................................... 2,690 1,562 9,970 9,663
Accrued expenses...................................................... 644 (2,356) 9,923 1,550
----------- --------- --------- -----------
Net cash provided by operating
activities........................................................ 45,670 55,519 66,479 18,104
----------- --------- --------- -----------
INVESTING ACTIVITIES:
Capital expenditures...................................................... (23,921) (30,111) (24,099) (6,122)
Debt issue costs.......................................................... -- (8,214) -- --
Proceeds from sale of property and other assets........................... 1,210 2,617 1,477 1,097
Purchase of investments in debt securities................................ (65,416) (23,026) -- --
Maturities of investments in debt securities.............................. 42,096 46,301 337 337
----------- --------- --------- -----------
Net cash used in investing activities............................... (46,031) (12,433) (22,285) (4,688)
----------- --------- --------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.................................. -- 239,059 -- --
Proceeds from issuance of stock and warrants.............................. -- 35,840 -- --
Redemption of common stock and related merger
costs..................................................................... -- (286,824) -- 30
Payments on long-term debt................................................ (2,431) (38,412) (31,059) (15,826)
Payments on capitalized lease obligations................................. (4,342) (5,355) (4,385) (263)
Dividends paid............................................................ (3,444) (1,877) -- --
----------- --------- --------- -----------
Net cash used in financing activities............................... (10,217) (57,569) (35,444) (16,059)
----------- --------- --------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................................................... (10,578) (14,483) 8,750 (2,643)
----------- --------- --------- -----------
CASH AND CASH EQUIVALENTS,
Beginning of Year........................................................ 30,737 20,159 5,676 5,676
----------- --------- --------- -----------
CASH AND CASH EQUIVALENTS, End of Year...................................... $ 20,159 $ 5,676 $ 14,426 $ 3,033
----------- --------- --------- -----------
----------- --------- --------- -----------
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Capitalized lease obligations incurred.................................... $ 3,158 $ 7,971 $ 3,538
----------- --------- ---------
----------- --------- ---------
Insurance premiums financed...............................................
Recapitalization transactions:
Preferred stock issued in exchange for notes
receivable and common stock........................................... $ 184
Preferred stock issued in settlement of
deferred compensation obligation...................................... 712
Preferred stock issued in redemption of
common stock.......................................................... 27,446
Common stock issued in exchange for
notes receivable...................................................... 176
Common stock issued in redemption of
common stock.......................................................... 588
---------
$ 29,106
---------
---------
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest.................................................... $ 12,534 $ 12,915 $ 35,902 $ 2,786
----------- --------- --------- -----------
----------- --------- --------- -----------
Cash paid for income taxes, net of refunds................................ $ 10,283 $ 7,700 $ (1,521) $ 15
----------- --------- --------- -----------
----------- --------- --------- -----------
<CAPTION>
<S> <C>
JULY 26,
1997
---------
<S> <C>
OPERATING ACTIVITIES:
Net earnings.............................................................. $ 2,159
Adjustment to reconcile net earnings to net cash
provided by operating activities:
Extraordinary Item...................................................... --
Depreciation and amortization........................................... 6,982
Loss on disposition of property and other
assets.................................................................. (3)
Deferred income tax expense (benefit)................................... --
Changes in assets and liabilities:
Receivables........................................................... (1,960)
Store and warehouse inventories....................................... (13,075)
Prepaid expenses and other............................................ (371)
Accounts payable...................................................... 10,962
Accrued expenses...................................................... 1,136
---------
Net cash provided by operating
activities........................................................ 5,830
---------
INVESTING ACTIVITIES:
Capital expenditures...................................................... (4,985)
Debt issue costs.......................................................... --
Proceeds from sale of property and other assets........................... 81
Purchase of investments in debt securities................................ --
Maturities of investments in debt securities.............................. --
---------
Net cash used in investing activities............................... (4,904)
---------
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt.................................. --
Proceeds from issuance of stock and warrants.............................. --
Redemption of common stock and related merger
costs..................................................................... --
Payments on long-term debt................................................ (9,197)
Payments on capitalized lease obligations................................. (900)
Dividends paid............................................................ --
---------
Net cash used in financing activities............................... (10,097)
---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................................................... (9,171)
---------
CASH AND CASH EQUIVALENTS,
Beginning of Year........................................................ 14,426
---------
CASH AND CASH EQUIVALENTS, End of Year...................................... $ 5,255
---------
---------
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Capitalized lease obligations incurred....................................
Insurance premiums financed............................................... $ 12,996
---------
---------
Recapitalization transactions:
Preferred stock issued in exchange for notes
receivable and common stock...........................................
Preferred stock issued in settlement of
deferred compensation obligation......................................
Preferred stock issued in redemption of
common stock..........................................................
Common stock issued in exchange for
notes receivable......................................................
Common stock issued in redemption of
common stock..........................................................
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest.................................................... $ 2,860
---------
---------
Cash paid for income taxes, net of refunds................................ $ 2,895
---------
---------
</TABLE>
See notes to consolidated financial statements.
F-8
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. NATURE OF OPERATIONS AND BASIS OF PRESENTATION -- Jitney-Jungle operates
supermarkets and gasoline stations located in six southeastern states primarily
using distribution centers located in Jackson, Mississippi.
The consolidated financial statements include those of Jitney-Jungle Stores
of America, Inc. and its wholly-owned subsidiaries, Southern Jitney Jungle
Company, Interstate Jitney Jungle Stores, Inc., McCarty-Holman Co., Inc. and
subsidiary, and Jitney Jungle Bakery, Inc. All material intercompany profits,
transactions and balances have been eliminated.
B. USE OF ESTIMATES -- The consolidated financial statements are prepared in
conformity with generally accepted accounting principles which require
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
C. FISCAL YEAR -- Jitney-Jungle's fiscal year ends on the Saturday nearest
April 30. Fiscal 1995 and 1996 include the operations of 52 weeks and fiscal
1997 includes the operations of 53 weeks.
D. INVESTMENTS IN DEBT SECURITIES -- Debt securities have been categorized
as available for sale and as a result are stated at fair value. The cost of debt
securities is adjusted for amortization of premiums and accretion of discounts
to maturity. Such amortization and interest are included in interest income.
Realized gains and losses are included in other income or expense. Unrealized
holding gains and losses are included as a component of stockholders' equity
until realized. The cost of securities sold is based on the specific
identification method.
E. INVENTORIES -- Store inventories are stated at cost (last-in, first-out
method), as determined principally by the retail inventory method. Warehouse
inventories are stated at cost (last-in, first-out method).
F. CAPITALIZATION, DEPRECIATION AND AMORTIZATION -- The cost of property,
fixtures, equipment and improvements is depreciated and amortized by the
straight-line method over the estimated useful lives of the assets. The
estimated useful lives of buildings range up to forty years and the estimated
useful life of fixtures and equipment is eight years. Capitalized lease assets
are recorded at the lower of fair market value or the present value of future
minimum lease payments. These assets and leasehold improvements are amortized by
the straight-line method over their primary lease term. License and franchise
rights are amortized by the straight-line method over twenty years. Debt issue
costs are amortized over the life of the related debt by the interest method. At
each balance sheet date the Company evaluates the recoverability of property,
equipment and other long-term assets based upon expectations of nondiscounted
cash flows and operating income.
G. STORE OPENING/CLOSING COSTS -- Non-capital expenditures incurred for new
or remodeled retail stores are expensed as incurred. When a store is closed, the
remaining investment in fixtures and leasehold improvements, net of expected
salvage, is charged against earnings; the present value of any remaining lease
liability, net of expected sublease recovery, is also expensed.
F-9
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
H. INCOME TAXES -- Deferred tax liabilities and assets are determined based
on the differences between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect in the years in which the
differences are expected to reverse.
I. CASH EQUIVALENTS -- For purposes of reporting cash flows, cash
equivalents include investments with maturities of three months or less when
purchased.
J. PER SHARE AMOUNTS -- Earnings per common and common equivalent share is
based on net income (loss) after preferred stock dividend requirements ($987 in
fiscal 1996, $7,655 in fiscal 1997, and the weighted average number of shares
outstanding during each year including shares attributed to outstanding warrants
to purchase common stock. For fiscal 1997, warrants have not been included as
their effect is antidilutive. The number of shares used in computing the
earnings (loss) per share was 20,368 in fiscal 1995, 91,241 in fiscal 1996 and
425,000 in fiscal 1997.
Dividends per common share are presented on the basis of total dividends
paid, including dividends paid by the entities acquired in the business
acquisitions accounted for in a manner similar to that followed for poolings of
interest (see Note 2), divided by common shares outstanding after giving
retroactive effect to common shares issued in such business acquisitions.
K. RECLASSIFICATIONS -- Certain reclassifications have been made in the 1995
and 1996 consolidated financial statements to conform to the 1997 method of
presentation.
2. MERGER ACTIVITIES
In a series of transactions that were consummated on March 5, 1996,
Jitney-Jungle acquired all of the issued and outstanding stock of Southern
Jitney Jungle Company, McCarty-Holman Company, Inc. and Jitney Jungle Bakery
(each of which was under common control with Jitney-Jungle) in exchange for
7,495 shares of common stock. These acquisitions have been accounted for at
historical cost in a manner similar to that followed for poolings of interest.
Prior to the acquisition, the operating results of the acquired entities had
been included in Jitney-Jungle's financial statements on a combined basis.
Accordingly, the acquisitions had no effect on the previously reported results
of operations of Jitney-Jungle; however, for purposes of computing earnings per
share the issuance of the additional shares of common stock has been given
retroactive effect.
On March 5, 1996, JJ Acquisitions Corp. (JJAC) merged with and into
Jitney-Jungle with Jitney-Jungle continuing as the surviving corporation (the
"Merger"). JJAC was a wholly-owned subsidiary of Bruckmann, Rosser, Sherrill &
Co., L.P. (the "Fund"). Upon consummation of the Merger, the Fund and related
investors received 83.82% of Jitney-Jungle's common stock and 11.76% was
retained by the shareholders at the time of the Merger.
The Merger was accounted for as a recapitalization which resulted in a
charge to equity of $312,571 to reflect the redemption of common stock of
Jitney-Jungle outstanding immediately prior to the Merger and related merger
costs, including a closing fee of $4,000 paid to the Fund Manager, an affiliate
of the Fund's sole General Partner.
F-10
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
2. MERGER ACTIVITIES (CONTINUED)
Prior to the Merger, JJAC issued 425,000 shares of common stock for an
aggregate of $6,500, issued an aggregate of $22,500 in liquidation preference of
Class A Preferred Stock, issued $10,000 in liquidation preference of Class C
Preferred Stock, and issued warrants to purchase 75,000 shares of common stock
to the then holder (along with related investors) of 100% of the Class A
Preferred Stock and 15% of the Class C Preferred Stock. Jitney-Jungle issued
$27,446 in liquidation preference of Class B Preferred Stock as part of the
consideration to shareholders at the time of the Merger. In the Merger the
common stock, Class A Preferred Stock, and Class C Preferred Stock issued by
JJAC were converted into like shares of Jitney-Jungle and Jitney-Jungle assumed
the obligations of JJAC under the warrants.
In connection with the Merger, Jitney-Jungle retired $35,700 of long-term
debt prior to its scheduled maturity. Early retirement of this debt resulted in
an extraordinary loss of $1,456, net of an income tax benefit of $866.
3. INVENTORIES
Had the cost for all inventories been determined on the first-in, first-out
method, inventories would have been higher by approximately $18,227 at April 27,
1996 and $17,245 at May 3, 1997. LIFO liquidations resulted in an increase in
fiscal year 1997 net earnings of approximately $148. The effect on net earnings
of LIFO liquidations in fiscal years 1995 and 1996 was not material.
4. INVESTMENTS IN DEBT SECURITIES
Investments in debt securities consisted of U.S. Treasury securities which
matured in fiscal 1997. Such investments, classified as available for sale, had
no unrealized gains or losses at April 27, 1996. Proceeds from sale of
investments in debt securities were approximately $6,100 in fiscal 1995 and
$13,000 in fiscal 1996. Gains of $14 (1995) and losses of $43 (1996) were
realized on those sales.
5. OTHER ASSETS
Other assets, net of accumulated amortization of $3,059 (1996) and $3,916
(1997), consisted of the following:
<TABLE>
<CAPTION>
APRIL 27, MAY 3,
1996 1997
----------- ---------
<S> <C> <C>
Debt issue costs.............................................................................. $ 7,917 $ 6,913
License and franchise rights.................................................................. 838 746
Other, primarily covenant not to compete...................................................... 952 825
----------- ---------
Total....................................................................................... $ 9,707 $ 8,484
----------- ---------
----------- ---------
</TABLE>
F-11
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
6. PROPERTY UNDER CAPITAL LEASES AND LEASE COMMITMENTS
Leased property capitalized in the financial statements is summarized as
follows:
<TABLE>
<CAPTION>
APRIL 27, MAY 3,
1996 1997
--------- ---------
<S> <C> <C>
Store property.............................................................................. $ 76,371 $ 70,920
Computer equipment.......................................................................... -- 3,169
Less accumulated depreciation............................................................... (32,993) (32,112)
--------- ---------
$ 43,378 $ 41,977
--------- ---------
--------- ---------
</TABLE>
Most store leases provide for contingent rentals based on percentages of
sales in excess of stipulated amounts. The leases have primary terms are ranging
from five to twenty years and generally contain renewal options. Portions of
store space are sublet under leases. The present value of future minimum lease
payments relative to capitalized leases is included in the financial statements
as obligations under capitalized leases. Lease liabilities are amortized over
the lease term using the interest method.
The future minimum rental commitments for capital leases and noncancelable
operating leases as of May 3, 1997, were as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
---------- -----------
<S> <C> <C>
1998...................................................................................... $ 13,840 $ 6,056
1999...................................................................................... 13,693 5,176
2000...................................................................................... 13,261 4,401
2001...................................................................................... 12,114 2,557
2002...................................................................................... 10,796 1,777
Remaining balance......................................................................... 70,024 4,895
---------- -----------
Total minimum lease commitments........................................................... $ 133,728 $ 24,862
---------- -----------
---------- -----------
</TABLE>
<TABLE>
<CAPTION>
CAPITAL
LEASES
---------
<S> <C> <C>
Less amount representing estimated executory costs (taxes, maintenance and insurance)....... $ 1,917
---------
Net minimum lease commitments............................................................... 131,811
Less amount representing imputed interest................................................... 67,349
---------
Present value of minimum lease commitments.................................................. 64,462
Current portion of obligations under capitalized leases..................................... 4,899
---------
Obligations under capitalized leases, less current installments............................. $ 59,563
---------
---------
</TABLE>
F-12
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
6. PROPERTY UNDER CAPITAL LEASES AND LEASE COMMITMENTS (CONTINUED)
Minimum rental commitments have not been reduced by minimum sublease rentals
of $1,306 applicable to capital leases and $841 applicable to operating leases
due in the future under noncancelable subleases.
The following schedule shows the composition of total rental expense for all
operating leases:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------
<S> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
----------- --------- ---------
Minimum rentals................................................................ $ 10,075 $ 10,211 $ 10,717
Continent rentals.............................................................. 328 346 325
Less: Sublease rentals......................................................... (323) (219) (288)
----------- --------- ---------
$ 10,080 $ 10,338 $ 10,754
----------- --------- ---------
----------- --------- ---------
</TABLE>
Rents, net of sublease income, paid to affiliated partnerships under
long-term lease commitments were as follows:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------
<S> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
----------- ----------- ---------
Capitalized Leases............................................................... $ 3,001 $ 3,017 $ 3,062
Operating leases................................................................. 321 334 331
----------- ----------- ---------
$ 3,322 $ 3,351 $ 3,393
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
Obligations to affiliated partnerships under capitalized leases were $9,150
at April 27, 1996 and $8,602 at May 3, 1997.
7. LONG-TERM DEBT
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
APRIL 27, MAY 3,
1996 1997
---------- ----------
<S> <C> <C>
Senior notes.............................................................................. $ 200,000 $ 200,000
Revolving credit loans.................................................................... 39,059 8,000
---------- ----------
Long-term debt............................................................................ $ 239,059 $ 208,000
---------- ----------
---------- ----------
</TABLE>
Aggregate maturities of long-term debt for the fiscal years following May 3,
1997 are as follows:
<TABLE>
<S> <C>
2001.............................................................................. $ 8,000
2006.............................................................................. 200,000
---------
$ 208,000
---------
---------
</TABLE>
F-13
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
7. LONG-TERM DEBT (CONTINUED)
In March 1996, Jitney-Jungle issued $200,000 of unsecured Senior Notes which
mature on March 1, 2006 and accrue interest at the rate of 12% per annum payable
semi-annually. The proceeds from issuance of the Senior Notes were used to fund
a portion of the Merger consideration (See Note 2). Except under certain
conditions, the Senior Notes are not redeemable at Jitney-Jungle's option prior
to March 1, 2001. Thereafter, the Senior Notes are subject to redemption at the
option of Jitney-Jungle at 106% of principal amount if redeemed during the
twelve-month period beginning March 1, 2001 decreasing to 100% of principal
amount if redeemed during the twelve-month period beginning March 1, 2004 and
thereafter plus accrued and unpaid interest thereon.
In the event of a change of control as defined in the Indenture, holders of
Senior Notes have the right to require Jitney-Jungle to repurchase all or any
part of such holder's notes at a price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon.
In March 1996, Jitney-Jungle entered into a revolving credit agreement with
a bank which provides a $100,000 Credit Facility. The Credit Facility was used
to finance a portion of the Merger consideration, refinance certain
indebtedness, and provide for working capital requirements. The commitments
under the Credit Facility will terminate and all loans outstanding thereunder
will be required to be repaid in full in March, 2001. Borrowings under the
Credit Facility, including revolving loans and up to $20,000 in letters of
credit, are limited to the lesser of (i) the "total commitment" which initially
was $100,000 and (ii) an amount equal to the sum of (a) up to 60% of eligible
inventory (valued at the lesser of FIFO cost or current market) and (b) the
"supplemental availability" which initially was $45,000. Each of the total
commitment and the supplemental availability will be reduced by $1,250 per
quarter, commencing December 31, 1996. The interest rates on borrowings under
the Credit Facility are, at Jitney-Jungle's option, a function of the bank's
prime rate or LIBOR. The weighted average interest rate of loans under the
Credit Facility was 8.62% at April 27, 1996 and 8.44% at May 3, 1997. The
agreement requires Jitney-Jungle to pay a facility fee at an annual rate of .50%
(.25% subsequent to March 31, 1997) of the unused amount available under the
Credit Facility. Letters of credit aggregating $10,481 were outstanding as of
April 27, 1996 and May 3, 1997 under the Credit Facility.
The Senior Notes are guaranteed on a full, unconditional and joint and
several basis by each of Jitney-Jungle's subsidiaries. The Credit Facility is
guaranteed by each of Jitney-Jungle's subsidiaries. In addition, obligations
under the Credit Facility are secured by a first lien on all of Jitney-Jungle's
and its subsidiaries' assets.
The Credit Facility and the Indenture pursuant to which the Senior Notes
were issued contain numerous covenants which, among other things, restrict or
limit the incurrence of indebtedness, payments of dividends and distributions,
and capital expenditures. The Credit Facility also contains numerous financial
covenants, the more significant of which relate to leverage ratio, interest
coverage ratio and cash flows. As of May 3, 1997 Jitney-Jungle was in compliance
with the covenants under its debt agreements.
F-14
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
8. INCOME TAXES
Income taxes were composed of the following:
<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------
<S> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
--------- ----------- ---------
Current provision................................................................. $ 9,157 $ 6,485 $ 3,913
Deferred provision (benefit)...................................................... 2,260 2,577 (3,574)
--------- ----------- ---------
Total........................................................................... $ 11,417 $ 9,062 $ 339
--------- ----------- ---------
--------- ----------- ---------
</TABLE>
The effective tax rate varied from the federal statutory rate of 35% as
follows:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------
<S> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
--------- ----------- -----------
Federal tax at statutory rate..................................................... $ 10,577 $ 8,742 $ 380
State income taxes, net of federal tax benefit.................................... 665 400 (25)
Other............................................................................. 175 (80) (16)
--------- ----------- -----
Income tax provision.............................................................. $ 11,417 $ 9,062 $ 339
--------- ----------- -----
--------- ----------- -----
</TABLE>
Deferred income tax expense relates to the following:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------
<S> <C> <C> <C>
APRIL 29, APRIL 27, MAY 3,
1995 1996 1997
----------- ----------- ---------
LIFO inventory................................................................... $ 1,499 $ 669 $ 773
Deferred compensation............................................................ (24) 2,290 9
Accrued estimated insurance claims............................................... (166) (285) (690)
Deferred income.................................................................. -- -- (1,567)
Property and equipment........................................................... 1,345 158 (676)
Capital leases................................................................... (448) (147) (1,004)
Other............................................................................ 54 (108) (419)
----------- ----------- ---------
Total............................................................................ $ 2,260 $ 2,577 $ (3,574)
----------- ----------- ---------
----------- ----------- ---------
</TABLE>
F-15
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
8. INCOME TAXES (CONTINUED)
The sources of temporary differences and the related deferred income tax
effects were as follows:
<TABLE>
<CAPTION>
APRIL 27, MAY 3,
1996 1997
--------- ---------
<S> <C> <C>
CURRENT DEFERRED TAX ASSETS (LIABILITIES):
LIFO inventory............................................................................ $ (1,739) $ (2,152)
Deferred compensation and compensated absences............................................ 571 562
Deferred income........................................................................... -- 1,567
Accrual of estimated insurance claims..................................................... 1,538 2,228
Other..................................................................................... 436 307
--------- ---------
Total net current deferred tax asset.................................................... $ 376 $ 2,152
--------- ---------
--------- ---------
NONCURRENT DEFERRED TAX (ASSETS) LIABILITIES:
Property and equipment.................................................................... $ 13,651 $ 12,975
Capital and closed store leases........................................................... (5,706) (6,710)
Other..................................................................................... 251 133
--------- ---------
Total net noncurrent deferred tax liability............................................. $ 8,196 $ 6,398
--------- ---------
--------- ---------
</TABLE>
Currently payable income taxes of $1,835 at May 3, 1997 are included in
accrued expenses.
Refundable income taxes of $3,890 at April 27, 1996 represent an overpayment
of estimated taxes and are included in prepaid expenses and other in the balance
sheet.
The Company's income tax returns through fiscal year 1994 have been examined
by the Internal Revenue Service.
F-16
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
9. CAPITAL STOCK
PREFERRED STOCK
Preferred stock consisted of the following:
<TABLE>
<CAPTION>
APRIL 27, 1996 MAY 3, 1997
----------------------- -----------------------
<S> <C> <C> <C> <C> <C> <C>
DIVIDEND OUTSTANDING LIQUIDATION CARRYING LIQUIDATION CARRYING
CLASS RATE SHARES PREFERENCE AMOUNT PREFERENCE AMOUNT
- --------------------------------------- ------------- ----------- ----------- ---------- ----------- ----------
A...................................... 15% 225,000 $ 22,500 $ 20,146 $ 26,722 $ 24,557
B...................................... 10% 274,460 27,446 27,446 30,685 30,685
C--Series 2............................ 10% 23,958 2,396 2,396 2,679 2,679
----------- ---------- ----------- ----------
Total Mandatorily Redeemable....................................... $ 52,342 $ 49,988 $ 60,086 $ 57,921
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
C--Series 1............................ 10% 76,042 $ 7,604 $ 7,604 $ 8,502 $ 8,502
----------- ---------- ----------- ----------
----------- ---------- ----------- ----------
</TABLE>
The excess of liquidation preference over the carrying amount of the Class A
Preferred Stock is being accreted by periodic charges to retained earnings to
the mandatory redemption date.
Dividends on Class A Preferred Stock are payable quarterly. Through March,
2001, such dividends are payable, at Jitney-Jungle's option, either by
cumulation to liquidation preference or in cash and thereafter are payable in
cash. Dividends on Class B Preferred Stock and Class C Preferred Stock cumulate
on a compounding basis until paid. Cumulative dividends not declared or paid on
preferred shares aggregated $8,642 at May 3, 1997.
The Class A Preferred Stock is redeemable at Jitney-Jungle's option, (i) at
any time after March 1, 2001 at a price equal to the then applicable liquidation
preference plus accrued and unpaid dividends and a prepayment premium or (ii) on
or prior to March 1, 1999 with the proceeds of a public offering of common stock
at a price per share equal to 114% of the then applicable liquidation preference
plus accrued and unpaid dividends thereon. All of the Class A Preferred Stock is
required to be redeemed on or before March, 2008 at a price per share equal to
the then applicable liquidation preference, plus accrued and unpaid dividends
thereon.
The Class B Preferred Stock and Class C Preferred Stock, Series 2, are
redeemable at Jitney-Jungle's option at any time, in whole or in part, at a
price per share equal to the then applicable liquidation preference, plus
accrued and unpaid dividends. All of the Class B Preferred Stock and all of the
Class C Preferred Stock, Series 2, are required to be redeemed in March, 2010
and March, 2011, respectively, at a price per share equal to the then applicable
liquidation preference plus accrued and unpaid dividends (including cumulated
dividends). The Class C Preferred Stock, Series 1, is not redeemable by
Jitney-Jungle at any time.
Under certain conditions, as defined, Jitney-Jungle is required to offer to
repurchase all shares of preferred stock. Upon a change in control,
Jitney-Jungle is required to offer to repurchase all shares of the
F-17
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
9. CAPITAL STOCK (CONTINUED)
Class A Preferred Stock at 101% of the then applicable liquidation preference
plus accrued and unpaid dividends and all shares of Class B Preferred Stock and
all shares of Class C Preferred Stock, Series 1 and Series 2, at 100% of the
liquidation preference thereof plus accrued and unpaid dividends. In addition,
Jitney-Jungle is required to offer to apply, subject to certain limitations, net
proceeds raised through a primary issuance of securities junior to Class B
Preferred Stock to repurchase shares of Class B Preferred Stock.
Except as required by law and with respect to certain specified matters,
Class A Preferred Stock has no voting rights. Neither the Class B Preferred
Stock nor the Class C Preferred Stock has any voting rights, except as required
by law.
The Class A Preferred Stock is exchangeable (with cumulated dividends) at
Jitney-Jungle's option, in whole but not in part, for subordinated exchange
debentures of Jitney-Jungle. The exchange debentures will pay interest from the
date of the exchange at the rate of 15% per annum, consisting of, at Jitney-
Jungle's option, additional exchange debentures or cash on or prior to March
2001 and cash thereafter. The exchange debentures will mature in March 2008.
Class A Preferred Stock ranks senior to Class B Preferred Stock and Class C
Preferred Stock in right of payment of cash dividends, liquidation preference
and redemption (both mandatory and optional). The Class C Preferred Stock ranks
junior to the Class B Preferred Stock in right of such cash payments.
The Credit Facility and the Indenture (See Note 7) restrict Jitney-Jungle's
ability to pay cash dividends, exchange Class A Preferred Stock for exchange
debentures and redeem or repurchase Class A Preferred Stock, Class B Preferred
Stock, Class C Preferred Stock and exchange debentures.
WARRANTS
Warrants to purchase 75,000 shares of common stock were issued in
conjunction with the Merger (See Note 2) and were outstanding as of April 27,
1996 and May 3, 1997. The warrants were recorded at fair value of $881 at date
of issue. The warrants have an exercise price of $.01 per share and will expire
in 2008.
10. EMPLOYEE BENEFIT AND COMPENSATION PLANS
Jitney-Jungle has a profit-sharing plan covering substantially all employees
with one or more years' service. Contributions are made at the discretion of the
Board of Directors of Jitney-Jungle and totaled $1,200 in fiscal 1995, 1996, and
1997.
Prior to March 1996, Jitney-Jungle had a Phantom Stock Plan for certain key
officers whereby deferred compensation units (expressed in shares of common
stock) were earned to the extent that performance targets (expressed in terms of
growth in stockholders' equity) were met. The amounts payable in accordance with
the provisions of the Phantom Stock Plan became fully vested and immediately
payable at the time of the Merger and Recapitalization (see Note 2). Effective
with the Merger, $4,252 was paid to the participants and $712 was applied
against the purchase price for shares of Class C Preferred Stock acquired by
them in connection with the Recapitalization.
F-18
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
10. EMPLOYEE BENEFIT AND COMPENSATION PLANS (CONTINUED)
Effective with the Recapitalization, the Phantom Stock Plan was amended and
restated and renamed the Deferred Compensation Plan for Jitney-Jungle Stores of
America, Inc. Under the amended plan no further awards may be made and no other
individuals will become participants. Units credited to the participants consist
of a cash amount payable in accordance with the terms of the Phantom Stock Plan
before its amendment and an amount that will continue to be credited under the
terms of the plan to an account, the value of which will be equal to the value
of the number of shares of Class C Preferred Stock of Jitney-Jungle that could
be acquired with that amount.
With respect to the amounts that continue to be credited under the plan as
amended, an amount equal to the amount of any cash dividends that would have
been paid on the number of shares of preferred stock credited to each
participant's account will be paid to the participant at the same time as any
cash dividends actually are paid on the preferred stock. Payment otherwise will
be made under the amended plan at the same time as the preferred stock is
redeemed, in an amount equal to the redemption price times the number (or
proportionate number, in the event of a partial redemption) of shares of
preferred stock credited to the participant's account.
11. SPECIAL CHARGES
Included in special charges is approximately $1,779 attributable to the
employment agreement with Jitney-Jungle's then Chairman and Chief Executive
Officer who, in January 1997, relinquished his position and duties as Chief
Executive Officer. Payments to be made under the employment agreement were
deemed to not relate to future services to be provided by the Chairman and,
accordingly, such amounts were charged to expense in fiscal 1997.
Special charges also include termination and retirement benefits payable to
employees whose positions were eliminated.
12. FAIR VALUES OF FINANCIAL INSTRUMENTS
In accordance with Statement of Financial Accounting Standards (SFAS) No.
107, "Disclosures About Fair Value of Financial Instruments", information is
provided about the fair value of certain financial instruments for which it is
practicable to estimate that value. The fair value amounts disclosed represent
management's best estimate of fair value. In accordance with SFAS No. 107, this
disclosure excludes certain financial instruments and all nonfinancial
instruments. The aggregate fair value amounts presented are not intended to
represent the underlying aggregate fair value of Jitney-Jungle.
The estimated fair values are significantly affected by assumptions used,
principally the timing of future cash flows, the discount rate, judgments
regarding current economic conditions, risk characteristics of various financial
instruments and other factors. Because assumptions are inherently subjective in
nature, the estimated fair values cannot be substantiated by comparison to
independent quotes and, in many cases, the estimated fair values could not
necessarily be realized in an immediate sale or settlement of the instrument.
The following methods and assumptions were used by Jitney-Jungle in estimating
fair value disclosures for financial instruments:
F-19
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
12. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTINUED)
CASH AND CASH EQUIVALENTS: The carrying amount reported in the balance
sheet approximates fair value.
INVESTMENTS IN DEBT SECURITIES: The securities are carried at fair value
and are based on quoted market prices.
RECEIVABLES, ACCOUNTS PAYABLE AND ACCRUED EXPENSES: The carrying amount
reported in the balance sheet approximates fair value.
LONG-TERM DEBT: The fair value of Jitney-Jungle's Senior Notes is based on
quoted market prices. The interest rates on borrowings under the Credit Facility
reset periodically. Consequently, the carrying value of borrowings under the
Credit Facility approximates fair value.
REDEEMABLE PREFERRED STOCK: The fair value of redeemable preferred stock is
estimated at carrying value as such stock is not traded in the open market and a
market price is not readily available.
The carrying amounts and fair values of Jitney-Jungle's financial
instruments were as follows:
<TABLE>
<CAPTION>
APRIL 27, 1996 MAY 3, 1997
-------------------- --------------------
<S> <C> <C> <C> <C>
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- --------- --------- ---------
Cash and cash equivalents............................................. $ 5,676 $ 5,676 $ 14,426 14,426
Investments in debt securities........................................ 337 337
Receivables........................................................... 4,892 4,892 5,463 5,463
Accounts payable...................................................... 40,008 40,008 49,978 49,978
Accrued expenses...................................................... 23,165 23,165 33,088 33,088
Long-term debt:
Senior Notes........................................................ 200,000 204,700 200,000 217,000
Credit Facility..................................................... 39,059 39,059 8,000 8,000
Redeemable preferred stock............................................ 49,988 49,988 57,921 57,921
</TABLE>
13. ACCOUNTING STANDARD TO BE ADOPTED IN THE FUTURE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share." The new
standard changes, the presentation and method in which earnings per share are
computed and is effective for Jitney-Jungle's year ending May 2, 1998. The new
standard will be applied on a "retroactive restatement of all prior periods"
basis. Jitney-Jungle is currently in the process of ascertaining the impact the
new standard will have on its earnings per share amounts for fiscal 1997 and
prior periods.
F-20
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED APRIL 29, 1995, APRIL 27, 1996 AND MAY 3, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
14. COMMITMENTS AND CONTINGENCIES
Jitney-Jungle is defendant in certain litigation incurred in the normal
course of business. Management, after consulting legal counsel, is of the
opinion that the liability, if any, which may result from this litigation will
not have a material adverse effect on Jitney-Jungle's financial position or
results of operations.
In 1996, Jitney-Jungle entered into a five-year supply agreement, which
replaced a previously existing agreement, relating to merchandise purchases for
stores located in Memphis, Tennessee and Little Rock and Pine Bluff, Arkansas.
In fiscal 1997, Jitney-Jungle sold the operating assets of its bakery
subsidiary for $750 and received $5,250 as consideration for entering into a
five-year supply agreement with the purchaser of such operating assets. The
$5,250 is being amortized over the term of the supply agreement.
In connection with the Merger and Recapitalization, Jitney-Jungle entered
into an agreement whereby the Fund Manager is entitled to receive $250 per year
from Jitney-Jungle as a management fee for the performance of strategic and
financial planning services. The amount of the annual management fee may be
increased by up to an additional $750 per year based upon certain performance
criteria. Management fees for fiscal year 1997 approximated $250.
15. SUBSEQUENT EVENTS
On June 3, 1997, Jitney-Jungle entered into a $12,996 insurance premium
finance agreement payable in monthly installments of $473, including interest at
6.75% per annum.
On July 8, 1997, Jitney-Jungle entered into a merger agreement with
Delchamps, Inc. ("Delchamps") which operates retail supermarkets in Alabama,
Florida, Louisiana and Mississippi. Pursuant to the agreement, Jitney-Jungle has
commenced an all-cash tender offer for all of Delchamps' outstanding common
stock at a price of $30 per share. The offer is conditioned upon, among other
things, there being tendered and not withdrawn prior to the expiration date of
the offer at least two-thirds of the outstanding shares of Delchamps' common
stock. In addition, regulatory approval and consent of the holders of Jitney-
Jungle's senior notes are required. Jitney-Jungle intends to issue up to $280
million of debt to finance the acquisition and to repay indebtedness of
Delchamps in connection with the acquisition.
16. INTERIM FINANCIAL DATA
The unaudited consolidated balance sheet as of July 26, 1997 and the related
unaudited consolidated statements of earnings and of cash flows for the 12 weeks
ended July 20, 1996 and July 26, 1997 have been prepared in accordance with the
accounting policies in effect as of May 3, 1997 as set forth in the annual
consolidated financial statements. In the opinion of management, such interim
financial statements contain all adjustments (all of which are normal and
recurring in nature) necessary to present fairly Jitney-Jungle's consolidated
financial position, results of operations and cash flows.
The results of operations for the 12 weeks ended July 26, 1997 are not
necessarily indicative of results to be expected for the full year.
F-21
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of:
Delchamps, Inc.:
We have audited the accompanying consolidated balance sheets of Delchamps,
Inc. and subsidiary as of June 28, 1997 and June 29, 1996, and the related
consolidated statements of earnings, stockholders' equity, and cash flows for
each of the years in the three-year period ended June 28, 1997. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Delchamps,
Inc. and subsidiary at June 28, 1997 and June 29, 1996 and the results of their
operations and their cash flows for each of the years in the three-year period
ended June 28, 1997, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick L.L.P.
KPMG PEAT MARWICK L.L.P.
August 8, 1997
Atlanta, Georgia
F-22
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
JUNE 29, 1996 JUNE 28, 1997
------------- -------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (2)............................................................... $ 10,503 $ 5,670
Trade and other accounts receivable......................................................... 8,422 7,961
Merchandise inventories (3 and 6)........................................................... 90,797 89,726
Prepaid expenses............................................................................ 1,376 2,094
Income taxes receivable (10)................................................................ 764 --
Deferred income taxes (10).................................................................. 3,878 6,525
------------- -------------
Total current assets.................................................................... 115,740 111,976
PROPERTY AND EQUIPMENT (4):
Land........................................................................................ 15,210 13,744
Buildings and improvements.................................................................. 58,111 59,079
Fixtures and equipment...................................................................... 221,090 233,542
Construction in progress.................................................................... 9,771 2,626
------------- -------------
304,182 308,991
Less accumulated depreciation and amortization.............................................. 166,931 179,672
------------- -------------
Net property and equipment.............................................................. 137,251 129,319
OTHER ASSETS.................................................................................... 2,192 2,166
------------- -------------
TOTAL ASSETS.................................................................................... $ 255,183 $ 243,461
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current installments of obligations under capital leases (4)................................ $ 749 $ 844
Current installments of long-term debt (5).................................................. 3,760 3,697
Notes payable (6)........................................................................... 14,000 4,600
Restructure obligation (12)................................................................. 3,996 2,273
Accounts payable............................................................................ 48,308 41,571
ACCRUED EXPENSES:
Salaries and wages.......................................................................... 4,603 7,026
Licenses and other taxes.................................................................... 8,017 7,778
Other....................................................................................... 10,240 14,192
------------- -------------
Total accrued expenses...................................................................... 22,860 28,996
Income taxes(10)............................................................................ -- 885
------------- -------------
Total current liabilities................................................................... 93,673 82,836
Obligations under capital leases, excluding current installments (4)............................ 10,398 9,556
Long-term debt, excluding current installments (5).............................................. 10,839 7,142
Restructure obligation, excluding current installments (12)..................................... 15,668 13,453
Deferred income taxes (10)...................................................................... 9,225 10,211
Other liabilities............................................................................... 2,455 2,244
------------- -------------
Total liabilities........................................................................... 142,258 125,442
------------- -------------
STOCKHOLDERS' EQUITY (5 and 11):
Junior participating preferred stock of no par value. Authorized 5,000,000 shares; no shares
issued..................................................................................... -- --
Common stock of $.01 par value. Authorized 25,000,000 shares; issued 7,112,320 shares at
June 29, 1996 and 7,121,749 shares at June 28, 1997........................................ 71 71
Additional paid-in capital.................................................................. 19,657 19,856
Retained earnings........................................................................... 93,359 98,182
------------- -------------
113,087 118,109
Less:
Unamortized restricted stock award compensation (8)..................................... (162) (90)
------------- -------------
Total stockholders' equity.............................................................. 112,925 118,019
Commitments and contingencies (4, 9, and 13)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY...................................................... $ 255,183 $ 243,461
------------- -------------
------------- -------------
</TABLE>
See notes to consolidated financial statements.
F-23
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------
JULY 1, JUNE 29, JUNE 28,
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Sales................................................................... $ 1,054,088 $ 1,126,629 $ 1,102,947
Cost of Sales (3)....................................................... 798,537 863,389 830,878
Gross profit.......................................................... 255,551 263,240 272,069
Selling, general and administrative expenses ("SG&A"):
Restructuring charge (12)............................................. 28,779 -- --
Other SG&A............................................................ 261,763 250,121 254,282
Total SG&A............................................................ 290,542 250,121 254,282
Operating income (loss)............................................. (34,991) 13,119 17,787
Other (expense) income:
Interest expense...................................................... (5,375) (7,169) (5,215)
Interest income....................................................... 100 349 233
------------ ------------ ------------
Total other (expense) income............................................ (5,275) (6,820) (4,982)
Earnings (loss) before income taxes..................................... (40,266) 6,299 12,805
Income tax expense (benefit) (10)....................................... (14,600) 2,447 4,851
------------ ------------ ------------
Net earnings (loss)................................................. $ (25,666) $ 3,852 $ 7,954
------------ ------------ ------------
------------ ------------ ------------
Net earnings (loss) per common share.................................... $ (3.61) $ 0.54 $ 1.12
------------ ------------ ------------
------------ ------------ ------------
Weighted average number of common shares................................ 7,113 7,110 7,116
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-24
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
COMMON STOCK
ISSUED ADDITIONAL
------------------------ PAID-IN RETAINED GUARANTEED STOCK STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS ESOP DEBT AWARDS EQUITY
----------- ----------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at July 2, 1994............ 7,114 $ 71 $ 19,731 $ 121,434 $ (4,000) $ (936) $ 136,300
Amortization of restricted stock
awards............................ -- -- -- -- -- 539 539
Retirement of restricted stock
awards............................ (5) -- (128) -- -- 128 --
Reduction of guaranteed ESOP debt... -- -- -- -- 2,000 -- 2,000
Net loss............................ -- -- -- (25,666) -- -- (25,666)
Dividends declared of $.44 per
share............................. -- -- -- (3,131) -- -- (3,131)
----- --- ----------- ----------- ----------- ----------- -------------
Balances at July 1, 1995............ 7,109 71 19,603 92,637 (2,000) (269) 110,042
Amortization of restricted stock
awards............................ -- -- -- -- -- 21 21
Retirement of restricted stock
awards............................ (3) -- (86) -- -- 86 --
Reduction of guaranteed ESOP debt... -- -- -- -- 2,000 -- 2,000
Issuance of shares for director
compensation...................... 4 -- 108 -- -- -- 108
Stock options exercised (14)........ 2 -- 32 -- -- -- 32
Net earnings........................ -- -- -- 3,852 -- -- 3,852
Dividends declared of $.44 per
share............................. -- -- -- (3,130) -- -- (3,130)
----- --- ----------- ----------- ----------- ----------- -------------
Balances at June 29, 1996........... 7,112 71 19,657 93,359 -- (162) 112,925
Amortization of restricted stock
awards............................ -- -- -- -- -- 72 72
Issuance of shares for director
compensation...................... 8 -- 167 -- -- -- 167
Stock options exercised (14)........ 2 -- 32 -- -- -- 32
Net earnings........................ -- -- -- 7,954 -- -- 7,954
Dividends declared of $.44 per
share............................. -- -- -- (3,131) -- -- (3,131)
----- --- ----------- ----------- ----------- ----------- -------------
Balances at June 28, 1997........... 7,122 $ 71 $ 19,856 $ 98,182 $ -- $ (90) $ 118,019
----- --- ----------- ----------- ----------- ----------- -------------
----- --- ----------- ----------- ----------- ----------- -------------
</TABLE>
See notes to consolidated financial statements.
F-25
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
YEAR ENDED
JULY 1, JUNE 29, JUNE 28,
1995 1996 1997
--------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)............................................................. $ (25,666) $ 3,852 $ 7,954
Adjustment to reconcile net earnings (loss) to net cash provided by operating
activities:
Depreciation and amortization................................................... 19,472 21,771 23,719
Write-off of cost in excess of fair value of assets acquired.................... 5,050 -- --
(Gain) loss on sale of property and equipment................................... 231 (420) (2,054)
Restricted stock award amortization............................................. 667 21 72
Non cash director compensation expense.......................................... -- 108 167
Deferred income tax expense (benefit)........................................... (9,206) 1,928 (1,661)
Decrease (increase) in merchandise inventories.................................. 11,855 3,011 1,071
Increase in accounts payable, accrued expenses, and current portion of
restructure obligation........................................................ 10,887 5,567 (2,324)
Increase (decrease) in income taxes, net........................................ (6,491) 5,785 1,619
(Decrease) increase in other liabilities and restructure obligation............. 19,113 (1,653) (2,023)
Increase in other assets........................................................ (716) (890) (3,203)
--------- ----------- ----------
Net cash flows provided by operating activities................................. 25,196 39,080 23,337
--------- ----------- ----------
Cash flows from investing activities:
Additions to property and equipment............................................. (35,239) (21,671) (15,551)
Proceeds from sale of property and equipment, net............................... 611 710 4,387
--------- ----------- ----------
Net cash used in investing activities........................................... (34,628) (20,961) (11,164)
--------- ----------- ----------
Cash flows from financing activities:
Principal payments on obligation under capital leases........................... (1,576) (665) (747)
Principal payments on long-term debt and notes payable.......................... (15,333) (25,239) (26,760)
Proceeds from issuance of long-term debt and notes payable...................... 30,000 5,480 13,600
Issuance of stock options....................................................... -- 32 32
Dividends paid.................................................................. (3,131) (3,130) (3,131)
--------- ----------- ----------
Net cash (used in) provided by financing activities........................... 9,960 (23,522) (17,006)
--------- ----------- ----------
Net (decrease) increase in cash and cash equivalents............................ 528 (5,403) (4,833)
Cash and cash equivalents at beginning of year.................................. 15,378 15,906 10,503
--------- ----------- ----------
Cash and cash equivalents at end of year........................................ $ 15,906 $ 10,503 $ 5,670
--------- ----------- ----------
--------- ----------- ----------
</TABLE>
See notes to consolidated financial statements.
F-26
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. DESCRIPTION OF BUSINESS
Delchamps, Inc. and subsidiary ("Delchamps") are engaged in the business of
retail food distribution through Delchamp's supermarkets located in Alabama,
Florida, Louisiana, and Mississippi.
B. DEFINITION OF FISCAL YEAR
Delchamp's fiscal year ends on the Saturday closest to June 30. Fiscal 1995,
1996 and 1997 all comprised 52 weeks.
C. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Delchamps,
Inc. and its wholly owned wholesale subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.
D. CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, the company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
E. MERCHANDISE INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined on
the last-in, first-out ("LIFO") basis for 87% in 1995, 88% in 1996 and 89% in
1997. With respect to the remaining inventories, primarily produce and market,
cost is determined on the first-in, first-out ("FIFO") basis. Inventories
developed from the retail method comprised approximately 55% of total
inventories in 1995, 58% in 1996 and 59% in 1997.
F. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Buildings and equipment acquired
prior to July 1, 1984 are depreciated over the estimated useful lives of the
respective assets using primarily the double-declining balance method. Buildings
and equipment acquired subsequent to July 1, 1984, are depreciated over the
estimated useful lives of the respective assets using the straight-line method.
Buildings and equipment under the capital leases are stated at the lower of the
present value of the minimum lease payments at the beginning of the lease term
or fair value of the property at the inception of the lease. Assets leased under
capital leases and leasehold improvements are amortized using the straight-line
method over the lesser of the lease term or the estimated useful lives of the
related assets. Delchamps uses the following periods for depreciating and
amortizing property and equipment:
<TABLE>
<CAPTION>
10-50
Buildings............................................................... years
<S> <C>
Leasehold improvements.................................................. 10 years
Fixtures and equipment.................................................. 5-10 years
</TABLE>
F-27
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
G. COST IN EXCESS OF FAIR VALUE OF ASSETS ACQUIRED
Cost in excess of fair value of assets acquired arose from the purchase of
three supermarkets and real estate in fiscal 1988. For fiscal 1988 through 1994,
amortization was recorded over a 40 year period on a straight-line basis.
The acquired property did not achieve sales and earnings projections
prepared at the time of the acquisition. The primary cause of the short-fall in
Delchamp's projections was because of the competitors increasing promotional
activity, competitors opening new supermarkets, and competitors expanding
existing supermarkets. Delchamps determined, based on the trend of operating
results for 1988 through 1995, that the projected results of the acquired
property would not support the future amortization of the remaining balance of
the costs in excess of fair value of assets acquired. Accordingly, Delchamps
wrote-off its remaining balance of cost in excess of fair value of assets
acquired of $5.1 million in the fourth quarter of fiscal 1995.
H. INCOME TAXES
Deferred tax liabilities or assets are established for temporary differences
between financial and tax reporting bases and are subsequently adjusted to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse. The major temporary differences and their net effect are
shown in the "Income Taxes" note.
Job credits are recorded as a reduction of the provision for Federal income
taxes in the year realized.
I. EARNINGS PER SHARE
Earnings per share are computed by dividing net earnings by the weighted
average number of shares of common stock outstanding.
J. MANAGEMENT ESTIMATES
Management of Delchamps has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from these estimates.
K. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash, accounts receivable, accounts payable, and
accrued expenses approximate fair value because of the short maturity of these
items.
The carrying amounts of the notes payable and long-term debt approximate
fair value because the interest rates in these instruments approximate market
interest rates.
L. IMPAIRMENT OF LONG-LIVED ASSETS
Effective June 30, 1996, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be
F-28
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Disposed Of" ("SFAS No. 121"). SFAS No. 121 establishes accounting standards for
the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used, or to be disposed of. The
implementation did not have a significant impact on the Company's financial
condition or results of operation.
(M) STOCK COMPENSATION
During fiscal 1997, Delchamps adopted Statement of Financial Accounting
Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation," which
was effective for fiscal years beginning after December 15, 1995. The statement
encourages the use of a fair-value-based method of accounting for stock-based
awards under which the fair value of stock options is determined on the date of
grant and expensed over the vesting period. Companies may, however, continue to
measure compensation costs for those plans using the method prescribed by
Accounting Principles Board Opinion No. 25 ("APB No. 25"), "Accounting for Stock
Issued to Employees." Companies that continue to apply APB No. 25 are required
to include pro forma disclosures of net earnings and earnings per share as if
the fair-value-based method of accounting had been applied. Delchamps has
elected to continue to account for such plans under the provisions of APB No.
25. Compensation expense computed under the fair-value-based method is not
significant to the financial statements as a whole, therefore pro forma
disclosures have not been included.
(2) CASH EQUIVALENTS
Cash equivalents are stated at cost which approximates market value. Cash
equivalents at June 29, 1996 and June 28, 1997 consisted of the following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
1996 1997
--------- ---------
Euro Dollar Time Deposits...................................................................... $ 1,130 $ 2
Marketable Unit Investment Fund................................................................ 856 856
Cash Management Tax Exempt Fund................................................................ 20 77
--------- ---------
$ 2,006 $ 935
--------- ---------
--------- ---------
</TABLE>
(3) MERCHANDISE INVENTORIES
Delchamps uses the LIFO method of valuing certain of its merchandise
inventories to minimize inflation-induced inventory profits and to achieve a
better matching of current costs with current revenues. Inventories would
increase by approximately $13,780,000 at June 29, 1996 and $14,171,000 at June
28, 1997 if all of Delchamp's inventories were stated at cost determined by the
first-in, first-out method. Further, net earnings would increase by
approximately $322,000 in fiscal year 1995, increase $262,000 in fiscal year
1996, and increase $240,000 in fiscal year 1997, after applying Delchamp's
marginal tax rate and without assuming an investment return on the applicable
income tax savings
Delchamps is a member of a cooperative association from which it purchases
private label merchandise for resale and certain supermarket equipment.
Merchandise inventories purchased from this cooperative association approximated
19% of total inventory purchases in 1995, 1996 and 1997.
F-29
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(4) LEASES
Delchamps leases certain supermarket properties and equipment under capital
leases that expire over the next 11 years. Delchamps also leases warehouses,
store properties, and store equipment under noncancelable operating leases that
expire over the next 20 years. Contingent rentals on store properties are paid
as a percentage of sales in excess of a stipulated minimum. In the normal course
of business, it is expected that most leases will be renewed or replaced by
leases on other properties and equipment.
Included in property and equipment are the following amounts applicable to
capital leases:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------------
<S> <C> <C>
1996 1997
--------- ---------
Buildings................................................................................... $ 13,998 $ 13,998
Fixtures and equipment...................................................................... 19,040 19,040
--------- ---------
33,038 33,038
Less accumulated amortization............................................................... 26,888 27,578
--------- ---------
$ 6,150 $ 5,460
--------- ---------
--------- ---------
</TABLE>
Future minimum lease payments under noncancelable operating leases and the
present value of future minimum capital lease payments as of June 28, 1997 are
as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
CAPITAL OPERATING
LEASES LEASES
--------- -----------
Fiscal Year
1998....................................................................................... $ 2,081 $ 38,292
1999....................................................................................... 2,081 37,702
2000....................................................................................... 2,081 37,081
2001....................................................................................... 2,081 34,989
2002....................................................................................... 1,961 33,766
Later years.................................................................................. 6,968 241,182
--------- -----------
</TABLE>
<TABLE>
<CAPTION>
Total minimum lease payments............................................. 17,253 $ 423,012
<S> <C> <C>
---------
---------
Less amount representing interest........................................ 6,853
---------
Present value of net minimum capital lease payments...................... 10,400
Less current installments of obligations under capital leases............ 844
---------
Long-term obligations under capital leases............................... $ 9,556
---------
---------
</TABLE>
F-30
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(4) LEASES (CONTINUED)
Rental expense and contingent rentals for operating leases are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
1995 1996 1997
--------- --------- ---------
Minimum rentals.................................................................. $ 43,552 $ 45,514 $ 45,329
Contingent rentals............................................................... 99 66 129
--------- --------- ---------
$ 43,651 $ 45,580 $ 45,458
--------- --------- ---------
--------- --------- ---------
</TABLE>
Most of Delchamp's leases stipulate that Delchamps pay taxes, maintenance,
insurance, and certain other operating expenses applicable to the leased
property.
(5) LONG-TERM DEBT
Long-term debt as of June 29, 1996 and June 28, 1997 consisted of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
1996 1997
--------- ---------
5.51% note payable, due in 84 monthly installments of $297,619 in principal plus interest,
with the final installment due July 1, 2000, unsecured.................................... $ 14,286 $ 10,714
Note payable, with interest rates based on LIBOR + 1.5%, due in 60 monthly installments of
$15,625 in principal plus interest, with the final installment due March 1, 1998, secured
by deposit accounts with the lender....................................................... 313 125
--------- ---------
Total long-term debt........................................................................ 14,599 10,839
Less current installments................................................................... 3,760 3,697
--------- ---------
Long-term debt, excluding current installments.............................................. $ 10,839 $ 7,142
--------- ---------
--------- ---------
</TABLE>
Agreements underlying the notes payable contain restrictive covenants which
limit the payment of dividends, additional debt, lease rentals, and transactions
with affiliates, and require maintenance of certain working capital and equity
levels. At June 28, 1997, Delchamps was in compliance with all covenants. At
June 28, 1997, approximately $4,950,000 of Delchamp's retained earnings was
available for the payment of dividends under such restrictive provisions.
Cash payments for interest were approximately $5,368,000, $7,129,000 and
$5,268,000 in 1995, 1996 and 1997, respectively.
Aggregate annual maturities of long-term debt for fiscal years after June
28, 1997 are approximately as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
FISCAL YEAR ANNUAL MATURITIES
- ----------------------------------------------------------------------------------------------- -----------------
<S> <C>
1998........................................................................................... $ 3,697
1999........................................................................................... 3,571
2000........................................................................................... 3,571
-------
$ 10,839
-------
-------
</TABLE>
F-31
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(5) LONG-TERM DEBT (CONTINUED)
Based on the borrowing rates currently available to Delchamps for long-term
debt with similar terms and maturities, the fair value of the long-term debt
outstanding at June 29, 1996 and June 28, 1997 approximated the carrying value,
with the exception of the 5.51% note payable, the fair value of which
approximated $13.7 million and $10.0 million at June 29, 1996 and June 28, 1997,
respectively. The fair value was estimated using a discounted cash flow analysis
based on Delchamps' borrowing rate for similar liabilities.
(6) NOTES PAYABLE
Short-term borrowings as of June 29, 1996 and June 28, 1997 consisted of the
following:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
1996 1997
--------- ---------
Revolving loan commitments, due on various dates throughout fiscal 1996 and fiscal 1997,
respectively, with interest rates based on LIBOR + 1.25%, secured by all of Delchamps'
inventory................................................................................. $ 14,000 $ 4,600
</TABLE>
On June 29, 1995, Delchamps entered into a $75,000,000 revolving loan credit
agreement. The revolving loan agreement is committed through June, 1998. There
is an annual commitment fee of .25 of 1% on the unused portion. At Delchamps'
option, interest under the agreement may be based on LIBOR or the prime rate. As
of June 28, 1997, Delchamps is committed to a LIBOR contract which expires July
28, 1997 and has a weighted average interest rate of 6.9375%.
The credit agreement requires Delchamps to maintain minimum levels of
earnings and to comply with stated debt covenants. At June 28, 1997, Delchamps
was in compliance with all covenants.
(7) LEVERAGED EMPLOYEE STOCK OWNERSHIP PLAN
In November 1987, Delchamps leveraged its existing Employee Stock Ownership
Plan ("ESOP"). The ESOP used the proceeds of the loan to purchase approximately
1,097,000 shares of Delchamps' common stock. The common stock was held by the
ESOP trustee in a suspense account and these shares served as collateral for the
loan. Each year through fiscal 1996, Delchamps made a contribution to the ESOP
which the trustee used to make principal payments. With each loan payment a
portion of the common stock was released from the suspense account and allocated
to participating employees. Delchamps was required to pay interest on the loan
in excess of any dividends received on unallocated shares. Delchamps guaranteed
$20 million of ESOP debt under the loan agreement. On June 26, 1996, the ESOP
loan was repaid in full. Therefore, as of June 29, 1996 and June 28, 1997, all
shares had been allocated to participants and no shares remain in the "suspense
account."
F-32
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(8) EMPLOYEE BENEFIT AND INCENTIVE PLANS
Delchamps has an employee stock ownership plan and a profit sharing plan
pursuant to section 401(k) of the Internal Revenue Code (the "Code") which cover
substantially all employees who have completed two years of service. The profit
sharing plan was implemented in fiscal year 1995. Participants may contribute a
percentage of compensation, but not in excess of the maximum allowed under the
Code. The plan provides for a matching contribution by Delchamps. The total
annual contributions to these plans by Delchamps for fiscal 1995, 1996 and 1997
were as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
1995 1996 1997
--------- --------- ---------
Employee stock ownership plan........................................................ $ 2,000 $ 2,000 $ --
Profit sharing plan.................................................................. 1,421 1,157 1,055
--------- --------- ---------
$ 3,421 $ 3,157 $ 1,055
--------- --------- ---------
--------- --------- ---------
</TABLE>
Delchamps has an incentive compensation plan for certain management
personnel tied to Delchamps' overall performance. Incentive compensation expense
was $1,252,000 in fiscal 1996 and $2,943,000 in fiscal 1997. Incentive
compensation was not paid in 1995.
In fiscal 1988, Delchamps adopted, with stockholder approval, a restricted
stock award plan. The plan provides that a maximum of 150,000 shares of common
stock be awarded to key executives. During 1989, 138,000 shares were awarded to
key executives at a price of $.01 per share. No shares have been awarded since
1989. These awarded shares are held by Delchamps for future distribution in
accordance with the provisions of the plan. Total compensation expense to be
charged to operations over the term of the plan is approximately $3,209,000.
Total compensation expense associated with the plan was determined based on the
market value of the stock at the date of award, and is being amortized on a
straight-line basis over the period the restrictions lapse. Charges to
operations for this plan were approximately $293,000 in 1995, $21,000 in 1996
and $72,000 in 1997.
(9) POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS
Delchamps provides a postemployment longevity bonus to associates that leave
employment after either attaining age 55 or completing 25 years of service. The
amount of longevity bonus is based on length of service and is recognized on an
accrual basis as employees perform services to earn the benefits. Longevity
bonus expense was $276,000 in 1995 and $304,000 in 1996 and 1997.
F-33
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(10) INCOME TAXES
The components of income tax expense (benefit) are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
CURRENT DEFERRED TOTAL
--------- --------- ----------
1995:
Federal........................................................................ $ (4,746) $ (8,101) $ (12,847)
State.......................................................................... (648) (1,105) (1,753)
--------- --------- ----------
$ (5,394) $ (9,206) $ (14,600)
--------- --------- ----------
--------- --------- ----------
1996:
Federal........................................................................ $ 461 $ 1,711 $ 2,172
State.......................................................................... 58 217 275
--------- --------- ----------
$ 519 $ 1,928 $ 2,447
--------- --------- ----------
--------- --------- ----------
1997:
Federal........................................................................ $ 5,750 $ (1,467) $ 4,283
State.......................................................................... 762 (194) 568
--------- --------- ----------
$ 6,512 $ (1,661) $ 4,851
--------- --------- ----------
--------- --------- ----------
</TABLE>
The actual income tax expense (benefit) differs from the statutory tax rate
for all years (computed by applying the U.S. federal corporate rate to earnings
(loss) before income taxes) as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
1995 1996 1997
---------- ---------- ---------
Statutory tax rate.............................................................. $ (13,690) $ 2,142 $ 4,354
Increase (reduction) in income taxes resulting from:
State income taxes, net of Federal income tax benefit......................... (2,219) 270 570
Targeted jobs tax credits..................................................... (385) (25) --
Cost in excess of fair value of assets acquired............................... 1,771 -- --
Other, net.................................................................... (77) 60 (73)
---------- ---------- ---------
Actual tax expense (benefit)................................................ $ (14,600) $ 2,447 $ 4,851
---------- ---------- ---------
---------- ---------- ---------
Effective tax rate.............................................................. 36.3% 38.8% 37.9%
---------- ---------- ---------
---------- ---------- ---------
</TABLE>
F-34
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(10) INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to the deferred tax
assets and deferred tax liabilities are as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C>
1996 1997
--------- ---------
Deferred tax assets:
Restructure obligation..................................................................... $ 7,531 $ 6,054
Capital lease obligation................................................................... 1,939 1,901
Accrued self-insurance..................................................................... 2,879 4,515
Accrued postemployment benefits............................................................ 888 847
Other accrued liabilities.................................................................. 1,585 2,099
--------- ---------
Net deferred tax assets.................................................................... 14,797 15,416
--------- ---------
Deferred tax liabilities:
Accelerated depreciation................................................................... 19,985 18,942
Other...................................................................................... 159 160
--------- ---------
Total gross deferred liabilities........................................................... 20,144 19,102
--------- ---------
Net deferred tax liability................................................................... $ 5,347 $ 3,686
--------- ---------
--------- ---------
</TABLE>
No valuation allowance was recorded against the deferred tax assets at June
28, 1997. Delchamps' management believes the existing net deductible temporary
differences comprising the total gross deferred tax assets will reverse during
the periods in which Delchamps generates net taxable income.
Cash payments for income taxes were approximately $1,437,000, $67,000 and
$5,454,000 in fiscal 1995, 1996 and 1997, respectively.
(11) SHARE PURCHASE RIGHTS PLAN
In October 1988, Delchamps adopted a Share Purchase Rights Plan and declared
a dividend distribution of one Right for each outstanding share of common stock.
Under certain conditions, each Right may be exercised to purchase one
one-hundredth of a share of Junior Participating Preferred Stock at a purchase
price of $70, subject to adjustment. Delchamps will be entitled to redeem the
Rights at $.01 per Right at any time prior to the earlier of the expiration of
the Rights in October 1998 or ten days following the time a person or group
acquires or obtains the right to acquire a 15% position in Delchamps. The Rights
do not have voting or dividend privileges. Until such time as they become
exercisable, the Rights have no dilutive effect on the earnings per share of
Delchamps.
(12) RESTRUCTURING CHARGE
During fiscal 1995, Delchamps recorded a pretax restructuring charge of
$28.8 million. The charge reflected anticipated costs associated with a program
to close certain underperforming stores which could not be subleased in whole or
in part and, to a lesser extent, severance costs related to the termination of
employment of former executives. Of the total $28.8 million restructuring
reserve, $3.2 million, $5.9 million
F-35
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(12) RESTRUCTURING CHARGE (CONTINUED)
and $3.9 million of costs and payments have been charged against the reserve for
fiscal 1995, 1996 and 1997, respectively. A detail of charges against the
restructure obligation follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
1995 1996 1997
--------- --------- ---------
Lease payments....................................................................... $ 1,421 $ 3,438 $ 2,745
Inventory write-offs................................................................. -- 253 300
Fixture and equipment write-offs..................................................... 24 1,828 138
Severance payments................................................................... 1,752 400 755
--------- --------- ---------
$ 3,197 $ 5,919 $ 3,938
--------- --------- ---------
--------- --------- ---------
</TABLE>
(13) COMMITMENTS AND CONTINGENCIES
Delchamps is a defendant in various claims and legal actions considered to
be in the normal course of business. Management intends to vigorously defend
these claims and believes that the ultimate disposition of these matters will
not have a material adverse effect on Delchamps' consolidated financial
condition.
In fiscal 1989, and subsequently, Delchamps has entered into certain
agreements with officers and key management. The agreements contain provisions
entitling each officer or employee covered by these agreements to receive from 1
to 3 times his annual compensation (as defined) if there is a change in control
of Delchamps (as defined) and a termination of his employment. The agreements
also provide for severance benefits under certain other circumstances. The
agreements do not constitute employment contracts and only apply in
circumstances following a change in control of Delchamps. In the event of a
change in control of Delchamps and termination of all persons covered by these
agreements, the cost would be approximately $12,100,000.
(14) STOCK INCENTIVE PLAN
Key employees of Delchamps (including officers and directors who are also
full-time employees of Delchamps) are eligible to receive one or more of the
following: incentive stock options and non-qualified stock options, stock
awards, restricted stock, performance shares, and cash awards. Approximately
460,800 stock options have been granted of which approximately 351,550 shares
are exercisable as of June 28, 1997. The stock options expire from December 2000
through October 2006. During fiscal 1997, approximately 2,000 options were
exercised. Exercise prices range from $17.88 to $23.00 which was market value at
date of grant.
F-36
<PAGE>
DELCHAMPS, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED JULY 1, 1995, JUNE 29, 1996 AND JUNE 28, 1997
(15) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected quarterly financial data for the years ended June 29, 1996 and June
28, 1997 is summarized as follows:
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL
QUARTERS
1996 FIRST SECOND THIRD FOURTH
- ------------------------------------------------------------- ---------- -------------- ---------- ----------
Sales........................................................ $ 284,689 $ 277,053 $ 280,225 $ 284,662
Gross profit................................................. 64,470 64,915 65,684 68,171
Earnings (loss) before tax................................... (1,124) 1,290 1,897 4,236
Net earnings (loss).......................................... (756) 808 1,147 2,653
Net earnings (loss) per common share......................... (0.11) 0.12 0.16 0.37
Dividends declared per common share.......................... 0.11 0.11 0.11 0.11
</TABLE>
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
--------------------------------------------------
<S> <C> <C> <C> <C>
FISCAL
QUARTERS
1997 FIRST SECOND THIRD FOURTH
- ------------------------------------------------------------- ---------- -------------- ---------- ----------
Sales........................................................ $ 289,699 $ 272,602 $ 273,753 $ 266,893
Gross profit................................................. 65,367 65,116 69,182 72,404
Earnings before tax.......................................... 343 321 4,428 7,713
Net earnings................................................. 204 176 2,720 4,854
Net earnings per common share................................ .03 .03 .38 .68
Dividends declared per common share.......................... 0.11 0.11 0.11 0.11
</TABLE>
(16) SUBSEQUENT EVENT
On July 8, 1997, Delchamps announced that it had entered into an agreement
to be acquired by Jitney-Jungle Stores of America, Inc. ("Jitney-Jungle"). The
terms of the agreement are described in Delchamps' 14D-9 and in Jitney-Jungle's
14D-1, both of which have been filed with the Securities and Exchange
Commission. Pursuant to the agreement, Jitney-Jungle has begun an all-cash
tender offer for all of Delchamps' outstanding common stock at a price of $30
per share. Following successful completion of the tender offer, Jitney-Jungle
will acquire for the same cash price any shares that are not tendered by means
of a merger of Delchamps with a wholly owned subsidiary of Jitney-Jungle.
Delchamps' Board of Directors has approved the transaction unanimously and has
recommended approval by Delchamps' stockholders.
F-37
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF.
------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Summary................................................................... 3
Use of Proceeds........................................................... 8
Risk Factors.............................................................. 14
The Transactions.......................................................... 20
Pro Forma Capitalization.................................................. 22
Pro Forma Condensed Consolidated Financial Statements..................... 23
Pro Forma Liquidity....................................................... 35
Selected Historical Financial Information of Jitney-Jungle................ 37
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Jitney-Jungle............................................. 38
Selected Historical Financial Information of Delchamps.................... 44
Management's Discussion and Analysis of Financial Condition and Results of
Operations of Delchamps................................................. 46
The Exchange Offer........................................................ 50
Business.................................................................. 56
Management................................................................ 68
Ownership of Capital Stock................................................ 74
Certain Relationships and Related Transactions............................ 78
Description of Certain Indebtedness....................................... 80
Description of the Notes.................................................. 83
Book-Entry; Delivery and Form............................................. 112
Certain Federal Income Tax Considerations................................. 114
Plan of Distribution...................................................... 115
Legal Matters............................................................. 116
Experts................................................................... 116
Index to Financial Statements............................................. F-1
</TABLE>
------------------------
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THE
ORIGINAL DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
PROSPECTUS
$200,000,000
[LOGO]
JITNEY-JUNGLE STORES OF AMERICA, INC.
OFFER TO EXCHANGE
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
FOR ALL OUTSTANDING
10 3/8% SENIOR SUBORDINATED NOTES DUE 2007
, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 79-48.51 of the Mississippi Business Corporation Act provides that a
Mississippi corporation may indemnify an individual made a party to a proceeding
because he is or was a director against liability incurred in the proceeding if
the individual (1) conducted himself in good faith; (2) reasonably believed (i)
in the case of conduct in his official capacity with the corporation, that his
conduct was in its best interests; and (ii) in all other cases, that his conduct
was a least not opposed to its best interests; and (3) in the case of any
criminal proceeding, he had no reasonable cause to believe his conduct was
unlawful. A corporation may indemnify a director in these circumstances only
upon specific authorization by the board of directors (or in certain
circumstances, a committee thereof) special legal counsel or by shareholders as
provided in Section 79-4-8.55. Section 79-4-8.52 of the Mississippi Business
Corporation Act provides that a Mississippi corporation must indemnify a
director who was wholly successful, on the merits or otherwise, in the defense
of any proceeding to which he was a party because he is or was a director of the
corporation against reasonable expenses incurred by him in connection with the
proceeding, unless the articles of incorporation provide otherwise.
The Articles of Incorporation of the Company provide that a director of the
Company shall not be liable to the corporation or its shareholders for money
damages for an action taken, or any failure to take any action, as a director,
except liability for: (i) the amount of a financial benefit received by a
director to which he is not entitled: (ii) an intentional infliction of harm on
the corporation or the shareholders; (ii) a violation Section 79-4-8.33 of the
Mississippi Business Corporation Act regarding unlawful distributions; or (iv)
an intentional violation of criminal law.
The bylaws of the Company provide that the Company will indemnify any person
who is a party or is threatened to be made a party to any threatened, pending or
instituted action, suit or proceedings, whether civil, criminal, administrative
or investigative by reason of the fact that he is or was a director or officer
of the Company, or is or was servicing at the request of the Company as a
director or officer of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, attorneys' fees, judgments, fines and
amounts paid in settlement actually and reasonable incurred by him in connection
with such action, suit or proceeding interests of the Company, and, with respect
to any criminal action or proceeding, had no reasonable judgment, order,
settlement, conviction, or plea or nolo contendere or its equivalent, will not,
in itself, create a presumption that the person did not act in good faith and in
a manner which reasonably believed to be in or not opposed to the best interests
of the Company, and with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful. The provision does
not apply to such claims on behalf of the Company against such director or
officer.
To the extent that any person described above has been successful on the
merits or otherwise in defense of any action, suit or proceeding or in defense
of any claim, issue or matter discussed above, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
Such indemnification under the bylaws may be made by the Company only as
authorized in each specific case upon a determination that indemnification of
the director or officer is proper under the determination shall be made, (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such actions, suit or proceedings, or (ii) if such
quorum is not obtainable, or even if obtainable a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or
(iii) by the shareholders.
Expenses incurred in defending a civil or criminal action, suit or
proceeding may be paid by the Company in advance of the final disposition of
such action, suit or proceeding if authorized by the Board
II-1
<PAGE>
of Directors in a specific case upon receipt of an undertaking by or on behalf
of the director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Company.
The indemnification provided by the bylaws should not be deemed exclusive of
any other rights to which a person seeking indemnification maybe e entitled
under any statute, by-law, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to a
person who has ceased to be a director or officer and shall inure to the benefit
of the heirs, executors and administrators or such a person.
The Company has power to purchase and maintain insurance on behalf of any
person who is or was a director or officer of the Company, or is or was serving
at the request of the Company as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, against any lability
asserted against him or incurred by him in any such capacity, or arising out of
his status as such, whether or not the Company would have the power to indemnify
him against such liability under the provisions of the bylaws. The Company has
the power to designate an attorney for such persons, and in any event, any
officer or director must notify the Board of Directors, in writing of any
potential claim or threatened action against him in order to be entitled to
indemnification. The requisite notice must be given within a reasonable time.
The foregoing summary of the Mississippi Business Corporation Act, of the
Company's Articles of Incorporation and of the Company's Bylaws, is qualified in
its entirety by reference to the relevant provisions of the Mississippi Business
Corporation Act and by reference to the relevant provisions of the Company's
Articles of Incorporation (filed as Exhibit 3.1) and the relevant provisions of
the Company's By-laws (filed as Exhibit 3.2).
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Exchange and of Merger, dated as of November 16, 1995 by and among JJ Acquisitions
Corp. and the Company, Southern Jitney-Jungle Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery,
Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the Commission on February 27, 1996)
3.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.3
to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on
February 27, 1996)
3.2 Restated by-laws of the Company (incorporated by reference to Exhibit 3.6 to Amendment No. 2 to Form S-1
[No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
4.1 Indenture dated as of September 15, 1997 between the Company, the Subsidiary Guarantors and Marine
Midland Bank, as Trustee
4.2 Registration Rights Agreement dated as of September 15, 1997 among the Company, the Subsidiary
Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston
4.3 Form of the Company's 10 3/8% Senior Subordinated Notes due 2007 (included in Exhibit 4.1)
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
4.4 Revolving Credit Agreement dated September 15, 1997 by and among Fleet Capital Corporation and the
Company
4.5 Indenture dated March 5, 1996 between the Company and Marine Midland Bank, as Trustee, relating to the
issuance and sale of $200,000,000 aggregate principal amount of 12% Senior Notes due 2006 (incorporated
by reference to Exhibit No. 4.2 to Amendment No. 2 to Form S- 1 [No. 33-80833] of JJ Acquisition Corp.
filed with the Commission on February 27, 1996)
4.6 Warrant dated March 4, 1996 to purchase 75,000 shares of Common Stock of the Company by DLJ Merchant
Banking Partners, L.P. and related investors (incorporated by reference by Exhibit No. 4.3 to Amendment
No. 2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisition Corp. filed with the Commission on
February 27, 1996)
4.7 Memorandum of Agreement dated October 15, 1985 by and among the City of Jackson, Mississippi and
McCarty-Holman Co., Inc. ($3,650,000)(incorporated by reference to Exhibit No. 4.8 to Amendment No. 2 to
Form S-1 [No. 33-80833] of JJ Acquisitions corp. filed with the Commission on February 27, 1996)
5.1 Opinion of Dechert Price & Rhoads*
9.1 Voting Trust Agreement dated November 1, 1990 by and among Carolyn Holman Kroeze, as Executrix and the
parties named therein (incorporated by reference to Exhibit No. 9.1 to Amendment No. 2 to Form S-1 [No.
33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.1 Purchase Agreement dated September 10, 1997 among the Company, Donaldson, Lufkin & Jenrette Securities
Corporation and Credit Suisse First Boston with respect to the 10 3/8% Senior Subordinated Notes due 2007
10.2 Supply Agreement dated March 19, 1989 as amended by and among Fleming Companies Inc. (successor in
interest to Malone & Hyde, Inc.), the Company and Interstate Jitney-Jungle Stores, Inc. (incorporated by
reference to Exhibit No. 10.2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27, 1996)
10.3 Membership in Topco Associates, Inc. (Cooperative) by ownership of six hundred (600) shares of Common
Stock, such stock certificate being dated July 1, 1991 (incorporated by reference to Exhibit No. 10.3 to
Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisition Corp. filed with the Commission on February
27, 1996)
10.4 Flour Sale Confirmation and Contract dated July 19, 1995 by and among Cargill, Incorporated and
Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit No. 10.4 to Amendment No. 2 to Form S-1
[No. 33-808833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.5 Employment Agreement dated as of February 15, 1995 by and among the Company and Roger P. Friou
(incorporated by reference to Exhibit 10.6 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions corp. filed with the Commission on February 27, 1996)
10.6 Employment Agreement dated as of February 24, 1995 by and among the Company and David K. Essary
(incorporated by reference to Exhibit 10.7 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the Commission on February 27, 1996)
10.7 Employment Agreement dated as of March 5, 1996 by and among the Company and W.H. Holman, Jr.
(incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K, dated July 24,
1997)
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.8 Employment Agreement dated as of March 5, 1996 by and among the Company and W.H. Holman, III
(incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K, dated July 24,
1997)
10.9 Restatement and Amendment by the Entirety of the Jitney-Jungle Stores of America, Inc. and Affiliates
Profit Sharing Plan and Trust (incorporated by reference to Exhibit No. 10.8 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.10 Deferred Compensation Plan for the Company dated as of November 16, 1995 by and among the Company,
Southern Jitney-Jungle Company, Jitney-Jungle Bakery, Inc. McCarty-Holman Co., Inc. and W.H. Holman, Jr.,
Roger P. Friou and David K. Essary (incorporated by reference to Exhibit No. 10.9 to Amendment No. 2 to
Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.11 Shareholders Agreement dated as of March 5, 1996 by and among DLJ Merchant Banking Partners, L.P. JJ
Acquisitions Corp., and certain other signatories party thereto (incorporated by reference to Exhibit No.
10.10 to Amendment No. 2 to Forms S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission
on February 27, 1996)
10.12 Securities Purchase and Holders Agreement dated as of March 5, 1996 by and among JJ Acquisitions Corp.,
Bruckmann, Rosser, Sherrill & Co., L.P. and other parties thereto (incorporated by reference to Exhibit
No. 10.12 to Amendment No. 2 to Form S-1 [No. 33- 80833] of JJ Acquisitions Corp. filed with the
commission on February 27, 1996)
10.13 Registration Rights Agreement dated as of March 5, 1996 dated as of March 5, 1996 by and among the
Company and other parties named therein (incorporated by reference to Exhibit No. 10.13 to Amendment No.
2 to Form S-1 [No.33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
12.1 Statement of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1)
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of KPMG Peat Marwick
24 Power of Attorney (included on signature pages of this Registration Statement)
25 Statement of Eligibility and Qualification, Form T-1, of Marine Midland Bank
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
</TABLE>
- ------------------------
* To be supplied by amendment.
(b) Financial Statement Schedules:
Schedule II--Valuation and Qualifying Accounts and Reserves
Schedules not listed above are omitted because of the absence of the
conditions under which they are required or because the information required by
such omitted schedules is set forth in the financial statements or the notes
thereto.
II-4
<PAGE>
ITEM 22. UNDERTAKINGS
(a) The undersigned registrants hereby undertake:
(1) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
(2) that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(c) The undersigned registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this Form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
(d) The undersigned registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-5
<PAGE>
SIGNATURES
JITNEY-JUNGLE STORES OF AMERICA, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
JITNEY-JUNGLE STORES OF AMERICA, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Finance and Chief
- ------------------------------ Financial Officer
David R. Black (Principal Accounting
Officer)
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-7
<PAGE>
INTERSTATE JITNEY-JUNGLE STORES, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
INTERSTATE JITNEY-JUNGLE STORES, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer
- ------------------------------ and Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-8
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-9
<PAGE>
MCCARTY-HOLMAN CO., INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
MCCARTY-HOLMAN CO., INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer
- ------------------------------ and Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-10
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-11
<PAGE>
SOUTHERN JITNEY JUNGLE COMPANY
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
SOUTHERN JITNEY JUNGLE COMPANY
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer
- ------------------------------ and Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ ROBER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-12
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-13
<PAGE>
PUMP AND SAVE, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
PUMP AND SAVE, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
/s/ MICHAEL E. JULIAN Chief Executive Officer
- ------------------------------ and Director (Principal
Michael E. Julian Executive Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer
- ------------------------------ and Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-14
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-15
<PAGE>
DELTA ACQUISITION CORPORATION
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
DELTA ACQUISITION CORPORATION
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian, and
David R. Black, either of whom may act as his true and lawful attorney-in-fact
and agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or their substitute or substitutes
may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer, Secretary and
- ------------------------------ Director (Principal
Michael E. Julian Executive Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer,
- ------------------------------ Assistant Secretary and
David R. Black Treasurer (Principal
Accounting Officer)
</TABLE>
II-16
<PAGE>
SUPERMARKET CIGARETTE SALES, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
SUPERMARKET CIGARETTE SALES, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
Treasurer, Chief
/s/ DAVID R. BLACK Financial Officer and
- ------------------------------ Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ W.H. HOLMAN, JR.
- ------------------------------ Director
W.H. Holman, Jr.
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-17
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ CARL F. BAILEY
- ------------------------------ Director
Carl F. Bailey
/s/ E.E. BISHOP
- ------------------------------ Director
E.E. Bishop
/s/ WILLIAM W. CRAWFORD
- ------------------------------ Director
William W. Crawford
</TABLE>
II-18
<PAGE>
JITNEY-JUNGLE BAKERY, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
JITNEY-JUNGLE BAKERY, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ W.H. HOLMAN, JR.
- ------------------------------ Chairman of the Board
W.H. Holman, Jr.
President, Chief Executive
/s/ MICHAEL E. JULIAN Officer and Director
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Chief Financial Officer
- ------------------------------ and Assistant Secretary
David R. Black (Principal Accounting
Officer)
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-19
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ JOHN M. MORIARTY, JR.
- ------------------------------ Director
John M. Moriarty, Jr.
/s/ RONALD E. JOHNSON
- ------------------------------ Director
Ronald E. Johnson
/s/ BERNARD E. EBBERS
- ------------------------------ Director
Bernard E. Ebbers
/s/ DONALD BENNETT
- ------------------------------ Director
Donald Bennett
</TABLE>
II-20
<PAGE>
DELCHAMPS, INC.
Pursuant to the requirements of the Securities Act of 1933, as amended, the
above-named Registrant has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Jackson, State of Mississippi, on the 28th day of October, 1997.
<TABLE>
<S> <C> <C>
DELCHAMPS, INC.
By: /s/ MICHAEL E. JULIAN
-----------------------------------------
Michael E. Julian
CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
Each person whose signature appears below appoints Michael E. Julian and
David R. Black, either of whom may act without the joinder of the other, as his
true and lawful attorney-in-fact and agent with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and all other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or their substitute or substitutes may lawfully do or cause to be
done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on October 28, 1997.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
Chairman of the Board and
/s/ MICHAEL E. JULIAN Chief Executive Officer
- ------------------------------ (Principal Executive
Michael E. Julian Officer)
Senior Vice President,
/s/ DAVID R. BLACK Treasurer, Chief
- ------------------------------ Financial Officer and
David R. Black Secretary (Principal
Accounting Officer)
/s/ E.E. BISHOP
- ------------------------------ Director
E.E. Bishop
/s/ BRUCE C. BRUCKMANN
- ------------------------------ Director
Bruce C. Bruckmann
/s/ ROGER P. FRIOU
- ------------------------------ Director
Roger P. Friou
/s/ WILLIAM W. CRAWFORD
- ------------------------------ Director
William W. Crawford
/s/ W.H. HOLMAN, JR.
- ------------------------------ Director
W.H. Holman, Jr.
</TABLE>
II-21
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------ --------------------------
<S> <C>
/s/ CARL F. BAILEY
- ------------------------------ Director
Carl F. Bailey
/s/ HAROLD O. ROSSER II
- ------------------------------ Director
Harold O. Rosser II
/s/ STEPHEN C. SHERRILL
- ------------------------------ Director
Stephen C. Sherrill
</TABLE>
II-22
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Agreement and Plan of Exchange and of Merger, dated as of November 16, 1995 by and among JJ Acquisitions
Corp. and the Company, Southern Jitney-Jungle Company, McCarty-Holman Co., Inc. and Jitney-Jungle Bakery,
Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the Commission on February 27, 1996)
3.1 Amended and Restated Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.3
to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on
February 27, 1996)
3.2 Restated by-laws of the Company (incorporated by reference to Exhibit 3.6 to Amendment No. 2 to Form S-1
[No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
4.1 Indenture dated as of September 15, 1997 between the Company, the Subsidiary Guarantors and Marine
Midland Bank, as Trustee
4.2 Registration Rights Agreement dated as of September 15, 1997 among the Company, the Subsidiary
Guarantors, Donaldson, Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston
4.3 Form of the Company's 10 3/8% Senior Subordinated Notes due 2007 (included in Exhibit 4.1)
4.4 Revolving Credit Agreement dated September 15, 1997 by and among Fleet Capital Corporation and the
Company
4.5 Indenture dated March 5, 1996 between the Company and Marine Midland Bank, as Trustee, relating to the
issuance and sale of $200,000,000 aggregate principal amount of 12% Senior Notes due 2006 (incorporated
by reference to Exhibit No. 4.2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisition Corp.
filed with the Commission on February 27, 1996)
4.6 Warrant dated March 4, 1996 to purchase 75,000 shares of Common Stock of the Company by DLJ Merchant
Banking Partners, L.P. and related investors (incorporated by reference by Exhibit No. 4.3 to Amendment
No. 2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisition Corp. filed with the Commission on
February 27, 1996)
4.7 Memorandum of Agreement dated October 15, 1985 by and among the City of Jackson, Mississippi and
McCarty-Holman Co., Inc. ($3,650,000)(incorporated by reference to Exhibit No. 4.8 to Amendment No. 2 to
Form S-1 [No. 33-80833] of JJ Acquisitions corp. filed with the Commission on February 27, 1996)
5.1 Opinion of Dechert Price & Rhoads*
9.1 Voting Trust Agreement dated November 1, 1990 by and among Carolyn Holman Kroeze, as Executrix and the
parties named therein (incorporated by reference to Exhibit No. 9.1 to Amendment No. 2 to Form S-1 [No.
33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.1 Purchase Agreement dated September 10, 1997 among the Company, Donaldson, Lufkin & Jenrette Securities
Corporation and Credit Suisse First Boston with respect to the 10% Senior Subordinated Notes due 2007
10.2 Supply Agreement dated March 19, 1989 as amended by and among Fleming Companies Inc. (successor in
interest to Malone & Hyde, Inc.), the Company and Interstate Jitney-Jungle Stores, Inc. (incorporated by
reference to Exhibit No. 10.2 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp.
filed with the Commission on February 27, 1996)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
10.3 Membership in Topco Associates, Inc. (Cooperative) by ownership of six hundred (600) shares of Common
Stock, such stock certificate being dated July 1, 1991 (incorporated by reference to Exhibit No. 10.3 to
Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisition Corp. filed with the Commission on February
27, 1996)
10.4 Flour Sale Confirmation and Contract dated July 19, 1995 by and among Cargill, Incorporated and
Jitney-Jungle Bakery, Inc. (incorporated by reference to Exhibit No. 10.4 to Amendment No. 2 to Form S-1
[No. 33-808833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.5 Employment Agreement dated as of February 15, 1995 by and among the Company and Roger P. Friou
(incorporated by reference to Exhibit 10.6 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions corp. filed with the Commission on February 27, 1996)
10.6 Employment Agreement dated as of February 24, 1995 by and among the Company and David K. Essary
(incorporated by reference to Exhibit 10.7 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ
Acquisitions Corp. filed with the Commission on February 27, 1996)
10.7 Employment Agreement dated as of March 5, 1996 by and among the Company and W.H. Holman, Jr.
(incorporated by reference to Exhibit 10.6 to the Company's Annual Report on Form 10-K, dated July 24,
1997)
10.8 Employment Agreement dated as of March 5, 1996 by and among the Company and W.H. Holman, III
(incorporated by reference to Exhibit 10.7 to the Company's Annual Report on Form 10-K, dated July 24,
1997)
10.9 Restatement and Amendment by the Entirety of the Jitney-Jungle Stores of America, Inc. and Affiliates
Profit Sharing Plan and Trust (incorporated by reference to Exhibit No. 10.8 to Amendment No. 2 to Form
S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.10 Deferred Compensation Plan for the Company dated as of November 16, 1995 by and among the Company,
Southern Jitney-Jungle Company, Jitney-Jungle Bakery, Inc. McCarty-Holman Co., Inc. and W.H. Holman, Jr.,
Roger P. Friou and David K. Essary (incorporated by reference to Exhibit No. 10.9 to Amendment No. 2 to
Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
10.11 Shareholders Agreement dated as of March 5, 1996 by and among DLJ Merchant Banking Partners, L.P. JJ
Acquisitions Corp., and certain other signatories party thereto (incorporated by reference to Exhibit No.
10.10 to Amendment No. 2 to Forms S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the Commission
on February 27, 1996)
10.12 Securities Purchase and Holders Agreement dated as of March 5, 1996 by and among JJ Acquisitions Corp.,
Bruckmann, Rosser, Sherrill & Co., L.P. and other parties thereto (incorporated by reference to Exhibit
No. 10.12 to Amendment No. 2 to Form S-1 [No. 33-80833] of JJ Acquisitions Corp. filed with the
commission on February 27, 1996)
10.13 Registration Rights Agreement dated as of March 5, 1996 dated as of March 5, 1996 by and among the
Company and other parties named therein (incorporated by reference to Exhibit No. 10.13 to Amendment No.
2 to Form S-1 [No.33-80833] of JJ Acquisitions Corp. filed with the Commission on February 27, 1996)
12.1 Statement of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of Dechert Price & Rhoads (included in Exhibit 5.1)
23.3 Consent of Deloitte & Touche LLP
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ---------- ---------------------------------------------------------------------------------------------------------
<S> <C>
23.4 Consent of KPMG Peat Marwick
24 Power of Attorney (included on signature pages of this Registration Statement)
25 Statement of Eligibility and Qualification, Form T-1, of Marine Midland Bank
99.1 Form of Letter of Transmittal*
99.2 Form of Notice of Guaranteed Delivery*
</TABLE>
- ------------------------
* To be supplied by amendment.
<PAGE>
EXHIBIT 4.1
EXECUTION COPY
================================================================================
JITNEY-JUNGLE STORES OF AMERICA, INC.
INTERSTATE JITNEY JUNGLE STORES, INC.
MCCARTY-HOLMAN CO., INC.
SOUTHERN JITNEY JUNGLE COMPANY
PUMP AND SAVE, INC.
DELTA ACQUISITION CORPORATION
DELCHAMPS, INC.
SUPERMARKET CIGARETTE SALES, INC.
-----------------------------------------
$200,000,000
103/8% SENIOR SUBORDINATED NOTES DUE 2007
-----------------------------------------
----------------
INDENTURE
DATED AS OF SEPTEMBER 15, 1997
----------------
MARINE MIDLAND BANK
Trustee
================================================================================
<PAGE>
Indenture, dated as of September 15, 1997, among Jitney-Jungle Stores of
America, Inc., a Mississippi corporation, (the "COMPANY"), Interstate
Jitney-Jungle Stores, Inc., an Alabama corporation ("INTERSTATE"),
McCarty-Holman Co., Inc., a Mississippi corporation ("MCCARTY-HOLMAN"), Southern
Jitney Jungle Company, a Mississippi corporation ("SOUTHERN"), Pump And Save,
Inc., a Mississippi corporation ("PUMP AND SAVE"), Delta Acquisition
Corporation, an Alabama corporation ("DAC"), Delchamps, Inc., an Alabama
corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a Louisiana
corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern, Pump And
Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together with any
Subsidiary of the Company that executes a Subsidiary Guarantee substantially in
the form of EXHIBIT D attached hereto, the "SUBSIDIARY GUARANTORS") and Marine
Midland Bank, as trustee (the "TRUSTEE").
The Company, the Subsidiary Guarantors and the Trustee agree as follows for
the benefit of each other and for the equal and ratable benefit of the holders
of the Company's 103/8% Senior Subordinated Notes due 2007 (the "SENIOR
SUBORDINATED NOTES") and the new 103/8% Senior Subordinated Notes due 2007 (the
"NEW SENIOR SUBORDINATED NOTES" and, together with the Senior Subordinated
Notes, the "NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"1996 MERGER" means the transactions contemplated by the 1996 Merger
Agreement.
"1996 MERGER AGREEMENT" means the Merger Agreement and Plan of Exchange and
Merger, dated as of November 16, 1995, by and among BRS No. 1, Inc. (renamed JJ
Acquisitions Corp.) and the Company, Southern, McCarty-Holman and Jitney-Jungle
Bakery, Inc., as amended.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified Person
and (ii) Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Notwithstanding the foregoing, in no event will the
holders of Indebtedness under or in respect of the Senior Credit Facility (by
reason of holding such Indebtedness) or Donaldson, Lufkin & Jenrette Securities
Corporation or any of their respective Affiliates be deemed Affiliates of the
Company or any of its Affiliates.
"AGENT" means any Registrar, Paying Agent or co-registrar.
1
<PAGE>
"APPLICABLE PROCEDURES" means applicable procedures of the Depositary,
Euroclear or Cedel, as the case may be.
"ASSET SALE" means: (i) the sale, conveyance, transfer or other disposition
of any assets (including, without limitation, by way of a sale and leaseback)
other than sales of inventory in the ordinary course of business (provided that
the sale, conveyance, transfer or other disposition of all or substantially all
of the assets of the Company and its Restricted Subsidiaries taken as a whole
will be governed by the provisions of Sections 3.09, 4.14 and/or 5.01 hereof and
not by the provisions of Section 4.10 hereof) or (ii) the issuance or sale by
the Company or any of its Restricted Subsidiaries of Equity Interests of any of
the Company's Restricted Subsidiaries, in the case of clauses (i) and (ii)
above, whether in a single transaction or a series of related transactions for
net proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i) a
sale, conveyance, transfer or other disposition of assets by the Company to a
Wholly Owned Restricted Subsidiary or by a Wholly Owned Restricted Subsidiary to
the Company or to another Wholly Owned Restricted Subsidiary; (ii) an issuance
of Equity Interests by a Wholly Owned Restricted Subsidiary to the Company or to
another Wholly Owned Restricted Subsidiary and (iii) a Restricted Payment that
is permitted by Section 4.07 hereof, in each case, shall not be deemed to be
Asset Sales.
"ATTRIBUTABLE DEBT" means, in respect of a sale and leaseback transaction,
at the time of determination, the present value (discounted at the rate of
interest implicit in such transaction, determined in accordance with GAAP) of
the obligation of the lessee for net rental payments during the remaining term
of the lease included in such sale and leaseback transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"BANKRUPTCY LAW" means title 11, U.S. Code or any similar Federal or state
law for the relief of debtors.
"BOARD OF DIRECTORS" means, unless otherwise specified, the Board of
Directors of the Company or any authorized committee thereof.
"BOARD RESOLUTION" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
"BORROWING BASE" means 60% of the net book value of all inventory of the
Company and its Restricted Subsidiaries.
"BRS" means Bruckmann, Rosser, Sherrill & Co., Inc.
"BRS MANAGEMENT AGREEMENT" means that certain management agreement, dated
September 8, 1995 between BRS and the Company, as amended on February 29, 1996
and on the date hereof, and as it may be further amended from time to time.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at such time be required to be capitalized on a balance sheet in accordance with
GAAP.
2
<PAGE>
"CAPITAL STOCK" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited) and (iv) any other interest or participation that
confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than one
year from the date of acquisition, (iii) certificates of deposit and eurodollar
time deposits with maturities of one year or less from the date of acquisition,
bankers' acceptances with maturities not exceeding one year and overnight bank
deposits, in each case with any lender party to the Senior Credit Facility or
with any domestic commercial bank having capital and surplus in excess of $500
million and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clauses (ii) and (iii) above entered into with any
financial institution meeting the qualifications specified in clause (iii) above
and (v) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Ratings Services and in each case
maturing within one year after the date of acquisition.
"CEDEL" means Cedel Bank, societe anonyme.
"CHANGE OF CONTROL" means the occurrence of any of the following: (i) the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all of the assets of the Company and its Restricted Subsidiaries
taken as a whole to any "person" (as such term is used in Section 13(d)(3) of
the Exchange Act) other than the Principals, their Related Parties, the DLJ
Entities or their Affiliates, (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company, (iii) the Company consolidates with,
or merges with or into, another "person" (as defined above) in a transaction or
series of related transactions in which the Voting Stock of the Company is
converted into or exchanged for cash, securities or other property, other than
any transaction where (A) the outstanding Voting Stock of the Company is
converted into or exchanged for Voting Stock (other than Disqualified Stock) of
the surviving or transferee corporation and (B) either (1) the "beneficial
owners" (as such term is defined in Rule 13d-3 and 13d-5 under the Exchange Act)
of the voting power of the Voting Stock of the Company immediately prior to such
transaction own, directly or indirectly through one or more Subsidiaries, not
less than a majority of the total voting power of the Voting Stock of the
surviving or transferee corporation immediately after such transaction or (2) if
immediately prior to such transaction the Company is a direct or indirect
Subsidiary of any other Person (the "Holding Company"), then the "beneficial
owners" (as defined above) of the Voting Stock of such Holding Company
immediately prior to such transaction own, directly or indirectly through one or
more Subsidiaries, not less than a majority of the voting power of the Voting
Stock of the surviving or transferee corporation immediately after such
transaction, (iv) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that (A) the
Principals, their Related Parties, the DLJ Entities or their Affiliates cease to
be the "beneficial owners" (as defined above), directly or indirectly, of at
least 35% of the voting power of the Voting Stock of the Company and (B) any
"person" (as defined above) becomes the "beneficial owner" (as defined above)
(PROVIDED that at any time following the occurrence of a Public Equity Offering,
the term "beneficial owner" shall exclude for such purpose the effect of Rule
13d-3(d)(1), other than any such effect with respect to the Warrants) directly
or indirectly, of more of the voting power of the Voting Stock of the Company
than is at the time "beneficially owned" (as defined above) by the Principals,
their Related Parties, the DLJ Entities and their Affiliates in the aggregate,
or (v) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors. For purposes of
3
<PAGE>
this definition, any transfer of an equity interest of an entity that was formed
for the purpose of acquiring Voting Stock of the Company will be deemed to be a
transfer of such portion of such Voting Stock as corresponds to the portion of
the equity of such entity that has been so transferred.
"CLASS A PREFERRED STOCK" means the Class A Senior Exchangeable Preferred
Stock, par value $0.01 per share, of the Company.
"CLASS B PREFERRED STOCK" means the Class B Compounding Cumulative
Redeemable Preferred Stock, par value $0.01 per share, of the Company.
"CLASS C PREFERRED STOCK" means the Class C Compounding Cumulative
Preferred Stock, Series 1 and Series 2, par value $0.01 per share, of the
Company.
"COMMON STOCK" means the common stock, par value $.01 per share, of the
Company.
"COMPANY" means Jitney-Jungle Stores of America, Inc., a Mississippi
corporation ("Jitney-Jungle"), unless and until a successor replaces
Jitney-Jungle in accordance with Article 5 hereof, and thereafter includes such
successor.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any period,
the aggregate of the Net Income of such Person and its Restricted Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that (i) the Net Income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included to the extent of the amount of dividends or
distributions paid in cash (or converted into cash) to the referent Person or a
Wholly Owned Restricted Subsidiary thereof that is a Subsidiary Guarantor, (ii)
the Net Income of any Restricted Subsidiary shall be excluded to the extent that
the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Net Income is not at the date of determination
permitted without any prior governmental approval (which has not been obtained)
or, directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (iii)
the Net Income of any Person acquired in a pooling of interests transaction for
any period prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.
"CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board of
Directors on the date hereof or (ii) was nominated for election or elected to
such Board of Directors with the approval of a majority of the Continuing
Directors who were members of such Board at the time of such nomination or
election.
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 13.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CUSTODIAN" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"DEFAULT" means any event that is or with the passage of time or the giving
of notice or both would become an Event of Default.
"DEFINITIVE NOTES" means Notes that are in the form of EXHIBIT A-1 attached
hereto (but without including the text referred to in footnotes 1 and 3
thereto).
4
<PAGE>
"DELCHAMPS ACQUISITION" means the Delchamps Merger and the Delchamps Tender
Offer.
"DELCHAMPS MERGER" means the merger contemplated by the Delchamps Merger
Agreement.
"DELCHAMPS MERGER AGREEMENT" means the Agreement and Plan of Merger, dated
July 8, 1997, by and among the Company, Delta Acquisition Corporation and
Delchamps, Inc.
"DELCHAMPS TENDER OFFER" means the tender offer contemplated by the
Delchamps Merger Agreement.
"DEPOSITARY" means, with respect to any Global Note, the Person specified
in Section 2.03 hereof as the Depositary with respect to such Note, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and thereafter, "Depositary" shall mean or include
such successor.
"DESIGNATED SENIOR DEBT" means (i) for so long as any Indebtedness is
outstanding under the Senior Credit Facility or the Senior Notes, any such
Indebtedness, and (ii) any other Senior Debt permitted under this Indenture the
principal amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
on which the Notes mature.
"DLJ ENTITIES" means DLJ Merchant Banking Partners, L.P., DLJ Offshore
Partners, C.V. and DLJ Merchant Banking Funding, Inc.
"EBITDA" means, with respect to any Person for any period, the Consolidated
Net Income of such Person for such period plus (i) an amount equal to any
extraordinary or non-recurring loss plus any net loss realized in connection
with (a) any Asset Sale (including, without limitation, dispositions pursuant to
sale and leaseback transactions) or (b) the dispositions of any securities by
such Person or any of its Restricted Subsidiaries or the extinguishment of any
Indebtedness of such Person or any of its Restricted Subsidiaries (in the case
of clauses (a) and (b) above, to the extent such losses were deducted in
computing such Consolidated Net Income), plus (ii) provision for taxes based on
income or profits of such Person and its Restricted Subsidiaries for such
period, to the extent that such provision for taxes was included in computing
such Consolidated Net Income, plus (iii) consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
and whether or not capitalized (including, without limitation, amortization of
original issue discount, non- cash interest payments, the interest component of
any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, commissions, discounts and other fees
and charges incurred in respect of letter of credit or bankers' acceptance
financing, and net payments (if any) pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income, plus (iv) non-cash LIFO charges (credits) of such Person and its
Restricted Subsidiaries for such period, plus (v) depreciation, amortization
(including amortization of goodwill and other intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period) and
other non-cash charges (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period) of such
Person and its Restricted Subsidiaries for such period to the extent that such
depreciation, amortization and other non-cash charges were deducted in computing
such
5
<PAGE>
Consolidated Net Income, plus (vi) non-recurring severance and transaction costs
incurred in connection with any acquisition, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization and other non-cash charges of, a Restricted Subsidiary of the
referent Person shall be added to Consolidated Net Income to compute EBITDA only
to the extent (and in the same proportion) that the Net Income of such
Restricted Subsidiary was included in calculating the Consolidated Net Income of
such Person.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EUROCLEAR" means Morgan Guaranty Trust Company of New York, the Brussels
office, as operator of the Euroclear system.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXCHANGE DEBENTURES" means the Company's Class A Exchange Debentures due
2008 issuable (1) in exchange for outstanding shares of Class A Preferred Stock
at the Company's option on the date of any scheduled dividend payment with
respect to the Class A Preferred Stock and (2) as payment of interest with
respect to outstanding Class A Exchange Debentures due 2008, in each case,
pursuant to the indenture related thereto in the form as in effect on the date
hereof.
"EXCHANGE OFFER" means the offer by the Company to Holders to exchange
Senior Subordinated Notes for New Senior Subordinated Notes.
"EXCHANGE OFFER REGISTRATION STATEMENT" has the meaning set forth in the
Registration Rights Agreement.
"EXISTING INDEBTEDNESS" means (i) up to $75.0 million of Indebtedness under
Capital Lease Obligations of the Company and its Restricted Subsidiaries in
existence on the date hereof, (ii) up to $200.0 million in aggregate principal
amount of Indebtedness of the Company and its Restricted Subsidiaries under the
Senior Notes, (iii) up to $13.0 million in aggregate principal amount of other
Indebtedness of the Company and its Restricted Subsidiaries (excluding
Indebtedness under the Senior Credit Facility) in existence on the date hereof
until such amounts are repaid and (iv) up to $16.0 million of Acquired
Indebtedness in connection with the Delchamps Acquisition.
"FIXED CHARGES" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued, to the extent such
expense was included in computing Consolidated Net Income (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed
interest with respect to Attributable Debt, commissions, discounts and other
fees and charges incurred in respect of letter of credit or bankers' acceptance
financing, and net payments (if any) pursuant to Hedging Obligations), (ii) the
consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period, (iii) any interest expense on
Indebtedness of another Person that is Guaranteed by such Person or one of its
Restricted Subsidiaries or secured by a Lien on assets of such Person or one of
its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon) and (iv) the product of (a) all dividend payments, whether or not in cash
(other than dividend payments to the Company or any Restricted Subsidiary and
other than dividend payments on Equity Interests of the Company and its
Restricted Subsidiaries that are paid solely in
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additional shares, or by accretion to the liquidation preference, of such Equity
Interests) on any series of preferred stock of such Person and its Restricted
Subsidiaries, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state and
local statutory tax rate of such Person and its Restricted Subsidiaries,
expressed as a decimal, in each case, on a consolidated basis and in accordance
with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the EBITDA of such Person and its Restricted Subsidiaries
for such period to the Fixed Charges of such Person and its Restricted
Subsidiaries for such period. In the event that the Company or any of its
Restricted Subsidiaries incurs, assumes, Guarantees or redeems any Indebtedness
(other than revolving credit borrowings) or issues preferred stock subsequent to
the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated but prior to the date on which the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
then the Fixed Charge Coverage Ratio shall be calculated giving pro forma effect
to such incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of preferred stock, as if the same had occurred at the
beginning of the applicable four-quarter reference period. For purposes of
making the computation referred to above, (i) acquisitions that have been made
by the Company or any of its Restricted Subsidiaries, including through mergers
or consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period, (ii) the EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded, and
(iii) the Fixed Charges attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the
Calculation Date, shall be excluded, but only to the extent that the obligations
giving rise to such Fixed Charges will not be obligations of the referent Person
or any of its Restricted Subsidiaries following the Calculation Date.
"FUND" means Bruckmann, Rosser, Sherrill & Co., L.P., a Delaware limited
partnership.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date hereof.
"GLOBAL NOTES" means the Regulation S Global Notes and the Rule 144A Global
Notes.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the obligations of
such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements and (ii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates.
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"HOLDER" means a Person in whose name a Note is registered.
"INCUR" means, with respect to any Indebtedness, to incur, create, issue,
assume, guarantee or otherwise become liable for or with respect to the payment
of, contingently or otherwise, such Indebtedness; PROVIDED that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an incurrence of Indebtedness.
"INDEBTEDNESS" means, with respect to any Person and without duplication,
any indebtedness of such Person, whether or not contingent, in respect of
borrowed money or evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof) or
banker's acceptances or representing Capital Lease Obligations or the balance
deferred and unpaid of the purchase price of any property or representing any
Hedging Obligations, except any such balance that constitutes an accrued expense
or trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability upon
a balance sheet of such Person prepared in accordance with GAAP, as well as all
indebtedness of others secured by a Lien on any asset of such Person (whether or
not such indebtedness is assumed by such Person) and, to the extent not
otherwise included, the Guarantee by such Person of any indebtedness of any
other Person.
"INDENTURE" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"INDIRECT PARTICIPANT" means a Person who holds an interest through a
Participant.
"INITIAL PURCHASERS" means Donaldson, Lufkin & Jenrette Securities
Corporation and Credit Suisse First Boston.
"INSOLVENCY OR LIQUIDATION PROCEEDINGS" means (i) any insolvency or
bankruptcy case or proceeding, or any receivership, liquidation, reorganization
or other similar case or proceeding, relative to the Company or to the creditors
of the Company, as such, or to the assets of the Company, or (ii) any
liquidation, dissolution, reorganization or winding up of the Company, whether
voluntary or involuntary and involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshalling of assets and
liabilities of the Company.
"INSTITUTIONAL ACCREDITED INVESTOR" means an "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"INVESTMENTS" means, with respect to any Person, all investments by such
Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees), advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities and all
other items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP; PROVIDED that an acquisition of assets, Equity
Interests or other securities by the Company for consideration consisting of
common equity securities of the Company shall not be deemed to be an Investment.
"IRB INDEBTEDNESS" means that certain Indebtedness of McCarty-Holman Co.,
Inc. pursuant to the Industrial Revenue Bond Issue with the City of Jackson,
Mississippi, dated December 1, 1985, evidenced by the Lease recorded in Book
3166 at Page 443 of the Land Records of Hinds County, First Judicial District,
Mississippi, including all agreements and documents related thereto.
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"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no additional interest
shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
(other than with respect to a lease that does not create a Capital Lease
Obligation) under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"LIQUIDATED DAMAGES" means, at any time of determination, all liquidated
damages then owing pursuant to the terms of the Registration Rights Agreement.
"MANAGEMENT AGREEMENT" means that certain Management Agreement, dated March
19, 1980, between McCarty-Holman Co., L.P. and the Company, concerning the
management of leased properties.
"NET INCOME" means, with respect to any Person, the net income (loss) of
such Person and its Restricted Subsidiaries, determined in accordance with GAAP
and before any reduction in respect of preferred stock dividends, excluding,
however, (i) any gain (but not loss), together with any related provision for
taxes on such gain (but not loss), realized in connection with (a) any Asset
Sale (including, without limitation, dispositions pursuant to sale and leaseback
transactions) or (b) the disposition of any securities by such Person or any of
its Restricted Subsidiaries or the extinguishment of any Indebtedness of such
Person or any of its Restricted Subsidiaries and (ii) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
on such extraordinary or nonrecurring gain (but not loss).
"NET PROCEEDS" means the aggregate cash proceeds received by the Company or
any of its Restricted Subsidiaries in respect of any Asset Sale (including,
without limitation, any cash received upon the sale or other disposition of any
non-cash consideration received in any Asset Sale), net of the direct costs
relating to such Asset Sale (including, without limitation, legal, accounting
and investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof, taxes paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
(other than Indebtedness described in clause (i) of the second paragraph under
Section 4.10) secured by a Lien on the asset or assets that were the subject of
such Asset Sale and any reserve for adjustment in respect of the sale price of
such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the Company
nor any of its Restricted Subsidiaries (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness) and (b) is directly or indirectly liable (as a guarantor or
otherwise); and (ii) no default with respect to which (including any rights that
the holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit (upon notice, lapse of time or both) any holder of any
other Indebtedness of the Company or any of its Restricted Subsidiaries to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity; and (iii) as to which the
lenders have been notified in writing that they will not have any recourse to
the stock or assets of the Company or any of its Restricted Subsidiaries.
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"NOTE CUSTODIAN" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto, as provided in Section 2.01.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the offering of Notes pursuant to the Offering Memorandum.
"OFFERING MEMORANDUM" means the offering memorandum, dated September 10,
1997, relating to the offering of the Senior Subordinated Notes.
"OFFICER" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
the Company, that meets the requirements of Section 13.05 hereof.
"OPINION OF COUNSEL" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 13.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"PARI PASSU INDEBTEDNESS" means Indebtedness of the Company or any of its
Restricted Subsidiaries that ranks PARI PASSU in right of payment to the Notes
or any Guarantee thereof.
"PARTICIPANT" means, with respect to DTC, Euroclear or Cedel, a Person who
has an account with DTC, Euroclear or Cedel, respectively (and, with respect to
DTC, shall include Euroclear and Cedel).
"PAYMENT IN FULL" (together with any correlative phrases E.G. "PAID IN
FULL" and "PAY IN FULL") means (i) with respect to any Senior Debt other than
Senior Debt under or in respect of the Senior Credit Facility, payment in full
thereof or due provision for payment thereof (x) in accordance with the terms of
the agreement or instrument pursuant to which such Senior Debt was issued or is
governed or (y) otherwise to the reasonable satisfaction of the holders of such
Senior Debt, which shall include, in any Insolvency or Liquidation Proceeding,
approval by such holders, individually or as a class, of the provision for
payment thereof, and (ii) with respect to Senior Debt under or in respect of the
Senior Credit Facility, payment in full thereof in cash or Cash Equivalents.
"PERMITTED BUSINESS" means any of the businesses and any other businesses
related to the businesses engaged in by the Company and its Restricted
Subsidiaries on the date hereof.
"PERMITTED INVESTMENTS" means (a) any Investments in the Company or in a
Restricted Subsidiary of the Company that is a Subsidiary Guarantor; (b) any
Investments in Cash Equivalents; (c) Investments by the Company or any
Restricted Subsidiary of the Company in a Person, if as a result of such
Investment (i) such Person becomes a Restricted Subsidiary of the Company and a
Subsidiary Guarantor or (ii) such Person is merged, consolidated or amalgamated
with or into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary of the Company that is a
Subsidiary Guarantor; (d) Restricted Investments made as a result of the receipt
of non-cash consideration from an Asset Sale that was made pursuant to and in
compliance with Section 4.10 hereof; and (e) other Investments in any Person
that do not exceed $1.5 million at any time outstanding.
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"PERMITTED JUNIOR SECURITIES" means Equity Interests in the Company and
debt securities of the Company or any Subsidiary Guarantor that are subordinated
to all Senior Debt (and any debt securities issued in exchange for Senior Debt
of the Company or such Subsidiary Guarantor) to substantially the same extent
as, or to a greater extent than, the Notes or Subsidiary Guarantees, as
applicable, are subordinated to Senior Debt pursuant to the subordination
provisions of this Indenture.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Company
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of the Company or any of its Restricted Subsidiaries
that is permitted to be incurred by the provisions of this Indenture; PROVIDED,
that, except with respect to Capital Lease Obligations, (i) the principal amount
(or accreted value, as applicable) of, or (with respect to revolving credit
Indebtedness) maximum commitment under, such Permitted Refinancing Indebtedness
does not exceed the principal amount (or accreted value, as applicable) of, or
(with respect to revolving credit Indebtedness) maximum commitment under, the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of premiums and reasonable expenses incurred in connection
therewith); (ii) such Permitted Refinancing Indebtedness has a final maturity
date later than the final maturity date of, and (other than with respect to
revolving credit Indebtedness) has a Weighted Average Life to Maturity equal to
or greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and (iv) such Indebtedness is incurred either by the Company and/or by
a Subsidiary Guarantor.
"PERSON" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PREFERRED STOCK" means the Class A Preferred Stock, the Class B Preferred
Stock and the Class C Preferred Stock.
"PRINCIPALS" means (i) the Fund and any of its Affiliates and (ii) Messrs.
W. H. Holman, Jr., W. H. Holman III, Essary, Friou, Bruckmann, Rosser, Sherrill
and Edwards.
"PRIVATE PLACEMENT LEGEND" means the legend initially set forth on the
Senior Subordinated Notes in the form set forth in Section 2.06(g) hereof.
"PUBLIC EQUITY OFFERING" means a public offering of common stock of the
Company.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A under
the Securities Act.
"REDEMPTION DATE" with respect to any Notes, means the date on which such
Notes are redeemed by the Company pursuant to Section 3.07 of this Indenture.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights Agreement,
dated as of September 15, 1997, by and among the Company and the Initial
Purchasers, as such agreement may be amended, modified or supplemented from time
to time.
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"REGULATION S" means Regulation S promulgated under the Securities Act.
"REGULATION S GLOBAL NOTES" means the Regulation S Temporary Global Notes
or the Regulation S Permanent Global Notes as applicable.
"REGULATION S PERMANENT GLOBAL NOTES" means the permanent global notes that
do not contain the paragraphs referred to in footnote 1 to the form of the Note
attached hereto as EXHIBIT A-2, and that are deposited with and registered in
the name of the Depositary or its nominee, representing a series of Notes sold
in reliance on Regulation S.
"REGULATION S TEMPORARY GLOBAL NOTES" means the temporary global notes that
contain the paragraphs referred to in footnote 1 to the form of the Note
attached hereto as EXHIBIT A-2, and that are deposited with and registered in
the name of the Depositary or its nominee, representing a series of Notes sold
in reliance on Regulation S.
"RELATED PARTY" means (i) any controlling stockholder, general partner, 80%
(or more) owned Subsidiary, or spouse or immediate family member (in the case of
an individual) of any Principal or (ii) any trust, corporation, partnership or
other entity, the beneficiaries, stockholders, partners, owners or Persons
holding an 80% or more controlling interest of which consist solely of one or
more Principals and/or such other Persons referred to in the immediately
preceding clause (i).
"REPRESENTATIVE" means the trustee with respect to the Senior Notes, the
agent with respect to the Senior Credit Facility, or any Person performing a
similar function with respect to other Senior Debt.
"RESPONSIBLE OFFICER" means any officer within the Corporate Trust
Department of the Trustee (or any successor group of the Trustee) with direct
responsibility for the administration of this Indenture and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject.
"RESTRICTED BENEFICIAL INTEREST" means any beneficial interest of a
Participant or Indirect Participant in the Rule 144A Global Note or the
Regulation S Global Note.
"RESTRICTED BROKER DEALER" has the meaning set forth in the Registration
Rights Agreement.
"RESTRICTED GLOBAL NOTES" means the Regulation S Global Notes and the Rule
144A Global Notes, all of which shall bear the Private Placement Legend.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED PERIOD" means the 40-day restricted period as defined in
Regulation S.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the referent
Person that is not an Unrestricted Subsidiary.
"RULE 144A" means Rule 144A promulgated under the Securities Act.
"RULE 144A GLOBAL NOTES" means the permanent global notes that contain the
paragraph referred to in footnote 1 and the additional schedule referred to in
footnote 3 to the form of the Note attached hereto as EXHIBIT A-1, and that is
deposited with and registered in the name of the Depositary or its nominee,
representing Notes initially sold in reliance on Rule 144A.
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"RULE 903" means Rule 903 promulgated under the Securities Act.
"RULE 904" means Rule 904 promulgated under the Securities Act.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SENIOR CREDIT FACILITY" means that certain revolving credit agreement,
dated as of March 5, 1996, as amended and restated on or prior to the date
hereof, by and among the Company, each of the Subsidiary Guarantors and the
lenders named therein, and Fleet Capital Corporation, as successor agent to
Fleet Bank, N.A., including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, as it may from time
to time be amended, renewed, supplemented or otherwise modified at the option of
the parties thereto and any other agreement pursuant to which any of the
Indebtedness, commitments, Obligations, costs, expenses, fees, reimbursements
and other indemnities payable or owing thereunder may be refinanced,
restructured, renewed, extended, increased, replaced or refunded, as any such
other agreements may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified, in each case, whether or
not with the same agent or lenders.
"SENIOR DEBT" means (i) Indebtedness pursuant to the Senior Credit
Facility, (ii) Indebtedness pursuant to the Senior Notes or guarantees thereof,
as applicable, (iii) the IRB Indebtedness, (iv) any other Indebtedness permitted
to be incurred by the Company or a Restricted Subsidiary under the terms of this
Indenture, unless the instrument under which such Indebtedness is incurred
expressly provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees, as applicable, and (v) all
Obligations with respect to the foregoing. Notwithstanding anything to the
contrary in the foregoing, Senior Debt will not include (w) any liability for
federal, state, local or other taxes owed or owing by the Company or any
Subsidiary Guarantor, (x) any Indebtedness of the Company or any Subsidiary
Guarantor to any of their respective Subsidiaries or other Affiliates, (y) any
trade payables or (z) any Indebtedness that is incurred in violation of this
Indenture.
"SENIOR NOTES" means the 12% Senior Notes of the Company due 2006.
"SHELF REGISTRATION STATEMENT" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"SIGNIFICANT RESTRICTED SUBSIDIARY" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof.
"STATED MATURITY" means, with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations to
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"SUBORDINATED INDEBTEDNESS" means any Indebtedness of the Company or any of
its Restricted Subsidiaries which is by its terms expressly subordinated in
right of payment to the Notes, any Subsidiary Guarantee or any other
Indebtedness that is subordinated in right of payment to the Notes or any
Subsidiary Guarantee.
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"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).
"SUBSIDIARY GUARANTORS" means each of (i) Interstate; (b) McCarty-Holman;
(c) Southern; (d) Pump And Save; (e) DAC; (f) SCSI and (g) Delchamps and (ii)
any other Subsidiary that executes a Subsidiary Guarantee in accordance with the
provisions of this Indenture, and their respective successors and assigns.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the Trust Indenture Act of 1939; provided, however, that in the event that
the Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the
extent required by such amendment, the Trust Indenture Act of 1939 as so
amended.
"TRANSFER RESTRICTED SECURITIES" means Notes or beneficial interests
therein that bear or are required to bear the Private Placement Legend.
"TRUSTEE" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"UNRESTRICTED GLOBAL NOTES" means one or more Global Notes that do not and
are not required to bear the Private Placement Legend.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary of the Company (other
than Interstate, McCarty-Holman, Southern, Pump And Save, DAC, SCSI and
Delchamps, or any successor to any of them) that is designated by the Board of
Directors as an Unrestricted Subsidiary pursuant to a Board Resolution and (ii)
any Subsidiary of an Unrestricted Subsidiary; but, in each case, only to the
extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse
Debt; (b) is not party to any agreement, contract, arrangement or understanding
with the Company or any Restricted Subsidiary of the Company unless the terms of
any such agreement, contract, arrangement or understanding are no less favorable
to the Company or such Restricted Subsidiary than those that might be obtained
at the time from Persons who are not Affiliates of the Company; (c) is a Person
with respect to which neither the Company nor any of its Restricted Subsidiaries
has any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; and (e)
has at least one director on its board of directors that is not a director or
executive officer of the Company or any of its Restricted Subsidiaries and has
at least one executive officer that is not a director or executive officer of
the Company or any of its Restricted Subsidiaries. Any such designation by the
Board of Directors shall be evidenced to the Trustee by filing with the Trustee
the Board Resolution giving effect to such designation and an Officers'
Certificate indicating that such designation complied with the foregoing
conditions and was permitted by Section 4.07 hereof. If, at any time, any
Unrestricted Subsidiary would fail to meet the foregoing requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
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Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default of such covenant). The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Restricted Subsidiary; PROVIDED
that such designation shall be deemed to be an incurrence of Indebtedness by a
Restricted Subsidiary of the Company of any outstanding Indebtedness of such
Unrestricted Subsidiary and such designation shall only be permitted if (i) such
Indebtedness is permitted under Section 4.09 hereof, (ii) no Default or Event of
Default would be in existence immediately following such designation and (iii)
the Company shall have delivered to the Trustee an Officers' Certificate
indicating that such designation complied with the foregoing conditions.
"VOTING STOCK" means, with respect to any Person, any class or series of
capital stock of such Person that is ordinarily entitled to vote in the election
of directors thereof at a meeting of stockholders called for such purpose,
without the occurrence of any additional event or contingency.
"WARRANTS" means the warrants to purchase up to 15% (on a fully diluted
basis) of the common stock, par value $0.01 per share, of the Company dated
March 5, 1996.
"WARRANT SHARES" means the shares of Common Stock issuable upon the
exercise of the Warrants.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (i) the sum of the
products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person, or by such Person and one or more Wholly Owned
Restricted Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
DEFINED IN
TERM SECTION
"AFFILIATE TRANSACTION"................................................4.11
"ASSET SALE OFFER".....................................................4.10
"CHANGE OF CONTROL OFFER"..............................................4.14
"CHANGE OF CONTROL PAYMENT"............................................4.14
"CHANGE OF CONTROL PAYMENT DATE".......................................4.14
"COVENANT DEFEASANCE"..................................................8.03
"CUSTODIAN"............................................................6.01
"DTC"..................................................................2.03
"EVENT OF DEFAULT".....................................................6.01
"EXCESS PROCEEDS"......................................................4.10
"INCUR"................................................................4.09
"LEGAL DEFEASANCE".....................................................8.02
"OFFER AMOUNT".........................................................3.09
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"OFFER PERIOD".........................................................3.09
"PAYING AGENT".........................................................2.03
"PAYMENT DEFAULT"......................................................6.01
"PERMITTED DEBT".......................................................4.09
"PURCHASE DATE"........................................................3.09
"REGISTRAR"............................................................2.03
"REPURCHASE OFFER".....................................................3.09
"RESTRICTED PAYMENTS"..................................................4.07
"SUBSIDIARY GUARANTEES"...............................................11.01
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"INDENTURE SECURITIES" means the Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Notes means the Company, each Subsidiary Guarantor
and any successor obligor upon the Notes.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by the Commission rule under the
TIA have the meanings so assigned to them therein.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein;
(2) an accounting term not otherwise defined herein has the meaning
assigned to it in accordance with GAAP;
(3) "OR" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) provisions apply to successive events and transactions; and
(6) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement or successor sections or
rules adopted by the Commission from time to time.
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ARTICLE 2
THE NOTES
SECTION 2.01. FORM AND DATING.
The Notes and the Trustee's certificate of authentication shall be
substantially in the form of EXHIBIT A-1 or EXHIBIT A-2 attached hereto. The
Notes may have notations, legends or endorsements required by law, stock
exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes initially shall be issued in denominations of $1,000
and integral multiples thereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
(a) GLOBAL NOTES. Notes offered and sold to QIBs in reliance on Rule
144A shall be issued initially in the form of Rule 144A Global Notes, which
shall be deposited on behalf of the purchasers of the Notes represented thereby
with a custodian of the Depositary, and registered in the name of the Depositary
or a nominee of the Depositary, duly executed by the Company and authenticated
by the Trustee as hereinafter provided. The aggregate principal amount of the
Rule 144A Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its nominee
as hereinafter provided.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, as custodian for the Depositary, and registered in the name of the
Depositary or the nominee of the Depositary for the accounts of designated
agents holding on behalf of Euroclear or Cedel, duly executed by the Company and
authenticated by the Trustee as hereinafter provided. The "40-DAY RESTRICTED
PERIOD" (as defined in Regulation S) shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Notes (except to the
extent of any beneficial owners thereof who acquired an interest therein
pursuant to another exemption from registration under the Securities Act and who
will take delivery of a beneficial ownership interest in a Rule 144A Global
Note, all as contemplated by Section 2.06(a)(ii) hereof), and (ii) an Officers'
Certificate from the Company certifying as to the same matters covered in clause
(i) above. Following the termination of the 40-day restricted period,
beneficial interests in the Regulation S Temporary Global Note shall be
exchanged for beneficial interests in Regulation S Permanent Global Notes
pursuant to the Applicable Procedures. Simultaneously with the authentication
of Regulation S Permanent Global Notes, the Trustee shall cancel the Regulation
S Temporary Global Notes. The aggregate principal amount of the Regulation S
Temporary Global Notes and the Regulation S Permanent Global Notes may from time
to time be increased or decreased by adjustments made on the records of the
Trustee and the Depositary or its nominee, as the case may be, in connection
with transfers of interest as hereinafter provided.
Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions and transfers
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of interests. Any endorsement of a Global Note to reflect the amount of any
increase or decrease in the amount of outstanding Notes represented thereby
shall be made by the Trustee or the Note Custodian, at the direction of the
Trustee, in accordance with instructions given by the Holder thereof as required
by Section 2.06 hereof.
The provisions of the "Operating Procedures of the Euroclear System"
and "Terms and Conditions Governing Use of Euroclear" and the "Management
Regulations" and "Instructions to Participants" of Cedel shall be applicable to
interests in the Regulation S Temporary Global Notes and the Regulation S
Permanent Global Notes that are held by Participants through Euroclear or Cedel.
The Trustee shall have no obligation to notify Holders of any such procedures or
to monitor or enforce compliance with the same.
Except as set forth in Section 2.06 hereof, the Global Notes may be
transferred, in whole and not in part, only to another nominee of the Depositary
or to a successor of the Depositary or its nominee.
(b) BOOK-ENTRY PROVISIONS. This Section 2.01(b) shall apply only to
Rule 144A Global Notes and Regulation S Permanent Global Notes deposited with or
on behalf of the Depositary.
The Company shall execute and the Trustee shall, in accordance with
this Section 2.01(b), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depositary or the nominee of the Depositary and
(ii) shall be delivered by the Trustee to the Depositary or pursuant to the
Depositary's instructions or held by the Trustee as custodian for the
Depositary.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depositary or by the Note
Custodian as custodian for the Depositary or under such Global Note, and the
Depositary may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of such Global Note for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depositary or impair, as between the Depositary and its
Participants, the operation of customary practices of such Depositary governing
the exercise of the rights of an owner of a beneficial interest in any Global
Note.
(c) DEFINITIVE NOTES. Notes issued in certificated form shall be
substantially in the form of EXHIBIT A-1 attached hereto (but without including
the text referred to in footnotes 1 and 3 thereto).
SECTION 2.02. EXECUTION AND AUTHENTICATION.
An Officer shall sign the Notes for the Company by manual or facsimile
signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
EXHIBIT A-1 or EXHIBIT A-2 hereto.
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The Trustee shall, upon a written order of the Company signed by an
Officer directing the Trustee to authenticate the Notes, authenticate Notes for
original issue up to the aggregate principal amount stated in paragraph 4 of the
Notes. The Trustee shall, upon written order of the Company signed by an
Officer, authenticate New Senior Subordinated Notes for original issuance in
exchange for a like principal amount of Senior Subordinated Notes exchanged in
the Exchange Offer or otherwise exchanged for New Senior Subordinated Notes
pursuant to the terms of the Registration Rights Agreement. The aggregate
principal amount of Notes outstanding at any time may not exceed the aggregate
principal amount stated in paragraph 4 of the Notes, except as provided in
Section 2.07 hereof.
The Trustee may (at the Company's expense) appoint an authenticating
agent acceptable to the Company to authenticate Notes. An authenticating agent
may authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with the
Company or an Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain (i) an office or agency where Notes may be
presented for registration of transfer or for exchange ("Registrar") and (ii) an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes. The
Company initially appoints the Trustee to act as the Registrar and Paying Agent
with respect to the Definitive Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent shall hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and shall
notify the Trustee of any default by the Company in making any such payment.
While any such default continues, the Trustee may require a Paying Agent to pay
all money held by it to the Trustee. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee. Upon payment over to
the Trustee, the Paying Agent (if other than the Company or a Subsidiary) shall
have no further liability for the money. If the Company or a Subsidiary acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent. Upon the
occurrence of events specified in Section 6.01(h) and (i) hereof, the Trustee
shall serve as Paying Agent for the Notes.
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SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Company and/or the Subsidiary Guarantors shall furnish
to the Trustee at least seven (7) Business Days before each interest payment
date and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Holders of Notes and the Company and the Subsidiary
Guarantors shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF BENEFICIAL INTERESTS IN GLOBAL NOTES. The
transfer and exchange of beneficial interests in Global Notes shall be effected
through the Depositary, in accordance with this Indenture and the procedures of
the Depositary therefor, which shall include restrictions on transfer comparable
to those set forth herein to the extent required by the Securities Act.
Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note in
accordance with the transfer restrictions set forth in subsection (g) of this
Section 2.06 or in an Unrestricted Global Note in accordance with subsection
(g)(iv). Transfers of beneficial interests in the Global Notes to Persons
required to take delivery thereof in the form of an interest in another Global
Note shall be permitted as follows:
(i) RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE. If, at any
time, an owner of a beneficial interest in a Rule 144A Global
Note deposited with the Depositary (or the Trustee as custodian
for the Depositary) wishes to transfer its beneficial interest in
such Rule 144A Global Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in
a Regulation S Global Note, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such
interest for an equivalent beneficial interest in a Regulation S
Global Note as provided in this Section 2.06(a)(i). Upon receipt
by the Trustee of (1) instructions given in accordance with the
Applicable Procedures from a Participant directing the Trustee to
credit or cause to be credited a beneficial interest in the
Regulation S Global Note in an amount equal to the beneficial
interest in the Rule 144A Global Note to be exchanged, (2) a
written order given in accordance with the Applicable Procedures
containing information regarding the Participant account of the
Depositary and the Euroclear or Cedel account to be credited with
such increase, and (3) a certificate in the form of EXHIBIT B-1
hereto given by the owner of such beneficial interest stating
that the transfer of such interest has been made in compliance
with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 of
Regulation S, then the Trustee, as Registrar, shall instruct the
Depositary to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable Rule 144A Global
Note and to increase or cause to be increased the aggregate
principal amount at maturity of the applicable Regulation S
Global Note by the principal amount at maturity of the beneficial
interest in the Rule 144A Global Note to be exchanged or
transferred, to credit or cause to be credited to the account of
the Person specified in such instructions, a beneficial interest
in the Regulation S Global Note equal to the reduction in the
aggregate principal amount at maturity of the Rule 144A Global
Note, and to debit, or
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cause to be debited, from the account of the Person making such
exchange or transfer the beneficial interest in the Rule 144A
Global Note that is being exchanged or transferred.
(ii) REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE. If, at any
time, after the expiration of the 40-day restricted period, an
owner of a beneficial interest in a Regulation S Global Note
deposited with the Depositary or with the Trustee as custodian
for the Depositary wishes to transfer its beneficial interest in
such Regulation S Global Note to a Person who is required or
permitted to take delivery thereof in the form of an interest in
a Rule 144A Global Note, such owner shall, subject to the
Applicable Procedures, exchange or cause the exchange of such
interest for an equivalent beneficial interest in a Rule 144A
Global Note as provided in this Section 2.06(a)(ii). Upon receipt
by the Trustee of (1) instructions from Euroclear or Cedel, if
applicable, and the Depositary, directing the Trustee, as
Registrar, to credit or cause to be credited a beneficial
interest in the Rule 144A Global Note equal to the beneficial
interest in the Regulation S Global Note to be exchanged, such
instructions to contain information regarding the Participant
account with the Depositary to be credited with such increase,
(2) a written order given in accordance with the Applicable
Procedures containing information regarding the participant
account of the Depositary and (3) a certificate in the form of
EXHIBIT B-2 attached hereto given by the owner of such beneficial
interest stating (A) if the transfer is pursuant to Rule 144A,
that the Person transferring such interest in a Regulation S
Global Note reasonably believes that the Person acquiring such
interest in a Rule 144A Global Note is a QIB and is obtaining
such beneficial interest in a transaction meeting the
requirements of Rule 144A and any applicable blue sky or
securities laws of any state of the United States, (B) that the
transfer complies with the requirements of Rule 144 under the
Securities Act, (C) if the transfer is to an Institutional
Accredited Investor that such transfer is in compliance with the
Securities Act and a certificate in the form of EXHIBIT C
attached hereto and, if such transfer is in respect of an
aggregate principal amount of less than $250,000, an Opinion of
Counsel acceptable to the Company that such transfer is in
compliance with the Securities Act or (D) if the transfer is
pursuant to any other exemption from the registration
requirements of the Securities Act, that the transfer of such
interest has been made in compliance with the transfer
restrictions applicable to the Global Notes and pursuant to and
in accordance with the requirements of the exemption claimed,
such statement to be supported by an Opinion of Counsel from the
transferee or the transferor in form reasonably acceptable to the
Company and to the Registrar and in each case, in accordance with
any applicable securities laws of any state of the United States
or any other applicable jurisdiction, then the Trustee, as
Registrar, shall instruct the Depositary to reduce or cause to be
reduced the aggregate principal amount at maturity of such
Regulation S Global Note and to increase or cause to be increased
the aggregate principal amount at maturity of the applicable Rule
144A Global Note by the principal amount at maturity of the
beneficial interest in the Regulation S Global Note to be
exchanged or transferred, and the Trustee, as Registrar, shall
instruct the Depositary, concurrently with such reduction, to
credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the
applicable Rule 144A Global Note equal to the reduction in the
aggregate principal amount at maturity of such Regulation
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S Global Note and to debit or cause to be debited from the
account of the Person making such transfer the beneficial
interest in the Regulation S Global Note that is being exchanged
or transferred.
(b) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes are
presented by a Holder to the Registrar with a request to register the transfer
of the Definitive Notes or to exchange such Definitive Notes for an equal
principal amount of Definitive Notes of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested only if:
(i) the Definitive Notes are presented or surrendered for
registration of transfer or exchange, endorsed and containing a
signature guarantee or accompanied by a written instrument of
transfer in form satisfactory to the Registrar duly executed by
such Holder or by his attorney and contains a signature
guarantee, duly authorized in writing; and
(ii) in the case of Definitive Notes that are Transfer Restricted
Securities, the Registrar has received the following
documentation, as applicable (all of which may be submitted by
facsimile):
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, or such Transfer Restricted
Security is being transferred to the Company or any of its
Subsidiaries, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto); or
(B) if such Transfer Restricted Security is being transferred to
a QIB in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance
with Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-3 hereto); or
(C) if such Transfer Restricted Security is being transferred to
a Non-U.S. Person in an offshore transaction in accordance
with Rule 904 under the Securities Act, a certification to
that effect from such Holder (in substantially the form of
EXHIBIT B-3 hereto);
(D) if such Transfer Restricted Security is being transferred to
an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B)
and (C) above, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto), a
certification substantially in the form of EXHIBIT C hereto,
and, if such transfer is in respect of an aggregate
principal amount of Notes of less than $250,000, an Opinion
of Counsel acceptable to the Company that such transfer is
in compliance with the Securities Act; or
(E) if such Transfer Restricted Security is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that
effect from such Holder (in substantially the
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form of EXHIBIT B-3 hereto) and an Opinion of Counsel from
such Holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
(c) TRANSFER OF A BENEFICIAL INTEREST IN A RULE 144A GLOBAL NOTE OR
REGULATION S PERMANENT GLOBAL NOTE FOR A DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Rule 144A Global
Note or Regulation S Permanent Global Note may upon request,
subject to the Applicable Procedures, exchange such beneficial
interest for a Definitive Note. Upon receipt by the Trustee of
written instructions or such other form of instructions as is
customary for the Depositary (or Euroclear or Cedel, if
applicable), from the Depositary or its nominee on behalf of any
Person having a beneficial interest in a Rule 144A Global Note or
Regulation S Permanent Global Note, and, in the case of a
Transfer Restricted Security, the following additional
information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial
owner, a certification to that effect from such Person (in
substantially the form of EXHIBIT B-4 hereto);
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act or
pursuant to an exemption from registration in accordance
with Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of EXHIBIT B-4 hereto);
(C) if such beneficial interest is being transferred to a
Non-U.S. Person in an offshore transaction in accordance
with Rule 904 under the Securities Act, a certification to
that effect from the transferor (in substantially the form
of EXHIBIT B-4 hereto);
(D) if such beneficial interest is being transferred to an
Institutional Accredited Investor, pursuant to a private
placement exemption from the registration requirements of
the Securities Act (and based on an Opinion of Counsel if
the Company so requests), a certification to that effect
from such Holder (in substantially the form of EXHIBIT B-4
hereto) and a certificate from the applicable transferee (in
substantially the form of EXHIBIT C hereto); or
(E) if such beneficial interest is being transferred in reliance
on any other exemption from the registration requirements of
the Securities Act, a certification to that effect from the
transferor (in substantially the form of EXHIBIT B-4 hereto)
and an Opinion of Counsel from the transferee or the
transferor reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in compliance
with the Securities Act, in which case the Trustee or the
Note Custodian, at the direction of the Trustee, shall, in
accordance with the standing
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instructions and procedures existing between the Depositary
and the Note Custodian, cause the aggregate principal amount
of Rule 144A Global Notes or Regulation S Permanent Global
Notes, as applicable, to be reduced accordingly and,
following such reduction, the Company shall execute and, the
Trustee shall authenticate and deliver to the transferee a
Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in
a Rule 144A Global Note or Regulation S Permanent Global Note, as
applicable, pursuant to this Section 2.06(c) shall be registered
in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or Indirect
Participants or otherwise, shall instruct the Trustee. The
Trustee shall deliver such Definitive Notes to the Persons in
whose names such Notes are so registered. Following any such
issuance of Definitive Notes, the Trustee, as Registrar, shall
instruct the Depositary to reduce or cause to be reduced the
aggregate principal amount at maturity of the applicable Global
Note to reflect the transfer.
(d) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(e) TRANSFER AND EXCHANGE OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST
IN A GLOBAL NOTE. When a Definitive Note is presented by a Holder to the
Registrar with a request to register the transfer of the Definitive Note to a
Person who is required or permitted to take delivery thereof in the form of an
interest in a Global Note, or to exchange such Definitive Note for an equal
interest in a Global Note, the Registrar shall register the transfer or make the
exchange as requested only if (i) the Definitive Note is presented or
surrendered for registration of transfer or exchange, endorsed and containing a
signature guarantee or accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by such Holder or by his attorney
and contains a signature guarantee, duly authorized in writing and (ii) in the
case of Definitive Notes that are Transfer Restricted Securities (other than
Transfer Restricted Securities that are being exchanged or transferred in
accordance with the transfer restrictions set forth in subsection (g)(iv) of
this Section 2.06), the Registrar has received the following documentation, as
applicable (all of which may be submitted by facsimile):
(A) if such Transfer Restricted Security is being delivered to
the Registrar by a Holder for registration in the name of
such Holder, without transfer, or such Transfer Restricted
Security is being transferred to the Company or any of its
Subsidiaries, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto); or
(B) if such Transfer Restricted Security is being transferred to
a QIB in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance
with Rule 144 under the Securities Act or pursuant to an
effective registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of EXHIBIT B-3 hereto); or
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(C) if such Transfer Restricted Security is being transferred to
a Non-U.S. Person in an offshore transaction in accordance
with Rule 904 under the Securities Act, a certification to
that effect from such Holder (in substantially the form of
EXHIBIT B-3 hereto);
(D) if such Transfer Restricted Security is being transferred to
an Institutional Accredited Investor in reliance on an
exemption from the registration requirements of the
Securities Act other than those listed in subparagraphs (B)
and (C) above, a certification to that effect from such
Holder (in substantially the form of EXHIBIT B-3 hereto), a
certification substantially in the form of EXHIBIT C hereto,
and, if such transfer is in respect of an aggregate
principal amount of Notes of less than $250,000, an Opinion
of Counsel acceptable to the Company that such transfer is
in compliance with the Securities Act; or
(E) if such Transfer Restricted Security is being transferred in
reliance on any other exemption from the registration
requirements of the Securities Act, a certification to that
effect from such Holder (in substantially the form of
EXHIBIT B-3 hereto) and an Opinion of Counsel from such
Holder or the transferee reasonably acceptable to the
Company and to the Registrar to the effect that such
transfer is in compliance with the Securities Act.
The Trustee shall (or, if at any time the Trustee ceases to be the
Registrar, shall upon receipt from the Registrar of written notification that
the foregoing documentation has been received by the Registrar) cancel the
Definitive Note, increase or cause to be increased the aggregate principal
amount of the appropriate Global Note.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITARY. If at
any time:
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary
for the Global Notes and a successor Depositary for the
Global Notes is not appointed by the Company within 90 days
after delivery of such notice; or
(ii) the Company, at its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then the Company shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (ii), (iii)
and (iv), each Note certificate evidencing Global Notes and
Definitive Notes (and all Notes issued in exchange therefor
or substitution thereof) shall bear the legend in
substantially the following form:
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"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF.
BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IS OTHERWISE
PERMITTED TO PURCHASE THE NOTES PURSUANT TO THE REQUIREMENTS
OF CLAUSE (2) BELOW, (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
ANY OF ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION
MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF
THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED FROM THE
TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES
THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO
THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO
REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or
pursuant to an effective registration statement under the
Securities Act:
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(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note that does not bear the legend set forth in
(i) above and rescind any restriction on the transfer of
such Transfer Restricted Security upon receipt of a
certification from the transferring holder substantially in
the form of EXHIBIT B-4 hereto, indicating paragraph number
three or four; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above,
but shall continue to be subject to the provisions of
Section 2.06(a) and (b) hereof; PROVIDED, HOWEVER, that with
respect to any request for an exchange of a Transfer
Restricted Security that is represented by a Global Note for
a Definitive Note that does not bear the legend set forth in
(i) above, which request is made in reliance upon Rule 144,
the Holder thereof shall certify in writing to the Registrar
that such request is being made pursuant to Rule 144 (such
certification to be substantially in the form of EXHIBIT B-4
hereto, indicating paragraph number three or four).
(iii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a
Global Note) in reliance on any exemption from the registration
requirements of the Securities Act (other than exemptions
pursuant to Rule 144A or Rule 144 under the Securities Act) in
which the Holder or the transferee provides an Opinion of Counsel
to the Company and the Registrar in form and substance reasonably
acceptable to the Company and the Registrar (which Opinion of
Counsel shall also state that the transfer restrictions contained
in the legend are no longer applicable):
(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder
thereof to exchange such Transfer Restricted Security for a
Definitive Note that does not bear the legend set forth in
(i) above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security represented
by a Global Note, such Transfer Restricted Security shall
not be required to bear the legend set forth in (i) above,
but shall continue to be subject to the provisions of
Section 2.06(a) and (b) hereof.
(iv) Notwithstanding the foregoing, upon the consummation of the
Exchange Offer in accordance with the Registration Rights
Agreement, the Company shall issue and, upon receipt of an
authentication order in accordance with Section 2.02 hereof, the
Trustee shall authenticate (i) one or more Unrestricted Global
Notes in aggregate principal amount equal to the principal amount
of the Restricted Beneficial Interests tendered for acceptance by
Persons that certify in the applicable letter of transmittal that
they (x) are acquiring the Notes in the ordinary course of
business, (y) are not participating in the distribution of the
Notes and (z) are not affiliates (as defined in Rule 144) of the
Company and accepted for exchange in the Exchange Offer and (ii)
Definitive Notes that do not
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bear the Private Placement Legend in an aggregate principal
amount equal to the principal amount of the Definitive Notes
accepted for exchange in the Exchange Offer, subject to delivery
by such Person of the certification described in clause (i).
Concurrently with the issuance of such Notes, the Trustee shall
cause the aggregate principal amount of the applicable Restricted
Global Notes to be reduced accordingly and the Company shall
execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in any Global Note has been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, such Global Note shall be returned to
or retained and cancelled by the Trustee in accordance with Section 2.11 hereof.
At any time prior to such cancellation, if any beneficial interest in a Global
Note is exchanged for Definitive Notes, redeemed, repurchased or cancelled, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note, by the Trustee
or the Notes Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall
authenticate Global Notes and Definitive Notes at the
Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Company
may require payment of a sum sufficient to cover any
stamp or transfer tax or similar governmental charge
payable in connection therewith (other than any such
stamp or transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections
2.10, 3.06, 4.10, 4.14 and 9.05 hereto).
(iii) All Global Notes and Definitive Notes issued upon
anyregistration of transfer or exchange of Global Notes
or Definitive Notes shall be the valid obligations of
the Company, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Global
Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(iv) The Registrar shall not be required:(A) to issue, to
register the transfer of or to exchange Notes during a
period beginning at the opening of fifteen (15)
Business Days before the day of any selection of Notes
for redemption under Section 3.02 hereof and ending at
the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so
selected for redemption in whole or in part, except the
unredeemed portion of any Note being redeemed in part,
or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding
interest payment date.
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(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the
Company may deem and treat the Person in whose name any
Note is registered as the absolute owner of such Note
for the purpose of receiving payment of principal of
and interest on such Notes and for all other purposes,
and neither the Trustee, any Agent nor the Company
shall be affected by notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of
Section 2.02 hereof.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee, or the Company and the
Trustee receives evidence to their satisfaction of the destruction, loss or
theft of any Note, the Company shall issue and the Trustee, upon the written
order of the Company signed by an Officer of the Company, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss that
any of them may suffer if a Note is replaced. The Company and the Trustee may
charge for their expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section 2.08 as not outstanding.
Except as set forth in Section 2.09 hereof, a Note does not cease to be
outstanding because the Company or any Subsidiary Guarantor or an Affiliate of
the Company or any Subsidiary Guarantor holds the Note.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Subsidiary Guarantor, or by any Affiliate of the Company or any
Subsidiary Guarantor, shall be considered as though not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent, only Notes a Responsible
Officer of the Trustee knows are so owned shall
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be so disregarded. Notwithstanding the foregoing, Notes that are to be acquired
by the Company or any Subsidiary Guarantor or an Affiliate of the Company or any
Subsidiary Guarantor pursuant to an exchange offer, tender offer or other
agreement shall not be deemed to be owned by such entity until legal title to
such Notes passes to such entity.
SECTION 2.10. TEMPORARY NOTES.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes upon a written order of the
Company signed by an Officer of the Company. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes. Without unreasonable delay,
the Company shall prepare and the Trustee shall upon receipt of a written order
of the Company signed by an Officer authenticate Definitive Notes in exchange
for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver to the Trustee for cancellation any
Notes previously authenticated and delivered hereunder or which the Company may
have acquired in any manner whatsoever, and all Notes so delivered shall be
promptly cancelled by the Trustee. All Notes surrendered for registration of
transfer, exchange or payment, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee. The Trustee and no one else shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation. Subject to Section 2.07 hereof, the Company may
not issue new Notes to replace Notes that it has redeemed or paid or that have
been delivered to the Trustee for cancellation. All cancelled Notes held by the
Trustee shall be destroyed and certification of their destruction delivered to
the Company, unless by a written order, signed by an Officer of the Company, the
Company shall direct that cancelled Notes be returned to it.
SECTION 2.12. DEFAULTED INTEREST.
If the Company or any Subsidiary Guarantor defaults in a payment of
interest on the Notes, it shall pay the defaulted interest in any lawful manner
plus, to the extent lawful, interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date, which date shall be
at the earliest practicable date but in all events at least five (5) Business
Days prior to the payment date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall fix or cause to be fixed each
such special record date and payment date, and shall promptly thereafter, notify
the Trustee of any such date. At least fifteen (15) days before the special
record date, the Company (or the Trustee, in the name and at the expense of the
Company) shall mail or cause to be mailed to Holders a notice that states the
special record date, the related payment date and the amount of such interest to
be paid.
SECTION 2.13. RECORD DATE.
The record date for purposes of determining the identity of Holders of the
Notes entitled to vote or consent to any action by vote or consent authorized or
permitted under this Indenture shall be determined as provided for in TIA
Section 316 (c).
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SECTION 2.14. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
SECTION 2.15. CUSIP NUMBER.
The Company in issuing the Notes may use a "CUSIP" number, and if it does
so, the Trustee shall use the CUSIP number in notices of redemption or exchange
as a convenience to Holders; PROVIDED that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any change in the CUSIP number.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 45
days but not more than 60 days before a redemption date (unless a shorter period
is acceptable to the Trustee) an Officers' Certificate setting forth (i) the
Section of this Indenture pursuant to which the redemption shall occur, (ii) the
redemption date, (iii) the principal amount of Notes to be redeemed and (iv) the
redemption price.
If the Company is required to make an offer to purchase Notes pursuant to
Section 4.10 or 4.14 hereof, it shall furnish to the Trustee, at least 45 days
before the scheduled purchase date, an Officers' Certificate setting forth (i)
the section of this Indenture pursuant to which the offer to purchase shall
occur, (ii) the terms of the offer, (iii) the principal amount of Notes to be
purchased, (iv) the purchase price, (v) the purchase date and (vi) and further
setting forth a statement to the effect that (a) the Company or one its
Subsidiaries has affected an Asset Sale and there are Excess Proceeds
aggregating more than $15.0 million or (b) a Change of Control has occurred, as
applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed at any time, selection of
Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or by such other method as the Trustee shall deem fair and appropriate; PROVIDED
that no Notes of $1,000 or less shall be redeemed in part. Notices of redemption
shall be mailed by first class mail at least 30 but not more than 60 days before
the redemption date to each Holder of Notes to be redeemed at its registered
address. If any Note is to be redeemed in part only, the notice of redemption
that relates to such Note shall state the portion of the principal amount
thereof to be redeemed. A new Note in principal amount equal to the unredeemed
portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Note. On and after the redemption date, interest
will cease to accrue on Notes or portions thereof called for redemption.
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SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date, the
Company shall mail or cause to be mailed by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed.
The notice shall identify the Notes to be redeemed and shall state:
(1) the redemption date;
(2) the redemption price for the Notes and accrued interest, and
Liquidated Damages, if any;
(3) if any Note is being redeemed in part, the portion of the
principal amount of such Notes to be redeemed and that, after the
redemption date, upon surrender of such Note, a new Note or Notes
in principal amount equal to the unredeemed portion shall be
issued upon surrender of the original Note;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in making such redemption
payment, interest and Liquidated Damages, if any, on Notes called
for redemption ceases to accrue on and after the redemption date;
(7) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being
redeemed; and
(8) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on
the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date (or such shorter period as shall be acceptable to the Trustee),
an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in the notice as provided in the
preceding paragraph. The notice mailed in the manner herein provided shall be
conclusively presumed to have been duly given whether or not the Holder receives
such notice. In any case, failure to give such notice by mail or any defect in
the notice to the Holder of any Note shall not affect the validity of the
proceeding for the redemption of any other Note.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price plus accrued and unpaid interest and Liquidated
Damages, if any, to such date. A notice of redemption may not be conditional.
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SECTION 3.05. DEPOSIT OF REDEMPTION OR PURCHASE PRICE.
On or before 10:00 a.m. (New York City time) on each redemption date or the
date on which Notes must be accepted for purchase pursuant to Section 4.10 or
4.14, the Company shall deposit with the Trustee or with the Paying Agent money
sufficient to pay the redemption price of and accrued and unpaid interest and
Liquidated Damages, if any, on all Notes to be redeemed or purchased on that
date. The Trustee or the Paying Agent shall promptly return to the Company upon
its written request any money deposited with the Trustee or the Paying Agent by
the Company in excess of the amounts necessary to pay the redemption price of
(including any applicable premium), accrued interest and Liquidated Damages, if
any, on all Notes to be redeemed or purchased.
If Notes called for redemption or tendered in an Asset Sale Offer or Change
of Control Offer are paid or if the Company has deposited with the Trustee or
Paying Agent money sufficient to pay the redemption or purchase price of, unpaid
and accrued interest and Liquidated Damages, if any, on all Notes to be redeemed
or purchased, on and after the redemption or purchase date interest and
Liquidated Damages, if any, shall cease to accrue on the Notes or the portions
of Notes called for redemption or tendered and not withdrawn in an Asset Sale
Offer or Change of Control Offer (regardless of whether certificates for such
securities are actually surrendered). If a Note is redeemed or purchased on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest and Liquidated Damages, if any, shall
be paid to the Person in whose name such Note was registered at the close of
business on such record date. If any Note called for redemption shall not be so
paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall be paid on the unpaid
principal and Liquidated Damages, if any, from the redemption or purchase date
until such principal and Liquidated Damages, if any, is paid, and to the extent
lawful on any interest not paid on such unpaid principal, in each case, at the
rate provided in the Notes and in Section 4.01 hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as provided in the following paragraph, the Notes will not be
redeemable at the Company's option prior to September 15, 2002. Thereafter, the
Notes will be subject to redemption at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on September 15 of the years indicated below:
YEAR PERCENTAGE
2002..........................................................105.188%
2003..........................................................103.458%
2004..........................................................101.729%
2005 and thereafter...........................................100.000%
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(b) Notwithstanding the foregoing, at any time prior to September 15, 2000
the Company may on any one or more occasions redeem up to 33 1 3% of the
aggregate principal amount of Notes originally issued in the Offering at a
redemption price of 110.375% of the principal amount thereof, plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the redemption date,
with the net proceeds of one or more Public Equity Offerings; PROVIDED that at
least 66 2 3% of the original aggregate principal amount of Notes remains
outstanding immediately after the occurrence of each such redemption; and
PROVIDED, further, that each such redemption shall occur within 120 days of the
date of the closing of the Public Equity Offering to which it relates.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 3.09, 4.10 and 4.14 hereof, the Company
shall not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
SECTION 3.09. REPURCHASE OFFERS.
In the event that the Company shall be required to commence an offer to all
Holders to repurchase Notes (a "Repurchase Offer") pursuant to Section 4.10
hereof, an Asset Sale Offer, or pursuant to Section 4.14 hereof, a Change of
Control Offer, the Company shall follow the procedures specified below.
A Repurchase Offer shall commence no earlier than 30 days and no later than
60 days after a Change of Control (unless the Company is not required to make
such offer pursuant to Section 4.14(c) hereof) or an Asset Sale Offer shall be
required to be made pursuant to Section 4.10, as the case may be, and remain
open for a period of twenty (20) Business Days following its commencement and no
longer, except to the extent that a longer period is required by applicable law
(the "Offer Period"). On a date specified in the notice of such Repurchase
Offer, which shall be no later than five (5) Business Days after the termination
of the Offer Period (the "Purchase Date"), the Company shall purchase the
principal amount of Notes required to be purchased pursuant to Section 4.10
hereof, in the case of an Asset Sale Offer, or 4.14 hereof, in the case of a
Change of Control Offer (the "Offer Amount") or, if less than the Offer Amount
has been tendered, all Notes tendered in response to the Repurchase Offer.
Payment for any Notes so purchased shall be made in the same manner as interest
payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest and
Liquidated Damages, if any, shall be paid to the Person in whose name a Note is
registered at the close of business on such record date, and no additional
interest or Liquidated Damages, if any, shall be payable to Holders who tender
Notes pursuant to the Repurchase Offer.
Upon the commencement of a Repurchase Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders. The notice
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to such Repurchase Offer. The Repurchase Offer shall be
made to all Holders. The notice, which shall govern the terms of the Repurchase
Offer, shall describe the transaction or transactions that constitute the Change
of Control or Asset Sale Offer, as the case may be, and shall state:
(a) that the Repurchase Offer is being made pursuant to this Section 3.09
and Section 4.10 or 4.14 hereof, as the case may be, and the length of time
the Repurchase Offer shall remain open;
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(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered and accepted for payment shall continue to
accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Repurchase Offer shall cease to accrue
interest and Liquidated Damages, if any, after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to a
Repurchase Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note,
duly completed, or to transfer their interest in such Note by book-entry
transfer, to the Company, the Depositary, or the Paying Agent at the
address specified in the notice not later than the close of business on the
last day of the Offer Period;
(f) that Holders shall be entitled to withdraw their election if the
Company, the Depositary or the Paying Agent, as the case may be, receives,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Note
purchased;
(g) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, shall be purchased); and
(h) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before 10:00 a.m. (New York City time) on each Purchase Date, the
Company shall irrevocably deposit with the Trustee or Paying Agent in
immediately available funds the aggregate purchase price with respect to a
principal amount of Notes equal to the Offer Amount, together with accrued and
unpaid interest and Liquidated Damages, if any, thereon, to be held for payment
in accordance with the terms of this Section 3.09. On the Purchase Date, the
Company shall, to the extent lawful, (i) accept for payment, on a PRO RATA basis
to the extent necessary, the Offer Amount of Notes or portions thereof tendered
pursuant to the Repurchase Offer, or if less than the Offer Amount has been
tendered, all Notes tendered, (ii) deliver or cause the Paying Agent or
depository, as the case may be, to deliver to the Trustee Notes so accepted and
(iii) deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than three (3)
Business Days after the Purchase Date) mail or deliver to each tendering Holder
an amount equal to the purchase price of the Notes tendered by such Holder and
accepted by the Company for purchase, plus any accrued and unpaid interest and
Liquidated Damages, if any, thereon, and the Company shall promptly issue a new
Note, and the Trustee, shall authenticate and mail or deliver such new Note, to
such Holder, equal in principal amount to any unpurchased portion of such
Holder's Notes surrendered. Any Note not so accepted shall be promptly mailed
or delivered by the Company to the Holder thereof. The Company shall publicly
announce in a newspaper of general circulation or in a press release provided to
a nationally recognized financial wire service the results of the Repurchase
Offer on the Purchase Date.
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Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01, 3.02, 3.05 and 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. The Company shall pay all Liquidated Damages, if any, in the same
manner on the dates and in the amounts set forth in the Registration Rights
Agreement. Principal, premium and Liquidated Damages, if any, and interest,
shall be considered paid for all purposes hereunder on the date the Paying Agent
(if other than the Company or a Subsidiary thereof) holds, as of 10:00 a.m. (New
York City time) money deposited by the Company in immediately available funds
and designated for and sufficient to pay all such principal, premium and
Liquidated Damages, if any, and interest, then due.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of New
York an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee or Registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon the Company in
respect of the Notes and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; PROVIDED, HOWEVER,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03 hereof.
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SECTION 4.03. COMMISSION REPORTS.
So long as required to do so under the Exchange Act, the Company shall file
with the Commission and distribute to the Holders copies of the quarterly and
annual financial information required to be filed with the Commission pursuant
to the Exchange Act. All such financial information shall include consolidated
financial statements (including footnotes) prepared in accordance with GAAP.
Such annual financial information shall also include an opinion thereon
expressed by an independent accounting firm of established national reputation.
All such consolidated financial statements shall be accompanied by a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its Restricted Subsidiaries. In addition, whether or not
required by the rules and regulations of the Commission, so long as any Notes
are outstanding, the Company shall furnish to the Holders (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company were required to file
such Forms, including a "Management's Discussion and Analysis of Financial
Condition and Results of Operations" that complies with the rules and
regulations of the Commission and that describes the financial condition and
results of operations of the Company and its Restricted Subsidiaries and, with
respect to the annual information only, a report thereon by the Company's
certified independent accountants and (ii) all current reports that would be
required to be filed with the Commission on Form 8-K if the Company were
required to file such reports. In addition, whether or not required by the rules
and regulations of the Commission, the Company will submit a copy of all such
information and reports to the Commission for public availability (unless the
Commission will not accept such materials) and make such information available
to prospective investors upon written request. In addition, during any period in
which the Company is not subject to the reporting requirements of the Exchange
Act, the Company shall furnish to Holders and prospective purchasers of the
Notes the information required by Rule 144A(d)(4) under the Securities Act. The
Company and each Subsidiary Guarantor shall at all times comply with TIA Section
314(a).
The financial information to be distributed to Holders of Notes shall be
filed with the Trustee and mailed to the Holders at their addresses appearing in
the register of Notes maintained by the Registrar, within 120 days after the end
of the Company's fiscal years and within 60 days after the end of each of the
first three quarters of each such fiscal year.
The Company shall provide the Trustee with a sufficient number of copies of
all reports and other documents and information and, if requested by the
Company, the Trustee will deliver such reports to the Holders under this Section
4.03.
SECTION 4.04. COMPLIANCE CERTIFICATE.
The Company and each Subsidiary Guarantor shall deliver to the Trustee,
within 90 days after the end of each fiscal year of the Company (which shall be
the Saturday nearest April 30 unless the Company otherwise notifies the Trustee
in writing), an Officers' Certificate stating (i)(A) that, in the course of the
performance by the signatories thereto of their duties as Officers of the
Company, they would normally have knowledge of any Default or Event of Default,
(B) whether or not such signatories know of any Default or Event of Default that
occurred during such period and (C) if any Default or Event of Default has
occurred during such period, the nature of such Default or Event of Default, its
status and what action the Company is taking or proposes to take in respect
thereto and (ii) that to the best of his or her knowledge no event has occurred
and remains in existence by reason of which payments on account of the principal
of or interest, if any, on the Notes are prohibited or if such event has
occurred,
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a description of the event and what action the Company is taking or proposes to
take with respect thereto.
So long as not contrary to the then current recommendations of the American
Institute of Certified Public Accountants, in connection with the year-end
financial statements delivered pursuant to Section 4.03 hereof, the Company
shall use its best efforts to deliver a written statement of the Company's
independent public accountants (who shall be a firm of established national
reputation) that in making the examination necessary for certification of such
financial statements, nothing has come to their attention that would lead them
to believe that the Company has violated any provisions of Article Four or
Section 5.01 hereof or, if any such violation has occurred, specifying the
nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation. In the event that such
written statement of the Company's independent public accountants cannot be
obtained, the Company shall deliver an Officers' Certificate certifying that it
has used its best efforts to obtain such statements and was unable to do so.
The Company shall, so long as any of the Notes are outstanding, deliver to
the Trustee, forthwith upon any Officer becoming aware of any Default or Event
of Default, an Officers' Certificate specifying such Default or Event of Default
and what action the Company is taking or proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency all material taxes, assessments and governmental levies,
except such as are contested in good faith and by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each Subsidiary Guarantor covenants (to the extent that it
may lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each Subsidiary Guarantor (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any distribution (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Restricted Subsidiary of the Company
that is a Subsidiary Guarantor) on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including in connection with a merger
or consolidation); (ii) purchase, redeem or otherwise acquire or retire for
value any outstanding Equity Interests of the Company or any Affiliate of the
Company (other than any such Equity Interests owned by the Company or any Wholly
Owned Restricted Subsidiary of the Company that is a Subsidiary Guarantor);
(iii) make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value, prior to any scheduled principal payment, any
sinking fund date or its
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scheduled maturity date, any Indebtedness that is subordinated to the Notes or
the Subsidiary Guarantees; (iv) make any Restricted Investment or (v) make any
payment pursuant to the BRS Management Agreement (all such payments and other
actions set forth in clauses (i) through (v) above being collectively referred
to as "Restricted Payments"), unless:
(a) at the time of and after giving effect to such Restricted
Payment, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date hereof (excluding Restricted Payments permitted by clauses
(o), (s)(ii), (x) and (y) of the next succeeding paragraph), is less than
the sum of (i) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing after the date hereof to the end of the Company's
most recently ended fiscal quarter for which internal financial statements
are available at the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a deficit, 100% of such
deficit), plus (ii) 100% of the aggregate net cash proceeds (or non-cash
proceeds when converted into cash) received by the Company in the form of
capital contributions or from the issue, sale or exercise since the date
hereof of Equity Interests of the Company or of debt securities of the
Company that have been converted into such Equity Interests (other than
Equity Interests (or convertible debt securities) sold to a Subsidiary of
the Company and other than Disqualified Stock or debt securities that have
been converted into Disqualified Stock), plus (iii) to the extent that any
Restricted Investment that was made after the date hereof is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment, plus (iv) 50% of the excess, if any, of the cash received upon
the sale or other disposition of a Restricted Investment over the amount
described in clause (iii) above.
The foregoing provisions shall not prohibit: (o) any repurchase, redemption
or retirement for value of Capital Stock of a Restricted Subsidiary of the
Company deemed to occur upon the merger of such Restricted Subsidiary with or
into the Company or another Wholly Owned Restricted Subsidiary of the Company
within one year following the date on which such merged Restricted Subsidiary
became a Restricted Subsidiary of the Company; (p) acquisition and retirement by
the Company of any Class B Preferred Stock in satisfaction of any claim by the
Company for indemnity pursuant to the 1996 Merger Agreement; (q) retirement of
the Class A Preferred Stock in connection with the issuance by the Company of
the Exchange Debentures; (r) the payment of cash in lieu of the issuance of (A)
fractional shares of common stock upon exercise of the Warrants and (B) any
Exchange Debenture that is not an integral multiple of $1,000 upon any exchange
of Class A Preferred Stock for Exchange Debentures; (s) the amendment of the BRS
Management Agreement to permit the payment of, and the payment of, fees to BRS
or any Affiliate of BRS (i) under the BRS Management Agreement after the end of
each fiscal quarter in an amount not to exceed the greater of (a) $250,000 or
(b) 1.0% of the Company's EBITDA for such fiscal quarter (PROVIDED, that the
total amount of all such payments shall not exceed in any fiscal year the
greater of (x) $1.0 million or (y) one percent of the Company's EBITDA for such
fiscal year)
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and (ii) in connection with the Delchamps Acquisition in an amount not to exceed
$5.0 million in the aggregate; (t) the payment of dividends on the Company's
capital stock, following the first Public Equity Offering after the date hereof,
of up to 6.0% of the aggregate proceeds to the Company in such Public Equity
Offering, other than a public offering with respect to the Company's common
stock registered on Form S-8; (u) the payment of any dividend within 60 days
after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions hereof; (v) the repurchase of
the Class A Preferred Stock in accordance with the terms thereof upon the
occurrence of a Change of Control; (w) the redemption of Exchange Debentures in
accordance with the terms thereof upon the occurrence of a Change of Control;
(x) the redemption, repurchase, retirement or other acquisition of any Equity
Interests of the Company in exchange for, or out of the proceeds of, the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of other Equity Interests of the Company (other than any Disqualified
Stock); PROVIDED that the amount of any such net cash proceeds that are utilized
for any such redemption, repurchase, retirement or other acquisition shall be
excluded from clause (c) (ii) of the preceding paragraph; (y) the defeasance,
redemption, repurchase, retirement or other acquisition of Subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of Equity Interests of the Company (other
than Disqualified Stock); PROVIDED that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, defeasance, retirement or
other acquisition shall be excluded from clause (c) (ii) of the preceding
paragraph; and (z) the repurchase, redemption, defeasance or other acquisition
or retirement for value of any Equity Interests of the Company or any Restricted
Subsidiary of the Company held by any member of the Company's (or any of its
Restricted Subsidiaries') management pursuant to any management equity
subscription agreement or stock option agreement in effect as of the date hereof
or any other option plan adopted by the Board of Directors of the Company;
PROVIDED that the aggregate price paid for all such repurchased, redeemed,
defeased, acquired or retired Equity Interests shall not exceed $2.0 million in
any twelve-month period plus (i) the aggregate cash proceeds received by the
Company during such twelve-month period from any issuance of Equity Interests by
the Company to members of management of the Company and its Restricted
Subsidiaries and (ii) the proceeds of any insurance policy to the extent applied
toward such repurchase, redemption, defeasance or other acquisition or
retirement for value of such Equity Interests; PROVIDED, that with respect to
clause (z) above, no Default or Event of Default shall have occurred and be
continuing immediately after such transaction.
As of the date hereof, all of the Company's Subsidiaries shall be
Restricted Subsidiaries. The Board of Directors may designate any Restricted
Subsidiary (other than Interstate, McCarty-Holman, Southern, Pump And Save, DAC,
Delchamps and SCSI) to be an Unrestricted Subsidiary if such designation would
not cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greater of (x) the net book value of such Investments at the time
of such designation and (y) the fair market value of such Investments at the
time of such designation. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the fair
market value (evidenced by a Board Resolution delivered to the Trustee) on the
date of the Restricted Payment of the asset(s) proposed to be transferred by the
Company or such Restricted Subsidiary, as the case may be, pursuant to the
Restricted Payment. Not later than the date of making any Restricted Payment,
the Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting
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forth the basis upon which the calculations required by this Section 4.07 were
computed, which calculations may be based upon the Company's latest available
internal financial statements.
SECTION 4.08. DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to:
(i)(a) pay dividends or make any other distributions to the Company or
any of its Restricted Subsidiaries on its Capital Stock or (b) pay any
Indebtedness owed to the Company or any of its Restricted Subsidiaries;
(ii) make loans or advances to the Company or any of its Restricted
Subsidiaries; or
(iii) transfer any of its properties or assets to the Company or any
of its Restricted Subsidiaries, except (in each case) for such encumbrances
or restrictions existing under or by reason of:
(a) the Existing Indebtedness as in effect on the date hereof;
(b) the Senior Credit Facility, as in effect as of the date
hereof, and any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
thereof; PROVIDED that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are no more restrictive in the aggregate than those
contained in the Senior Credit Facility, as in effect on the date
hereof;
(c) this Indenture, the Subsidiary Guarantees and the Notes;
(d) applicable law;
(e) any instrument governing Capital Stock or Indebtedness of any
Person acquired by the Company or any of its Restricted Subsidiaries,
as in effect at the time of such acquisition (except to the extent
such Indebtedness was incurred in connection with, or in contemplation
of, such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person,
other than the Person, or the properties or assets of the Person, so
acquired;
(f) customary non-assignment and subletting provisions in leases
and other contracts entered into in the ordinary course of business
and consistent with past practices;
(g) purchase money obligations for property acquired in the
ordinary course of business that impose restrictions of the nature
described in clause (iii) above on the property so acquired;
(h) Permitted Refinancing Indebtedness, PROVIDED that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are no more
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restrictive in the aggregate than those contained in the agreements
governing the Indebtedness being refinanced;
(i) contractual encumbrances or restrictions in effect on the
date hereof;
(j) mortgage or construction financing that imposes restrictions
on the real property acquired or improved;
(k) contracts for the sale of assets that include customary
restrictions concerning the disposition of property;
(l) secured Indebtedness permitted by this Indenture that limits
the right to dispose of the assets securing the Indebtedness; and
(m) encumbrances or restrictions imposed by any amendments to the
contracts, agreements or obligations referred to in clauses (a)
through (l) above if not more restrictive in the aggregate than under
existing contracts.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume, Guarantee
or otherwise become directly or indirectly liable, contingently or otherwise,
with respect to (collectively, "incur") any Indebtedness (including Acquired
Indebtedness) and the Company shall not issue and shall not permit any of its
Restricted Subsidiaries to issue any Disqualified Stock (other than the
Preferred Stock); PROVIDED, however, that the Company or its Restricted
Subsidiaries may incur Indebtedness (including Acquired Indebtedness) or issue
shares of Disqualified Stock if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been (A) at least 2.25 to 1.0 if such date is prior to September 15, 2000
and (B) 2.50 to 1.0 if such date is on or after September 15, 2000, in each case
determined on a pro forma basis (including a pro forma application of the net
proceeds therefrom), as if the additional Indebtedness had been incurred, or the
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness and reimbursement obligations in respect of
letters of credit pursuant to the Senior Credit Facility (with letters of
credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) in an aggregate principal amount not to exceed an amount equal
to (x) the greater of (1) the amount of the Borrowing Base and (2) $150.0
million less the aggregate amount of all Net Proceeds of Asset Sales
applied to permanently reduce the total commitments with respect to such
Indebtedness pursuant to Section 4.10 hereof plus (y) $50.0 million less
any outstanding Indebtedness incurred pursuant to clause (viii) below;
(ii) the incurrence by the Company or any of its Restricted
Subsidiaries of the Existing Indebtedness;
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(iii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by the Notes and the Subsidiary
Guarantees;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage or construction financing or purchase money obligations, in each
case incurred for the purpose of financing all or any part of the purchase
price or cost of construction or improvement of property used in the
business of the Company or such Restricted Subsidiary, in an aggregate
principal amount not to exceed $30.0 million in any fiscal year; PROVIDED
that the principal amount (or, in the case of a Capital Lease Obligation,
the amount required to be capitalized on a balance sheet under GAAP) of
such Indebtedness when incurred shall not exceed the purchase price and/or
actual cost of construction or improvement, as the case may be, to which
such incurrence relates;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to extend, refinance, renew, replace,
defease or refund, Indebtedness that was permitted by this Indenture to be
incurred;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and
any of its Wholly Owned Restricted Subsidiaries; PROVIDED, however, that
(i) any subsequent issuance or transfer (other than for security purposes)
of Equity Interests that results in any such Indebtedness being held by a
Person other than a Wholly Owned Restricted Subsidiary and (ii) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of this Indenture to be
outstanding;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness (in addition to Indebtedness permitted by any
other clause of this paragraph) in an aggregate principal amount at any
time outstanding not to exceed $50.0 million less the amount of any
Indebtedness incurred pursuant to clause (i)(y) of this paragraph;
(ix) the incurrence by the Company or any of its Restricted
Subsidiaries of Acquired Indebtedness, PROVIDED that such Indebtedness (A)
is not incurred in contemplation of the acquisition to which it relates and
(B) is nonrecourse to the Company and its Restricted Subsidiaries, or to
any of their respective assets (other than the acquired Subsidiary and its
Subsidiaries, or the acquired assets, as applicable);
(x) the incurrence by the Company of Indebtedness pursuant to
Exchange Debentures described under clause (2) of the definition of
Exchange Debentures;
(xi) the Guarantee of any Indebtedness otherwise permitted to be
incurred pursuant to this Indenture; and
(xii) Obligations in respect of performance and surety bonds.
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SECTION 4.10. ASSETS SALES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (i) the Company (or the
Restricted Subsidiary, as the case may be) receives consideration at the time of
such Asset Sale at least equal to the fair market value (evidenced by a Board
Resolution delivered to the Trustee) of the assets or Equity Interests issued or
sold or otherwise disposed of; and (ii) at least 75% of the consideration
therefor received by the Company or such Restricted Subsidiary is in the form of
cash or Cash Equivalents; PROVIDED that the amount of (x) any liabilities (as
shown on the Company's or such Restricted Subsidiary's most recent balance sheet
or in the notes thereto) of the Company or any Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Notes or any guarantee
thereof) that are assumed by the transferee of any such assets and (y) any notes
or other obligations received by the Company or any such Restricted Subsidiary
from such transferee that are immediately converted by the Company or such
Restricted Subsidiary into cash (to the extent of the cash received), shall be
deemed to be cash for purposes of this provision and PROVIDED further that (1)
the 75% limitation referred to above shall not apply to any Asset Sale in which
the cash or Cash Equivalents portion of the consideration received therefor,
determined in accordance with the foregoing proviso, is equal to or greater than
what the net after-tax proceeds would have been had such Asset Sale complied
with the aforementioned 75% limitation and (2) the provisions of clauses (i) and
(ii) above shall not apply to any sale or other disposition of assets required
pursuant to a consent order or other agreement entered into by the Company with
the Federal Trade Commission or the Department of Justice in connection with the
Delchamps Acquisition.
Within 435 days after the receipt of any Net Proceeds from an Asset Sale,
the Company or its Restricted Subsidiary, as the case may be, may apply such Net
Proceeds by (i) permanently reducing Indebtedness under the Senior Credit
Facility (and correspondingly reducing commitments with respect thereto) or
other Senior Debt, (ii) investing (or entering into a binding commitment to
invest) in any one or more business, capital expenditure or other tangible
asset, in each case in the same line of business as the Company or its
Restricted Subsidiaries was engaged in on the date hereof or a line of business
reasonably related thereto, (iii) investing (or entering into a binding
commitment to invest) in properties or assets that replace the properties and
assets that are the subject of such Asset Sale and (iv) in the case of a sale of
a store or stores, deeming such Net Proceeds to have been applied to the extent
of any capital expenditures made to acquire or construct another store within
435 days preceding the date of the Asset Sale; PROVIDED that if such Net
Proceeds are applied by entering into a binding commitment under clause (ii) or
(iii) above, then the investment contemplated by such commitment shall be made
no later than 45 days following the end of such 435 day period. Pending the
final application of any such Net Proceeds, the Company or its Restricted
Subsidiary, as the case may be, may temporarily reduce Indebtedness under the
Senior Credit Facility or otherwise invest such Net Proceeds in any manner that
is not prohibited by this Indenture. Any Net Proceeds from Asset Sales that are
not applied or invested as provided in the first sentence of this paragraph will
be deemed to constitute "Excess Proceeds." When the aggregate amount of Excess
Proceeds exceeds $15.0 million, the Company shall be required to make an offer
to all Holders (an "Asset Sale Offer") to purchase the maximum principal amount
of Notes that may be purchased out of the Excess Proceeds, at a price in cash
equal to 100% of the principal amount thereof plus accrued and unpaid interest
and Liquidated Damages, if any, thereon to the date of purchase, in accordance
with the procedures set forth in this Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less than
the aggregate amount of Excess Proceeds, the Company or its Restricted
Subsidiary, as the case may be, may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the aggregate amount of Excess Proceeds,
the Trustee shall select the Notes to be purchased in accordance with the terms
of this Indenture. Upon completion of each Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
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SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make any contract, agreement, understanding, loan, advance or Guarantee with,
or for the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (i) such Affiliate Transaction is on terms that are no
less favorable to the Company or the relevant Restricted Subsidiary than those
that would have been obtained in a comparable transaction by the Company or such
Restricted Subsidiary with an unrelated Person and (ii) the Company delivers to
the Trustee (a) with respect to any Affiliate Transaction or series of related
Affiliate Transactions involving aggregate consideration in excess of $1.0
million, a Board Resolution certifying that such Affiliate Transaction or series
of related Affiliate Transactions complies with clause (i) above and that such
Affiliate Transaction or series of related Affiliate Transactions has been
approved by a majority of the disinterested members of the Board of Directors
and (b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million (other
than Affiliate Transactions in the ordinary course of business of the Company
and its Restricted Subsidiaries between or among the Company or any Restricted
Subsidiary of the Company and any Person providing goods and/or services to the
Company or any Restricted Subsidiary in the ordinary course of business that is
an Affiliate of the Company or such Restricted Subsidiary solely by virtue of
the fact that the Fund, or any Person controlling the Fund, directly or
indirectly controls both the Company or such Restricted Subsidiary and such
Affiliate; PROVIDED, however, that such Affiliate Transaction shall comply with
clause (i) above), an opinion as to the fairness to the Company or such
Restricted Subsidiary of such Affiliate Transaction from a financial point of
view issued by an independent nationally recognized investment banking or
appraisal firm experienced in the appraisal or similar review of similar types
of transactions (or if an opinion is unavailable as to the fairness from a
financial point of view of any transaction for which a fairness opinion is not
customarily rendered then an opinion that such transaction meets the
requirements of clause (i) above); PROVIDED that (u) payments by Delchamps
pursuant to change of control agreements with certain employees of Delchamps in
an amount not to exceed $13.0 million, (v) payments to McCarty-Holman Co., L.P.
in accordance with the terms of the Management Agreement in an amount not to
exceed $100,000 in each fiscal year, (w) the 18 leases described in the Offering
Memorandum under the caption "Certain Transactions--Leases of Certain Stores and
Facilities," (x)(1) any employment agreement entered into by the Company or any
of its Restricted Subsidiaries and (2) payment of employee benefits, including
bonuses, retirement plans and stock options, in each case, in the ordinary
course of business and consistent with the past practice of the Company or such
Restricted Subsidiary, (y) transactions between or among the Company and/or its
Restricted Subsidiaries and (z) transactions permitted by the provisions of
Section 4.07 hereof, in each case, shall not be deemed Affiliate Transactions.
SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien securing Pari Passu Indebtedness or Subordinated Indebtedness on
any asset now owned or hereafter acquired by the Company or any of its
Restricted Subsidiaries, or any income or profits therefrom, or assign or convey
any right to receive income therefrom; PROVIDED, however that the Company and
its Restricted Subsidiaries may create, incur, assume or suffer to exist a Lien
securing Pari Passu Indebtedness if the Notes are equally and ratably secured
with the obligations so secured until such time as such obligations are no
longer secured by a Lien.
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SECTION 4.13. SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction (other than the
sale and leaseback of newly constructed grocery stores as part of the
development of grocery store sites); PROVIDED that the Company and its
Restricted Subsidiaries may enter into a sale and leaseback transaction if (i)
the Company or such Restricted Subsidiary could have (a) incurred Indebtedness
in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction pursuant to Section 4.09 hereof and (b) incurred a Lien to secure
such Indebtedness pursuant to Section 4.12 hereof, (ii) the gross cash proceeds
of such sale and leaseback transaction are at least equal to the fair market
value (as determined in good faith by the Company's Board of Directors and set
forth in an Officers' Certificate delivered to the Trustee) of the property that
is the subject of such sale and leaseback transaction and (iii) the transfer of
assets in such sale and leaseback transaction is permitted by, and the Company
or such Restricted Subsidiary applies the proceeds of such transaction in
compliance with, Section 4.10 hereof.
SECTION 4.14. OFFER TO PURCHASE UPON CHANGE OF CONTROL.
Upon the occurrence of a Change of Control, each Holder will have the right
to require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of such Holder's Notes pursuant to the offer
described below (the "Change of Control Offer") at a price in cash equal to 101%
of the aggregate principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase (the "Change of
Control Payment"). Within 30 days following any Change of Control, the Company
will mail or cause to be mailed a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes pursuant to the procedures required by Section 3.09 hereof
and described in such notice. The Company will comply with the requirements of
Rule 14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of the Notes as a result of a Change of Control. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligations described herein by virtue thereof.
Prior to complying with the provisions of this Section 4.14, but in any
event within 30 days following a Change of Control, the Company will either
repay all outstanding Senior Debt, or offer to repay in full all outstanding
Senior Debt and repay the Senior Debt with respect to which such offer has been
accepted, or obtain the requisite consents, if any, under all outstanding Senior
Debt to permit the repurchase of the Notes required by this Section 4.14.
On the payment date set forth in the Change of Control Offer (the "Change
of Control Payment Date"), the Company shall, to the extent lawful, (1) accept
for payment all Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (2) deposit with the Trustee or with the Paying Agent
(or, if the Company or any of its Subsidiaries is the Paying Agent, separate and
hold in trust) an amount in same-day funds equal to the Change of Control
Payment in respect of all Notes or portions thereof so tendered and (3) deliver
or cause to be delivered to the Trustee for cancellation the Notes so accepted
together with an Officers' Certificate stating that such Notes or portions
thereof have been tendered to and purchased by the Company. The Paying Agent
shall promptly mail to each Holder of Notes so tendered the Change of Control
Payment for such Notes, and the Trustee shall promptly authenticate and mail (or
cause to be transferred by book entry) to each Holder a new Note equal in
principal amount to any unpurchased portion of the Notes surrendered, if any;
PROVIDED that each such
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new Note will be in a principal amount of $1,000 or an integral multiple
thereof. The Company shall publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
Except as described above with respect to a Change of Control, this
Indenture does not contain provisions that permit the Holders of the Notes to
require that the Company repurchase or redeem the Notes in the event of a
takeover, recapitalization or similar restructuring.
SECTION 4.15. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (a) its corporate
existence, and the corporate, partnership or other existence of each of its
Restricted Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Restricted Subsidiary and (b) the rights (charter and statutory), licenses
and franchises of the Company and its Restricted Subsidiaries; PROVIDED that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted
Subsidiaries, if the Board of Directors shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Restricted Subsidiaries, taken as a whole, and that the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.16. LIMITATION ON ISSUANCES OF CAPITAL STOCK OF WHOLLY OWNED
RESTRICTED SUBSIDIARIES.
Notwithstanding any other provisions in this Indenture, except with respect
to the pledge of Capital Stock of its Subsidiaries pursuant to the Senior Credit
Facility, the Company (a) shall not, and shall not permit any Wholly Owned
Restricted Subsidiary of the Company to, transfer, convey, sell, lease or
otherwise dispose of any Capital Stock of any Subsidiary Guarantor to any Person
(other than the Company or a Wholly Owned Restricted Subsidiary of the Company
that is a Subsidiary Guarantor), unless (i) such transfer, conveyance, sale,
lease or other disposition is of all the Capital Stock of such Subsidiary
Guarantor and (ii) the cash Net Proceeds from such transfer, conveyance, sale,
lease or other disposition are applied in accordance with Section 4.10 hereof
and (b) will not permit any Subsidiary Guarantor to issue any of its Equity
Interests (other than, if necessary, shares of its Capital Stock constituting
directors' qualifying shares) to any Person other than to the Company or another
Subsidiary Guarantor.
SECTION 4.17. BUSINESS ACTIVITIES.
The Company shall not, and shall not permit any Restricted Subsidiary to,
engage in any business other than (i) the retail and wholesale grocery business
and such business activities as are incidental or reasonably related thereto,
including the sale of liquor and the retail gasoline business, and (ii) such
other businesses as the Company or its Restricted Subsidiaries are engaged in on
the date hereof.
SECTION 4.18. ADDITIONAL GUARANTEES.
If the Company or any of its Restricted Subsidiaries shall, after the date
of this Indenture, transfer or cause to be transferred, in one transaction or a
series of related transactions, any assets, businesses,
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divisions, real property or equipment having an aggregate fair market value (as
determined in good faith by the Board of Directors) in excess of $1.0 million to
any Subsidiary that is not a Subsidiary Guarantor, or if the Company or any of
its Restricted Subsidiaries shall acquire another Subsidiary having total assets
with a fair market value (as determined in good faith by the Board of Directors)
in excess of $1.0 million, then such transferee or acquired Subsidiary shall (a)
execute a Guarantee in substantially the form of EXHIBIT D hereto, (b) execute
and deliver to the Trustee a supplemental indenture in the form of EXHIBIT E
hereto pursuant to which such transferee or acquired Subsidiary shall
unconditionally guarantee all of the Company's obligations under the Notes and
this Indenture on the terms set forth in such supplemental indenture and (c)
deliver to the Trustee an Opinion of Counsel satisfactory to the Trustee that
such Guarantee and such supplemental indenture have been duly executed and
delivered by such transferee or acquired Subsidiary. Notwithstanding the
foregoing, if such transferee or acquired Subsidiary has been properly
designated as an Unrestricted Subsidiary in accordance with this Indenture, then
for so long as it continues to constitute an Unrestricted Subsidiary that
transferee or acquired Subsidiary shall not be required to execute a Guarantee
or supplemental indenture or deliver to the Trustee an Opinion of Counsel in
accordance with clause (c) above.
SECTION 4.19. PAYMENT FOR CONSENTS.
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions hereof or
the Notes unless such consideration is offered to be paid or is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame set
forth in the solicitation documents relating to such consent, waiver or
agreement.
SECTION 4.20. NO SENIOR SUBORDINATED DEBT.
The Company shall not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt and senior in any respect in right of payment to the
Notes. No Subsidiary Guarantor shall incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to the Senior Debt of such Subsidiary Guarantor and senior in
any respect in right of payment to the Subsidiary Guarantees. For purposes of
this Section 4.20, no Indebtedness shall be deemed to be subordinated in right
of payment to any other Indebtedness solely by reason of the fact that such
other Indebtedness is secured by a Lien or is subject to a Guarantee.
SECTION 4.21. NO RESTRICTIONS ON CONSUMMATION OF DELCHAMPS ACQUISITION.
Notwithstanding any provision contained herein to the contrary, this
Indenture shall not prohibit the consummation of the Delchamps Acquisition and
the transactions related thereto in accordance with the terms set forth in this
Offering Memorandum and in the tender offer statement on Schedule 14D-1, as
filed with the Commission on July 14, 1997 and as subsequently amended or
supplemented, naming Delchamps, Inc. as the subject company.
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ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION OR SALE OF ASSETS.
Except as otherwise provided in Section 4.21, the Company may not
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets in one or more related
transactions to, another Person unless (a) the Company is the surviving
corporation or the Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made (the "SUCCESSOR") is
a corporation organized or existing under the laws of the United States, any
state thereof, the District of Columbia or a territory thereof; (b) the
Successor assumes all the obligations of the Company under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (c) immediately after such transaction no Default or Event of
Default exists; (d) the Successor will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in Section 4.09 hereof and (e) the Company has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel each stating that all
conditions precedent herein provided for relating to such transaction have been
complied with. The foregoing will not prohibit (i) any consolidation or merger
of, or transfer of all or part of the property and assets of, any Restricted
Subsidiary with or to the Company or any Subsidiary Guarantor or (ii) the
Delchamps Merger.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and shall exercise every
right and power of the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein; PROVIDED, that, (i)
solely for the purposes of computing Consolidated Net Income for purposes of
clause (b) of the first paragraph of Section 4.07 hereof, the Consolidated Net
Income of any Person other than the Company and its Subsidiaries shall be
included only for periods subsequent to the effective time of such merger,
consolidation, combination or transfer of assets; and (ii) in the case of any
sale, assignment, transfer, lease, conveyance, or other disposition of less than
all of the assets of the predecessor Company, the predecessor Company shall not
be released or discharged from the obligation to pay the principal of or
interest and Liquidated Damages, if any, on the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an Event of Default:
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(a) default for 30 days in the payment when due, upon redemption,
acceleration or otherwise, of interest on, or Liquidated Damages with
respect to, the Notes;
(b) default in payment when due of the principal of or premium, if any, on
the Notes;
(c) failure by the Company for 30 days after receipt of written notice
from the Trustee or from Holders of at least 25% of the aggregate
principal amount of the Notes then outstanding to comply with the
provisions described under Sections 4.07, 4.09, 4.10 or 4.14 hereof;
(d) failure by the Company for 60 days after receipt of written notice
from the Trustee or from Holders of at least 25% of the aggregate
principal amount of the Notes then outstanding to comply with any of
its other agreements in this Indenture or the Notes;
(e) default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Company or any of its
Restricted Subsidiaries or the payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries (other than Indebtedness
owed to the Company or its Restricted Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the date
hereof, if both (a) such default either (1) results from the failure
to pay any such Indebtedness at its stated final maturity (after
giving effect to any applicable grace periods) or (2) relates to an
obligation other than the obligation to pay principal of any such
Indebtedness at its stated maturity and results in the holder or
holders of such Indebtedness causing such Indebtedness to become due
prior to its stated maturity and (b) the principal amount of such
Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate $15.0 million or
more;
(f) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments (other than any judgments as to which a reputable
insurance company has accepted liability) aggregating in excess of
$15.0 million, which judgments are not paid, discharged, bonded or
stayed for a period of 60 days after their entry;
(g) except as permitted by this Indenture, any Subsidiary Guarantee shall
be held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor,
shall deny or disaffirm its obligations under its Subsidiary
Guarantee; and
(h) the Company or any Significant Restricted Subsidiary or group of
Restricted Subsidiaries that, together, would constitute a Significant
Restricted Subsidiary, pursuant to or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in
an involuntary case in which it is the debtor,
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(iii) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors,
or
(v) admits in writing its inability generally to pay its debts
as they become due; or
(i) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any Significant
Restricted Subsidiary or group of Restricted Subsidiaries
that, together, would constitute a Significant Restricted
Subsidiary in an involuntary case in which any of them is
the debtor,
(ii) appoints a Custodian of the Company or any Significant
Restricted Subsidiary or group of Restricted Subsidiaries
that, together, would constitute a Significant Restricted
Subsidiary or for all or substantially all of the property
of any of the foregoing, or
(iii) orders the liquidation of the Company or any Significant
Restricted Subsidiary or group of Restricted Subsidiaries
that, together, would constitute a Significant Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default occurs and is continuing, the Trustee by notice to
the Company or the Holders of at least 25% in aggregate principal amount of the
then outstanding Notes by notice to the Company and the Trustee may declare all
the Notes to be due and payable immediately; PROVIDED, however, that, so long as
any Designated Senior Debt shall be outstanding, no such acceleration shall be
effective until the earlier of (i) acceleration of any such Designated Senior
Debt or (ii) five Business Days after the giving of written notice to the
Company and the Representatives under the Designated Senior Debt of such
acceleration. Notwithstanding the foregoing, in the case of an Event of Default
specified in clauses (h) or (i) of Section 6.01, all outstanding Notes will
become due and payable without further action or notice. In the event of any
Event of Default specified in clause (e) of Section 6.01, such Event of Default
and all consequences thereof (including, without limitation, any acceleration or
resulting payment default) shall be annulled, waived and rescinded,
automatically and without any action by the Trustee or the Holders of the Notes,
if within 20 days after such Event of Default arose (x) the Indebtedness or
Guarantee that is the basis for such Event of Default has been discharged in a
manner that does not violate the terms of this Indenture or (y) the holders
thereof have rescinded or waived the acceleration, notice or action (as the case
may be) giving rise to such Event of Default. The Trustee will have no
obligation to accelerate the Notes if, in the best judgment of the Trustee,
acceleration is not in the best interests of the Holders.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the Notes pursuant
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to the optional redemption provisions of Section 3.07(a) hereof, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the Notes. If an Event of Default
occurs prior to September 15, 2002 by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding the prohibition on redemption of the Notes prior to September 15, 2002,
then the amount payable in respect of such Notes for purposes of this paragraph
for each of the twelve-month periods beginning on September 15 of the years
indicated below shall be set forth below, expressed as percentages of the
principal amount that would otherwise be due but for the provisions of this
sentence, plus accrued and unpaid interest and Liquidated Damages, if any, to
the date of payment:
YEAR PERCENTAGE
---- ----------
1997.....................................................110.375%
1998.....................................................109.338%
1999.....................................................108.300%
2000.....................................................107.263%
2001.....................................................106.225%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, interest
and Liquidated Damages, if any, on the Notes or to enforce the performance of
any provision of the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event of Default and its consequences
hereunder except a continuing Default or Event of Default in the payment of the
principal of or interest on any Note held by a non-consenting Holder (including
in connection with an offer to purchase); PROVIDED that the Holders of a
majority in aggregate principal amount of the then outstanding Notes may rescind
an acceleration and its consequences, including any related payment default that
resulted from such acceleration. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or impair any right consequent thereon.
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SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture, that the Trustee determines may be unduly
prejudicial to the rights of other Holders or that may involve the Trustee in
personal liability. The Trustee may take any other action which it deems proper
which is not inconsistent with any such direction. Notwithstanding any
provision to the contrary in this Indenture, the Trustee shall not be obligated
to take any action with respect to the provisions of the last paragraph of
Section 6.02 hereof unless directed to do so pursuant to this Section 6.05.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this Indenture, the
Subsidiary Guarantees or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default or the Trustee receives such notice from
the Company;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the
remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision
of indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a
direction inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium, if any, interest, and
Liquidated Damages, if any, on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) hereof occurs
and is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and
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such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
securities or property payable or deliverable upon the conversion or exchange of
the Notes or on any such claims and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Holders, to pay to the Trustee any amount due to it for
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article 6, it shall pay
out the money in the following order:
FIRST: to the Trustee, for amounts due under Section 7.07 hereof;
SECOND: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, if any, interest, and Liquidated Damages, if any,
ratably, without preference or priority of any kind, according to the amounts
due and payable on the Notes for principal, premium, if any, interest, and
Liquidated Damages, if any, respectively; and
THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party
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litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by
a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more
than 10% in principal amount of the then outstanding Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture or the TIA and the Trustee need
perform only those duties that are specifically set forth in this Indenture
or the TIA and no others, and no implied covenants or obligations shall be
read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon Officers' Certificates or Opinions of
Counsel furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements of
this Indenture.
(c) The Trustee may not be relieved from liabilities for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b) and (c) of this Section 7.01.
(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, including, without limitation, the provisions of Section
6.05 hereof, unless such Holders shall have offered to the Trustee security and
indemnity reasonably satisfactory to it against any loss, liability or expense
that might be incurred by it in complying with such request.
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(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may rely upon any document believed by it to be genuine
and to have been signed or presented by the proper Person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture; PROVIDED that the Trustee's conduct
does not constitute willful misconduct or negligence.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company. A permissive right granted to the Trustee hereunder
shall not be deemed an obligation to act.
(f) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such Default or Event of Default or (ii) written notice
of such Default or Event of Default shall have been given to the Trustee by the
Company or any Holder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest (as defined in the
TIA) it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture, the Notes or any Subsidiary
Guarantee, shall not be accountable for the Company's use of the proceeds from
the Notes or any money paid to the Company or upon the Company's direction under
any provision of this Indenture, shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in
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connection with the sale of the Notes or pursuant to this Indenture other than
its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to a Responsible Officer of the Trustee, the Trustee shall mail to all
Holders a notice of the Default or Event of Default within 90 days after it
occurs. Except in the case of a Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so long
as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders. The Trustee shall
not be deemed to have actual knowledge of a Default or an Event of Default
hereunder, except in the case of a Default or an Event of Default under Section
6.01(a) (other than with respect to the payment of Liquidated Damages) or
6.01(b) at such time as the Trustee is also the Paying Agent, until a
Responsible Officer of the Trustee receives written notice thereof from the
Company or any Holders that such a Default or an Event of Default has occurred.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each May 1 beginning with the May 1 first following
the date of this Indenture, and for so long as Notes remain outstanding, the
Trustee shall mail to the Holders a brief report dated as of such reporting date
that complies with TIA Section 313(a) (but if no event described in TIA Section
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA Section
313(b). The Trustee shall also transmit by mail all reports as required by TIA
Section 313(c).
A copy of each report at the time of its mailing to the Holders shall be
mailed to the Company and filed with the SEC and each stock exchange on which
the Notes are listed in accordance with TIA Section 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder as the
Trustee and the Company may agree in writing. The Trustee's compensation shall
not be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company shall indemnify the Trustee against, and hold it harmless from,
any and all losses, liabilities or expenses incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company (including this Section 7.07) and defending itself against any claim
(whether asserted by the Company or any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder, except to the extent any such loss, liability or expense may be
attributable to its negligence or bad faith. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee shall
cooperate in the defense. The Trustee may have separate counsel and the Company
shall pay the
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reasonable fees and expenses of such counsel not to exceed one law firm. The
Company need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of the Company under this Section 7.07 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of this
Indenture.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the Notes on all money or property held or
collected by the Trustee, except that held in trust to pay principal and
interest on particular Notes. Such Lien shall survive the resignation or
removal of the Trustee and the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(h) or 6.01(i) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its agents
and counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section 7.08.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become
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effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. The successor Trustee shall mail a
notice of its succession to all Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, PROVIDED,
that all sums owing to the Trustee hereunder have been paid and subject to the
Lien provided for in Section 7.07. Notwithstanding replacement of the Trustee
pursuant to this Section 7.08, the Company's obligations under Section 7.07
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Notes shall have been authenticated but not delivered, any
such successor to the Trustee may adopt the certificate of authentication of any
predecessor trustee, and deliver such Notes so authenticated; and in case at
that time any of the Notes shall not have been authenticated, any successor to
the Trustee may authenticate such Notes either in the name of the predecessor
trustee or in the name of the successor to the Trustee; and in all such cases
such certificates shall have the full force which it is anywhere in the Notes or
in this Indenture provided that the certificate of the Trustee shall have.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $50 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to TIA Section
310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors evidenced by a
Board Resolution, at any time, elect to have either Section 8.02 or 8.03 hereof
be applied to all outstanding Notes upon compliance with the conditions set
forth below in this Article 8.
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SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and its Subsidiaries shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from their respective obligations with respect to
all outstanding Notes on the date the conditions set forth below are satisfied
(hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal Defeasance means
that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Notes, which shall thereafter be
deemed to be "outstanding" only for the purposes of Section 8.05 hereof and the
other Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the
rights of Holders of outstanding Notes to receive solely from the trust fund
described in Section 8.04 hereof, and as more fully set forth in such Section,
payments in respect of the principal of, premium, if any, and interest on such
Notes when such payments are due, (b) the Company's obligations with respect to
such outstanding Notes under Article 2 and Section 4.02 hereof, (c) the rights,
powers, trusts, duties and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (d) this Article 8. Subject to
compliance with this Article 8, the Company may exercise its option under this
Section 8.02 notwithstanding the prior exercise of its option under Section 8.03
hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.03, 4.04, 4.05, 4.07,
4.08, 4.09 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.17, 4.18, 4.19, 11.03 and
Article 5 hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company and its Subsidiaries may omit to comply with
and shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(f), 6.01(g), 6.01(h) and 6.01(i) hereof shall
not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
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(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium,
if any, and interest on the outstanding Notes on the stated date for
payment thereof or on the applicable redemption date, as the case may be;
(b) the Company must specify whether the Notes are being defeased
to maturity or to a particular redemption date;
(c) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that (1) the
Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (2) since the date of this Indenture, there has
been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm
that, subject to customary assumptions and exclusions, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Legal Defeasance had
not occurred;
(d) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming that, subject
to customary assumptions and exclusions, the Holders of the outstanding
Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(e) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit
or the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article 8 concurrently
with such incurrence) or insofar as Sections 6.01(h) or 6.01(i) hereof is
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(f) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company or
any of its Restricted Subsidiaries is bound (including, without limitation,
any agreement or instrument pursuant to which any Senior Debt was
incurred);
(g) on or prior to the 91st day following the deposit, the
Company shall have delivered to the Trustee an Opinion of Counsel to the
effect that, subject to customary assumptions and exclusions, after the
91st day following the deposit, the trust funds will not be subject to any
applicable bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally;
(h) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders
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over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company; and
(i) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that, subject to
customary assumptions and exclusions, all conditions precedent provided for
or relating to the Legal Defeasance or the Covenant Defeasance have been
complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become due thereon in respect of principal, premium, if any, and interest, but
such money need not be segregated from other funds except to the extent required
by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
SECTION 8.06. REPAYMENT TO COMPANY.
(a) Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
(b) The Trustee shall promptly pay to the Company, after written request
therefor, any money held at such time in excess of the amounts required to pay
any of the Company's Obligations then owing with respect to the Notes.
(c) Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon request any money held by them for
the payment of principal, or premium, if any, or interest that remains unclaimed
for two years after such principal or premium, if any, or interest became due
and payable and any such money held by the Company in trust shall be discharged
from such trust, and, thereafter, Holders entitled to the money must look to the
Company for payment of such money as secured creditors and all liability of the
Trustee and the Paying Agent with respect to such money shall cease; PROVIDED,
HOWEVER, that the Trustee or such Paying Agent, before being required to make
any such repayment, shall, at the expense of the Company, cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of
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such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; PROVIDED that, if the Company makes any payment of
principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees or the Notes without notice to or the consent of any
Holder:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders in the case of a merger, consolidation or sale of assets
pursuant to this Indenture;
(d) to add Subsidiary Guarantees with respect to the Notes;
(e) to provide security for the Notes;
(f) to make any change that would provide any additional rights or
benefits to the Holders or that does not adversely affect the legal
rights hereunder of any Holder; or
(g) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon receipt by the Trustee of the documents described in Section 9.06 hereof,
the Trustee shall join with the Company and the Subsidiary Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
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SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company, the Subsidiary
Guarantors and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantees and the Notes with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding (including consents
obtained in connection with a tender offer or exchange offer for the Notes),
and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of
Default (other than a Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture, the Subsidiary Guarantees or the Notes may
be waived with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection with a
tender offer or exchange offer for the Notes).
Upon the request of the Company accompanied by a Board Resolution
authorizing the execution of any such amended or supplemental Indenture, and
upon the filing with the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Holders as aforesaid, and upon receipt by the
Trustee of the documents described in Section 9.06 hereof, the Trustee shall
join with the Company and the Subsidiary Guarantors in the execution of such
amended or supplemental Indenture unless such amended or supplemental Indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental Indenture.
It shall not be necessary for the consent of the Holders under this Section
9.02 to approve the particular form of any proposed amendment or waiver, but it
shall be sufficient if such consent approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02 becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such amended or supplemental Indenture,
Subsidiary Guarantee or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding may waive any existing Default or compliance in a particular
instance by the Company or any Subsidiary Guarantor with any provision of this
Indenture, the Subsidiary Guarantees or the Notes. However, without the consent
of each Holder affected, an amendment or waiver may not (with respect to any
Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter the provisions with respect to the redemption of the Notes (other
than provisions relating to Sections 4.10 and 4.14 hereof);
(c) reduce the rate of or change the time for payment of interest or
Liquidated Damages on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium, if any, or interest or Liquidated Damages on the Notes (except
a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the Notes and a waiver of the
payment default that resulted from such acceleration);
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(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders to receive payments of
principal of or premium, if any, or interest or Liquidated Damages on the
Notes;
(g) waive a redemption payment with respect to any Note (other than a
payment required by Section 4.10 and/or 4.14 hereof); or
(h) make any change in Section 6.04 or 6.07 hereof or in this Section
9.02 or in Section 9.01 hereof.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in an amended or supplemental Indenture that complies with the TIA as then
in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder or
portion of a Note that evidences the same debt as the consenting Holder's Note,
even if notation of the consent is not made on any Note. However, any such
Holder or subsequent Holder may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to give their consent to any
amendment, supplement or waiver or take any other action described above or
required or permitted to be taken pursuant to this Indenture. If a record date
is fixed, then notwithstanding the immediately preceding paragraph, those
Persons who were Holders at such record date (or their duly designated proxies),
and only those Persons, shall be entitled to give such consent to such
amendment, supplement or waiver or to revoke any consent previously given or to
take any such action, whether or not such Persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than 90
days after such record date.
SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Alternatively, if
the Company or the Trustee so determines, the Company in exchange for all Notes
may issue and the Trustee shall authenticate new Notes that reflect the
amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
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SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article 9 if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive, and (subject to Section 7.01) shall be
fully protected in relying upon, in addition to the documents required by
Section 13.04 hereof, an Officers' Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental Indenture is authorized or
permitted by this Indenture.
ARTICLE 10
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company agrees, and each Holder of Notes by accepting a Note agrees,
that the Indebtedness evidenced by the Note is subordinated in right of payment,
to the extent and in the manner provided in this Article 10, to the prior
payment in full of all Senior Debt of the Company, whether outstanding on the
date hereof or hereafter incurred, that the subordination is for the benefit of,
and shall be enforceable directly by, the holders of the Senior Debt and that
each holder of Senior Debt, whether now outstanding or hereafter created,
incurred assumed or guaranteed shall be deemed to have acquired Senior Debt in
reliance upon the covenants and provisions contained in this Indenture and the
Notes.
SECTION 10.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Company in a liquidation or
dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property, an
assignment for the benefit of creditors or any marshalling of the Company's
assets and liabilities, the holders of Senior Debt of the Company will be
entitled to receive payment in full in cash of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) before the
Holders will be entitled to receive any payment with respect to the Notes, and
until all Obligations with respect to Senior Debt are paid in full in cash, any
distribution to which the Holders would be entitled shall be made to the holders
of Senior Debt (except that Holders may receive Permitted Junior Securities and
payments made from the trust described under Article 8 hereof).
SECTION 10.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company shall not make any payment upon or in respect of the Notes
(except in Permitted Junior Securities or from the trust described under Article
8 hereof) if (i) a default in the payment of the principal of, premium, if any,
or interest on Designated Senior Debt occurs and is continuing beyond any
applicable period of grace or (ii) any other default occurs and is continuing
with respect to Designated Senior Debt that permits holders of such Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of such
default (a "Payment Blockage Notice") from the Representative of the holders of
such Designated Senior Debt. Payments on the Notes may and shall be resumed (a)
in the case of a payment default, upon the date on which such default is cured
or waived in writing and (b) in case of a nonpayment default, the earlier of (x)
the date on which such nonpayment default is cured or waived in writing, (y) 179
days after the date on which the applicable Payment Blockage Notice is received,
in each
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case, unless the maturity of any Designated Senior Debt has been accelerated or
(z) the date on which such Payment Blockage Period (as defined below) shall have
been terminated by written notice to the Trustee from the Representative of the
holders of Designated Senior Debt initiating such Payment Blockage Period.
During any consecutive 360-day period, the aggregate number of days in which
payments due on the Notes may not be made as a result of nonpayment defaults on
Designated Senior Debt (a "Payment Blockage Period") shall not exceed 179 days,
and there shall be a period of at least 181 consecutive days in each consecutive
360-day period during which no Payment Blockage Period is in effect. No
nonpayment default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived in writing for a period of not less than 90 days (it being acknowledged
that any subsequent action, or any breach of any financial covenant for a period
commencing after the date of commencement of such Payment Blockage Period that,
in either case, would give rise to a default pursuant to any provisions under
which a default previously existed or was continuing, shall constitute a new
default for this purpose).
SECTION 10.04. ACCELERATION OF NOTES.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
SECTION 10.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Note receives any payment
of any Obligations with respect to the Notes at a time when such payment is
prohibited by Section 10.03 hereof, such payment shall be held by the Trustee or
such Holder, in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt as their
interests may appear or their Representative under the indenture or other
agreement (if any) pursuant to which Senior Debt may have been issued, as their
respective interests may appear, for application to the payment of all
Obligations with respect to Senior Debt of the Company remaining unpaid to the
extent necessary to pay such Obligations in full in accordance with their terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Debt of the Company.
With respect to the holders of Senior Debt of the Company, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt of the Company.
SECTION 10.06. NOTICE BY THE COMPANY.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article, which notice shall specifically
refer to this Article 10, but failure to give such notice shall not affect the
subordination of the Notes to the Senior Debt of the Company as provided in this
Article.
SECTION 10.07. SUBROGATION.
After all Senior Debt of the Company is paid in full and until the Notes
are paid in full, Holders of the Notes shall be subrogated (equally and ratably
with all other PARI PASSU indebtedness) to the rights of holders of Senior Debt
of the Company to receive distributions applicable to Senior Debt of the
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Company to the extent that distributions otherwise payable to the Holders of the
Notes have been applied to the payment of Senior Debt of the Company. A
distribution made under this Article to holders of Senior Debt of the Company
that otherwise would have been made to Holders of the Notes is not, as between
the Company and Holders of the Notes, a payment by the Company on the Notes.
SECTION 10.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Notes and
holders of Senior Debt of the Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of the Notes, the
obligations of the Company, which are absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of the Notes and creditors
of the Company other than their rights in relation to holders of Senior
Debt; or
(3) prevent the Trustee or any Holder of the Notes from exercising
its available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of the Notes.
If the Company fails because of this Article to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
SECTION 10.09. SUBORDINATION MAY NOT BE IMPAIRED BY THE COMPANY.
No right of any holder of Senior Debt of the Company to enforce the
subordination of the Indebtedness evidenced by the Notes shall be impaired by
any act or failure to act by the Company or any Holder or by the failure of the
Company or any Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt of the Company, or any of them, may, at any time and from
time to time, without the consent of or notice to the Holders of the Notes,
without incurring any liabilities to any Holder of any Notes and without
impairing or releasing the subordination and other benefits provided in this
Indenture or the obligations of the Holders of the Notes to the holders of the
Senior Debt of the Company, even if any right of reimbursement or subrogation or
other right or remedy of any Holder of Notes is affected, impaired or
extinguished thereby, do any one or more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Senior Debt, any security therefor or guaranty thereof or any
liability of any obligor thereon (including any guarantor) to such holder,
or any liability incurred directly or indirectly in respect thereof or
otherwise amend, renew, exchange, extend, modify, increase or supplement in
any manner any Senior Debt or any instrument evidencing or guaranteeing or
securing the same or any agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any obligor
thereon to such holder, or any liability incurred directly or indirectly in
respect thereof;
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(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any reason
or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such holder
or any liability incurred directly or indirectly in respect thereof.
SECTION 10.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt of the Company, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of the Notes shall be entitled to
rely upon any order or decree made by any court of competent jurisdiction so
long as such order or decree recognizes the provisions of this Article 10 or
upon any certificate of such Representative or of the liquidating trustee or
agent or other Person making any distribution to the Trustee or to the Holders
of the Notes for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Debt and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least three Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article, which notice shall specifically refer to this
Article 10 (provided that, notwithstanding the foregoing, the making of any such
payments shall otherwise be subject to the provisions of Sections 10.02, 10.03
and 10.05 hereof). Only the Company or a Representative may give the notice.
Nothing in this Article 10 shall impair the claims of, or payments to, the
Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
SECTION 10.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 10, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the
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form required in any proceeding referred to in Section 6.09 hereof at least 30
days before the expiration of the time of such claim, the Representatives of the
Designated Senior Debt, including debt under the Senior Credit Facility, are
hereby authorized to file an appropriate claim for and on behalf of the Holders
of the Notes.
SECTION 10.13. AMENDMENTS.
Any amendment to the provisions of this Article 10 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the legal rights of
Holders.
ARTICLE 11
GUARANTEE OF NOTES
SECTION 11.01. SUBSIDIARY GUARANTEE.
Subject to Section 11.05 hereof, each of the Subsidiary Guarantors hereby,
on a full, unconditional, joint and several, unsecured basis guarantees (the
"Subsidiary Guarantees") to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture, the Notes and the Obligations
of the Company hereunder and thereunder, that: (a) the principal of, premium, if
any, interest and Liquidated Damages, if any, on the Notes will be promptly paid
in full when due, subject to any applicable grace period, whether at maturity,
by acceleration, redemption or otherwise, and interest on the overdue principal,
premium, if any, (to the extent permitted by law) interest on any interest, if
any, and Liquidated Damages, if any, on the Notes, and all other payment
Obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full and performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, subject to any applicable grace period, whether at stated maturity,
by acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed for whatever reason the Subsidiary Guarantors will be
jointly and severally obligated to pay the same immediately. An Event of
Default under this Indenture or the Notes shall constitute an event of default
under the Subsidiary Guarantees, and shall entitle the Holders to accelerate the
Obligations of the Subsidiary Guarantors hereunder in the same manner and to the
same extent as the Obligations of the Company. The Subsidiary Guarantors hereby
agree that their Obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
with respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Subsidiary Guarantor. Each Subsidiary Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and covenants
that this Subsidiary Guarantee will not be discharged except by complete
performance of the Obligations contained in the Notes and this Indenture. If
any Holder or the Trustee is required by any court or otherwise to return to the
Company, the Subsidiary Guarantors, or any Custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Subsidiary Guarantors, any amount paid by either to the Trustee or such Holder,
this Subsidiary Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each
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Subsidiary Guarantor agrees that it shall not be entitled to, and hereby waives,
any right of subrogation in relation to the Holders in respect of any
Obligations guaranteed hereby. Each Subsidiary Guarantor further agrees that,
as between the Subsidiary Guarantors, on the one hand, and the Holders and the
Trustee, on the other hand, (x) the maturity of the Obligations guaranteed
hereby may be accelerated as provided in Article 6 for the purposes of the
Subsidiary Guarantees, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such Obligations as
provided in Article 6 hereof, such Obligations (whether or not due and payable)
shall forthwith become due and payable by the Subsidiary Guarantors for the
purpose of the Subsidiary Guarantees. The Subsidiary Guarantors shall have the
right to seek contribution from any non-paying Subsidiary Guarantor so long as
the exercise of such right does not impair the rights of the Holders under the
Subsidiary Guarantees.
SECTION 11.02. EXECUTION AND DELIVERY OF SUBSIDIARY GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form of EXHIBIT D shall be endorsed by an Officer of such
Subsidiary Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Subsidiary Guarantor, by
manual or facsimile signature, by an Officer of such Subsidiary Guarantor.
Each Subsidiary Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Subsidiary Guarantee.
If an Officer whose signature is on this Indenture or on the Subsidiary
Guarantee no longer holds that office at the time the Trustee authenticates the
Note on which a Subsidiary Guarantee is endorsed, the Subsidiary Guarantee shall
be valid nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Subsidiary Guarantee set forth
in this Indenture on behalf of the Subsidiary Guarantors.
SECTION 11.03. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS
(a) Except as set forth in Articles 4 and 5, nothing contained in this
Indenture or in the Notes shall prevent (i) any consolidation or merger of a
Subsidiary Guarantor with or into the Company or any other Subsidiary Guarantor,
(ii) any sale or conveyance of the property of a Subsidiary Guarantor as an
entirety or substantially as an entirety, to the Company or any other Subsidiary
Guarantor or (iii) the Merger.
(b) Except as set forth in Article 4, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Subsidiary
Guarantor with or into a Person or Persons other than the Company or any other
Subsidiary Guarantor (in each case, whether or not affiliated with the
Subsidiary Guarantor), or successive consolidations or mergers in which a
Subsidiary Guarantor or its successor or successors shall be a party or parties,
or shall prevent any sale or conveyance of the property of a Subsidiary
Guarantor as an entirety or substantially as an entirety, to a Person other than
the Company or any other Subsidiary Guarantor (in each case, whether or not
affiliated with the Subsidiary Guarantor) authorized to acquire and operate the
same; PROVIDED, HOWEVER, that each Subsidiary Guarantor hereby covenants and
agrees that: (i) upon any such consolidation, merger, sale or conveyance, the
Subsidiary Guarantee endorsed on the Notes, and the due and punctual performance
and
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observance of all of the covenants and conditions of this Indenture to be
performed by such Subsidiary Guarantor, shall be expressly assumed (in the event
that the Subsidiary Guarantor is not the surviving Person in the merger), by
supplemental indenture substantially in the form of EXHIBIT E hereto, executed
and delivered to the Trustee, by the Person formed by such consolidation, or
into which the Subsidiary Guarantor shall have been merged, or by the Person
which shall have acquired such property; (ii) immediately after giving effect to
such transaction, no Default or Event of Default exists; and (iii) the Company
would be permitted, immediately after giving effect to such transaction, to
incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge
Coverage Ratio test set forth in Section 4.09. The foregoing will not prohibit
(i) any consolidation or merger of a Guarantor with or into the Company or any
other Guarantor, (ii) any sale or conveyance of the property of a Guarantor as
an entirety or substantially as an entirety, to the Company or any other
Subsidiary Guarantor or (iii) the Merger.
(c) In the case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor Person, by supplemental indenture, executed
and delivered to the Trustee and substantially in the form of EXHIBIT E hereto,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Subsidiary Guarantor, such successor Person shall succeed to
and be substituted for the Subsidiary Guarantor with the same effect as if it
had been named herein as a Subsidiary Guarantor. Such successor Person
thereupon may cause to be signed any or all of the Subsidiary Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All of the
Subsidiary Guarantees so issued shall in all respects have the same legal rank
and benefit under this Indenture as the Subsidiary Guarantees theretofore and
thereafter issued in accordance with the terms of this Indenture as though all
of such guarantees had been issued at the date of the execution hereof.
SECTION 11.04. RELEASES FOLLOWING SALE OF ASSETS, MERGER, SALE OF CAPITAL STOCK
ETC..
Concurrently with any sale of assets (including, if applicable, all of the
Capital Stock of any Subsidiary Guarantor by merger or otherwise), any Liens in
favor of the Trustee in the assets sold thereby shall be released; PROVIDED
that, in the event of an Asset Sale, the Net Proceeds from such sale or other
disposition are treated in accordance with the provisions of Section 4.10
hereof. If the assets sold in such sale or other disposition include all or
substantially all of the assets of any Subsidiary Guarantor or all of the
Capital Stock of any Subsidiary Guarantor, then such Subsidiary Guarantor (in
the event of a sale or other disposition of all of the Capital Stock of such
Subsidiary Guarantor) or the Person acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of a
Subsidiary Guarantor) shall be released from and relieved of its Obligations
under its Subsidiary Guarantee or Section 11.03 hereof, as the case may be;
PROVIDED that (i) in the event of an Asset Sale, the Net Proceeds from such sale
or other disposition are treated in accordance with the provisions of Section
4.10 hereof and (ii) the Company is in compliance with all other provisions of
this Indenture applicable to such disposition. Upon delivery by the Company to
the Trustee of an Officers' Certificate to the effect of the foregoing, together
with the documents required by Section 13.04 hereof, the Trustee shall execute
any documents reasonably required in order to evidence the release of any
Subsidiary Guarantor from its Obligation under its Subsidiary Guarantee. Any
Subsidiary Guarantor not released from its Obligations under its Subsidiary
Guarantee shall remain liable for the full amount of principal of, premium, if
any, and interest on the Notes and for the other Obligations of such Subsidiary
Guarantor under this Indenture as provided in this Article 11.
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SECTION 11.05. LIMITATION ON SUBSIDIARY GUARANTOR LIABILITY.
For purposes hereof, the obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee shall be limited to the lesser of (i) the aggregate amount
of the Obligations of the Company under the Notes and this Indenture and (ii)
the amount, if any, which would not have (A) rendered such Subsidiary Guarantor
"insolvent" (as such term is defined in the United States Bankruptcy Code and in
the Debtor and Creditor Law of the State of New York) or (B) left such
Subsidiary Guarantor with unreasonably small capital at the time its Subsidiary
Guarantee of the Notes was entered into; PROVIDED that it will be a presumption
in any lawsuit or other proceeding in which a Subsidiary Guarantor is a party
that the amount guaranteed pursuant to the Subsidiary Guarantee is the amount
set forth in clause (i) above unless any creditor, or representative of
creditors of such Subsidiary Guarantor, or debtor in possession or trustee in
bankruptcy of the Subsidiary Guarantor, otherwise proves in such a lawsuit that
the aggregate liability of the Subsidiary Guarantor is the amount set forth in
clause (ii) above. In making any determination as to solvency or sufficiency of
capital of a Subsidiary Guarantor in accordance with the previous sentence, the
right of such Subsidiary Guarantor to contribution from other Subsidiary
Guarantors, and any other rights such Subsidiary Guarantor may have, shall be
taken into account.
SECTION 11.06. "TRUSTEE" TO INCLUDE PAYING AGENT.
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article 11 shall in each case (unless the context shall otherwise
require) be construed as extending to and including such Paying Agent within its
meaning as fully and for all intents and purposes as if such Paying Agent were
named in this Article 11 in place of the Trustee.
ARTICLE 12
SUBORDINATION OF SUBSIDIARY GUARANTEE
SECTION 12.01. AGREEMENT TO SUBORDINATE.
The Subsidiary Guarantors agree, and each Holder by accepting a Note
agrees, that all Obligations under the Subsidiary Guarantees shall be
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment in full of all Senior Debt of the
Subsidiary Guarantors, whether outstanding on the date hereof or thereafter
incurred, that the subordination is for the benefit of, and shall be enforceable
directly by, the holders of the Senior Debt of the Subsidiary Guarantors and
that each holder of Senior Debt of the Subsidiary Guarantors, whether now
outstanding or hereafter created, incurred assumed or guaranteed shall be deemed
to have acquired Senior Debt in reliance upon the covenants and provisions
contained in this Indenture and the Subsidiary Guarantees.
SECTION 12.02. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any distribution to creditors of the Subsidiary Guarantors in a
liquidation or dissolution of the Subsidiary Guarantors or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Subsidiary Guarantors or their respective property, an assignment for the
benefit of creditors or any marshalling of the Subsidiary Guarantors' assets and
liabilities, the holders of Senior Debt of the Subsidiary Guarantors will be
entitled to receive payment in full in cash of all Obligations due in respect of
such Senior Debt (including interest after the commencement of any such
proceeding at the rate specified in the applicable Senior Debt) before the
Holders will be entitled to
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receive any payment with respect to the Subsidiary Guarantees, and until all
Obligations with respect to Senior Debt are paid in full in cash, any
distribution to which the Holders would be entitled shall be made to the holders
of Senior Debt of the Subsidiary Guarantors (except that Holders may receive
Permitted Junior Securities and payments made from the trust described under
Article 8 hereof).
SECTION 12.03. DEFAULT ON DESIGNATED SENIOR DEBT.
The Subsidiary Guarantors shall not make any payment upon or in respect of
the Subsidiary Guarantees (except in Permitted Junior Securities or from the
trust described under Article 8 hereof) if (i) a default in the payment of the
principal of, premium, if any, or interest on Designated Senior Debt occurs and
is continuing beyond any applicable period of grace or (ii) any other default
occurs and is continuing with respect to Designated Senior Debt that permits
holders of such Designated Senior Debt to accelerate its maturity and the
Trustee receives a Payment Blockage Notice from the Representative of the
holders of such Designated Senior Debt. Payments on the Subsidiary Guarantees
may and shall be resumed (a) in the case of a payment default, upon the date on
which such default is cured or waived in writing and (b) in case of a nonpayment
default, the earlier of (x) the date on which such nonpayment default is cured
or waived in writing, (y) 179 days after the date on which the applicable
Payment Blockage Notice is received, in each case, unless the maturity of any
Designated Senior Debt has been accelerated or (z) the date on which such
Payment Blockage Period shall have been terminated by written notice to the
Trustee from the Representative of the holders of Designated Senior Debt
initiating such Payment Blockage Period. During any consecutive 360-day period,
the aggregate number of days in which payments due on the Notes may not be made
as a result of nonpayment defaults on Designated Senior Debt shall not exceed
179 days, and there shall be a period of at least 181 consecutive days in each
consecutive 360-day period during which no Payment Blockage Period is in effect.
No nonpayment default that existed or was continuing on the date of delivery of
any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a
subsequent Payment Blockage Notice unless such default shall have been cured or
waived in writing for a period of not less than 90 days (it being acknowledged
that any subsequent action, or any breach of any financial covenant for a period
commencing after the date of commencement of such Payment Blockage Period that,
in either case, would give rise to a default pursuant to any provisions under
which a default previously existed or was continuing, shall constitute a new
default for this purpose).
SECTION 12.04. ACCELERATION OF SUBSIDIARY GUARANTEES.
If payment of the Subsidiary Guarantees is accelerated because of an Event
of Default, the Subsidiary Guarantor shall promptly notify the Representatives
of Senior Debt of the acceleration.
SECTION 12.05. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee or any Holder of a Subsidiary Guarantee
receives any payment of any Obligations with respect to the Subsidiary
Guarantees at a time when such payment is prohibited by Section 12.03 hereof,
such payment shall be held by the Trustee or such Holder, in trust for the
benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt of the
Subsidiary Guarantors remaining unpaid to the extent necessary to pay such
Obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt of the
Subsidiary Guarantors.
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With respect to the holders of Senior Debt of the Subsidiary Guarantors,
the Trustee undertakes to perform only such obligations on the part of the
Trustee as are specifically set forth in this Article 12, and no implied
covenants or obligations with respect to the holders of Senior Debt of the
Subsidiary Guarantors shall be read into this Indenture against the Trustee.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Debt of the Subsidiary Guarantors.
SECTION 12.06. NOTICE BY SUBSIDIARY GUARANTOR.
The Subsidiary Guarantors shall promptly notify the Trustee and the Paying
Agent of any facts known to the Subsidiary Guarantors that would cause a payment
of any Obligations with respect to the Subsidiary Guarantees to violate this
Article, which notice shall specifically refer to this Article 12, but failure
to give such notice shall not affect the subordination of the Subsidiary
Guarantees to the Senior Debt of the Subsidiary Guarantors as provided in this
Article.
SECTION 12.07. SUBROGATION.
After all Senior Debt of the Subsidiary Guarantors is paid in full and
until the Notes are paid in full, Holders of the Subsidiary Guarantees shall be
subrogated (equally and ratably with all PARI PASSU indebtedness) to the rights
of holders of Senior Debt of the Subsidiary Guarantors to receive distributions
applicable to Senior Debt of the Subsidiary Guarantors to the extent that
distributions otherwise payable to the Holders of the Subsidiary Guarantees have
been applied to the payment of Senior Debt of the Subsidiary Guarantors. A
distribution made under this Article to holders of Senior Debt of the Subsidiary
Guarantors that otherwise would have been made to Holders of the Subsidiary
Guarantees is not, as between the Subsidiary Guarantors and Holders of the
Subsidiary Guarantees, a payment by the Subsidiary Guarantors on the Subsidiary
Guarantees.
SECTION 12.08. RELATIVE RIGHTS.
This Article defines the relative rights of Holders of the Subsidiary
Guarantees and holders of Senior Debt of the Subsidiary Guarantors. Nothing in
this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders of the
Subsidiary Guarantees, the obligations of the Subsidiary Guarantors, which
are absolute and unconditional, to pay principal of and interest on the
Notes in accordance with the terms of the Subsidiary Guarantees;
(2) affect the relative rights of Holders of the Subsidiary
Guarantees and creditors of the Subsidiary Guarantors other than their
rights in relation to holders of Senior Debt; or
(3) prevent the Trustee or any Holder of the Subsidiary Guarantees
from exercising its available remedies upon a Default or Event of Default,
subject to the rights of holders and owners of Senior Debt to receive
distributions and payments otherwise payable to Holders of the Subsidiary
Guarantees.
If the Subsidiary Guarantors fail because of this Article to pay principal
of or interest on a Note on the due date in accordance with the terms of the
Subsidiary Guarantees, the failure is still a Default or Event of Default.
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SECTION 12.09. SUBORDINATION MAY NOT BE IMPAIRED BY SUBSIDIARY GUARANTOR.
No right of any holder of Senior Debt of the Subsidiary Guarantors to
enforce the subordination of the Indebtedness evidenced by the Subsidiary
Guarantees shall be impaired by any act or failure to act by the Subsidiary
Guarantors or any Holder or by the failure of the Subsidiary Guarantors or any
Holder to comply with this Indenture.
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Debt of the Subsidiary Guarantors, or any of them, may, at any
time and from time to time, without the consent of or notice to the Holders of
the Subsidiary Guarantees, without incurring any liabilities to any Holder of
any Subsidiary Guarantees and without impairing or releasing the subordination
and other benefits provided in this Indenture or the obligations of the Holders
of the Subsidiary Guarantees to the holders of the Senior Debt of the Subsidiary
Guarantors, even if any right of reimbursement or subrogation or other right or
remedy of any Holder of Subsidiary Guarantees is affected, impaired or
extinguished thereby, do any one or more of the following:
(1) change the manner, place or terms of payment or change or extend
the time of payment of, or renew, exchange, amend, increase or alter, the
terms of any Senior Debt, any security therefor or guaranty thereof or any
liability of any obligor thereon (including any guarantor) to such holder,
or any liability incurred directly or indirectly in respect thereof or
otherwise amend, renew, exchange, extend, modify, increase or supplement in
any manner any Senior Debt or any instrument evidencing or guaranteeing or
securing the same or any agreement under which Senior Debt is outstanding;
(2) sell, exchange, release, surrender, realize upon, enforce or
otherwise deal with in any manner and in any order any property pledged,
mortgaged or otherwise securing Senior Debt or any liability of any obligor
thereon, to such holder, or any liability incurred directly or indirectly
in respect thereof;
(3) settle or compromise any Senior Debt or any other liability of
any obligor of the Senior Debt to such holder or any security therefor or
any liability incurred directly or indirectly in respect thereof and apply
any sums by whomsoever paid and however realized to any liability
(including, without limitation, Senior Debt) in any manner or order; and
(4) fail to take or to record or to otherwise perfect, for any reason
or for no reason, any lien or security interest securing Senior Debt by
whomsoever granted, exercise or delay in or refrain from exercising any
right or remedy against any obligor or any guarantor or any other person,
elect any remedy and otherwise deal freely with any obligor and any
security for the Senior Debt or any liability of any obligor to such holder
or any liability incurred directly or indirectly in respect thereof.
SECTION 12.10. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt of the Subsidiary Guarantors, the distribution may be made and the
notice given to their Representative.
Upon any payment or distribution of assets of any Subsidiary Guarantor
referred to in this Article 12, the Trustee and the Holders of the Subsidiary
Guarantees shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction so long as such order or decree recognizes the
provisions of this Article 12 or upon any certificate of such Representative or
of the liquidating trustee
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or agent or other Person making any distribution to the Trustee or to the
Holders of the Subsidiary Guarantees for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt of
the Subsidiary Guarantors and other Indebtedness of the Company or any
Subsidiary Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 12.
SECTION 12.11. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 12 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes or the Subsidiary Guarantees, unless the Trustee shall have
received at its Corporate Trust Office at least three Business Days prior to the
date of such payment written notice of facts that would cause the payment of any
Obligations with respect to the Notes or the Subsidiary Guarantees to violate
this Article, which notice shall specifically refer to this Article 12 (provided
that, notwithstanding the foregoing, the making of any such payments shall
otherwise be subject to the provisions of Sections 12.02, 12.03 and 12.05
hereof). Only the Company, the Subsidiary Guarantors or a Representative may
give the notice. Nothing in this Article 12 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt of
the Subsidiary Guarantors with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights.
SECTION 12.12. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of a Note by the Holder's acceptance thereof authorizes and
directs the Trustee on the Holder's behalf to take such action as may be
necessary or appropriate to effectuate the subordination as provided in this
Article 12, and appoints the Trustee to act as the Holder's attorney-in-fact for
any and all such purposes, including without limitation the timely filing of a
claim for the unpaid balance of the Notes held by such Holder in the form
required in any Insolvency or Liquidation Proceeding and causing such claim to
be approved. If the Trustee does not file a proper proof of claim or proof of
debt in the form required in any proceeding referred to in Section 6.09 hereof
at least 30 days before the expiration of the time of such claim, the
Representatives of the Designated Senior Debt, including debt under the Senior
Credit Facility, are hereby authorized to file an appropriate claim for and on
behalf of the Holders of the Notes.
SECTION 12.13. AMENDMENTS.
Any amendment to the provisions of this Article 12 shall require the
consent of the Holders of at least 75% in aggregate amount of Notes then
outstanding if such amendment would adversely affect the rights of the Holders
of Subsidiary Guarantees.
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ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 13.02. NOTICES.
Any notice or communication by the Company, the Subsidiary Guarantors or
the Trustee to the others is duly given if in writing and delivered in person or
mailed by first class mail (registered or certified, return receipt requested),
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company or any Subsidiary Guarantor:
Jitney-Jungle Stores of America, Inc.
1770 Ellis Avenue
Suite 200
Jackson, Mississippi 39204
Telecopier No.: (601) 371-8665
Attention: Chief Financial Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Bruce B. Wood
If to the Trustee:
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005-1180
Telecopier No.: (212) 658-6425
Attention: Corporate Trust Administration
The Company, the Subsidiary Guarantors or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier promising next Business Day delivery.
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Any notice or communication to a Holder shall be mailed by first class mail
or by overnight air courier promising next Business Day delivery to its address
shown on the register kept by the Registrar. Any notice or communication shall
also be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it;
PROVIDED that notice to the Trustee shall not be deemed to have been given until
receipt by the Trustee of such notice.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
SECTION 13.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 13.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company or the Subsidiary Guarantors
to the Trustee to take any action under this Indenture (other than the initial
issuance of the Senior Subordinated Notes), the Company or Subsidiary Guarantor
shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 13.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 13.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA Section 314(a)(4)) shall comply with the provisions of TIA
Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
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(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
SECTION 13.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 13.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company under the Notes, any Subsidiary Guarantee or this
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes and the Subsidiary Guarantees.
SECTION 13.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE CHOICE OF
LAW RULES THEREOF, SHALL GOVERN AND BE USED TO CONSTRUE THIS INDENTURE, THE
NOTES AND THE SUBSIDIARY GUARANTEES.
SECTION 13.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 13.10. SUCCESSORS.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture, the Notes and the Subsidiary Guarantees shall bind their respective
successors and assigns. All agreements of the Trustee in this Indenture shall
bind its successors and assigns.
SECTION 13.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 13.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
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SECTION 13.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of September 15, 1997 JITNEY-JUNGLE STORES OF AMERICA, INC.
By:
-----------------------------------
Name:
Title:
INTERSTATE JITNEY-JUNGLE STORES, INC.
By:
-----------------------------------
Name:
Title:
MCCARTY-HOLMAN CO., INC.
By:
-----------------------------------
Name:
Title:
SOUTHERN JITNEY JUNGLE COMPANY
By:
-----------------------------------
Name:
Title:
PUMP AND SAVE, INC.
By:
-----------------------------------
Name:
Title:
DELTA ACQUISITION CORPORATION
By:
-----------------------------------
Name:
Title:
<PAGE>
DELCHAMPS, INC.
By:
-----------------------------------
Name:
Title:
SUPERMARKET CIGARETTE SALES, INC.
By:
-----------------------------------
Name:
Title:
MARINE MIDLAND BANK,
as Trustee
By:
-----------------------------
Name:
Title:
<PAGE>
EXHIBIT A-1
-----------
(Face of Note)
103/8% Senior Subordinated Notes due 2007
No. ___ $_______________
CUSIP NO.
JITNEY-JUNGLE STORES OF AMERICA, INC.
promises to pay to _____________ or registered assigns, the principal sum of
___________ Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
JITNEY-JUNGLE STORES OF AMERICA, INC.
By:
-----------------------------------
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
Dated: ___________
MARINE MIDLAND BANK,
as Trustee
By:
----------------------------
<PAGE>
(Back of Note)
103/8% Senior Subordinated Notes due 2007
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depository Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL in as much as the
registered owner hereof, Cede & Co., has an interest herein.] (1)
[THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD
SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
ACT) (A "QIB"), (B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT
OR (C) IS OTHERWISE PERMITTED TO PURCHASE THE NOTES PURSUANT TO THE
REQUIREMENTS OF CLAUSE (2) BELOW, (2) AGREES THAT IT WILL NOT RESELL
OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF
ITS SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES
IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF
THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION
D UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER,
FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH
TRANSFER IS IN RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS
THAN $250,000, AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT
SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (F) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE
TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE
EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY
RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.] (2)
- --------------------------
(1) This paragraph should be included only if the Senior Subordinated Note is
issued in global form.
(2) This paragraph should be removed upon the exchange of Senior Subordinated
Notes for New Subordinated Notes in the Exchange Offer or upon the registration
of the Senior Subordinated Notes pursuant to the terms of the Registration
Rights Agreement.
A-1-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Jitney-Jungle Stores of America, Inc., a Mississippi
corporation, or its successor (the "Company"), promises to pay interest on
the principal amount of this Note at the rate of 103/8% per annum and shall
pay the Liquidated Damages, if any, payable pursuant to Section 5 of the
Registration Rights Agreement referred to below. The Company will pay
interest and Liquidated Damages, if any, in United States dollars (except
as otherwise provided herein) semi-annually in arrears on March 15 and
September 15, commencing on March 15, 1998, (each an "Interest Payment
Date") or if any such day is not a Business Day, on the next succeeding
Business Day. Interest on the Notes shall accrue from the most recent date
to which interest has been paid or, if no interest has been paid, from the
date of issuance; PROVIDED that if there is no existing Default or Event of
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date, except in the case of the original
issuance of Notes, in which case interest shall accrue from the date of
authentication. The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal
at the rate equal to 1% per annum in excess of the then applicable interest
rate on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to
any applicable grace period) at the same rate to the extent lawful.
Interest shall be computed on the basis of a 360-day year comprised of
twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, on the applicable
Interest Payment Date to the Persons who are registered Holders of Notes at
the close of business on the March 1 or September 1 next preceding the
Interest Payment Date, even if such Notes are cancelled after such record
date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The
Notes shall be payable as to principal, premium and Liquidated Damages, if
any, and interest at the office or agency of the Company maintained for
such purpose within or without the City and State of New York, or, at the
option of the Company, payment of interest and Liquidated Damages, if any,
may be made by check mailed to the Holders at their addresses set forth in
the register of Holders; PROVIDED that payment by wire transfer of
immediately available funds shall be required with respect to principal of,
premium and Liquidated Damages, if any, and interest on, all Global Notes
and all other Notes the Holders of which shall have provided written wire
transfer instructions to the Company and the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the Trustee
under the Indenture, shall act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as of
September 15, 1997 ("Indenture") among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those stated in
the Indenture and those made a part of the Indenture by reference to the
Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb) (the
A-1-3
<PAGE>
"TIA"). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. The Notes are
general unsecured Obligations of the Company limited to $200,000,000 in
aggregate principal amount, plus amounts, if any, sufficient to pay premium
or Liquidated Damages, if any, and interest on outstanding Notes as set
forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as provided in the following paragraph, the Notes will not be
redeemable at the Company's option prior to September 15, 2002. Thereafter,
the Notes will be subject to redemption at the option of the Company, in
whole or in part, upon not less than 30 nor more than 60 days' notice, at
the redemption prices (expressed as percentages of principal amount) set
forth below plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the applicable redemption date, if redeemed during the
twelve-month period beginning on September 15 of the years indicated below:
YEAR PERCENTAGE
2002.................................................... 105.188%
2003.................................................... 103.458%
2004.................................................... 101.729%
2005 and thereafter..................................... 100.000%
Notwithstanding the foregoing, at any time prior to September 15, 2000
the Company may on any one or more occasions redeem up to 33 1 3% of the
aggregate principal amount of Notes originally issued in the Offering at a
redemption price of 110.375% of the principal amount thereof, plus accrued
and unpaid interest and Liquidated Damages, if any, thereon to the
redemption date, with the net proceeds of one or more Public Equity
Offerings; PROVIDED that at least 66 2 3% of the original aggregate
principal amount of Notes remains outstanding immediately after the
occurrence of each such redemption; and PROVIDED, further, that each such
redemption shall occur within 120 days of the date of the closing of the
Public Equity Offering to which it relates.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not be
required to make mandatory redemption or sinking fund payments with respect
to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder will have the
right to require the Company to repurchase all or any part (equal to $1,000
or an integral multiple thereof) of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer") at a price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase (the "Change of Control Payment"). Within 30 days following any
Change of Control, the Company will mail or cause to be mailed a notice to
each Holder describing the transaction or transactions that constitute the
Change of Control and offering to repurchase Notes pursuant to the
procedures required by the Indenture.
A-1-4
<PAGE>
(b) When the aggregate amount of Excess Proceeds exceeds $15.0 million,
the Company shall be required to make an offer to all Holders (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes that may be
purchased out of the Excess Proceeds, at a price in cash equal to 100% of
the principal amount thereof plus accrued and unpaid interest and
Liquidated Damages, if any, thereon to the date of purchase, in accordance
with the procedures set forth in the Indenture. To the extent that the
aggregate amount of Notes tendered pursuant to an Asset Sale Offer is less
than the aggregate amount of Excess Proceeds, the Company or its Restricted
Subsidiary, as the case may be, may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Notes
surrendered by Holders thereof exceeds the aggregate amount of Excess
Proceeds, the Trustee shall select the Notes to be purchased in accordance
with the terms of the Indenture. Upon completion of each Asset Sale Offer,
the amount of Excess Proceeds shall be reset at zero.
(c) Holders of the Notes that are the subject of an offer to purchase will
receive a Change of Control Offer or Asset Sale Offer from the Company
prior to any related purchase date and may elect to have such Notes
purchased by completing the form titled "Option of Holder to Elect
Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least 30
days but not more than 60 days before the redemption date to each Holder
whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date, interest and Liquidated
Damages, if any, ceases to accrue on the Notes or portions thereof called
for redemption.
9. SUBORDINATION. The payment of principal, premium, if any, and interest and
Liquidated Damages on the Notes is subordinated in right of payment, as set
forth in the Indenture, to the prior payment in full of all Senior Debt,
which is (i) Indebtedness pursuant to the Senior Credit Facility, (ii)
Indebtedness pursuant to the Senior Notes or guarantees thereof, as
applicable, (iii) the IRB Indebtedness, (iv) any other Indebtedness
permitted to be incurred by the Company or a Restricted Subsidiary under
the terms of the Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes or the Subsidiary Guarantees,
as applicable, and (v) all Obligations with respect to the foregoing.
Notwithstanding anything to the contrary in the foregoing, Senior Debt will
not include (w) any liability for federal, state, local or other taxes owed
or owing by the Company or any Subsidiary Guarantor, (x) any Indebtedness
of the Company or any Subsidiary Guarantor to any of their respective
Subsidiaries or other Affiliates, (y) any trade payables or (z) any
Indebtedness that is incurred in violation of the Indenture. To the extent
provided in the Indenture, Senior Debt must be paid before the Notes may be
paid. The Company agrees and each Holder of Notes by accepting a Note
consents and agrees to the subordination provided in the Indenture and
authorizes the Trustee to give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in initial denominations of $1,000 and integral multiples
of $1,000. The transfer of the Notes may be registered and the Notes may
be exchanged as provided in the Indenture. The Registrar and the Trustee
may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to
pay any taxes and fees required by law or permitted by the Indenture. The
Registrar need not exchange or register the transfer of any Note or portion
of a Note selected for redemption, except for the unredeemed portion of any
Note being redeemed in part. Also, it need not exchange or register the
transfer of any
A-1-5
<PAGE>
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a record date and the corresponding Interest
Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as
its owner for all purposes.
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following paragraphs, the
Indenture, the Notes and the Subsidiary Guarantees may be amended or
supplemented with the consent of the Holders of at least a majority in
principal amount of the Notes then outstanding (including, without
limitation, consents obtained in connection with a purchase of or, tender
offer or exchange offer for Notes), and any existing Default or Event of
Default or compliance with any provision of the Indenture, the Notes or the
Subsidiary Guarantees may be waived with the consent of the Holders of a
majority in principal amount of the then outstanding Notes (including
consents obtained in connection with a tender offer or exchange offer for
Notes).
Without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture, the Subsidiary Guarantees or
the Notes to cure any ambiguity, defect or inconsistency, to provide for
uncertificated Notes in addition to or in place of certificated Notes, to
provide for the assumption of the Company's or a Subsidiary Guarantor's
obligations to Holders of Notes in the case of a merger, consolidation or
sale of assets, to make any change that would provide any additional rights
or benefits to the Holders of Notes or that does not adversely affect the
legal rights under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act. Any
amendments with respect to subordination provisions of the Notes or the
Subsidiary Guarantees would require the consent of the Holders of at least
75% in aggregate amount of Notes then outstanding if such amendment would
adversely affect the rights of the Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30 days
in the payment when due, upon redemption, acceleration or otherwise, of
interest on, or Liquidated Damages with respect to, the Notes; (ii) default
in payment when due of the principal of or premium, if any, on the Notes;
(iii) failure by the Company for 30 days after receipt of written notice
from the Trustee or from Holders of at least 25% of the aggregate principal
amount of the Notes then outstanding to comply with the provisions
described under Sections 4.07, 4.09, 4.10 or 4.14 of the Indenture; (iv)
failure by the Company for 60 days after receipt of written notice from the
Trustee or from Holders of at least 25% of the aggregate principal amount
of the Notes then outstanding to comply with any of its other agreements in
the Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries or the payment of which is Guaranteed by the
Company or any of its Restricted Subsidiaries (other than Indebtedness owed
to the Company or its Restricted Subsidiaries) whether such Indebtedness or
Guarantee now exists, or is created after the date hereof, if both (a) such
default either (1) results from the failure to pay any such Indebtedness at
its stated final maturity (after giving effect to any applicable grace
periods) or (2) relates to an obligation other than the obligation to pay
principal of any such Indebtedness at its stated maturity and results in
the holder or holders of such Indebtedness causing such Indebtedness to
become due prior to its stated maturity and (b) the principal amount of
such Indebtedness, together with the principal amount of any other such
Indebtedness in default for failure to pay principal at stated final
maturity (after giving effect to any applicable grace periods), or the
maturity of which has been so accelerated, aggregate $15.0 million or more;
A-1-6
<PAGE>
(vi) failure by the Company or any of its Restricted Subsidiaries to pay
final judgments (other than any judgments as to which a reputable insurance
company has accepted liability) aggregating in excess of $15.0 million,
which judgments are not paid, discharged, bonded or stayed for a period of
60 days after their entry; (vii) except as permitted by the Indenture, any
Subsidiary Guarantee will be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force
and effect or any Guarantor, or any Person acting on behalf of any
Subsidiary Guarantor, will deny or disaffirm its obligations under its
Subsidiary Guarantee; and (viii) certain events of bankruptcy or insolvency
with respect to the Company, any of its Significant Restricted Subsidiaries
or any group of Restricted Subsidiaries that, taken together, would
constitute a Significant Restricted Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may declare all the Notes to be due and payable
immediately; PROVIDED, however, that, so long as any Designated Senior Debt
shall be outstanding, no such acceleration shall be effective until the
earlier of (i) acceleration of any such Designated Senior Debt or (ii) five
Business Days after the giving of written notice to the Company and the
Representatives under the Designated Senior Debt of such acceleration.
Notwithstanding the foregoing, in the case of an Event of Default arising
from certain events of bankruptcy or insolvency with respect to the
Company, any Significant Restricted Subsidiary or any group of Restricted
Subsidiaries that, taken together, would constitute a Significant
Restricted Subsidiary, all outstanding Notes will become due and payable
without further action or notice. Holders of the Notes may not enforce the
Indenture or the Notes except as provided in the Indenture. In the event
of any Event of Default specified in clause (v) above, such Event of
Default and all consequences thereof (including, without limitation, any
acceleration or resulting payment default) shall be annulled, waived and
rescinded, automatically and without any action by the Trustee or the
Holders of the Notes, if within 20 days after such Event of Default arose
(x) the Indebtedness or guarantee that is the basis for such Event of
Default has been discharged in a manner that does not violate the terms of
the Indenture or (y) the holders thereof have rescinded or waived the
acceleration, notice or action (as the case may be) giving rise to such
Event of Default. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders
of the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal, interest
or Liquidated Damages) if it determines that withholding notice is in their
interest. In addition, the Trustee shall have no obligation to accelerate
the Notes if, in the best judgment of the Trustee, acceleration is not in
the best interests of the Holders.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for
the Company, the Subsidiary Guarantors or their respective Affiliates, and
may otherwise deal with the Company, the Subsidiary Guarantors or their
respective Affiliates, as if it were not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator
or stockholder of the Company or any Subsidiary Guarantor, as such, shall
have any liability for any obligations of the Company under the Notes, any
Subsidiary Guarantee or the Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of
Notes by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes
and the Subsidiary Guarantees.
A-1-7
<PAGE>
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the Commission that such a waiver is
against public policy.
16. AUTHENTICATION. This Note shall not be valid until authenticated by the
manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a Holder
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants
by the entireties), JT TEN (= joint tenants with right of survivorship and
not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the
Indenture, Holders of Transferred Restricted Securities (as defined in the
Registration Rights Agreement) shall have all the rights set forth in the
Registration Rights Agreement, dated as of the date hereof, among the
Company, the Subsidiary Guarantors and the Initial Purchaser (the
"Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the Committee
on Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Notes and the Trustee may use CUSIP numbers in
notices of redemption as a convenience to the Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes
or as contained in any notice of redemption and reliance may be placed only
on the other identification numbers placed thereon.
The Company shall furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Jitney-Jungle Stores of America, Inc.
1770 Ellis Avenue
Suite 200
Jackson, Mississippi 39204
Telecopier No.: (601) 371-8665
Attention: Chief Financial Officer
A-1-8
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
- --------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. no.)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date:_____________________
Your Signature:______________________________
(Sign exactly as your name appearson the
face of this Note)
Signature Guarantee:
A-1-9
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.14 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.14
If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.10 or Section 4.14 of the Indenture, state the
amount you elect to have purchased: $___________
Date:_____________________
Your Signature:______________________________
(Sign exactly as your name appearson the
face of this Note)
Tax Identification No.:______________________
Signature Guarantee.
A-1-10
<PAGE>
SCHEDULE OF EXCHANGES OF NOTES (3)
<TABLE>
<CAPTION>
THE FOLLOWING EXCHANGES OF A PART OF THIS GLOBAL NOTE FOR OTHER NOTES HAVE BEEN MADE:
- ----------------------------------------------------------------------------------------------------------------------
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of authorized
Principal Amount of Principal Amount of following such decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
</TABLE>
- ------------------------
(3) This should be included only if the Senior Subordinated Note is issued in
global form.
A-1-11
<PAGE>
EXHIBIT A-2
-----------
(Face of Regulation S Temporary Global Note)
103/8% Senior Subordinated Notes due 2007
No. _____ $_______________
CIN NO.
JITNEY-JUNGLE STORES OF AMERICA, INC.
promises to pay to ________________ or registered assigns, the principal sum of
________ Dollars on September 15, 2007.
Interest Payment Dates: March 15 and September 15
Record Dates: March 1 and September 1
JITNEY-JUNGLE STORES OF AMERICA, INC.
By:______________________________
Name:
Title:
This is one of the
Notes referred to in the
within-mentioned Indenture:
Dated: _________________________
MARINE MIDLAND BANK,
as Trustee
By:_____________________________
A-2-1
<PAGE>
(Back of Regulation S Temporary Global Note)
103/8% Senior Subordinated Notes due 2007
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO
THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY
SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR
DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) ("DTC"),TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
[THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
THE THIRD SENTENCE HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), (B) IT IS
ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT OR (C) IS OTHERWISE PERMITTED TO PURCHASE THE NOTES
PURSUANT TO THE REQUIREMENTS OF CLAUSE (2) BELOW, (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH
TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN
REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE (THE FORM
OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT
OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT. THE
INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING.
A-2-2
<PAGE>
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).
NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON PRIOR TO THE
EXCHANGE OF THIS NOTE FOR A REGULATION S TEMPORARY GLOBAL NOTE AS CONTEMPLATED
BY THE INDENTURE.](1)
[Until this Regulation S Temporary Global Note is exchanged for Regulation
S Permanent Global Notes, the Holder hereof shall not be entitled to receive
payments of interest or Liquidated Damages, if any, hereon although interest and
Liquidated Damages, if any, will continue to accrue; until so exchanged in full,
this Regulation S Temporary Global Note shall in all other respects be entitled
to the same benefits as other Notes under the Indenture.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Regulation S Permanent Global Notes or Rule 144A Global Notes
only (i) on or after the termination of the 40-day restricted period (as defined
in Regulation S) and (ii) upon presentation of certificates (accompanied by an
Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon
exchange of this Regulation S Temporary Global Note for one or more Regulation S
Permanent Global Notes or Rule 144A Global Notes, the Trustee shall cancel this
Regulation S Temporary Global Note.
This Regulation S Temporary Global Note shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This
Regulation S Temporary Global Note shall be governed by and construed in
accordance with the laws of the State of the New York.](2) All references to
"$," "Dollars," "dollars" or "U.S. $" are to such coin or currency of the United
States of America as at the time shall be legal tender for the payment of public
and private debts therein.
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Jitney-Jungle Stores of America, Inc., a Mississippi
corporation, or its successor (the "Company"), promises to pay
interest on the principal amount of this Note at the rate of 103/8%
per annum and shall pay the Liquidated Damages, if any, payable
pursuant to Section 5 of the Registration Rights Agreement referred to
below. The Company will pay interest and Liquidated Damages, if any,
in United States dollars (except as otherwise provided herein)
semi-annually in arrears on March 15 and September 15, commencing on
March 15, 1998 (each an "Interest Payment Date"), or if any such day
is not a Business Day, on the next succeeding Business Day. Interest
on the Notes shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of
issuance; PROVIDED that if there is no existing Default or Event of
Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next
succeeding Interest
- -----------------------
(1) These paragraphs should be removed upon the exchange of Senior Subordinated
Notes for New Senior Subordinated Notes in the Exchange Offer or upon the
registration of the Senior Subordinated Notes pursuant to the terms of the
Registration Rights Agreement.
(2) These paragraphs should be removed upon the exchange of the Regulation S
Temporary Global Notes for Regulation S Permanent Global Notes pursuant to the
Indenture.
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<PAGE>
Payment Date, interest shall accrue from such next succeeding Interest
Payment Date, except in the case of the original issuance of Notes, in
which case interest shall accrue from the date of authentication. The
Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate
equal to 1% per annum in excess of the then applicable interest rate
on the Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without
regard to any applicable grace period) at the same rate to the extent
lawful. Interest shall be computed on the basis of a 360-day year
comprised of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages, if any, on the applicable
Interest Payment Date to the Persons who are registered Holders of
Notes at the close of business on the March 1 or September 1 next
preceding the Interest Payment Date, even if such Notes are cancelled
after such record date and on or before such Interest Payment Date,
except as provided in Section 2.12 of the Indenture with respect to
defaulted interest. The Notes shall be payable as to principal,
premium and Liquidated Damages, if any, and interest at the office or
agency of the Company maintained for such purpose within or without
the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages, if any, may be made by
check mailed to the Holders at their addresses set forth in the
register of Holders; PROVIDED that payment by wire transfer of
immediately available funds shall be required with respect to
principal of, premium and Liquidated Damages, if any, and interest on,
all Global Notes and all other Notes the Holders of which shall have
provided written wire transfer instructions to the Company and the
Paying Agent. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for
payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Marine Midland Bank, the
Trustee under the Indenture, shall act as Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice to
any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture dated as
of September 15, 1997 ("Indenture") among the Company, the Subsidiary
Guarantors and the Trustee. The terms of the Notes include those
stated in the Indenture and those made a part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code
Sections 77aaa-77bbbb) (the "TIA"). The Notes are subject to all
such terms, and Holders are referred to the Indenture and such Act for
a statement of such terms. The Notes are general unsecured
Obligations of the Company limited to $200,000,000 in aggregate
principal amount, plus amounts, if any, sufficient to pay premium or
Liquidated Damages, if any, and interest on outstanding Notes as set
forth in Paragraph 2 hereof.
5. OPTIONAL REDEMPTION.
Except as provided in the following paragraph, the Notes will not
be redeemable at the Company's option prior to September 15, 2002.
Thereafter, the Notes will be subject to redemption at the option of
the Company, in whole or in part, upon not less
A-2-4
<PAGE>
than 30 nor more than 60 days' notice, at the redemption prices
(expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to
the applicable redemption date, if redeemed during the twelve-month
period beginning on September 15 of the years indicated below:
YEAR PERCENTAGE
2002.................................................... 105.188%
2003.................................................... 103.458%
2004.................................................... 101.729%
2005 and thereafter..................................... 100.000%
Notwithstanding the foregoing, at any time prior to September 15,
2000 the Company may on any one or more occasions redeem up to 33 1 3%
of the aggregate principal amount of Notes originally issued in the
Offering at a redemption price of 110.375% of the principal amount
thereof, plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the redemption date, with the net proceeds of one or
more Public Equity Offerings; PROVIDED that at least 66 2 3% of the
original aggregate principal amount of Notes remains outstanding
immediately after the occurrence of each such redemption; and
PROVIDED, further, that each such redemption shall occur within 120
days of the date of the closing of the Public Equity Offering to which
it relates.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall not
be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require the Company to repurchase all or any part (equal
to $1,000 or an integral multiple thereof) of such Holder's Notes
pursuant to the offer described below (the "Change of Control Offer")
at a price in cash equal to 101% of the aggregate principal amount
thereof plus accrued and unpaid interest and Liquidated Damages, if
any, thereon to the date of purchase (the "Change of Control
Payment"). Within 30 days following any Change of Control, the
Company will mail or cause to be mailed a notice to each Holder
describing the transaction or transactions that constitute the Change
of Control and offering to repurchase Notes pursuant to the procedures
required by the Indenture.
(b) When the aggregate amount of Excess Proceeds exceeds $15.0
million, the Company shall be required to make an offer to all Holders
(an "Asset Sale Offer") to purchase the maximum principal amount of
Notes that may be purchased out of the Excess Proceeds, at a price in
cash equal to 100% of the principal amount thereof plus accrued and
unpaid interest and Liquidated Damages, if any, thereon to the date of
purchase, in accordance with the procedures set forth in the
Indenture. To the extent that the aggregate amount of Notes tendered
pursuant to an Asset Sale Offer is less than the aggregate amount of
Excess Proceeds, the Company or its Restricted Subsidiary, as the case
may be, may use any remaining Excess Proceeds for general corporate
purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the aggregate amount of Excess Proceeds, the
Trustee shall select the Notes to be purchased
A-2-5
<PAGE>
in accordance with the terms of the Indenture. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at
zero.
(c) Holders of the Notes that are the subject of an offer to purchase
will receive a Change of Control Offer or Asset Sale Offer from the
Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form titled "Option of Holder to
Elect Purchase" appearing below.
8. NOTICE OF REDEMPTION. Notice of redemption shall be mailed at least
30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address.
Notes in denominations larger than $1,000 may be redeemed in part but
only in whole multiples of $1,000, unless all of the Notes held by a
Holder are to be redeemed. On and after the redemption date, interest
and Liquidated Damages, if any, ceases to accrue on the Notes or
portions thereof called for redemption.
9. SUBORDINATION. The payment of principal, premium, if any, and
interest and Liquidated Damages on the notes is subordinated in right
of payment, as set forth in the Indenture, to the prior payment in
full of all Senior Debt, which is (i) Indebtedness pursuant to the
Senior Credit Facility, (ii) Indebtedness pursuant to the Senior Notes
or guarantees thereof, as applicable, (iii) the IRB Indebtedness, (iv)
any other Indebtedness permitted to be incurred by the Company or a
Restricted Subsidiary under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly
provides that it is on a parity with or subordinated in right of
payment to the Notes or the Subsidiary Guarantees, as applicable, and
(v) all Obligations with respect to the foregoing. Notwithstanding
anything to the contrary in the foregoing, Senior Debt will not
include (w) any liability for federal, state, local or other taxes
owed or owing by the Company or any Subsidiary Guarantor, (x) any
Indebtedness of the Company or any Subsidiary Guarantor to any of
their respective Subsidiaries or other Affiliates, (y) any trade
payables or (z) any Indebtedness that is incurred in violation of the
Indenture. To the extent provided in the Indenture, Senior Debt must
be paid before the Notes may be paid. The Company agrees and each
Holder of Notes by accepting a Note consents and agrees to the
subordination provided in the Indenture and authorizes the Trustee to
give it effect.
10. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form
without coupons in initial denominations of $1,000 and integral
multiples of $1,000. The transfer of the Notes may be registered and
the Notes may be exchanged as provided in the Indenture. The
Registrar and the Trustee may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not exchange or
register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the transfer
of any Notes for a period of 15 days before a selection of Notes to be
redeemed or during the period between a record date and the
corresponding Interest Payment Date.
11. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated
as its owner for all purposes.
A-2-6
<PAGE>
12. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to the following
paragraphs, the Indenture, the Notes and the Subsidiary Guarantees may
be amended or supplemented with the consent of the Holders of at least
a majority in principal amount of the Notes then outstanding
(including, without limitation, consents obtained in connection with a
purchase of or, tender offer or exchange offer for Notes), and any
existing Default or Event of Default or compliance with any provision
of the Indenture, the Notes or the Subsidiary Guarantees may be waived
with the consent of the Holders of a majority in principal amount of
the then outstanding Notes (including consents obtained in connection
with a tender offer or exchange offer for Notes).
Without the consent of any Holder of Notes, the Company and the
Trustee may amend or supplement the Indenture, the Subsidiary
Guarantees or the Notes to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Notes in addition to or
in place of certificated Notes, to provide for the assumption of the
Company's or a Subsidiary Guarantor's obligations to Holders of Notes
in the case of a merger, consolidation or sale of assets, to make any
change that would provide any additional rights or benefits to the
Holders of Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with the
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act. Any
amendments with respect to subordination provisions of the Notes or
the Subsidiary Guarantees would require the consent of the Holders of
at least 75% in aggregate amount of Notes then outstanding if such
amendment would adversely affect the rights of the Holders of Notes.
13. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due, upon redemption, acceleration or
otherwise, of interest on, or Liquidated Damages with respect to, the
Notes; (ii) default in payment when due of the principal of or
premium, if any, on the Notes; (iii) failure by the Company for 30
days after receipt of written notice from the Trustee or from Holders
of at least 25% of the aggregate principal amount of the Notes then
outstanding to comply with the provisions described under Sections
4.07, 4.09, 4.10 or 4.14 of the Indenture; (iv) failure by the Company
for 60 days after receipt of written notice from the Trustee or from
Holders of at least 25% of the aggregate principal amount of the Notes
then outstanding to comply with any of its other agreements in the
Indenture or the Notes; (v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Restricted Subsidiaries or the payment of which
is Guaranteed by the Company or any of its Restricted Subsidiaries
(other than Indebtedness owed to the Company or its Restricted
Subsidiaries) whether such Indebtedness or Guarantee now exists, or is
created after the date hereof, if both (a) such default either (1)
results from the failure to pay any such Indebtedness at its stated
final maturity (after giving effect to any applicable grace periods)
or (2) relates to an obligation other than the obligation to pay
principal of any such Indebtedness at its stated maturity and results
in the holder or holders of such Indebtedness causing such
Indebtedness to become due prior to its stated maturity and (b) the
principal amount of such Indebtedness, together with the principal
amount of any other such Indebtedness in default for failure to pay
principal at stated final maturity (after giving effect to any
applicable grace periods), or the maturity of which has been so
accelerated, aggregate $15.0 million or more; (vi) failure by the
Company or any of its Restricted Subsidiaries to pay final judgments
(other than any judgments as to which a reputable insurance company
has accepted liability) aggregating
A-2-7
<PAGE>
in excess of $15.0 million, which judgments are not paid, discharged,
bonded or stayed for a period of 60 days after their entry; (vii)
except as permitted by the Indenture, any Subsidiary Guarantee will be
held in any judicial proceeding to be unenforceable or invalid or
shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor,
will deny or disaffirm its obligations under its Subsidiary Guarantee;
and (viii) certain events of bankruptcy or insolvency with respect to
the Company, any of its Significant Restricted Subsidiaries or any
group of Restricted Subsidiaries that, taken together, would
constitute a Significant Restricted Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in aggregate principal amount of the then
outstanding Notes may declare all the Notes to be due and payable
immediately; PROVIDED, however, that, so long as any Designated Senior
Debt shall be outstanding, no such acceleration shall be effective
until the earlier of (i) acceleration of any such Designated Senior
Debt or (ii) five Business Days after the giving of written notice to
the Company and the Representatives under the Designated Senior Debt
of such acceleration. Notwithstanding the foregoing, in the case of
an Event of Default arising from certain events of bankruptcy or
insolvency with respect to the Company, any Significant Restricted
Subsidiary or any group of Restricted Subsidiaries that, taken
together, would constitute a Significant Restricted Subsidiary, all
outstanding Notes will become due and payable without further action
or notice. Holders of the Notes may not enforce the Indenture or the
Notes except as provided in the Indenture. In the event of any Event
of Default specified in clause (v) above, such Event of Default and
all consequences thereof (including, without limitation, any
acceleration or resulting payment default) shall be annulled, waived
and rescinded, automatically and without any action by the Trustee or
the Holders of the Notes, if within 20 days after such Event of
Default arose (x) the Indebtedness or guarantee that is the basis for
such Event of Default has been discharged in a manner that does not
violate the terms of the Indenture or (y) the holders thereof have
rescinded or waived the acceleration, notice or action (as the case
may be) giving rise to such Event of Default. Subject to certain
limitations, Holders of a majority in principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust
or power. The Trustee may withhold from Holders of the Notes notice
of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal, interest or
Liquidated Damages) if it determines that withholding notice is in
their interest. In addition, the Trustee shall have no obligation to
accelerate the Notes if, in the best judgment of the Trustee,
acceleration is not in the best interests of the Holders.
14. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform
services for the Company, the Subsidiary Guarantors or their
respective Affiliates, and may otherwise deal with the Company, the
Subsidiary Guarantors or their respective Affiliates, as if it were
not the Trustee.
15. NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Company or any Subsidiary
Guarantor, as such, shall have any liability for any obligations of
the Company under the Notes, any Subsidiary Guarantee or the Indenture
or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a
Note waives and releases all such liability. The waiver and release
are part of the consideration for
A-2-8
<PAGE>
issuance of the Notes and the Subsidiary Guarantees. Such waiver may
not be effective to waive liabilities under the federal securities
laws and it is the view of the Commission that such a waiver is
against public policy.
16. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
17. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right
of survivorship and not as tenants in common), CUST (= Custodian), and
U/G/M/A (= Uniform Gifts to Minors Act).
18. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of the Notes under the
Indenture, Holders of Transferred Restricted Securities (as defined in
the Registration Rights Agreement) shall have all the rights set forth
in the Registration Rights Agreement, dated as of the date hereof,
among the Company, the Subsidiary Guarantors and the Initial Purchaser
(the "Registration Rights Agreement").
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Notes and the Trustee
may use CUSIP numbers in notices of redemption as a convenience to the
Holders. No representation is made as to the accuracy of such numbers
either as printed on the Notes or as contained in any notice of
redemption and reliance may be placed only on the other identification
numbers placed thereon.
The Company shall furnish to any Holder upon written request and
without charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
Jitney-Jungle Stores of America, Inc.
1770 Ellis Avenue
Suite 200
Jackson, Mississippi 39204
Telecopier No.: (601) 371-8665
Attention: Chief Financial Officer
A-2-9
<PAGE>
SCHEDULE OF EXCHANGES FOR GLOBAL NOTES
The following exchanges of a part of this Regulation S Temporary Global
Note for other Global Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of
Amount of decrease in Amount of increase in this Global Note Signature of authorized
Principal Amount of Principal Amount of following such decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- ---------------- --------------------- --------------------- ----------------------- -----------------------
<S><C>
</TABLE>
A-2-10
<PAGE>
EXHIBIT B-1
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE TO REGULATION S GLOBAL NOTE
(Pursuant to Section 2.06(a)(1) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Re: 103/8% Senior Subordinated Notes due 2007 of Jitney-Jungle Stores of
America, Inc.
Reference is hereby made to the Indenture, dated as of September 15, 1997
(the "Indenture"), among Jitney-Jungle Stores of America, Inc., a Mississippi
corporation (the "COMPANY"), Interstate Jitney-Jungle Stores, Inc., an Alabama
corporation ("INTERSTATE"), McCarty-Holman Co., Inc., a Mississippi corporation
("MCCARTY-HOLMAN"), Southern Jitney Jungle Company, a Mississippi corporation
("SOUTHERN"), Pump And Save, Inc., a Mississippi corporation ("PUMP AND SAVE"),
Delta Acquisition Corporation, an Alabama corporation ("DAC"), Delchamps, Inc.,
an Alabama corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a
Louisiana corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern,
Pump And Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "SUBSIDIARY
GUARANTORS") and Marine Midland Bank, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $ _______________ principal amount of Senior
Subordinated Notes which are evidenced by one or more Rule 144A Global Notes and
held with the Depositary in the name of ______________________ (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Senior Subordinated Notes to a Person who will take delivery
thereof in the form of an equal principal amount of Senior Subordinated Notes
evidenced by one or more Regulation S Global Notes, which amount, immediately
after such transfer, is to be held with the Depositary through Euroclear or
Cedel or both.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that such transfer has been effected in
compliance with the transfer restrictions applicable to the Global Notes and
pursuant to and in accordance with Rule 903 or Rule 904 under the United States
Securities Act of 1933, as amended (the "Securities Act"), and accordingly the
Transferor hereby further certifies that:
(1) The offer of the Senior Subordinated Notes was not made to a person in
the United States;
(2) either:
B-1-1
<PAGE>
(a) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting
on its behalf reasonably believed and believes that the
transferee was outside the United States; or
(b) the transaction was executed in, on or through the facilities of
a designated offshore securities market and neither the
Transferor nor any person acting on its behalf knows that the
transaction was prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in contravention of
the requirements of Rule 904(b) of Regulation S;
(4) the transaction is not part of a plan or scheme to evade the
registration provisions of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depositary
through Euroclear or Cedel or both.
Upon giving effect to this request to exchange a beneficial interest in a
Rule 144A Global Note for a beneficial interest in a Regulation S Global Note,
the resulting beneficial interest shall be subject to the restrictions on
transfer applicable to Regulation S Global Notes pursuant to the Indenture and
the Securities Act and, if such transfer occurs prior to the end of the 40-day
restricted period associated with the initial offering of Senior Subordinated
Notes, the additional restrictions applicable to transfers of interest in the
Regulation S Temporary Global Note.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston, the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:
--------------------------------------
Name:
Title:
Dated:
cc: Jitney-Jungle Stores of America, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston
B-1-2
<PAGE>
EXHIBIT B-2
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM REGULATION S GLOBAL NOTE TO RULE 144A GLOBAL NOTE
(Pursuant to Section 2.06(a)(ii) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Re: 103/8% Senior Subordinated Notes due 2007 of Jitney-Jungle Stores of
America, Inc.
Reference is hereby made to the Indenture, dated as of September 15, 1997
(the "Indenture"), among Jitney-Jungle Stores of America, Inc., a Mississippi
corporation (the "COMPANY"), Interstate Jitney-Jungle Stores, Inc., an Alabama
corporation ("INTERSTATE"), McCarty-Holman Co., Inc., a Mississippi corporation
("MCCARTY-HOLMAN"), Southern Jitney Jungle Company, a Mississippi corporation
("SOUTHERN"), Pump And Save, Inc., a Mississippi corporation ("PUMP AND SAVE"),
Delta Acquisition Corporation, an Alabama corporation ("DAC"), Delchamps, Inc.,
an Alabama corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a
Louisiana corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern,
Pump And Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "SUBSIDIARY
GUARANTORS") and Marine Midland Bank, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $_________ principal amount of Senior Subordinated
Notes which are evidenced by one or more Regulation S Global Notes and held with
the Depositary through Euroclear or Cedel in the name of
__________________________________ (the "Transferor"). The Transferor has
requested a transfer of such beneficial interest in the Senior Subordinated
Notes to a Person who will take delivery thereof in the form of an equal
principal amount of Senior Subordinated Notes evidenced by one or more Rule 144A
Global Notes, to be held with the Depositary.
In connection with such request and in respect of such Senior Subordinated
Notes, the Transferor hereby certifies that:
[CHECK ONE]
/ / such transfer is being effected pursuant to and in accordance with Rule
144A under the United States Securities Act of 1933, as amended (the
"Securities Act"), and, accordingly, the Transferor hereby further
certifies that the Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the Senior
Subordinated Notes for its own account, or for one or more accounts with
respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within
the meaning of Rule 144A in a transaction meeting the requirements of Rule
144A;
B-2-1
<PAGE>
or
/ / such transfer is being effected pursuant to and in accordance with Rule 144
under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption under the
Securities Act other than Rule 144A or Rule 144 and the Transferor further
certifies that the Transfer complies with the transfer restrictions
applicable to beneficial interests in Global Notes and Definitive Senior
Subordinated Notes bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is supported by
(x) if such transfer is in respect of a principal amount of Senior
Subordinated Notes at the time of Transfer of $250,000 or more, a
certificate executed by the Transferee in the form of EXHIBIT C to the
Indenture, or (y) if such Transfer is in respect of a principal amount of
Senior Subordinated Notes at the time of transfer of less than $250,000,
(1) a certificate executed in the form of EXHIBIT C to the Indenture and
(2) an Opinion of Counsel provided by the Transferor or the Transferee (a
copy of which the Transferor has attached to this certification), to the
effect that (1) such Transfer is in compliance with the Securities Act and
(2) such Transfer complies with any applicable blue sky securities laws of
any state of the United States;
or
/ / such transfer is being effected pursuant to an effective registration
statement under the Securities Act;
or
/ / such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A or
Rule 144, and the Transferor hereby further certifies that the Senior
Subordinated Notes are being transferred in compliance with the transfer
restrictions applicable to the Global Notes and in accordance with the
requirements of the exemption claimed, which certification is supported by
an Opinion of Counsel, provided by the transferor or the transferee (a copy
of which the Transferor has attached to this certification) in form
reasonably acceptable to the Company and to the Registrar, to the effect
that such transfer is in compliance with the Securities Act;
and such Senior Subordinated Notes are being transferred in compliance with any
applicable blue sky securities laws of any state of the United States.
Upon giving effect to this request to exchange a beneficial interest in
Regulation S Global Notes for a beneficial interest in 144A Global Senior
Subordinated Notes, the resulting beneficial interest shall be subject to the
restrictions on transfer applicable to Rule 144A Global Notes pursuant to the
Indenture and the Securities Act.
B-2-2
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation, and Credit Suisse First Boston, the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:
--------------------------------
Name:
Title:
Dated:
cc: Jitney-Jungle Stores of America, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston
B-2-3
<PAGE>
EXHIBIT B-3
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
OF DEFINITIVE SENIOR SUBORDINATED NOTES FOR OTHER DEFINITIVE SENIOR SUBORDINATED
NOTES OR BENEFICIAL INTERESTS IN GLOBAL NOTES
(Pursuant to Section 2.06(b) or (e) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Re: 103/8% Senior Subordinated Notes due 2007 of Jitney-Jungle Stores of
America, Inc.
Reference is hereby made to the Indenture, dated as of September 15, 1997
(the "Indenture"), among Jitney-Jungle Stores of America, Inc., a Mississippi
corporation (the "COMPANY"), Interstate Jitney-Jungle Stores, Inc., an Alabama
corporation ("INTERSTATE"), McCarty-Holman Co., Inc., a Mississippi corporation
("MCCARTY-HOLMAN"), Southern Jitney Jungle Company, a Mississippi corporation
("SOUTHERN"), Pump And Save, Inc., a Mississippi corporation ("PUMP AND SAVE"),
Delta Acquisition Corporation, an Alabama corporation ("DAC"), Delchamps, Inc.,
an Alabama corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a
Louisiana corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern,
Pump And Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "SUBSIDIARY
GUARANTORS") and Marine Midland Bank, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This relates to $ principal amount of Senior Subordinated
Notes which are evidenced by one or more Definitive Senior Subordinated Notes in
the name of (the "Transferor"). The Transferor has
requested an exchange or transfer of such Definitive Senior Subordinated Note(s)
in the form of an equal principal amount of Senior Subordinated Notes evidenced
by (a) one or more Definitive Senior Subordinated Notes, to be delivered to the
Transferor or, in the case of a transfer of such Senior Subordinated Notes, to
such Person as the Transferor instructs the Trustee or (b) a beneficial interest
in one or more Global Notes.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
/ / 1. the Surrendered Senior Subordinated Notes are being acquired for the
Transferor's own account, without transfer;
or
/ / 2. the Surrendered Senior Subordinated Notes are being transferred to the
Company;
B-3-1
<PAGE>
or
/ / 3. the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the
Surrendered Senior Subordinated Notes are being transferred to a
Person that the Transferor reasonably believes is purchasing the
Surrendered Senior Subordinated Notes for its own account, or for one
or more accounts with respect to which such Person exercises sole
investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in
each case in a transaction meeting the requirements of Rule 144A;
or
/ / 4. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
/ / 5. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 903 or Rule 904 under the Securities
Act;
or
/ / 6. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an exemption under the Securities Act other than Rule
144A, Rule 144 or Rule 904 and the Transferor further certifies that
the Transfer complies with the transfer restrictions applicable to
beneficial interests in Global Notes and Definitive Senior
Subordinated Notes bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount
of Senior Subordinated Notes at the time of Transfer of $250,000 or
more, a certificate executed by the Transferee in the form of EXHIBIT
C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer
of less than $250,000, (1) a certificate executed in the form of
EXHIBIT C to the Indenture and (2) an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has
attached to this certification), to the effect that (1) such Transfer
is in compliance with the Securities Act and (2) such Transfer
complies with any applicable blue sky securities laws of any state of
the United States;
or
/ / 7. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
/ / 8. such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Senior Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Notes and in accordance
with the requirements of the exemption claimed, which certification is
supported by an
B-3-2
<PAGE>
Opinion of Counsel, provided by the transferor or the transferee (a
copy of which the Transferor has attached to this certification) in
form reasonably acceptable to the Company and to the Registrar, to the
effect that such transfer is in compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston, the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:
--------------------------------
Name:
Title:
Dated:
cc: Jitney-Jungle Stores of America, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston
B-3-3
<PAGE>
EXHIBIT B-4
FORM OF CERTIFICATE FOR EXCHANGE OR REGISTRATION OF TRANSFER
FROM RULE 144A GLOBAL NOTE OR REGULATION S
PERMANENT GLOBAL NOTE
TO DEFINITIVE SENIOR SUBORDINATED NOTE
(Pursuant to Section 2.06(c) of the Indenture)
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Re: 103/8% Senior Subordinated Notes due 2007 of Jitney-Jungle Stores of
America, Inc.
Reference is hereby made to the Indenture, dated as of September 15, 1997
(the "Indenture"), among Jitney-Jungle Stores of America, Inc., a Mississippi
corporation (the "COMPANY"), Interstate Jitney-Jungle Stores, Inc., an Alabama
corporation ("INTERSTATE"), McCarty-Holman Co., Inc., a Mississippi corporation
("MCCARTY-HOLMAN"), Southern Jitney Jungle Company, a Mississippi corporation
("SOUTHERN"), Pump And Save, Inc., a Mississippi corporation ("PUMP AND SAVE"),
Delta Acquisition Corporation, an Alabama corporation ("DAC"), Delchamps, Inc.,
an Alabama corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a
Louisiana corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern,
Pump And Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "SUBSIDIARY
GUARANTORS") and Marine Midland Bank, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
This letter relates to $__________ principal amount of Senior Subordinated
Notes which are evidenced by a beneficial interest in one or more Rule 144A
Global Notes or Regulation S Permanent Global Notes in the name of
(the "Transferor"). The Transferor has requested an exchange or transfer
of such beneficial interest in the form of an equal principal amount of Senior
Subordinated Notes evidenced by one or more Definitive Senior Subordinated
Notes, to be delivered to the Transferor or, in the case of a transfer of such
Senior Subordinated Notes, to such Person as the Transferor instructs the
Trustee.
In connection with such request and in respect of the Senior Subordinated
Notes surrendered to the Trustee herewith for exchange (the "Surrendered Senior
Subordinated Notes"), the Holder of such Surrendered Senior Subordinated Notes
hereby certifies that:
[CHECK ONE]
/ / 1. the Surrendered Senior Subordinated Notes are being transferred to the
beneficial owner of such Senior Subordinated Notes;
or
/ / 2. the Surrendered Senior Subordinated Notes are being transferred
pursuant to and in accordance with Rule 144A under the United States
Securities Act of 1933, as amended
B-4-1
<PAGE>
(the "Securities Act"), and, accordingly, the Transferor hereby
further certifies that the Surrendered Senior Subordinated Notes are
being transferred to a Person that the Transferor reasonably believes
is purchasing the Surrendered Senior Subordinated Notes for its own
account, or for one or more accounts with respect to which such Person
exercises sole investment discretion, and such Person and each such
account is a "qualified institutional buyer" within the meaning of
Rule 144A, in each case in a transaction meeting they requirements of
Rule 144A;
or
/ / 3. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 144 under the Securities Act;
or
/ / 4. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an effective registration statement under the Securities
Act;
or
/ / 5. the Surrendered Senior Subordinated Notes are being transferred in a
transaction permitted by Rule 903 or Rule 904 under the Securities
Act;
or
/ / 6. the Surrendered Senior Subordinated Notes are being transferred
pursuant to an exemption under the Securities Act other than Rule
144A, Rule 144 or Rule 904 and the Transferor further certifies that
the Transfer complies with the transfer restrictions applicable to
beneficial interests in Global Notes and Definitive Senior
Subordinated Notes bearing the Private Placement Legend and the
requirements of the exemption claimed, which certification is
supported by (x) if such transfer is in respect of a principal amount
of Senior Subordinated Notes at the time of Transfer of $250,000 or
more, a certificate executed by the Transferee in the form of EXHIBIT
C to the Indenture, or (y) if such Transfer is in respect of a
principal amount of Senior Subordinated Notes at the time of transfer
of less than $250,000, (1) a certificate executed in the form of
EXHIBIT C to the Indenture and (2) an Opinion of Counsel provided by
the Transferor or the Transferee (a copy of which the Transferor has
attached to this certification), to the effect that (1) such Transfer
is in compliance with the Securities Act and (2) such Transfer
complies with any applicable blue sky securities laws of any state of
the United States;
or
/ / 7. such transfer is being effected pursuant to an exemption from the
registration requirements of the Securities Act other than Rule 144A
or Rule 144, and the Transferor hereby further certifies that the
Senior Subordinated Notes are being transferred in compliance with the
transfer restrictions applicable to the Global Notes and in accordance
with the requirements of the exemption claimed, which certification is
supported by an Opinion of Counsel, provided by the transferor or the
transferee (a copy of which the Transferor has attached to this
certification) in form reasonably acceptable to the
B-4-2
<PAGE>
Company and to the Registrar, to the effect that such transfer is in
compliance with the Securities Act;
and the Surrendered Senior Subordinated Notes are being transferred in
compliance with any applicable blue sky securities laws of any state of the
United States.
B-4-3
<PAGE>
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company, the Subsidiary Guarantors and Donaldson,
Lufkin & Jenrette Securities Corporation and Credit Suisse First Boston, the
initial purchasers of such Senior Subordinated Notes being transferred. Terms
used in this certificate and not otherwise defined in the Indenture have the
meanings set forth in Regulation S under the Securities Act.
[Insert Name of Transferor]
By:
-------------------------------
Name:
Title:
Dated:
cc: Jitney-Jungle Stores of America, Inc.
Donaldson, Lufkin & Jenrette Securities Corporation
Credit Suisse First Boston
B-4-4
<PAGE>
EXHIBIT C
---------
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Marine Midland Bank
140 Broadway, 12th Floor
New York, NY 10005
Re: 103/8% Senior Subordinated Notes due 2007 of Jitney-Jungle Stores of
America, Inc.
Reference is hereby made to the Indenture, dated as of September 15, 1997
(the "Indenture"), among Jitney-Jungle Stores of America, Inc., a Mississippi
corporation (the "COMPANY"), Interstate Jitney-Jungle Stores, Inc., an Alabama
corporation ("INTERSTATE"), McCarty-Holman Co., Inc., a Mississippi corporation
("MCCARTY-HOLMAN"), Southern Jitney Jungle Company, a Mississippi corporation
("SOUTHERN"), Pump And Save, Inc., a Mississippi corporation ("PUMP AND SAVE"),
Delta Acquisition Corporation, an Alabama corporation ("DAC"), Delchamps, Inc.,
an Alabama corporation ("DELCHAMPS") and Supermarket Cigarette Sales, Inc., a
Louisiana corporation ("SCSI") (each of Interstate, McCarty-Holman, Southern,
Pump And Save, DAC, Delchamps and SCSI a "SUBSIDIARY GUARANTOR" and together
with any Subsidiary of the Company that executes a Subsidiary Guarantee
substantially in the form of EXHIBIT D to the Indenture, the "SUBSIDIARY
GUARANTORS") and Marine Midland Bank, as trustee (the "TRUSTEE"). Capitalized
terms used but not defined herein shall have the meanings given to them in the
Indenture.
In connection with our proposed purchase of $__________ aggregate
principal amount of:
(a) / / Beneficial interests, or
(b) / / Definitive Senior Subordinated Notes,
we confirm that:
1. We understand that any subsequent transfer of the Senior
Subordinated Notes of any interest therein is subject to certain restrictions
and conditions set forth in the Indenture and the undersigned agrees to be bound
by, and not to resell, pledge or otherwise transfer the Senior Subordinated
Notes or any interest therein except in compliance with, such restrictions and
conditions and the Securities Act of 1933, as amended (the "SECURITIES ACT").
2. We understand that the offer and sale of the Senior Subordinated
Notes have not been registered under the Securities Act, and that the Senior
Subordinated Notes and any interest therein may not be offered or sold except as
permitted in the following sentence. We agree, on our own behalf and on behalf
of any accounts for which we are acting as hereinafter stated, that if we should
sell the Senior Subordinated Notes or any interest therein, (A) we will do so
only (1)(a) to a person who we reasonably believe is a qualified institutional
buyer (as defined in Rule 144A under the Securities Act) in a transaction
meeting the requirements of 144A, (b) in a transaction meeting the requirements
of Rule 144 under the Securities Act, (c) outside the United States to a foreign
person in a transaction meeting
C-1
<PAGE>
the requirements of Rule 904 of the Securities Act, (d) to an institutional
"accredited investor" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act who prior to the consummation of such sale
furnishes you with a signed certificate substantially in the form hereof or (e)
in accordance with another exemption from the registration requirements of the
Securities Act (and based upon an opinion of counsel), (2) to the Company or any
of its subsidiaries or (3) pursuant to an effective registration statement and,
in each case, in accordance with any applicable securities laws of any State of
the United States or any other applicable jurisdiction and (B) we will, and each
subsequent holder will be required to, notify any purchaser from it of the
security evidenced hereby of the resale restrictions set forth in (A) above."
3. We understand that, on any proposed resale of the Senior
Subordinated Notes or beneficial interests, we will be required to furnish to
you and the Company such certifications, legal opinions and other information as
you and the Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the Senior
Subordinated Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Senior Subordinated
Notes, and we and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.
5. We are acquiring the Senior Subordinated Notes or beneficial
interests therein purchased by us for our own account or for one or more
accounts (each of which is an institutional "accredited investor") as to each of
which we exercise sole investment discretion.
6. We are not acquiring the Senior Subordinated Notes with a view to
any distribution thereof that would violate the Securities Act or the securities
laws of any State of the United States.
C-2
<PAGE>
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
______________________________
[Insert Name of Accredited
Investor]
By:___________________________
Name:
Title:
Dated: ______________, ____
C-3
<PAGE>
EXHIBIT D
---------
SUBSIDIARY GUARANTEE
Subject to Section 11.05 of the Indenture, each Subsidiary Guarantor
hereby, jointly and severally, unconditionally guarantees to each Holder of a
Note authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of the
Indenture, the Notes and the Obligations of the Company under the Notes or under
the Indenture, that: (a) the principal of, premium, if any, interest and
Liquidated Damages, if any, on the Notes will be promptly paid in full when due,
subject to any applicable grace period, whether at maturity, by acceleration,
redemption or otherwise, and interest on overdue principal, premium, if any, (to
the extent permitted by law) interest on any interest, if any, and Liquidated
Damages, if any, on the Notes and all other payment Obligations of the Company
to the Holders or the Trustee under the Indenture or under the Notes will be
promptly paid in full and performed, all in accordance with the terms thereof;
and (b) in case of any extension of time of payment or renewal of any Notes or
any of such other payment Obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
subject to any applicable grace period, whether at stated maturity, by
acceleration, redemption or otherwise. Failing payment when so due of any
amount so guaranteed or any performance so guaranteed for whatever reason, the
Subsidiary Guarantors will be jointly and severally obligated to pay the same
immediately.
The obligations of the Subsidiary Guarantor to the Holders and to the
Trustee pursuant to this Subsidiary Guarantee and the Indenture are (a)
expressly set forth in Article 11 of the Indenture and (b) subordinated to
Senior Debt as set forth in the Indenture, and reference is hereby made to such
Indenture for the precise terms of this Subsidiary Guarantee. The terms of
Article 11 of the Indenture are incorporated herein by reference. This
Subsidiary Guarantee is subject to release as and to the extent provided in
Section 11.04 of the Indenture.
This is a continuing Guarantee and shall remain in full force and effect
and shall be binding upon each Subsidiary Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full and
final payment of all of the Company's Obligations under the Notes and the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a
Subsidiary Guarantee of payment and not a guarantee of collection.
This Subsidiary Guarantee shall not be valid or obligatory for any purpose
until the certificate of authentication on the Note upon which this Subsidiary
Guarantee is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized officers.
For purposes hereof, each Subsidiary Guarantor's liability shall be limited
to the lesser of (i) the aggregate amount of the Obligations of the Company
under the Notes and the Indenture and (ii) the amount, if any, which would not
have (A) rendered such Subsidiary Guarantor "insolvent" (as such term is defined
in the Bankruptcy Law and in the Debtor and Creditor Law of the State of New
York) or (B) left such Subsidiary Guarantor with unreasonably small capital at
the time its Subsidiary Guarantee of the Notes was entered into; PROVIDED that,
it will be a presumption in any lawsuit or other proceeding in which a
Subsidiary Guarantor is a party that the amount guaranteed pursuant to the
Subsidiary Guarantee is the amount set forth in clause (i) above unless any
creditor, or representative of creditors of such Subsidiary Guarantor, or debtor
in possession or trustee in bankruptcy of such Subsidiary Guarantor,
D-1
<PAGE>
otherwise proves in such a lawsuit that the aggregate liability of the
Subsidiary Guarantor is limited to the amount set forth in clause (ii) above.
The Indenture provides that, in making any determination as to the solvency or
sufficiency of capital of a Subsidiary Guarantor in accordance with the previous
sentence, the right of such Subsidiary Guarantors to contribution from other
Subsidiary Guarantors and any other rights such Subsidiary Guarantors may have,
contractual or otherwise, shall be taken into account.
Capitalized terms used herein have the same meanings given in the Indenture
unless otherwise indicated.
Dated as of ___________________ [NAME OF GUARANTOR]
By:
-----------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E
---------
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of
___________, between Subsidiary Guarantor (the "New Subsidiary Guarantor"), a
subsidiary of Jitney-Jungle Stores of America, Inc., a Mississippi corporation
(the "Company"), and Marine Midland Bank, as trustee under the indenture
referred to below (the "Trustee"). Capitalized terms used herein and not
defined herein shall have the meaning ascribed to them in the Indenture (as
defined below).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of September 15, 1997, providing for
the issuance of an aggregate principal amount of $200,000,000 of 103/8% Senior
Subordinated Notes due 2007 (the "Senior Subordinated Notes");
WHEREAS, Sections 4.18 and 11.03 of the Indenture provide that under
certain circumstances the Company is required to cause certain of its
Subsidiaries to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Subsidiaries shall unconditionally guarantee all of the
Company's Obligations under the Senior Subordinated Notes pursuant to a
Subsidiary Guarantee on the terms and conditions set forth herein; and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor and the Trustee mutually covenant and agree for the equal
and ratable benefit of the Holders of the Senior Subordinated Notes as follows:
1. CAPITALIZED TERMS. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. AGREEMENT TO SUBSIDIARY GUARANTEE. The New Subsidiary Guarantor
hereby agrees, jointly and severally with all other Subsidiary Guarantors, to
guarantee the Company's Obligations under the Senior Subordinated Notes and the
Indenture on the terms and subject to the conditions set forth in Article 11 of
the Indenture and to be bound by all other applicable provisions of the
Indenture.
E-1
<PAGE>
3. NO RECOURSE AGAINST OTHERS. No past, present or future director,
officer, employee, incorporator, shareholder or agent of any Subsidiary
Guarantor, as such, shall have any liability for any obligations of the Company
or any Subsidiary Guarantor under the Senior Subordinated Notes, any Subsidiary
Guarantees, the Indenture or this Supplemental Indenture or for any claim based
on, in respect of, or by reason of, such obligations or their creation. Each
Holder by accepting a Senior Subordinated Note waives and releases all such
liability. The waiver and release are part of the consideration for issuance of
the Senior Subordinated Notes.
4. NEW YORK LAW TO GOVERN. The internal law of the State of New York
shall govern and be used to construe this Supplemental Indenture.
5. COUNTERPARTS The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not affect the construction hereof.
7. THE TRUSTEE. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the correctness of the recitals of fact
contained herein, all of which recitals are made solely by the New Subsidiary
Guarantor.
E-2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture
to be duly executed and attested, all as of the date first above written.
Dated: ________________ [NAME OF NEW SUBSIDIARY GUARANTOR]
By: ____________________________
Name:
Title:
Dated: ________________ MARINE MIDLAND BANK,
as Trustee
By: ____________________________
Name:
Title:
E-3
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT Section INDENTURE SECTION
310 (a)(1)...................................................... 7.10
(a)(2)...................................................... 7.10
(a)(3)...................................................... N.A.
(a)(4)...................................................... N.A.
(a)(5)...................................................... 7.10
(b)......................................................... 7.03; 7.10
(c)......................................................... N.A.
311 (a) ........................................................ 7.11
(b)......................................................... 7.11
(c)......................................................... N.A.
312 (a)......................................................... 2.05
(b)......................................................... 13.03
(c)......................................................... 13.03
313 (a)......................................................... 7.06
(b)(1)...................................................... 7.06
(b)(2)...................................................... 7.06; 7.07
(c)......................................................... 7.06;13.02
(d)......................................................... 7.06
314 (a)......................................................... 4.03;13.05
(b)......................................................... N.A.
(c)(1)...................................................... 13.04
(c)(2)...................................................... 13.04
(c)(3)...................................................... N.A.
(d)......................................................... N.A.
(e)......................................................... 13.05
(f)......................................................... N.A.
315 (a)......................................................... 7.01
(b)......................................................... 7.05,13.02
(c)......................................................... 7.01
(d)......................................................... 7.01
(e)......................................................... 6.11
316 (a)(last sentence).......................................... 2.09
(a)(1)(A)................................................... 6.05
(a)(1)(B)................................................... 6.04
(a)(2)...................................................... N.A.
(b)......................................................... 6.07
(c)......................................................... 2.13
317 (a)(1)...................................................... 6.08
(a)(2)...................................................... 6.09
(b)......................................................... 2.04
318 (a)......................................................... 13.01
(b)......................................................... N.A.
(c)......................................................... 13.01
N.A. means not applicable.
*This Cross-Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions................................................ 1
Section 1.02. Other Definitions.......................................... 15
Section 1.03. Incorporation by Reference of Trust Indenture Act.......... 16
Section 1.04. Rules of Construction...................................... 16
ARTICLE 2
THE NOTES
Section 2.01. Form and Dating............................................ 17
Section 2.02. Execution and Authentication............................... 18
Section 2.03. Registrar and Paying Agent................................. 19
Section 2.04. Paying Agent to Hold Money in Trust........................ 19
Section 2.05. Holder Lists............................................... 20
Section 2.06. Transfer and Exchange...................................... 20
Section 2.07. Replacement Notes.......................................... 29
Section 2.08. Outstanding Notes.......................................... 29
Section 2.09. Treasury Notes............................................. 29
Section 2.10. Temporary Notes............................................ 30
Section 2.11. Cancellation............................................... 30
Section 2.12. Defaulted Interest......................................... 30
Section 2.13. Record Date................................................ 30
Section 2.14. Computation of Interest.................................... 31
Section 2.15. CUSIP Number............................................... 31
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee......................................... 31
Section 3.02. Selection of Notes to be Redeemed.......................... 31
Section 3.03. Notice of Redemption....................................... 32
Section 3.04. Effect of Notice of Redemption............................. 32
Section 3.05. Deposit of Redemption or Purchase Price.................... 33
Section 3.06. Notes Redeemed in Part..................................... 33
Section 3.07. Optional Redemption........................................ 33
Section 3.08. Mandatory Redemption....................................... 34
Section 3.09. Repurchase Offers.......................................... 34
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes........................................... 36
Section 4.02. Maintenance of Office or Agency............................ 36
i
<PAGE>
Section 4.03. Commission Reports......................................... 37
Section 4.04. Compliance Certificate..................................... 37
Section 4.05. Taxes...................................................... 38
Section 4.06. Stay, Extension and Usury Laws............................. 38
Section 4.07. Restricted Payments........................................ 38
Section 4.08. Dividends and Other Payment Restrictions Affecting
Restricted Subsidiaries.................................... 41
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock...................................................... 42
Section 4.10. Assets Sales............................................... 44
Section 4.11. Transactions With Affiliates............................... 45
Section 4.12. Liens...................................................... 45
Section 4.13. Sale and Leaseback Transactions............................ 46
Section 4.14. Offer to Purchase Upon Change of Control................... 46
Section 4.15. Corporate Existence........................................ 47
Section 4.16. Limitation on Issuances of Capital Stock of Wholly Owned
Restricted Subsidiaries.................................... 47
Section 4.17. Business Activities........................................ 47
Section 4.18. Additional Guarantees...................................... 47
Section 4.19. Payment for Consents....................................... 48
Section 4.20. No Senior Subordinated Debt................................ 48
Section 4.21. No Restrictions on Consummation of Delchamps Acquisition... 48
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation or Sale of Assets.................... 49
Section 5.02. Successor Corporation Substituted.......................... 49
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.......................................... 49
Section 6.02. Acceleration............................................... 51
Section 6.03. Other Remedies............................................. 52
Section 6.04. Waiver of Past Defaults.................................... 52
Section 6.05. Control by Majority........................................ 53
Section 6.06. Limitation on Suits........................................ 53
Section 6.07. Rights of Holders of Notes to Receive Payment.............. 53
Section 6.08. Collection Suit by Trustee................................. 53
Section 6.09. Trustee May File Proofs of Claim........................... 54
Section 6.10. Priorities................................................. 54
Section 6.11. Undertaking for Costs...................................... 54
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.......................................... 55
Section 7.02. Rights of Trustee.......................................... 56
ii
<PAGE>
PAGE
Section 7.03. Individual Rights of Trustee............................... 56
Section 7.04. Trustee's Disclaimer....................................... 56
Section 7.05. Notice of Defaults......................................... 57
Section 7.06. Reports by Trustee to Holders of the Notes................. 57
Section 7.07. Compensation and Indemnity................................. 57
Section 7.08. Replacement of Trustee..................................... 58
Section 7.09. Successor Trustee by Merger, etc........................... 59
Section 7.10. Eligibility; Disqualification.............................. 59
Section 7.11. Preferential Collection of Claims Against Company.......... 59
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance... 59
Section 8.02. Legal Defeasance and Discharge............................. 60
Section 8.03. Covenant Defeasance........................................ 60
Section 8.04. Conditions to Legal or Covenant Defeasance................. 60
Section 8.05. Deposited Money and Government Securities to be Held in
Trust; Other Miscellaneous Provisions...................... 62
Section 8.06. Repayment to Company....................................... 62
Section 8.07. Reinstatement.............................................. 63
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes........................ 63
Section 9.02. With Consent of Holders of Notes........................... 64
Section 9.03. Compliance with Trust Indenture Act........................ 65
Section 9.04. Revocation and Effect of Consents.......................... 65
Section 9.05. Notation on or Exchange of Notes........................... 65
Section 9.06. Trustee to Sign Amendments, etc............................ 66
ARTICLE 10
SUBORDINATION
Section 10.01. Agreement to Subordinate.................................. 66
Section 10.02. Liquidation; Dissolution; Bankruptcy...................... 66
Section 10.03. Default on Designated Senior Debt......................... 66
Section 10.04. Acceleration of Notes..................................... 67
Section 10.05. When Distribution Must Be Paid Over....................... 67
Section 10.06. Notice by the Company..................................... 67
Section 10.07. Subrogation............................................... 67
Section 10.08. Relative Rights........................................... 68
Section 10.09. Subordination May Not Be Impaired by the Company.......... 68
Section 10.10. Distribution or Notice to Representative.................. 69
Section 10.11. Rights of Trustee and Paying Agent........................ 69
Section 10.12. Authorization to Effect Subordination..................... 69
Section 10.13. Amendments................................................ 70
iii
<PAGE>
PAGE
ARTICLE 11
GUARANTEE OF NOTES
Section 11.01. Subsidiary Guarantee........................................ 70
Section 11.02. Execution and Delivery of Subsidiary Guarantee.............. 71
Section 11.03. Subsidiary Guarantors May Consolidate, etc., on
Certain Terms............................................... 71
Section 11.04. Releases Following Sale of Assets, Merger, Sale of
Capital Stock Etc........................................... 72
Section 11.05. Limitation on Subsidiary Guarantor Liability................ 73
Section 11.06. "Trustee" to Include Paying Agent........................... 73
ARTICLE 12
SUBORDINATION OF SUBSIDIARY GUARANTEE
Section 12.01. Agreement to Subordinate.................................... 73
Section 12.02. Liquidation; Dissolution; Bankruptcy........................ 73
Section 12.03. Default on Designated Senior Debt........................... 74
Section 12.04. Acceleration of Subsidiary Guarantees....................... 74
Section 12.05. When Distribution Must Be Paid Over......................... 74
Section 12.06. Notice by Subsidiary Guarantor.............................. 75
Section 12.07. Subrogation................................................. 75
Section 12.08. Relative Rights............................................. 75
Section 12.09. Subordination May Not Be Impaired by Subsidiary Guarantor... 76
Section 12.10. Distribution or Notice to Representative.................... 76
Section 12.11. Rights of Trustee and Paying Agent.......................... 77
Section 12.12. Authorization to Effect Subordination....................... 77
Section 12.13. Amendments.................................................. 77
ARTICLE 13
MISCELLANEOUS
Section 13.01. Trust Indenture Act Controls................................ 78
Section 13.02. Notices..................................................... 78
Section 13.03. Communication by Holders of Notes with Other Holders
of Notes.................................................... 79
Section 13.04. Certificate and Opinion as to Conditions Precedent.......... 79
Section 13.05. Statements Required in Certificate or Opinion............... 79
Section 13.06. Rules by Trustee and Agents................................. 80
Section 13.07. No Personal Liability of Directors, Officers, Employees and
Stockholders................................................ 80
Section 13.08. Governing Law............................................... 80
Section 13.09. No Adverse Interpretation of Other Agreements............... 80
Section 13.10. Successors.................................................. 80
Section 13.11. Severability................................................ 80
Section 13.12. Counterpart Originals....................................... 80
Section 13.13. Table of Contents, Headings, etc............................ 81
iv
<PAGE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFEROR
Exhibit C FORM OF CERTIFICATE FROM ACQUIRING INSTITUTIONAL
ACCREDITED INVESTOR
Exhibit D FORM OF SUBSIDIARY GUARANTEE
Exhibit E FORM OF SUPPLEMENTAL INDENTURE
v
<PAGE>
Exhibit 4.2
EXECUTION COPY
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of September 15, 1997
by and among
JITNEY-JUNGLE STORES OF AMERICA, INC.
SOUTHERN JITNEY JUNGLE COMPANY
MCCARTY-HOLMAN CO., INC.
INTERSTATE JITNEY-JUNGLE STORES, INC.
PUMP AND SAVE, INC.
DELTA ACQUISITION CORPORATION
DELCHAMPS, INC.
SUPERMARKET CIGARETTE SALES, INC.
and
. . . . . . . . . . . . . . DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CREDIT SUISSE FIRST BOSTON
================================================================================
<PAGE>
This Registration Rights Agreement (this "AGREEMENT") is made and
entered into as of September 15, 1997, by and among Jitney-Jungle Stores of
America, Inc., a Mississippi corporation (the "COMPANY"), Southern Jitney Jungle
Company, a Mississippi corporation, McCarty-Holman Co., Inc., a Mississippi
corporation, Interstate Jitney-Jungle Stores, Inc., an Alabama corporation, Pump
and Save, Inc., a Mississippi corporation, Delta Acquisition Corporation, an
Alabama corporation, Delchamps, Inc., an Alabama corporation ("DELCHAMPS"), and
Supermarket Cigarette Sales, Inc., a Louisiana corporation ("SCSI") (each a
"GUARANTOR" and, collectively, the "GUARANTORS"), and Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ") and Credit Suisse First Boston (each an
"INITIAL PURCHASER" and, collectively, the "INITIAL PURCHASERS"), each of whom
has agreed to purchase the Company's 10-3/8% Senior Subordinated Notes due 2007
(the "SENIOR SUBORDINATED NOTES") pursuant to the Purchase Agreement (as defined
below).
This Agreement is made pursuant to the Purchase Agreement, dated
September 10, 1997 (the "PURCHASE AGREEMENT"), by and among the Company, the
Guarantors and the Initial Purchasers. In order to induce the Initial
Purchasers to purchase the Senior Subordinated Notes, the Company has agreed to
provide the registration rights set forth in this Agreement. The execution and
delivery of this Agreement by each of the parties hereto (other than Delchamps
and SCSI) is a condition to the obligations of the Initial Purchasers set forth
in Section 3 of the Purchase Agreement. The parties acknowledge that the
execution and delivery of this Agreement by Delchamps and SCSI is conditioned
upon the Consummation (as that term is defined in the Purchase Agreement and not
as otherwise defined in this Agreement) of the Delchamps Tender Offer (as
defined in the Purchase Agreement).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
AFFILIATE: As defined in Rule 144 under the Act.
BUSINESS DAY: Any day except a Saturday, Sunday or other day in the
City of New York, or in the city of the corporate trust office of the Trustee,
on which banks are authorized to close.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
BROKER-DEALER TRANSFER RESTRICTED SECURITIES: New Senior Subordinated
Notes that are acquired by a Broker-Dealer in the Exchange Offer in exchange for
Senior Subordinated Notes that such Broker-Dealer acquired for its own account
as a result of market making activities or other trading activities (other than
Senior Subordinated Notes acquired directly from the Company or any of its
affiliates).
CERTIFICATED SECURITIES: As defined in the Indenture.
CLOSING DATE: The date hereof.
COMMISSION: The Securities and Exchange Commission.
<PAGE>
CONSUMMATE: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the New Senior Subordinated Notes to be issued in the Exchange
Offer, (b) the maintenance of such Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the
minimum period required pursuant to Section 3(b) hereof and (c) the delivery by
the Company to the Registrar under the Indenture of New Senior Subordinated
Notes in the same aggregate principal amount as the aggregate principal amount
of Senior Subordinated Notes tendered and not withdrawn by Holders thereof
pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Senior Subordinated Notes,
each Interest Payment Date.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Company under the Act of the
New Senior Subordinated Notes pursuant to the Exchange Offer Registration
Statement pursuant to which the Company shall offer the Holders of all
outstanding Senior Subordinated Notes the opportunity to exchange all such
outstanding Senior Subordinated Notes for New Senior Subordinated Notes in an
aggregate principal amount equal to the aggregate principal amount of the Senior
Subordinated Notes tendered in such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Initial Purchasers
propose to sell the Senior Subordinated Notes to certain "qualified
institutional buyers," as such term is defined in Rule 144A under the Act, and
to persons permitted to purchase the Senior Subordinated Notes in offshore
transactions in reliance upon Regulation S under the Act.
GLOBAL NOTEHOLDER: As defined in the Indenture.
HOLDERS: As defined in Section 2 hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated the Closing Date, among the Company,
the Guarantors and Marine Midland Bank, as trustee (the "TRUSTEE"), pursuant to
which the Notes are to be issued, as such Indenture is amended or supplemented
from time to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the Notes.
LIQUIDATED DAMAGES: As defined in Section 5.
NASD: National Association of Securities Dealers, Inc.
NEW SENIOR SUBORDINATED NOTES: The Company's new 10-3/8% Senior
Subordinated Notes due 2007 to be issued pursuant to the Indenture (i) in the
Exchange Offer or (ii) upon the request of any
2
<PAGE>
Holder of Senior Subordinated Notes covered by a Shelf Registration Statement,
in exchange for such Senior Subordinated Notes.
NOTES: The Senior Subordinated Notes and the New Senior Subordinated
Notes.
PERSON: An individual, partnership, corporation, trust,
unincorporated organization, or a government or agency or political subdivision
thereof.
PROSPECTUS: The prospectus included in a Registration Statement at
the time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
RECORD HOLDER: With respect to any Damages Payment Date, each Person
who is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Company and
the Guarantors relating to (a) an offering of New Senior Subordinated Notes
pursuant to an Exchange Offer or (b) the registration for resale of Transfer
Restricted Securities pursuant to the Shelf Registration Statement, in each
case, (i) which is filed pursuant to the provisions of this Agreement and (ii)
including the Prospectus included therein, all amendments and supplements
thereto (including post-effective amendments) and all exhibits and material
incorporated by reference therein.
RESTRICTED BROKER-DEALER: Any Broker-Dealer which holds Broker-Dealer
Transfer Restricted Securities.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each Note, until the earliest to
occur of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Restricted Broker-Dealer pursuant to
the "Plan of Distribution" contemplated by the Exchange Offer Registration
Statement (including delivery of the Prospectus contained therein) or (d) the
date on which such Note is distributed to the public pursuant to Rule 144 under
the Act.
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Company are sold to an underwriter for reoffering to the
public.
3
<PAGE>
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Purchase Agreement.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "HOLDER") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law (after the procedures set forth in Section 6(a)(i) below have been
complied with), the Company and the Guarantors shall (i) cause to be filed with
the Commission as soon as practicable after the Closing Date, but in no event
later than 45 days after the Closing Date, the Exchange Offer Registration
Statement, (ii) use its reasonable best efforts to cause such Exchange Offer
Registration Statement to become effective at the earliest possible time, but in
no event later than 120 days after the Closing Date, (iii) in connection with
the foregoing, (A) file all pre-effective amendments to such Exchange Offer
Registration Statement as may be necessary in order to cause such Exchange Offer
Registration Statement to become effective, (B) file, if applicable, a
post-effective amendment to such Exchange Offer Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the New Senior
Subordinated Notes to be made under the Blue Sky laws of such jurisdictions as
are reasonably requested by the Holders and are necessary to permit Consummation
of the Exchange Offer, and (iv) upon the effectiveness of such Exchange Offer
Registration Statement, commence and Consummate the Exchange Offer. The
Exchange Offer shall be on the appropriate form permitting registration of the
New Senior Subordinated Notes to be offered in exchange for the Senior
Subordinated Notes that are Transfer Restricted Securities and to permit sales
of Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no event shall
such period be less than 20 Business Days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Notes shall be included in the
Exchange Offer Registration Statement. The Company and the Guarantors shall use
their respective best efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 Business Days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Restricted Broker-Dealer who holds Senior Subordinated Notes
that are Transfer Restricted Securities and that were acquired for the account
of such Broker-Dealer as a result of market-making activities or other trading
activities, may exchange such Senior Subordinated Notes (other than Transfer
Restricted Securities acquired directly from the Company or any Affiliate of the
Company) pursuant to the Exchange Offer; however, such Broker-Dealer may be
deemed to be an "underwriter" within the meaning of the Act and must, therefore,
deliver
4
<PAGE>
a prospectus meeting the requirements of the Act in connection with its initial
sale of each New Senior Subordinated Note received by such Broker-Dealer in the
Exchange Offer, which prospectus delivery requirement may be satisfied by the
delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers that the Commission may
require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Broker-Dealer or disclose the amount of
Notes held by any such Broker-Dealer, except to the extent required by the
Commission as a result of a change in policy, rules or regulations after the
date of this Agreement.
If requested by any Restricted Broker-Dealer, the Company and the
Guarantors shall use their respective reasonable best efforts to keep the
Exchange Offer Registration Statement continuously effective, supplemented and
amended as required by the provisions of Section 6(c) below to the extent
necessary to ensure that it is available for sales of Broker-Dealer Transfer
Restricted Securities by such Restricted Broker-Dealer, and to ensure that such
Registration Statement conforms with the requirements of this Agreement, the Act
and the policies, rules and regulations of the Commission as announced from time
to time, for a period of 180 days from the date on which the Exchange Offer is
Consummated or such shorter period as will terminate when no Restricted
Broker-Dealer holds Broker-Dealer Transfer Restricted Securities.
The Company and the Guarantors shall promptly provide sufficient
copies of the latest version of such Prospectus to such Restricted Broker-Dealer
promptly upon request, and in no event later than one Business Day after such
request, at any time during the period referred to in the immediately preceding
paragraph in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Company is not required to file
an Exchange Offer Registration Statement with respect to the New Senior
Subordinated Notes because the Exchange Offer is not permitted by applicable law
or Commission policy (after the procedures set forth in Section 6(a)(i) below
have been complied with) or (ii) if any Holder of Transfer Restricted Securities
shall notify the Company within 20 days following the Consummation of the
Exchange Offer that (A) such Holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such Holder may not resell the
New Senior Subordinated Notes acquired by it in the Exchange Offer to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not appropriate or available for such resales by
such Holder or (C) such Holder is a Broker-Dealer and holds Senior Subordinated
Notes acquired directly from the Company or one of its Affiliates, then the
Company and the Guarantors shall (x) cause to be filed on or prior to 45 days
after the date on which the Company determines that it is not required to file
the Exchange Offer Registration Statement pursuant to clause (i) above or 30
days after the date on which the Company receives the notice specified in clause
(ii) above, a shelf registration statement pursuant to Rule 415 under the Act
(which may be an amendment to the Exchange Offer Registration Statement (in
either event, the "SHELF REGISTRATION STATEMENT")), relating to all Transfer
Restricted Securities the Holders of which shall have provided the information
required pursuant to Section 4(b) hereof, and (y) use their best efforts to
cause such Shelf Registration Statement to become effective on or prior to 120
days after the date on which the Company becomes obligated to file such Shelf
Registration Statement. If, after the Company has filed an Exchange Offer
Registration Statement which satisfies the requirements of Section 3(a) above,
the Company is required to file and
5
<PAGE>
make effective a Shelf Registration Statement solely because the Exchange Offer
shall not be permitted under applicable federal law, then the filing of the
Exchange Offer Registration Statement shall be deemed to satisfy the
requirements of clause (x) above. Such an event shall have no effect on the
requirements of clause (y) above. The Company and the Guarantors shall use
their respective reasonable best efforts to keep the Shelf Registration
Statement required by this Section 4(a) continuously effective, supplemented and
amended as required by and subject to the provisions of Sections 6(b) and (c)
hereof to the extent necessary to ensure that it is available for sales of
Transfer Restricted Securities by the Holders thereof entitled to the benefit of
this Section 4(a), and to ensure that it conforms with the requirements of this
Agreement, the Act and the policies, rules and regulations of the Commission as
announced from time to time, for a period of at least two years (as extended
pursuant to Section 6(c)(i)) following the date on which such Shelf Registration
Statement first becomes effective under the Act, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold. Notwithstanding the foregoing, following the date on
which such Shelf Registration Statement first becomes effective under the Act,
the Company may suspend the effectiveness of the Shelf Registration Statement by
written notice to the Holders for a period not to exceed 45 days in any calendar
year if (i) an event occurs and is continuing as a result of which the Shelf
Registration Statement would, in the Company's good faith judgment, contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading and (ii) (A) the Company
determines in good faith that the disclosure of such event at such time would
have a material adverse effect on the business, operations or prospects of the
Company and its subsidiaries, taken as a whole, or (B) the disclosure otherwise
relates to a previously undisclosed pending material business transaction, the
disclosure of which would impede the Company's ability to consummate such
transaction.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 15 days after receipt of a request therefor, the
information specified in Item 507 of Regulation S-K under the Act and such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary Prospectus included
therein. No Holder of Transfer Restricted Securities shall be entitled to
Liquidated Damages pursuant to Section 5 hereof unless and until such Holder
shall have used its best efforts to provide all such information. Each Holder
as to which any Shelf Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the date specified for such filing in
this Agreement, (ii) any such Registration Statement has not been declared
effective by the Commission on or prior to the date specified for such
effectiveness in this Agreement, (iii) the Exchange Offer has not been
Consummated within 30 Business Days after the Exchange Offer Registration
Statement is first declared effective by the Commission or (iv) any Registration
Statement required by this Agreement is filed and declared effective but, except
as permitted by Section 4(a) hereof, shall thereafter cease to be effective or
fail to be usable in connection with resales of Transfer Restricted Securities
during the periods specified herein and is not succeeded within 15 days by
another effective Registration Statement or by a post-effective amendment to
such Registration
6
<PAGE>
Statement that is itself declared effective immediately, in either case, that
cures such failure (each such event referred to in clauses (i) through (iv), a
"REGISTRATION DEFAULT"), then the Company and the Guarantors hereby jointly and
severally agree to pay liquidated damages (the "LIQUIDATED DAMAGES") to each
Holder of Transfer Restricted Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an amount
equal to $.05 per week per $1,000 principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the Liquidated Damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Transfer Restricted Securities with respect to each subsequent 90-day period
until all Registration Defaults have been cured, up to a maximum amount of
Liquidated Damages of $.40 per week per $1,000 principal amount of Transfer
Restricted Securities; PROVIDED that the Company and the Guarantors shall in no
event be required to pay Liquidated Damages for more than one Registration
Default at any given time. Notwithstanding anything to the contrary set forth
herein, (1) upon filing of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (i) above, (2)
upon the effectiveness of the Exchange Offer Registration Statement (and/or, if
applicable, the Shelf Registration Statement), in the case of (ii) above, (3)
upon Consummation of the Exchange Offer, in the case of (iii) above, or (4) upon
the filing of a post-effective amendment to the Registration Statement or an
additional Registration Statement that causes the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement) to again be
declared effective or made usable in the case of (iv) above, the Liquidated
Damages payable with respect to the Transfer Restricted Securities as a result
of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued Liquidated Damages shall be paid to the Global Noteholder
by wire transfer of immediately available funds or by federal funds check and to
Holders of Certificated Securities on each Damages Payment Date by wire transfer
to the accounts specified by them or by mailing checks to their registered
addresses if no such accounts have been specified. All accrued Liquidated
Damages with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such security shall have been
satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the sale of Broker-Dealer Transfer Restricted
Securities being sold in accordance with the intended method or methods of
distribution thereof, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company there is a substantial question as to whether the Exchange Offer is
permitted by applicable federal law, the Company and the Guarantors hereby
agree to seek a no-action letter or other favorable decision from the
Commission allowing the Company and the Guarantors to Consummate an
Exchange Offer for such Senior Subordinated Notes. The Company and the
Guarantors hereby agree to pursue the issuance of such a decision to the
Commission staff level but shall not be required to take commercially
unreasonable actions to effect a change in Commission policy. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all
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such other reasonable actions as are requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences
with the Commission, (B) delivering to the Commission staff an analysis
prepared by counsel to the Company setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an Affiliate of the Company, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the New Senior
Subordinated Notes to be issued in the Exchange Offer and (C) it is
acquiring the New Senior Subordinated Notes in its ordinary course of
business. Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Exchange Offer to participate
in a distribution of the securities to be acquired in the Exchange Offer
(1) could not under Commission policy as in effect on the date of this
Agreement rely on the position of the Commission enunciated in MORGAN
STANLEY AND CO., INC. (available June 5, 1991) and EXXON CAPITAL HOLDINGS
CORPORATION (available May 13, 1988), as interpreted in the Commission's
letter to Shearman & Sterling dated July 2, 1993, and similar no-action
letters (including, if applicable, any no-action letter obtained pursuant
to clause (i) above), and (2) must comply with the registration and
prospectus delivery requirements of the Act in connection with a secondary
resale transaction and that such a secondary resale transaction must be
covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K if the resales are of New Senior Subordinated Notes obtained
by such Holder in exchange for Senior Subordinated Notes acquired by such
Holder directly from the Company or an Affiliate thereof.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in MORGAN STANLEY AND CO., INC. (available June 5,
1991) and EXXON CAPITAL HOLDINGS CORPORATION (available May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the New Senior Subordinated Notes to be received in the
Exchange Offer and that, to the best of the Company's and each Guarantor's
information and belief, each Holder participating in the Exchange Offer is
acquiring the New Senior Subordinated Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the New Senior Subordinated Notes
received in the Exchange Offer and (C) any other undertaking or
representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable.
(b) SHELF REGISTRATION STATEMENT. In connection with any Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
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Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) GENERAL PROVISIONS. In connection with any Shelf Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities or any Exchange Offer
Registration Statement and the related Prospectus, to the extent, and only to
the extent, that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers, the
Company and the Guarantors shall:
(i) use their respective reasonable best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained therein
(A) to contain a material misstatement or omission or (B) not to be
effective and usable for resale of Transfer Restricted Securities during
the period required by this Agreement, the Company and the Guarantors shall
file promptly an appropriate amendment to such Registration Statement, (1)
in the case of clause (A), correcting any such misstatement or omission,
and (2) in the case of clauses (A) and (B), use their respective best
efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter.
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as may
be necessary to keep the applicable Registration Statement effective for
the applicable period set forth in Section 3 or 4 hereof, as the case may
be; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 under
the Act, and to comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner; and comply with the provisions of the Act
with respect to the disposition of all securities covered by such
Registration Statement during the applicable period in accordance with the
intended method or methods of distribution by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, confirm such advice in writing,
(A) when the Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to any applicable Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that requires the making of any
additions to or changes in the Registration Statement in order to make
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the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time;
(iv) furnish to the Initial Purchaser(s), each selling Holder
named in any Registration Statement or Prospectus and each of the
underwriter(s) in connection with such sale, if any, before filing with the
Commission, copies of any Registration Statement or any Prospectus included
therein or any amendments or supplements to any such Registration Statement
or Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment of such Holders and underwriter(s) in
connection with such sale, if any, for a period of at least five Business
Days, and the Company will not file any such Registration Statement or
Prospectus or any amendment or supplement to any such Registration
Statement or Prospectus (including all such documents incorporated by
reference) to which the selling Holders of the Transfer Restricted
Securities covered by such Registration Statement or the underwriter(s) in
connection with such sale, if any, shall reasonably object within five
Business Days after the receipt thereof. A selling Holder or underwriter,
if any, shall be deemed to have reasonably objected to such filing if such
Registration Statement, amendment, Prospectus or supplement, as applicable,
as proposed to be filed, contains a material misstatement or omission or
fails to comply with the applicable requirements of the Act;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders and to the
underwriter(s) in connection with such sale, if any, make the Company's and
the Guarantors' representatives available for discussion of such document
and other customary due diligence matters, and include such information in
such document prior to the filing thereof as such selling Holders or
underwriter(s), if any, reasonably may request;
(vi) if (a) a Shelf Registration Statement is filed pursuant to
Section 4 hereof or (b) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 3 hereof is required to be
delivered under the Act by any Restricted Broker-Dealer who seeks to sell
Broker-Dealer Transfer Restricted Securities during the period specified in
Section 3(c) hereof, make available for inspection by any Holder of such
Transfer Restricted Securities being sold, or each Restricted
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Transfer Restricted Securities, if any, and any
attorney, accountant or other agent retained by any such selling Holder or
each such Restricted Broker-Dealer, as the case may be, or underwriter
(collectively, the "INSPECTORS"), at the offices where normally kept,
during reasonable business hours, all financial and other records,
pertinent corporate documents and instruments of the Company and its
subsidiaries (collectively, the "RECORDS") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities,
and cause the officers, directors and employees of the Company and its
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement and Prospectus.
Each Inspector shall agree in writing that it will not disclose any records
that the Company determines, in good faith, to be
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confidential and that it notifies the Inspectors in writing are
confidential unless (w) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in such Registration Statement
or Prospectus, (x) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, (y)
disclosure of such information is necessary or advisable in connection with
any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon,
relating to or involving this Agreement or the Purchase Agreement, or any
transactions contemplated hereby or thereby or arising hereunder or
thereunder, or (z) the information in such Records has been made generally
available to the public; PROVIDED, HOWEVER, that such Inspector shall take
such actions as are reasonably necessary to protect the confidentiality of
such information (if practicable) to the extent such action is otherwise
not inconsistent with, an impairment of or in derogation of the rights and
interests of the Holder or any Inspector.
(vii) if requested by any selling Holders or the underwriter(s)
in connection with such sale, if any, promptly include in any Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included therein,
including, without limitation, information relating to the "Plan of
Distribution" of the Transfer Restricted Securities, information with
respect to the principal amount of Transfer Restricted Securities being
sold to such underwriter(s), the purchase price being paid therefor and any
other terms of the offering of the Transfer Restricted Securities to be
sold in such offering; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(viii) furnish to each selling Holder and each of the
underwriter(s) in connection with such sale, if any, without charge, at
least one copy of the Registration Statement, as first filed with the
Commission, and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including exhibits
incorporated therein by reference);
(ix) deliver to each selling Holder and each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Company and the
Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each of the selling
Holders and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(x) in connection with any Underwritten Offering pursuant to a
Shelf Registration Statement, enter into such agreements (including an
underwriting agreement) and make such representations and warranties and
take all such other actions in connection therewith as may be reasonably
requested by the managing underwriter in connection with any sale or resale
pursuant to any such Shelf Registration Statement contemplated by this
Agreement, and in such connection, the Company and the Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
best efforts to furnish) to each underwriter, at each closing under
such underwriting or similar agreement, as and to the extent required
thereunder:
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(1) a certificate, dated the date of such closing, signed
on behalf of the Company and each Guarantor by (x) the President
or any Vice President and (y) a principal financial or accounting
officer of the Company and such Guarantor, confirming, as of the
date thereof, the matters set forth in paragraphs (a) through (c)
of Section 9 of the Purchase Agreement and such other similar
matters as the underwriter(s) may reasonably request;
(2) an opinion, dated the date of such closing, of counsel
for the Company and the Guarantors covering matters similar to
those set forth in paragraphs (e), (f), (g) and (h) of Section 9
of the Purchase Agreement, and in any event including a statement
(which may be provided separately from the opinion) to the effect
that such counsel has no reason to believe that, as of the date
of the Prospectus contained in the Shelf Registration Statement,
such Prospectus, as amended or supplemented, if applicable
(except for the financial statements and the notes related
thereto and other financial, statistical and accounting data
included therein, as to which such counsel need not express any
belief) contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. In writing such letter with
respect to such matters, such counsel may state that their belief
is based upon their participation in the preparation of the Shelf
Registration Statement and any amendments or supplements thereto
and review and discussion of the contents thereof, but are
without independent check or verification except as specified;
and
(3) a customary comfort letter, dated the date of such
closing, from the Company's independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters to underwriters in connection with
primary underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9 of
the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any sale or resale
pursuant to any Shelf Registration Statement the indemnification
provisions and procedures of Section 8 hereof with respect to all
parties to be indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by the underwriter(s) to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company
and the Guarantors pursuant to this clause (x).
If at any time the representations and warranties of the Company and
the Guarantors contemplated in (A)(1) above cease to be true and correct in
any material respect, the Company and the Guarantors shall so advise the
underwriter(s) promptly and if requested by such Persons, shall confirm
such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
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the Transfer Restricted Securities covered by the applicable Registration
Statement; PROVIDED, HOWEVER, that neither the Company nor any Guarantor
shall be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would constitute general
consent to service of process in suits or to taxation in any jurisdiction
where it is not now so subject;
(xii) issue, upon the request of any Holder of Senior
Subordinated Notes covered by any Shelf Registration Statement contemplated
by this Agreement, New Senior Subordinated Notes having an aggregate
principal amount equal to the aggregate principal amount of Senior
Subordinated Notes surrendered to the Company by such Holder in exchange
therefor or being sold by such Holder; such New Senior Subordinated Notes
to be registered in the name of such Holder or in the name of the
purchaser(s) of such Notes, as the case may be; in return, the Senior
Subordinated Notes held by such Holder shall be surrendered to the Company
for cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and to register such Transfer
Restricted Securities in such denominations and such names as the Holders
or the underwriter(s), if any, may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) use their respective reasonable best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriter(s), if any, to consummate the
disposition of such Transfer Restricted Securities, subject to the proviso
contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have occurred,
prepare a supplement or post-effective amendment to the Registration
Statement or related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of Transfer Restricted Securities, the
Prospectus will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration Statement
covering such Transfer Restricted Securities and provide the Trustee under
the Indenture with printed certificates for the Transfer Restricted
Securities which are in a form eligible for deposit with the Depository
Trust Company;
(xvii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use their respective reasonable best efforts to cause such
Registration Statement to become effective and approved by such
governmental agencies or authorities as may be necessary
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to enable the Holders selling Transfer Restricted Securities to consummate
the disposition of such Transfer Restricted Securities;
(xviii) otherwise use their respective reasonable best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning with the first month of
the Company's first fiscal quarter commencing after the effective date of
the Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and
the Holders of Notes to effect such changes to the Indenture as may be
required for such Indenture to be so qualified in accordance with the terms
of the TIA; and execute and use its best efforts to cause the Trustee to
execute, all documents that may be required to effect such changes and all
other forms and documents required to be filed with the Commission to
enable such Indenture to be so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) RESTRICTIONS ON HOLDERS. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(i) or any notice from the Company of the existence of any fact of
the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus (the "Advice"). If
so directed by the Company, each Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of either such notice. In
the event the Company shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section 6(c)(i)
or Section 6(c)(iii)(D) hereof to and including the date when each selling
Holder covered by such Registration Statement shall have received the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof
or shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses (including
fees and expenses with respect to filings with the NASD (and, if applicable, the
fees and expenses of any "qualified independent underwriter" and its counsel)
that may be required by the rules and regulations
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of the NASD); (ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws; (iii) all expenses of printing (including
printing certificates for the New Senior Subordinated Notes to be issued in the
Exchange Offer and printing of Prospectuses), messenger and delivery services
and telephone; (iv) all fees and disbursements of counsel for the Company, the
Guarantors and, subject to paragraph 7(b) below, the Holders of Transfer
Restricted Securities; (v) all application and filing fees in connection with
listing the Notes on a national securities exchange or automated quotation
system pursuant to the requirements hereof; and (vi) all fees and disbursements
of independent certified public accountants of the Company and the Guarantors
(including the expenses of any special audit and comfort letters required by or
incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Holders of Transfer Restricted Securities being tendered in
the Exchange Offer and/or resold pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be chosen by the Holders
of a majority in principal amount of the Transfer Restricted Securities for
whose benefit such Registration Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and each of the Guarantors agrees, jointly and
severally, to indemnify and hold harmless each Holder, its directors, its
officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) such Holder, from and against any
and all losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses reasonably incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, preliminary Prospectus or Prospectus (or any
amendment or supplement thereto) provided by the Company or any Guarantor to any
Holder or prospective purchaser of Senior Subordinated Notes or caused by any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are (i) caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to a Holder furnished in writing to the Company by such
Holder (and not with respect to the information provided by any other Holder) or
(ii) caused by any untrue statement or omission, or any alleged untrue statement
or omission, made in the any preliminary Prospectus or Prospectus, but
eliminated or remedied in a final or amended Prospectus if (A) the Company shall
have previously furnished copies thereof to the Holders in accordance with this
Agreement, (B) a copy of the amended or final Prospectus was not sent or given
to such person at or prior to the written confirmation of such sale, (C) the
amended or final Prospectus would have completely corrected such untrue
statement or omission and (D) such allegations are upheld by a final judgement.
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(b) Each Holder of Transfer Restricted Securities agrees,
severally and not jointly, to indemnify and hold harmless the Company and the
Guarantors, and their respective directors and officers and each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or any Guarantor, to the same extent as the foregoing
indemnity from the Company and the Guarantors to each Holder but only with
reference to information relating to a Holder furnished in writing to the
Company by such Holder (and not with respect to the information provided by any
other Holder) expressly for use in any Registration Statement, preliminary
Prospectus or Prospectus or any amendment or supplement thereto.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Holders shall not be
required to assume the defense of such action pursuant to this Section 8(c), but
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holders). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable for any
settlement of any such action or proceeding effected without its prior written
consent (not to be unreasonably withheld) and if settled with its written
consent or if there is a final judgment for the plaintiff, the indemnifying
party agrees to indemnify and hold harmless the indemnified party to the extent
provided herein. Notwithstanding the immediately preceding sentence, if in any
case where the fees and expenses of counsel are at the expense of the
indemnifying party and an indemnified party shall have requested the
indemnifying party to reimburse the indemnified party for such fees and expenses
of counsel, such indemnifying party agrees that it shall be liable for any
settlement of any action effected without its written consent if (i) such
settlement is entered into more than thirty business days after the receipt by
such indemnifying party of the aforesaid request and (ii) such indemnifying
party shall have failed to reimburse the indemnified party in accordance with
such request for reimbursement prior to the date of such settlement (unless the
reasonableness of such fees and expenses of counsel is being contested in good
faith). No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry
16
<PAGE>
of judgment with respect to, any pending or threatened action in respect of
which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment includes an unconditional
release of the indemnified party from all liability on claims that are or could
have been the subject matter of such action.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the indemnified Holder, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and any Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Guarantors, on the one
hand, or such Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Guarantors, and the Holders, agree that it
would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Holders were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or judgments referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses incurred by such
indemnified party in connection with investigating or defending any matter,
including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Holder shall be required to contribute, in the aggregate, any
amount in excess of the amount by which the total received by such Holder with
respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Transfer Restricted Securities PLUS (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 8(d) are several in proportion to the respective principal
amount of Senior Subordinated Notes held by each of the Holders hereunder and
not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
SECTION 9. RULE 144A
17
<PAGE>
The Company and each Guarantor hereby agrees with each Holder, for so
long as any Transfer Restricted Securities remain outstanding and during any
period in which the Company or such Guarantor is not subject to Section 13 or
15(d) of the Securities Exchange Act, to make available, upon request of any
Holder of Transfer Restricted Securities, to any Holder or beneficial owner of
Transfer Restricted Securities in connection with any sale thereof and any
prospective purchaser of such Transfer Restricted Securities designated by such
Holder or beneficial owner, the information required by Rule 144A(d)(4) under
the Act in order to permit resales of such Transfer Restricted Securities
pursuant to Rule 144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in customary underwriting arrangements entered
into in connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment
bankers and manager or managers for any Underwritten Offering that will
administer such offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED that such investment bankers and managers must be
reasonably satisfactory to the Company. Such investment bankers and managers
are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) REMEDIES. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company and the Guarantors
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by them of the provisions of this Agreement and
hereby agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. Neither the Company nor any
Guarantor will, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with
rights granted to the holders of the Company's and the Guarantors' securities
under any agreement in effect on the date hereof.
(c) ADJUSTMENTS AFFECTING THE NOTES. Neither the Company nor any
Guarantor will take any action, or voluntarily permit any change to occur, with
respect to the Notes that would materially and adversely affect the ability of
the Holders to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained
18
<PAGE>
the written consent of Holders of all outstanding Transfer Restricted Securities
and (ii) in the case of all other provisions hereof, the Company has obtained
the written consent of Holders of a majority of the outstanding principal amount
of Transfer Restricted Securities. Notwithstanding the foregoing, a waiver or
consent to departure from the provisions hereof that relates exclusively to the
rights of Holders whose securities are being transferred or exchanged pursuant
to a Registration Statement and that does not affect directly or indirectly the
rights of other Holders whose securities are not being transferred or exchanged
pursuant to such Registration Statement may be given by the Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities
being transferred or exchanged pursuant to such Registration Statement.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Company or the Guarantors:
Jitney-Jungle Stores of America, Inc.
1770 Ellis Avenue
Suite 200
Jackson, Mississippi 39204
Telecopier No.: (601) 371-8665
Attention: Chief Financial Officer
With a copy to:
Dechert Price & Rhoads
30 Rockefeller Plaza
New York, New York 10112
Telecopier No.: (212) 698-3599
Attention: Bruce B. Wood
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless
19
<PAGE>
and to the extent such successor or assign acquired Transfer Restricted
Securities directly from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
JITNEY-JUNGLE STORES OF AMERICA, INC.
By:
-----------------------------------
Name:
Title:
SOUTHERN JITNEY JUNGLE COMPANY
By:
-----------------------------------
Name:
Title:
MCCARTY-HOLMAN CO., INC.
By:
-----------------------------------
Name:
Title:
INTERSTATE JITNEY-JUNGLE STORES, INC.
By:
-----------------------------------
Name:
Title:
PUMP AND SAVE, INC.
By:
-----------------------------------
Name:
Title:
DELTA ACQUISITION CORPORATION
By:
-----------------------------------
Name:
Title:
21
<PAGE>
DELCHAMPS, INC.
By:
-----------------------------------
Name:
Title:
SUPERMARKET CIGARETTE SALES, INC.
By:
-----------------------------------
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above
written by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
--------------------------------
Name:
Title:
22
<PAGE>
[Execution Copy]
AMENDED AND RESTATED
REVOLVING CREDIT AGREEMENT
Dated as of September 15, 1997
Among
JITNEY-JUNGLE STORES OF AMERICA, INC.,
SOUTHERN JITNEY JUNGLE COMPANY,
McCARTY- HOLMAN CO., INC.,
JITNEY- JUNGLE BAKERY, INC.,
PUMP AND SAVE, INC.,
INTERSTATE JITNEY JUNGLE STORES, INC.,
DELTA ACQUISITION CORPORATION,
DELCHAMPS, INC.,
THE GUARANTORS NAMED HEREIN,
THE LENDERS NAMED HEREIN,
DLJ CAPITAL FUNDING, INC., AS DOCUMENTATION AGENT
and
FLEET CAPITAL CORPORATION, AS AGENT
<PAGE>
AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT, dated as of
September 15, 1997, among JITNEY-JUNGLE STORES OF AMERICA, INC., a
Mississippi corporation ("Jitney Jungle"), SOUTHERN JITNEY JUNGLE
COMPANY, a Mississippi corporation and a wholly-owned subsidiary of
Jitney Jungle ("Southern Jitney"), McCARTY-HOLMAN CO., INC., a
Mississippi corporation and a wholly-owned subsidiary of Jitney
Jungle ("McCarty-Holman"), JITNEY- JUNGLE BAKERY, INC., a
Mississippi corporation and a wholly-owned subsidiary of Jitney
Jungle ("Bakery"), PUMP AND SAVE, INC., a Mississippi corporation
and a wholly-owned subsidiary of McCarty-Holman ("Pump And Save"),
INTERSTATE JITNEY JUNGLE STORES, INC., an Alabama corporation and a
wholly-owned subsidiary of Jitney Jungle ("Interstate"), DELTA
ACQUISITION CORPORATION, an Alabama corporation and a wholly-owned
subsidiary of Jitney Jungle ("Acquisition Corp."), DELCHAMPS, INC.,
an Alabama corporation and upon the purchase of the Tendered
Securities on the date hereof and as contemplated hereby, a
subsidiary of Acquisition Corp. ("Delchamps" and together with
Jitney Jungle, Southern Jitney, McCarty-Holman, Bakery, Pump And
Save, Interstate and Acquisition Corp., each a "Borrower" and
collectively, the "Borrowers"), the Guarantors signatory hereto, the
lenders named in Schedule 2.01 annexed hereto (collectively with
their respective permitted successors and assigns, the "Lenders"),
DLJ CAPITAL FUNDING, INC. ("DLJ"), as documentation agent for the
Lenders (in such capacity together with any successor thereto in
such capacity, the "Documentation Agent") and FLEET CAPITAL
CORPORATION ("Fleet"), as agent for the Lenders (in such capacity
together with any successor thereto in such capacity, the "Agent").
Capitalized terms used in this paragraph shall have the respective
meanings ascribed to such terms above or hereinafter.
Certain of the Borrowers and the Guarantors, all or some of the
Lenders (in such capacity, the "Existing Lenders"), and Fleet Bank, N.A.
(formerly known as NatWest Bank N.A.), as agent (in such capacity, the
"Existing Agent") are parties to the Revolving Credit Agreement, dated as of
March 5, 1996 (as heretofore amended and in effect on the date hereof,
together with the Exhibits and Schedules thereto, the
<PAGE>
"Existing Credit Agreement"), providing for loans to be made to, and letters
of credit to be issued for the account of, the Borrowers in the aggregate
principal and/or face amount not exceeding $96,250,000 at any one time
outstanding. Immediately prior to the execution and delivery of this
Agreement, (i) Fleet succeeded to the position of the Existing Agent as Agent
under the Existing Credit Agreement and (ii) Fleet acquired from Fleet Bank,
a Lender under the Existing Credit Agreement, an assignment of its Commitment
and outstanding Loans thereunder.
The Borrowers have informed the Agent and the Lenders that they
desire to acquire the Target Stock of the Target Company upon the terms and
conditions set forth herein and in the Merger Documents and the Tender Offer
Documents. In connection therewith, the Borrowers have jointly and severally
applied to the Lenders for Loans on a revolving basis up to an aggregate
principal amount of $150,000,000 to be made at any time and from time to time
prior to the Termination Date. The proceeds of the Loans shall be used by
the Borrowers (i) to refinance the Indebtedness under the Existing Credit
Agreement outstanding on the Initial Closing Date on the terms set forth
herein, (ii) to provide a portion of the funds necessary (but not to exceed
$0) for the tender offer consideration pursuant to the Tender Offer on the
Initial Closing Date, (iii) to provide a portion of the funds necessary (but
not to exceed $24,500,000) for the merger consideration payable under the
Merger Agreement in connection with the merger of Acquisition Corp. with and
into the Target Company on the Merger Closing Date, (iv) to repay certain
Indebtedness of the Target Company and its subsidiaries outstanding on the
Initial Closing Date (but not to exceed $16,225,000), (v) to pay fees and
expenses in connection with the financing contemplated hereby and the
transactions contemplated by the Merger Agreement (but not to exceed
$27,000,000) and (vi) for the working capital and general corporate purposes
of the Borrowers to the extent that such purposes are permitted hereunder.
The Lenders are severally, and not jointly, willing to extend such Loans to
the Borrowers subject to the terms and conditions hereinafter set forth.
Accordingly, the Borrowers, the Guarantors, the Lenders and the Agent hereby
agree to amend and restate the Existing Credit Agreement as follows:
I. DEFINITIONS
For purposes hereof, the following terms shall have the meanings
specified below:
"Acquisition" shall mean, collectively, the transactions contemplated
under the Merger Agreement which will result in the Merger.
"Acquisition Corp." shall have the meaning assigned to such term in
the preamble to this Agreement.
"Acquisition Securities" shall mean the Common Stock of Jitney Jungle,
<PAGE>
15% Class A Senior Exchangeable Preferred Stock of Jitney Jungle, 10% Class B
Compounding Cumulative Redeemable Preferred Stock of Jitney Jungle, 10% Class
C Compounding Cumulative Redeemable Preferred Stock of Jitney Jungle, the
Senior Notes and the Warrants to Purchase Common Stock of Jitney Jungle, each
with such terms, rights and premiums as in effect on the Original Closing
Date, except with respect to the Senior Notes, which shall be with such
terms, rights and premiums as in effect on the Initial Closing Date.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar Loan
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the product of (i) the LIBO Rate
in effect for such Interest Period and (ii) Statutory Reserves. For purposes
hereof, "Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including,
without limitation, any marginal, special, emergency, or supplemental
reserves) expressed as a decimal established by the Board and any other
banking authority to which any Lender is subject with respect to the Adjusted
LIBO Rate for Eurocurrency Liabilities (as defined in Regulation D). Such
reserve percentages shall include, without limitation, those imposed under
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to any Lender under
Regulation D. Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Affiliate" of any person shall mean any other person which,
directly or indirectly, controls or is controlled by or is under common
control with such person and, without limiting the generality of the
foregoing, includes (i) any other person which beneficially owns or holds 5%
or more of any class of voting securities of such person or 5% or more of the
equity interest in such person, (ii) any person of which such person
beneficially owns or holds 5% or more of any class of voting securities or in
which such person beneficially owns or holds 5% or more of the equity
interest in such person and (iii) any director, officer or partner of such
person. For the purposes of this definition, the term "control" (including,
with correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the ownership of
voting securities or by contract or otherwise.
"Agent" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Aircraft" shall have the meaning assigned to such term in the
Chattel Mortgage.
<PAGE>
"Anticipated Reinvestment Amount" shall mean, with respect to any
Reinvestment Election, the amount specified in the Reinvestment Notice
delivered by the relevant Borrower in connection therewith as the amount of
the Net Cash Proceeds from the related Asset Sale that such Borrower intends
to use to purchase, construct or otherwise acquire Reinvestment Assets.
"Applicable Lending Office" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of a Base Rate Loan
and such Lender's Eurodollar Lending Office in the case of a Eurodollar Loan.
"Applicable Margin" shall mean, from the Initial Closing Date
through the Initial Adjustment Date, (i) in the case of Loans which are Base
Rate Loans, three-quarters of one percent (0.75%), and (ii) in the case of
Loans which are Eurodollar Loans, two percent (2.00%), and on and after the
Initial Adjustment Date (x) in the case of Loans which are Base Rate Loans,
one percent (1.00%), minus the then applicable Reduction Discount, if any,
and (y) in the case of Loans which are Eurodollar Loans, two and one-quarter
percent (2.25%), minus the then applicable Reduction Discount, if any.
"Asset Sale" shall mean the sale, transfer or other disposition by
any Borrower, any Guarantor or any subsidiary of any of them to any person
other than a Borrower or a Guarantor of any asset of such Borrower, such
Guarantor or such subsidiary (other than sales in the ordinary course of
business of inventory).
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee and accepted by the Agent, in
substantially the form of Exhibit E annexed hereto.
"Assignment of Contract" shall mean the Assignment of Contract As
Collateral Security, dated as of March 5, 1996, as heretofore amended and as
amended and restated as of the date hereof among the Borrowers and the Agent,
for the benefit of the Secured Parties, substantially in the form of Exhibit
G, annexed hereto, as amended, modified or supplemented from time to time.
"Bakery" shall have the meaning assigned to this term in the
preamble to this Agreement.
"Base Rate" shall mean a variable rate of interest per annum equal
to the higher of (i) the Prime Rate then in effect and (ii) the Federal Funds
Effective Rate then in effect plus one-half of one percent (1/2%). Any
change in the Base Rate shall be effective hereunder on the effective date of
such change as determined by the Agent.
"Base Rate Loan" shall mean a Loan bearing interest based on the
Base
<PAGE>
Rate in accordance with Article II hereof.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning assigned to such term in the
preamble to this Agreement.
"Borrowers" shall refer to all of the Borrowers on a collective
basis.
"Borrowing Base" shall have the meaning assigned to such term in
Section 2.01(a)(i) hereof.
"BRS" shall mean Bruckmann, Rosser, Sherrill & Co., L.P., together
with its successors and assigns.
"Business Day" shall mean any day, other than a Saturday, Sunday or
legal holiday in the State of New York, on which banks are open for
substantially all their banking business in New York City, except that if any
determination of a "Business Day" shall relate to a Eurodollar Loan, the term
"Business Day" shall in addition exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean the amount of all purchases made
by the Borrowers or any of their respective subsidiaries directly or
indirectly for the purpose of acquiring, constructing or maintaining fixed
assets, real property or equipment which, in accordance with generally
accepted accounting principles, would be added as a debit to the fixed asset
account of any such Borrower or any such subsidiary (excluding fixed assets
acquired relating to Capitalized Lease Obligations and fixed assets acquired
pursuant to a financing permitted under Section 7.01(e) of this Agreement
(other than with respect to the down payment for such fixed assets))
including the acquisition cost of assets of any kind (but not the acquisition
cost paid for inventory) which are acquired in connection with an acquisition
or purchase permitted by this Agreement. For purposes of this definition,
the purchase price paid with respect to equipment, fixed assets or real
property which is purchased simultaneously with the trade-in or sale of
existing equipment, fixed assets, or real property owned by any Borrower or
any of its subsidiaries or with insurance proceeds (regardless of whether
such proceeds are first applied to prepay the Loans) or cash landlord/vendor
allowances shall be included in Capital Expenditures only to the extent of
the gross amount of such purchase price paid less the credit granted by the
seller of such equipment for the equipment being traded in at such time, the
purchase price of such existing equipment or the amount of such proceeds or
allowances, as the case may be.
<PAGE>
"Capitalization Documents" shall mean, collectively: (i) any or
all of the stock certificates, notes or debentures representing Acquisition
Securities; (ii) the other documents pursuant to which such Acquisition
Securities are issued or to be issued; (iii) each document governing the
issuance of, or setting forth the terms of such Acquisition Securities; and
(iv) any stockholders or intercreditor agreement between or among the holders
of such Acquisition Securities, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith, in each
case as in effect on the Original Closing Date and as amended, modified or
supplemented from time to time in accordance with the terms thereof and
subject to the terms of Section 7.18 hereof.
"Capitalized Lease Obligation" shall mean an obligation to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real and/or personal property which obligation is required to be
classified and accounted for as a capital lease on a balance sheet prepared
in accordance with generally accepted accounting principles, consistently
applied, and for purposes hereof the amount of such obligation shall be the
capitalized amount thereof determined in accordance with such principles.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred
payment pursuant to a note receivable issued in connection with such Asset
Sale, other than the portion of such deferred payment constituting interest,
but only as and when so received) received by a Borrower, a Guarantor or any
subsidiary of any of them from such Asset Sale.
"Change of Control" shall mean any of the following: (i) BRS shall
fail to own, beneficially and of record all voting rights with respect to, at
least 35% of all of the issued and outstanding shares of each class of voting
stock of Jitney Jungle, or (ii) BRS shall cease to own capital stock of
Jitney Jungle entitling it, at the time a determination is made hereunder, to
cast the votes required to elect a majority of members of the Board of
Directors of Jitney Jungle or (iii) Jitney Jungle shall fail to own,
beneficially and all voting rights with respect to, 100% of all of the issued
and outstanding shares of each class of capital stock of each of its
subsidiaries (other than the Target Company following the Tender Offer for
the Target Stock but prior to the Merger Closing Date), (iv) the occurrence
of a "Change of Control" (as such term is defined in the Senior Indenture)
under the Senior Indenture or (v) the occurrence of a "Change of Control" (as
such term is defined in the Senior Subordinated Indenture) under the Senior
Subordinated Indenture.
"Chattel Mortgage" shall mean the Chattel Mortgage - Security
Agreement, dated as of March 5, 1996, between the Grantor and the Agent, for
the benefit of the Secured Parties, as amended, modified or supplemented from
time to time.
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all collateral and security as described in
the Security Documents.
"Commitment" shall mean, with respect to each Lender, the Commitment
of such Lender as set forth in Schedule 2.01 annexed hereto, as it may be
adjusted from time to time pursuant to Section 2.07.
"Commitment Fee" shall mean, from the Initial Closing Date through
the Initial Adjustment Date, 0.425 percent (0.425%) per annum, and on and
after the Initial Adjustment Date, one-half of one percent (0.50%) per annum,
minus the then applicable Reduction Discount, if any.
"Commitment Letter" shall mean the letter agreement, dated July 7,
1997, by Fleet to Jitney Jungle, as in effect on the Initial Closing Date and
as amended, supplemented or modified from time to time in writing by Fleet
and Jitney Jungle.
"Consolidated" shall mean, in respect of any person, as applied to
any financial or accounting term, such term determined on a consolidated
basis in accordance with generally accepted accounting principles (except as
otherwise required herein) for the person and all consolidated subsidiaries
thereof.
"Credit Event" shall mean each borrowing of a Loan and each issuance
of a Letter of Credit hereunder.
"Default" shall mean any condition, act or event which, with notice
or lapse of time or both, would constitute an Event of Default.
"Delchamps" shall have the meaning assigned to this term in the
preamble to this Agreement.
"Documentation Agent" shall have the meaning assigned to this term
in the preamble to this Agreement.
"dollars" or the symbol "$" shall mean dollars in lawful currency of
the United States of America.
"Domestic Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" opposite
its name in Schedule 2.02 annexed hereto, or such other office of such Lender
as such Lender may from time to time specify to the Borrowers and the Agent.
<PAGE>
"EBITDA" shall mean, for any period, the sum of (i) Net Income
(before any (A) extraordinary and non-recurring non-cash gains, (B)
extraordinary and non-recurring non-cash losses and (C) non-cash gains or
losses from assets held for sale), (ii) Interest Expense to the extent
deducted in determining Net Income for such period, (iii) depreciation and
amortization expense to the extent deducted in determining Net Income for
such period, (iv) cash federal, state and local income taxes to the extent
deducted in determining Net Income for such period and (v) increases in LIFO
reserves to the extent deducted in determining Net Income for such period, in
each case of the Borrowers and their respective subsidiaries for such period
determined on a Consolidated basis, computed and calculated in accordance
with generally accepted accounting principles.
"Eligible Assignee" shall mean a commercial bank, finance company,
insurance company, fund or other financial institution acceptable to the
Agent.
"Eligible Inventory" shall mean inventory owned by a Borrower which
is not, in the judgment of the Agent, obsolete or unmerchantable and is and
at all times shall continue to be acceptable to the Agent in its good faith
judgment in all respects but shall in any event include only finished goods
and shall not in any event include liquor and other alcoholic beverages,
delicatessen, produce, intercompany profit, print shop materials, gasoline
and/or grocery warehouse supplies, such categories of inventory to be
determined in a manner consistent in each case with the historical practices
and procedures of Jitney Jungle and its subsidiaries as heretofore presented
to the Agent and the Lenders. Standards of eligibility may be fixed and
revised from time to time solely by the Agent in the Agent's exclusive
judgment exercised in good faith. In determining eligibility, the Agent may,
but need not, rely on reports and schedules furnished by any Borrower, but
reliance by the Agent thereon from time to time shall not be deemed to limit
the right of the Agent to revise standards of eligibility at any time as to
both present and future inventory of such Borrower.
"Environmental Claim" shall mean any written notice of violation,
claim, demand, abatement or other order by any governmental authority or any
person for personal injury (including sickness, disease or death), tangible
or intangible property damage, damage to the environment, nuisance,
pollution, contamination or other adverse effects on the environment, or for
fines, penalties or deed or use restrictions, resulting from or based upon
(i) the existence, or the continuation of the existence, of a Release
(including, without limitation, sudden or non-sudden, accidental or
nonaccidental Releases), of, or exposure to, any Hazardous Material in, into
or onto the environment (including, without limitation, the air, ground,
water or any surface) at, in, by or from any of the properties of a Borrower
or its subsidiaries, (ii) the environmental aspects of the transportation,
storage, treatment or disposal of Hazardous Materials in connection with the
operation of any of the properties of a Borrower or its subsidiaries or (iii)
the violation, or alleged violation by a Borrower or any of its subsidiaries,
of any Environmental Laws relating to any of the properties of a Borrower or
its subsidiaries.
<PAGE>
"Environmental Laws" shall mean the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601 et seq.),
the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),
the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et seq.), the
Oil Pollution Act of 1990 (P.L. 101-380), the Safe Drinking Water Act (42
U.S.C. Section 300(f), et seq.), the Clear Air Act (42 U.S.C. Section 7401
et seq.), the Toxic Substances Control Act, as amended (15 U.S.C. Section
2601 et seq.), the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136 et seq.), and the Occupational Safety and Health Act (29
U.S.C. Section 651 et seq.), as such laws have been and hereafter may be
amended or supplemented, and any related or analogous present or future
Federal, state or local, statutes, rules, regulations, ordinances, licenses,
permits and interpretations and orders of regulatory and administrative
bodies.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder, as in
effect from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) which together with any person or a subsidiary of such person
would be treated as a single employer under the provisions of Title I or
Title IV of ERISA.
"Eurodollar Lending Office" shall mean, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office"
opposite its name in Schedule 2.03 annexed hereto (or, if no such office is
specified, its Domestic Lending Office), or such other office of such Lender
as such Lender may from time to time specify to the Borrowers and the Agent.
"Eurodollar Loan" shall mean a Loan bearing interest based on the
Adjusted LIBO Rate in accordance with Article II hereof.
"Event of Default" shall have the meaning assigned to such term in
Article VIII hereof.
"Excess Cash Flow" means, for any period, without duplication, (i)
the sum for such period of (A) Net Income, (B) depreciation and amortization
expenses of the Borrowers and their respective subsidiaries for such period,
to the extent the same are deducted from net revenues in determining Net
Income for such period, (C) the change (with such change being deemed to be a
positive number in the event of an increase and such change being deemed to
be a negative number in the event of a decrease) in deferred tax liabilities
of the Borrowers and their respective subsidiaries during such period, (D)
other non-cash items of the Borrowers and their respective subsidiaries
properly deducted in arriving at Net Income for such period, and (E) the
<PAGE>
change (with such change being deemed to be a negative number to the extent
that it shall have resulted in an increase in Net Income for such period and
such change being deemed to be a positive number to the extent that it shall
have resulted in a decrease in Net Income for such period) in deferred tax
assets of the Borrowers and their respective subsidiaries during such period,
minus (ii) the sum for such period of (A) the aggregate amount actually paid
by the Borrowers and their respective subsidiaries in cash during such period
on account of Capital Expenditures (including payments in respect of
Capitalized Lease Obligations), (B) the aggregate amount actually
distributed by the Borrowers and their respective subsidiaries in cash during
such period in respect of dividends on or other distributions, redemptions or
other retirements of capital stock of any Borrower or subsidiary thereof, in
accordance with the provisions of this Agreement, (C) reserves taken and
occasioned by the closing of store locations, and (D) the aggregate of
principal payments (whether regularly scheduled payments, voluntary or
mandatory prepayments (including, without limitation, by reason of any
reduction of the Total Commitment and/or the Supplemental Availability) or
occurring by reason of acceleration or otherwise) of all Indebtedness
(including, without limitation, Capitalized Lease Obligations, Indebtedness
issued under the Senior Indenture and Indebtedness issued under the Senior
Subordinated Indenture) made or scheduled to have been made by the Borrowers
and their respective subsidiaries during such period (other than principal
payments on Loans except to the extent paid to permanently reduce the Total
Commitment and/or the Supplemental Availability), determined on a
Consolidated basis in accordance with generally accepted accounting
principles.
"Existing Credit Agreement" shall have the meaning assigned to such
term in the introductory paragraphs to this Agreement.
"Existing Lenders" shall have the meaning assigned to such term in
the introductory paragraphs to this Agreement.
"Existing Letters of Credit" shall mean the letters of credit issued
under the Existing Credit Agreement and outstanding on the Initial Closing
Date, all of which are listed on Schedule IV annexed hereto.
"Existing Loans" shall mean the "Loans" outstanding on the Initial
Closing Date under (and as defined in) the Existing Credit Agreement.
"Existing Security Documents" shall mean the "Security Documents" as
defined in the Existing Credit Agreement.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business Day, the
average for the quotations
<PAGE>
for the day of such transactions received by the Agent from three Federal
funds brokers of recognized standing selected by it.
"Fee Letter" shall mean that certain Fee Letter, dated July 7, 1997,
by Fleet to Jitney Jungle and accepted by Jitney Jungle, as amended, modified
or supplemented from time to time in writing by Fleet and Jitney Jungle.
"Final Maturity Date" shall mean the six and one-half year
anniversary of the Initial Closing Date.
"Financial Officer" shall mean, with respect to any person, the
chief financial officer, chief accounting officer or treasurer of such person.
"FIRREA" shall mean the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended and supplemented from time to time.
"fiscal month" shall mean each of the thirteen consecutive four-week
periods of the Borrowers used for accounting purposes and ending on the dates
designated as fiscal month-ends in Schedule II annexed hereto.
"fiscal quarter" shall mean each of the four fiscal quarters of each
fiscal year of the Borrowers used for accounting purposes and ending on the
dates designated as fiscal quarter-ends in Schedule II annexed hereto.
"Fiscal Year" shall mean the fiscal year of the Borrowers for
accounting purposes which ends on the dates designated as fiscal year-ends in
Schedule II annexed hereto.
"Fixed Charge Coverage Ratio" shall mean, for any fiscal period, the
ratio of (i) EBITDA of the Borrowers and their respective subsidiaries for
the four most recent consecutive fiscal quarters ending on or prior to the
date of determination to (ii) the sum of, without duplication, (A) Interest
Expense, (B) Capital Expenditures, (C) cash dividends paid by, or other
distributions, redemptions, repurchases or retirements of capital stock of,
the Borrowers and their respective subsidiaries, (D) taxes actually paid by
the Borrowers and their respective subsidiaries in cash and (E) the aggregate
of principal payments (whether regularly scheduled payments, voluntary or
mandatory prepayments (including, without limitation, by reason of any
reduction of the Total Commitment and/or the Supplemental Availability) or
occurring by reason of acceleration or otherwise) of all Indebtedness
(including, without limitation, Capitalized Lease Obligations, Indebtedness
issued under the Senior Indenture and under the Senior Subordinated
Indenture) made or scheduled to have been made by the Borrowers and their
respective subsidiaries (other than principal payments on Loans except to the
extent paid to permanently reduce the Total Commitment and/or the
Supplemental Availability), for such four-quarter period, in each case
determined on a
<PAGE>
Consolidated basis in accordance with generally accepted accounting principles.
"Fleet" shall have the meaning assigned to such term in the preamble
to this Agreement.
"Fleet Bank" shall mean Fleet Bank, N.A.
"FTC Divestiture Stores" shall mean the Borrowers' stores required
to be sold in connection with the Borrowers' divestiture plan with the
Federal Trade Commission, as listed on Schedule V annexed hereto.
"Grantor" shall mean any Assignor, Grantor, Pledgor, Mortgagor or
Debtor, as such terms are defined in any of the Security Documents.
"Guarantee" shall mean any obligation, contingent or otherwise, of
any person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or obligation of any other person in any manner, whether
directly or indirectly, and shall in any event include any guarantee under
Article XII hereof, and shall include, without limitation, any obligation of
such person, direct or indirect, to (i) purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or obligation or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness or obligation, (ii) purchase property,
securities or services for the purpose of assuring the owner of such
Indebtedness or obligation of the payment of such Indebtedness or obligation,
or (iii) maintain working capital, equity capital, available cash or other
financial condition of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or obligation; provided, however, that the
term Guarantee shall not include endorsements for collection or collections
for deposit, in either case in the ordinary course of business.
"Guarantor" shall mean, collectively, each Borrower and each
subsidiary thereof or any subsidiary of any Borrower which becomes a
guarantor of the Obligations after the date hereof.
"Hazardous Material" shall mean any pollutant, contaminant,
chemical, or industrial or hazardous, toxic or dangerous waste, substance or
material, defined or regulated as such in (or for purposes of) any
Environmental Law and any other toxic, reactive, or flammable chemicals,
including (without limitation) any asbestos, any petroleum (including crude
oil or any fraction), any radioactive substance and any polychlorinated
biphenyls; provided, in the event that any Environmental Law is amended so as
to broaden the meaning of any term defined thereby, such broader meaning
shall apply subsequent to the effective date of such amendment; provided,
further, to the extent that the applicable laws of any state establish a
meaning for "hazardous material," "hazardous substance," "hazardous waste,"
"solid waste" or "toxic substance" which is broader than that specified in
any federal Environmental Law, such broader meaning shall apply.
<PAGE>
"Indebtedness" shall mean, with respect to any person, without
duplication, (i) all obligations of such person for borrowed money or with
respect to deposits or advances of any kind, (ii) all obligations of such
person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such person for the deferred purchase price of
property or services, except current accounts payable arising in the ordinary
course of business and not overdue or being contested in good faith, (iv) all
obligations of such person under conditional sale or other title retention
agreements relating to property purchased by such person, (v) all payment
obligations of such person with respect to interest rate or currency
protection agreements, (vi) all obligations of such person as an account
party under any letter of credit or in respect of bankers' acceptances, (vii)
all obligations of any third party secured by property or assets owned by
such person (regardless of whether or not such person is liable for repayment
of such obligations), (viii) all Guarantees of such person and (ix) all
obligations of such person as lessee under leases the expenditures under
which are Capitalized Lease Obligations.
"Indemnitees" shall have the meaning assigned to such term in
Section 11.04(c) hereof.
"Information" shall have the meaning assigned to such term in
Section 11.11 hereof.
"Initial Adjustment Date" shall mean the date on which the Borrowers
deliver to the Agent the financial statements with respect to the fiscal
quarter ending January 10, 1998.
"Initial Closing Date" shall mean the date of the first Loan, but in
no event later than September 30, 1997.
"Intercompany Indebtedness" shall mean, with respect to any
Borrower, Indebtedness of such person to any subsidiary thereof or any other
Borrower or any subsidiary thereof, incurred in the ordinary course of
business.
"Intercompany Loans" shall mean, with respect to any Borrower, loans
made by such person to any subsidiary thereof or any other Borrower or any
subsidiary thereof, in the ordinary course of such Borrower's business.
"Interest Coverage Ratio" shall mean, for any fiscal period, the
ratio of (i) EBITDA of the Borrowers and their respective subsidiaries for
the four most recent consecutive fiscal quarters ending on or prior to the
date of determination, to (ii) Interest Expense of the Borrowers and their
respective subsidiaries for such four-quarter period.
<PAGE>
"Interest Expense" shall mean, for any fiscal period, the interest
expense paid or payable in cash of the Borrowers and their respective
subsidiaries during such fiscal period determined on a Consolidated basis in
accordance with generally accepted accounting principles, and shall in any
event include, without limitation, interest on Capitalized Lease Obligations
for such fiscal period.
"Interest Payment Date" shall mean (i) in the case of a Base Rate
Loan, the last Business Day of each March, June, September and December,
commencing September 30, 1997, and (ii) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable thereto, and, in addition, in
respect of any Eurodollar Loan of more than three (3) months' duration, each
earlier day which is three (3) months after the first day of such Interest
Period.
"Interest Period" shall mean, as to any Eurodollar Loan, the period
commencing on the date of such Eurodollar Loan and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on the
last day) in the calendar month that is one (1), two (2), three (3) or six
(6) months thereafter, as the Borrowers may elect with respect to such
Eurodollar Loan in accordance with the terms hereof; provided, however, that
(x) if an Interest Period would end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless,
with respect to such Eurodollar Loan, such next succeeding Business Day would
fall in the next calendar month, in which case such Interest Period shall end
on the next preceding Business Day, (y) no Interest Period shall end later
than the Final Maturity Date and (z) interest shall accrue from and including
the first day of an Interest Period to but excluding the last day of such
Interest Period.
"Interstate" shall have the meaning assigned to this term in the
preamble to this Agreement.
"Investor Group" shall mean BRS, DLJ Merchant Banking Partners L.P.
and such other investors as are set forth on Schedule I annexed hereto.
"IRB Indebtedness" shall mean the Indebtedness with respect to the
City of Jackson, Mississippi Industrial Revenue Bonds (McCarty-Holman Co.,
Inc. Project), Series 1985, in the aggregate outstanding amount of $3,650,000.
"IRB Trustee" shall mean SunTrust Bank, Atlanta, as trustee under
the trust indenture relating to the IRB Indebtedness.
"Landlord Waiver" shall mean a landlord's or bailee's agreement with
respect to each property of a Borrower subject to a lease substantially in
the form of Exhibit H hereto or as agreed to by Agent.
"Lender" shall have the meaning assigned to such term in the
preamble to this Agreement.
<PAGE>
"Letter of Credit" shall have the meaning assigned such term in
Section 2A.01 hereof.
"Letter of Credit Issuer" shall mean Fleet, Fleet Bank , Fleet
National Bank or any other Lender which, with the consent of the Agent,
agrees, in such Lender's sole discretion, to become a Letter of Credit Issuer
for purposes of issuing Letters of Credit hereunder.
"Letter of Credit Usage" shall mean at any time, (i) the aggregate
undrawn amount of all outstanding Letters of Credit plus (ii) the
unreimbursed drawing at such time under Letters of Credit.
"Leverage Ratio" shall mean, at the end of any fiscal quarter, the
ratio of (i) all Indebtedness of the Borrowers and their respective
subsidiaries (including, without limitation, the amount of Obligations
outstanding under this Agreement (whether for principal, interest or
premium), the Indebtedness under the Senior Notes and Indebtedness under the
Senior Subordinated Notes, but excluding Intercompany Indebtedness) as at the
date of determination to (ii) EBITDA of the Borrowers and their respective
subsidiaries for the four-quarter period ending at the date of determination,
in each case determined on a Consolidated basis in accordance with generally
accepted accounting principles.
"LIBO Rate" shall mean, with respect to any Eurodollar Loan for any
Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to the rate at which dollar deposits
approximately equal in principal amount to the corresponding Eurodollar Loan
and for a maturity equal to the applicable Interest Period are offered in
immediately available funds to Fleet National Bank by leading banks in the
London interbank market for Eurodollars at approximately 11:00 A.M., London
time, two (2) Business Days prior to the first day of such Interest Period.
"Lien" shall mean, with respect to any asset, (i) any mortgage,
lien, pledge, encumbrance, charge or security interest in or on such asset,
(ii) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or other title retention agreement relating to such
asset, (iii) in the case of securities, any purchase option, call or similar
right of a third party with respect to such securities or (iv) any other
right of or arrangement with any creditor to be entitled to receive any such
mortgage, lien, pledge, encumbrance, charge or security interest on or to
have such creditor's claim satisfied out of such assets, or the proceeds
therefrom, prior to the general creditors of the owner thereof.
"Loan" shall mean a Loan made pursuant to Sections 2.01(a) and 2.02
hereof.
<PAGE>
"Loan Documents" shall mean this Agreement, each Security Document,
the Notes, any letter of credit applications with respect to Letters of
Credit and each other document, instrument, or agreement now or hereafter
delivered to the Agent, any Lender or the Letter of Credit Issuer in
connection herewith or therewith.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on
(i) the business, assets, liabilities, properties, prospects, operations or
financial condition of the Borrowers and their respective subsidiaries taken
as a whole, (ii) the ability of any Borrower or any Guarantor to perform or
pay the Obligations in accordance with the terms hereof or of any other Loan
Document or to perform its other material obligations thereunder or (iii) the
Agent's Lien on any Collateral (other than a de minimis portion of the
Collateral) or the priority of such Lien.
"Maximum Facility Amount" shall mean, with respect to any Borrower,
at any date of determination, (A) the lesser of (i) the Total Commitment (as
such amount may be reduced pursuant to Section 2.07 hereof) and (ii) the
Borrowing Base of such Borrower (calculated for the purposes of this
definition using only Eligible Inventory owned by such Borrower (and not any
other Borrower) and deducting all Supplemental Availability Advances then
outstanding to any Borrower other than such Borrower) minus (B) all Loans
previously made to or on behalf of such Borrower and not repaid and all
Letter of Credit Usage with respect to Letters of Credit previously issued
for the account of such Borrower.
"McCarty-Holman" shall have the meaning assigned to this term in the
preamble to this Agreement.
"Merger" shall have the meaning assigned to such term in the Merger
Agreement.
"Merger Agreement" shall mean the Agreement and Plan of Merger,
dated as of July 8, 1997, among Jitney Jungle, Acquisition Corp. and the
Target Company, as amended, modified or supplemented from time to time in
accordance with the terms thereof and subject to the terms of Section 7.18
hereof.
"Merger Closing Date" shall mean the date on which the conditions
set forth in Section 5.03 are satisfied, but in no event later than March 13,
1998.
"Merger Documents" shall mean the Merger Agreement, and all
agreements, documents and instruments executed and delivered pursuant thereto
or in connection therewith, in each case as in effect on the Initial Closing
Date and as
<PAGE>
amended, modified or supplemented from time to time in accordance
with the terms thereof and subject in each case to the terms of Section 7.18
hereof.
"Minimum Percentage" shall have the meaning assigned to such term in
Section 5.02(m)(ii) hereof.
"Mortgages" shall have the meaning set forth in Section 3.03 hereof.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Net Amount of Eligible Inventory" of any Borrower shall mean, at
any time, the aggregate value, computed at the lower of cost (on a FIFO
basis) and current market value, of Eligible Inventory of such Borrower.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of expenses of sale (including
reasonable brokers and attorneys fees and payment of principal, premium and
interest of Indebtedness secured by the assets the subject of the Asset Sale
and required to be, and which is, repaid under the terms thereof as a result
of such Asset Sale), and incremental taxes paid or payable as a result
thereof.
"Net Income" shall mean, for any period, the aggregate income (or
loss) of the Borrowers and their respective subsidiaries determined on a
Consolidated basis for such period, all computed and calculated in accordance
with generally accepted accounting principles consistently applied.
"New Lenders" shall mean DLJ Capital Funding, Inc.
"Non-Defaulting Lenders" shall have the meaning assigned to such
term in Section 11.15(b) hereof.
"Non-Ratable Loans" shall have the meaning assigned to such term in
Section 2.17(c)(iii) hereof.
"Notes" shall mean the revolving notes of the Borrowers, executed
and delivered as provided in Section 2.04 hereof, in substantially the form
of Exhibit A annexed hereto, as amended, modified or supplemented from time
to time.
"Obligations" shall mean all obligations, liabilities and
Indebtedness of any Borrower and/or any Guarantor to the Lenders, the Agent
and/or the Letter of Credit Issuer, whether now existing or hereafter
created, direct or indirect, due or not, whether created directly or acquired
by assignment, participation or otherwise, under or with respect to this
Agreement, the Notes, the Security Documents and the other Loan
<PAGE>
Documents, including, without limitation, the principal of and interest on
the Loans and the payment or performance of all other obligations,
liabilities, and Indebtedness of any Borrower and/or any Guarantor to the
Lenders, the Agent and/or the Letter of Credit Issuer hereunder, under or
with respect to the Letters of Credit, under any one or more of the other
Loan Documents or owing to Fleet under or with respect to interest rate
protection agreements and other similar arrangements permitted by Section
7.03(iv) hereof, including but not limited to all fees, costs, expenses and
indemnity obligations hereunder and thereunder.
"Offer to Purchase" means Jitney Jungle's Offer to Purchase for Cash
dated July 14, 1997 (including all exhibits and schedules thereto), as in
effect on the date hereof, and filed by Jitney Jungle with the SEC in
connection with the Tender Offer, as from time to time amended, modified or
supplemented subject to the terms of Section 7.18 hereof.
"Original Acquisition Documents" shall mean the "Acquisition
Documents" as defined in the Existing Credit Agreement.
"Original Closing Date" shall mean March 5, 1996.
"Other Taxes" shall have the meaning assigned to such term in
Section 2.15(b) hereof.
"Partnership Pledge Agreement" shall mean the Partnership Pledge
Agreement, among the Grantors party thereto and the Agent, for the benefit of
the Secured Parties, in substantially the form of Exhibit C-2 annexed hereto,
as amended, modified or supplemented from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" shall mean any Plan which is subject to the
provisions of Title IV of ERISA.
"Permits" shall have the meaning assigned to such term in Section
4.18 hereof.
"person" shall mean any natural person, corporation, business trust,
association, company, joint venture, partnership or government or any agency
or political subdivision thereof.
"Plan" shall mean any employee benefit plan within the meaning of
Section 3(3) of ERISA and which is maintained (in whole or in part) for
employees of any Borrower or any subsidiary thereof or any ERISA Affiliate
thereof or for employees of the Target Company or any subsidiary thereof or
any ERISA Affiliate thereof.
<PAGE>
"Pledge Agreement" shall mean the Pledge Agreement, dated as of
March 5, 1996, as heretofore amended and as amended and restated as of the
date hereof, among the Borrowers, the Guarantors and the Agent, for the
benefit of the Secured Parties, in substantially the form of Exhibit C-1
annexed hereto, as amended, modified or supplemented from time to time.
"Pledged Stock" shall have the meaning assigned to such term in the
Pledge Agreement.
"Prime Rate" shall mean the rate which Fleet National Bank announces
from time to time as its prime lending rate, as in effect from time to time.
The Prime Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Fleet National Bank
and any Affiliate thereof may make commercial loans or offer loans at, above
or below the Prime Rate. Any change in the Prime Rate shall be effective
hereunder on the effective date of such change announced by Fleet National
Bank.
"Prior Indebtedness" shall mean the Indebtedness of Jitney Jungle
and/or its subsidiaries outstanding on the Initial Closing Date, other than
(i) the IRB Indebtedness, (ii) Capitalized Lease Obligations existing on the
date hereof and secured by Liens permitted under Section 7.01, (iii) the
Senior Notes and (iv) reimbursement obligations under letters of credit
issued for the account of Delchamps in an approximate amount of $750,000.
"Reduction Discount" shall mean initially zero and from and after
the first day of each fiscal quarter, commencing with the first fiscal
quarter ending after the Initial Adjustment Date, immediately following the
date of delivery by the Borrowers to the Agent of the financial statements
with respect to the immediately preceding fiscal quarter (a "Test Period") of
the Borrowers and their respective subsidiaries (the "Financials") as
required under Section 6.05(b)(i) of this Agreement, together with
calculations in form and substance reasonably satisfactory to the Agent
supporting the calculation of the Leverage Ratio as at the end of such fiscal
quarter and a written certification from the Financial Officer of Jitney
Jungle to such effect, the Reduction Discount shall be as specified in
clauses (i) through (v) below, when, and for so long as, the Leverage Ratio
set forth in such clause has been satisfied as at the end of the then Test
Period:
(i) for purposes of calculating the Applicable Margin and the
Commitment Fee, the Reduction Discount shall be zero in the event that, as of
the end of the Test Period, the Leverage Ratio for the four consecutive
fiscal quarters ending on the last day of such Test Period is greater than or
equal to 5.00; or
(ii) for purposes of calculating the Applicable Margin, the Reduction
<PAGE>
Discount shall be .25 and for purposes of calculating the Commitment Fee, the
Reduction Discount shall be .075 in the event that, as of the end of the Test
Period, the Leverage Ratio for the four consecutive fiscal quarters ending on
the last day of such Test Period is greater than or equal to 4.25 but less
than 5.00; or
(iii) for purposes of calculating the Applicable Margin, the
Reduction Discount shall be .50 and for purposes of calculating the
Commitment Fee, the Reduction Discount shall be .125 in the event that, as of
the end of the Test Period, the Leverage Ratio for the four consecutive
fiscal quarters ending on the last day of such Test Period is greater than or
equal to 3.75 but less than 4.25; or
(iv) for purposes of calculating the Applicable Margin, the
Reduction Discount shall be .75 and for purposes of calculating the
Commitment Fee, the Reduction Discount shall be .25 in the event that, as of
the end of the Test Period, the Leverage Ratio for the four consecutive
fiscal quarters ending on the last day of such Test Period is greater than or
equal to 3.25 but less than 3.75; or
(v) for purposes of calculating the Applicable Margin, the
Reduction Discount shall be 1.00 and for purposes of calculating the
Commitment Fee, the Reduction Discount shall be .25 in the event that, as of
the end of the Test Period the Leverage Ratio for the four consecutive fiscal
quarters ending on the last day of such Test Period is less than 3.25;
provided, that the entire Reduction Discount, if any, at any time in effect
shall be reduced to zero at all times on and after the occurrence and during
the continuance of an Event of Default; and provided, further, that in the
event that the Leverage Ratio on the last day of any Test Period (the "New
Test Period") is less than or greater than the ratio then in effect for the
previous Test Period pursuant to clause (ii), (iii), (iv) or (v) above, the
Reduction Discount specified in clause (ii), (iii), (iv) or (v) above shall
be discontinued and the Reduction Discount shall be the Reduction Discount
applicable to the Leverage Ratio for such New Test Period effective as of the
first day of the fiscal quarter immediately following the date of delivery by
the Borrowers to the Agent of such Financials.
"Register" shall have the meaning assigned to such term in Section
11.03(e) hereof.
"Regulation D" shall mean Regulation D of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation G" shall mean Regulation G of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation T" shall mean Regulation T of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
<PAGE>
"Regulation U" shall mean Regulation U of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder or thereof.
"Regulation X" shall mean Regulation X of the Board, as the same is
from time to time in effect, and all official rulings and interpretations
thereunder.
"Reinvestment Assets" shall mean, with respect to any Asset Sale,
any properties or assets that replace the properties or assets that were the
subject of such Asset Sale that will be employed in the business of the
Borrowers and their respective subsidiaries as operated on the Initial
Closing Date.
"Reinvestment Election" shall have the meaning provided in Section
2.09(d)(i) hereof.
"Reinvestment Notice" shall mean a written notice signed by an
Responsible Officer of the relevant Borrower stating that such Borrower, in
good faith, intends and expects to use all or a specified portion of the Net
Cash Proceeds of an Asset Sale to purchase, construct or otherwise acquire
Reinvestment Assets.
"Reinvestment Prepayment Amount" shall mean, with respect to any
Reinvestment Election, the amount, if any, on the Reinvestment Prepayment
Date relating thereto by which (i) the Anticipated Reinvestment Amount in
respect of such Reinvestment Election exceeds (ii) the aggregate amount
thereof expended by the relevant Borrower to acquire Reinvestment Assets.
"Reinvestment Prepayment Date" shall mean, with respect to any
Reinvestment Election, the earlier of (i) the date occurring one year after
such Reinvestment Election and (ii) the date on which the Borrowers shall
have determined not to, or shall have otherwise ceased to, proceed with the
purchase, construction or other acquisition of Reinvestment Assets with the
related Anticipated Reinvestment Amount.
"Related Transactions" shall mean the Acquisition, the Tender Offer,
the Merger, the execution and delivery of the Merger Documents and the Tender
Offer Documents, each borrowing of a Loan on the Initial Closing Date and the
Merger Closing Date, the issuance of the Senior Subordinated Notes, the
repayment of the Target Indebtedness and the payment of all fees, costs and
expenses associated with all of the foregoing.
"Release" shall mean any releasing, spilling, leaking, seeping,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping, in each case as defined in Environmental Law,
and shall include any
<PAGE>
"Threatened Release," as defined in Environmental Law.
"Remedial Work" shall mean any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial work of any kind
or nature with respect to any property of any Borrower or any of its
subsidiaries (whether such property is owned, leased, subleased or used),
including, without limitation, with respect to Hazardous Materials and the
Release thereof.
"Reportable Event" shall mean a Reportable Event as defined in
Section 4043(b) of ERISA, but not including any such event as to which the
PBGC, by applicable regulation, has waived the requirement of notice under
Section 4043(a).
"Required Lenders" shall mean Lenders having 51% of the Total
Commitment.
"Responsible Officer" shall mean, with respect to any person, the
chief executive officer, chief financial officer, president, vice president,
or treasurer, of such person.
"SEC" shall mean the Securities and Exchange Commission.
"Secured Parties" shall mean the Agent, the Lenders and the Letter of
Credit Issuer.
"Securities Purchase and Holders Agreement" shall mean the
Securities Purchase and Holders Agreement, dated as of March 5, 1996, among
Jitney Jungle, BRS, the individuals listed on Schedule I thereto and the
Trust established under a Trust Agreement dated as of March 1, 1996 between
Jitney Jungle as grantor and Trustmark National Bank, as trustee, as from
time to time amended, supplemented or modified.
"Security Agreement" shall mean each Security Agreement, dated as of
March 5, 1996, as heretofore amended and as amended and restated as of the
date hereof, between the Grantor(s) and the Agent, for the benefit of the
Secured Parties, each substantially in the form of Exhibit D annexed hereto,
as amended, modified or supplemented from time to time.
"Security Agreement -- Patents and Trademarks" shall mean each
Security Agreement -- Patents and Trademarks dated as of March 5, 1996, as
heretofore amended and as amended and restated as of the date hereof, between
the Grantor(s) and the Agent, for the benefit of the Secured Parties, each
substantially in the form of Exhibit F annexed hereto, as amended, modified
or supplemented from time to time.
"Security Documents" shall mean the Assignment of Contract, the
<PAGE>
Pledge Agreement, the Partnership Pledge Agreement, the Security Agreement,
the Security Agreement -- Patents and Trademarks, the Chattel Mortgage, the
Mortgages and each other agreement now existing or hereafter created
providing collateral security for the payment or performance of any
Obligations.
"Senior Indenture" shall mean the Indenture relating to the Senior
Notes dated as of March 5, 1996, as amended and in effect on the Initial
Closing Date, among the Borrowers and Marine Midland Bank, as trustee, as
from time to time amended, supplemented or modified, subject to the terms of
Section 7.18 hereof.
"Senior Notes" shall mean the $200,000,000 minimum aggregate
original principal amount of the Borrowers' senior unsecured promissory notes
issued and delivered pursuant to the Senior Indenture.
"Senior Subordinated Indenture" shall mean the Indenture relating to
the Senior Subordinated Notes, dated as of September 15, 1997, by and among
the Borrowers party thereto, the Subsidiary Guarantors (as defined therein)
party thereto and Marine Midland Bank, as trustee, as from time to time as
amended, modified or supplemented, subject to the terms of Section 7.18
hereof.
"Senior Subordinated Notes" shall mean the $200,000,000 minimum
aggregate original principal amount of the Borrowers' senior subordinated
unsecured promissory notes issued and delivered pursuant to the Senior
Subordinated Indenture.
"Settlement Date" shall mean each Business Day after the Initial
Closing Date selected by the Agent in its sole discretion subject to and in
accordance with the provisions of Section 2.17(c) as of which a Settlement
Report is delivered by the Agent and on which settlement is to be made among
the Lenders in accordance with the provisions of Section 2.17 hereof.
"Settlement Report" shall mean each report, substantially in the
form attached hereto as Exhibit I hereto, prepared by the Agent and delivered
to each Lender and setting forth, among other things, as of the Settlement
Date indicated thereon and as of the next preceding Settlement Date, the
aggregate principal balance of all Loans outstanding, each Lender's ratable
portion thereof, each Lender's Loans and all Non-Ratable Loans made, and all
payments of principal received by the Agent from or for the account of the
Borrowers during the period beginning on such next preceding Settlement Date
and ending on such Settlement Date.
"Southern Jitney Jungle" shall have the meaning assigned to this
term in the preamble to this Agreement.
"Subordinated Indebtedness" shall mean, with respect to any Borrower
or any subsidiary thereof, Indebtedness subordinated in right of payment to
such person's
<PAGE>
monetary obligations under this Agreement and the other Loan Documents
upon terms satisfactory to and approved in writing by the Agent, to the extent
it does not by its terms (except as otherwise approved in writing by the Agent)
mature or become subject to any mandatory prepayment or amortization of
principal prior to the Final Maturity Date, and shall in any event include the
Indebtedness of Jitney Jungle pursuant to the Senior Subordinated Indenture.
"subsidiary" shall mean, with respect to any person, the parent of
such person, any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled, directly or indirectly, by the parent or one or more
subsidiaries of the parent.
"SunTrust LC" shall mean the irrevocable letter of credit
number F501212 issued by SunTrust Bank, Atlanta, in favor of the IRB Trustee.
"Supplemental Availability" shall mean initially $53,000,000, as from
time to time reduced pursuant to Section 2.07(b) hereof.
"Supplemental Availability Advances" shall mean the aggregate amount
of Loans and Letters of Credit Usage outstanding in excess of the amount set
forth in Section 2.01(a)(1)(B)(i).
"Syndication Date" shall mean the earlier of (x) the date which is 90
days after the Initial Closing Date and (y) the date upon which the Agent
determines in its sole discretion (and notifies Jitney Jungle) that the primary
syndication (and the resulting addition to institutions as Lenders pursuant to
Section 11.03(c)) has been completed.
"Target Company" shall mean Delchamps, Inc., an Alabama corporation.
"Target Indebtedness" shall mean the Indebtedness of the Target
Company and/or its subsidiaries outstanding on the Initial Closing Date under
(x) a Loan Agreement, dated as of June 29, 1995, among the Target Company, the
financial institutions from time to time party thereto and Hibernia National
Bank, as agent, (y) a Promissory Note in the original principal amount of
$937,521.00 dated March 1, 1993 by the Target Company in favor of Hibernia
National Bank and (z) a Note Agreement dated as of June 30, 1993 between the
Target Company and Great West Life & Annuity Insurance Company relating to the
Target Company's 5.51% Senior Notes due July 1, 2000, in each case as from time
to time amended and in effect on the Initial Closing Date.
"Target Stock" shall mean shares of capital stock of the Target
Company.
<PAGE>
"Taxes" shall have the meaning assigned to such term in
Section 2.15(a) hereof.
"Tender Offer" shall mean the public tender offer by Jitney Jungle to
purchase for cash 100% of the outstanding shares of common stock, par value $.01
per share, of the Target Company, including associated preferred share purchase
rights, at a price not to exceed $30.00 per share, all in accordance with the
terms of the Offer to Purchase, as filed by Jitney Jungle with the SEC pursuant
to Section 14(d)(1) of the Securities Exchange Act of 1934.
"Tender Offer Documents" shall mean the Offer to Purchase, the
Schedule 14D-1 filed by Jitney Jungle, and all amendments, exhibits, proxy
material and related documents and materials filed with the SEC or distributed
to the stockholders of the Target Company.
"Tendered Securities" shall mean and include the Target Stock deemed
to have been accepted for payment (and thereby purchased) by Jitney Jungle
pursuant to the Offer to Purchase.
"Termination Date" shall mean the earlier to occur of (i) the Final
Maturity Date and (ii) the date on which the Commitments shall terminate, expire
or be canceled in accordance with the terms of this Agreement.
"Total Commitment" shall mean the sum of the Lenders' Commitments.
"Transactions" shall have the meaning assigned to such term in
Section 4.02 hereof.
"Undrawn Availability" shall mean, at any time, an amount equal to
(A) the lesser of (i) the Total Commitment and (ii) the Borrowing Base, minus
(B) the sum of (i) all Loans outstanding at such time, (ii) the Letter of Credit
Usage at such time and (iii) reserves established pursuant to Section 2.01(c)
below at such time.
Unless otherwise expressly provided herein, each accounting term used
herein shall have the meaning given it under generally accepted accounting
principles in effect from time to time in the United States applied on a basis
consistent with those used in preparing the financial statements referred to in
Section 6.05 hereof; provided, however, that each reference in Article VII
hereof, or in the definition of any term used in Article VII hereof, to
generally accepted accounting principles shall mean generally accepted
accounting principles as in effect on the date hereof. In calculating EBITDA,
the Fixed Charge Coverage Ratio and Interest Expense for purposes of determining
compliance with the financial covenants contained in Section 7.08 through 7.11
(inclusive) and the calculation of Applicable Margin (and the definitions
contained herein to the extent utilized in determining such compliance) for each
fiscal period
<PAGE>
ending on or prior to the fiscal quarter of the Borrowers and their
respective subsidiaries ending on October 18, 1997 only, such calculations
shall be made for each of Jitney Jungle and its subsidiaries (excluding
Delchamps and its subsidiaries) and Delchamps and its subsidiaries, in each
case on a Consolidated Basis for such period in accordance with generally
accepted accounting principles, and then combined.
IA. AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT
SECTION 1A.01. (a) Existing Loans and Existing Letters of Credit.
On the Initial Closing Date:
(i) the Existing Loans held by each Existing Lender shall
automatically, and without any action on the part of any person,
be Loans of such Lender hereunder and any Notes (as defined in
the Existing Credit Agreement) evidencing the same shall be
returned to the Agent and marked "Replaced" (to be held until the
Termination Date), with any Loans then outstanding to be
reflected by the Agent on its books and records in accordance
with the terms of this Agreement;
(ii) the Existing Letters of Credit shall automatically, and
without any action on the part of any person, be Letters of
Credit issued hereunder;
(iii) the "commitment" of each of the Existing Lenders
to lend under the Existing Credit Agreement shall continue as,
and be evidenced by, the Commitment of each such Lender under
this Agreement, except that the Commitment of each such Lender
shall be as set forth in Schedule 2.01 annexed hereto, and the
Commitment of each New Lender shall be as set forth in
Schedule 2.01 annexed hereto, in each case as reflected by the
Agent on its books and records; and
(iv) all interest and fees (other than the fee specified in
Section 2.06(b)) accrued up to, but not including, the Initial
Closing Date, under the Existing Credit Agreement shall be paid
by the Borrowers to the Agent for disbursement to the Agent
(under and as defined in the Existing Credit Agreement), the
Existing Lenders and Fleet Bank, as letter of credit issuer
thereunder, in accordance with the terms of the Existing Credit
Agreement; all such interest and fees may be financed by the
Lenders as a Loan to be made on the Initial Closing Date;
in each case in such amounts (and the Lenders shall, through the
Agent,
<PAGE>
make such additional adjustments among themselves as shall be
necessary) so that after giving effect to such assignments,
adjustments, revolving credit loans and letters of credit, the
interests of the Lenders in the Loans and the Letters of Credit
shall be pro rata in accordance with Section 2.13 hereof.
(b) Interest Periods. On the Initial Closing Date, all "Interest
Periods" under and as defined in the Existing Credit Agreement, if any, shall
automatically be terminated.
(c) Continuation of Indebtedness, Etc. Except as expressly provided
herein, the indebtedness outstanding under the Existing Credit Agreement on the
Initial Closing Date shall not be deemed to be repaid or prepaid by the
amendment and restatement of the Existing Credit Agreement provided for hereby
or the other transactions stated to occur on the Initial Closing Date, but such
indebtedness shall continue to be outstanding hereunder on the terms and
conditions hereof. Without limitation of the foregoing, upon the satisfaction
of the conditions precedent set forth in Section 5.01 and 5.02 hereof, the
Commitments and the Notes (if any) shall be in renewal of, and substitution and
replacement for, the commitments (if any) of the Existing Lenders to lend under
the Existing Credit Agreement (and each of the Notes as defined therein and
delivered thereunder).
(d) No Novation. The execution, delivery or effectiveness of this
Agreement shall not extinguish the obligations for the payment of money
outstanding under the Existing Credit Agreement or discharge or release the lien
or priority of any security agreement or any other security therefor. Nothing
herein contained shall be construed as a substitution or novation of the
obligations outstanding under the Existing Credit Agreement or instruments
securing the same, which shall remain in full force and effect, except as
modified hereby or by instruments executed concurrently herewith. Nothing
expressed or implied in this Agreement or any other document contemplated hereby
or thereby shall be construed as a release or other discharge of any Borrower,
any Guarantor, any Assignor, any Debtor, any Grantor, any Mortgagor or any
Pledgor under the Existing Credit Agreement or any of the Loan Documents (as
defined in the Existing Credit Agreement) from any of its obligations and
liabilities as a "Guarantor", "Assignor", "Debtor", "Grantor", "Mortgagor" or
"Pledgor", as the case may be, thereunder. Each of the Existing Credit
Agreement and the other Loan Documents (as defined in the Existing Credit
Agreement) shall remain in full force and effect, until and except as modified
hereby or in connection herewith. Notwithstanding any provision of this
Agreement that may be to the contrary, the provisions of Section 11.04 of the
Existing Credit Agreement, including all defined terms used therein, will
continue to be effective as to all matters arising out of or in any way related
to facts or events existing or occurring prior to the Initial Closing Date.
<PAGE>
II. THE LOANS
SECTION II.1. Commitments. (a) Subject to the terms and conditions
and relying upon the representations and warranties herein set forth, each
Lender, severally and not jointly, agrees to make Loans to the Borrowers, at any
time and from time to time from the date hereof to the Termination Date, in an
aggregate principal amount at any time outstanding not to exceed the amount of
such Lender's Commitment set forth opposite its name in Schedule 2.01 annexed
hereto, as such Commitment may be reduced from time to time in accordance with
the provisions of this Agreement. Notwithstanding the foregoing and subject to
Section 2.20 hereof, the aggregate principal amount of Loans outstanding at any
time to the Borrowers shall not exceed (1) the lesser of (A) the Total
Commitment (as such amount may be reduced pursuant to Section 2.07 hereof) and
(B) an amount equal to the sum of (i) up to sixty-five percent (65%) of the
aggregate Net Amount of Eligible Inventory of the Borrowers, plus (ii) subject
to the terms of Sections 2.07(b) and 2.09(d) hereof, the Supplemental
Availability then in effect (this clause (1) (B) referred to herein as the
"Borrowing Base"), minus (2) the Letter of Credit Usage at such time (which
Letter of Credit Usage shall not exceed $30,000,000 at any time), minus
(3) reserves established pursuant to Section 2.01(c) below at such time. The
Borrowing Base will be computed as provided in Section 2.20 hereof, and the
Borrowing Base and other collateral reporting material will be delivered to the
Agent in accordance with Section 6.05(g) and/or Section 6.05(h) hereof. In no
event shall the aggregate outstanding Loans and Letters of Credit made to or for
the account of any Borrower exceed the Maximum Facility Amount for such
Borrower.
(b) Subject to the foregoing and within the foregoing limits, and
subject to all other applicable terms, provisions and limitations set forth in
this Agreement, the Borrowers may borrow, repay (or, subject to the provisions
of Section 2.09 hereof, prepay) and reborrow Loans, on and after the date hereof
and prior to the Termination Date.
(c) The Agent may from time to time decrease the Loans and Letters of
Credit available to the Borrowers by an amount equal to the aggregate amount of
all reserves which the Agent deems necessary or desirable to maintain hereunder,
such reserves to be determined by the Agent in its judgment exercised in good
faith and to include, without limitation, reserves instituted under
Section 2.07(b) or Section 2.09(e) or reserves with respect to (i) rent payments
past due and owing by any Borrower with respect to premises leased by any
Borrower for which a Landlord Waiver has not been obtained, (ii) trust fund
liabilities under the Perishable Agricultural Commodities Act and the Packers
and Stockyards Act, (iii) environmental remediation and liability, (iv) Liens on
Collateral (other than Liens in existence on the Initial Closing Date which are
listed on Schedule 7.01 and other than encumbrances permitted under
Section 7.01), (v) credit exposure of any Borrower with respect to interest rate
protection arrangements, (vi) reserves contemplated by Section 5.02(i)(ii) and
(vii) 103% of the
<PAGE>
face amount of letters of credit issued by persons other than the Letter of
Credit Issuer for the account of any Borrower or any subsidiary thereof.
SECTION II.2. Loans. (a) The Eurodollar Loans made by the Lenders
on any date shall be in integral multiples of $1,000,000 and in a minimum
aggregate principal amount of $1,000,000.
(b) Subject to the provisions of Sections 2.17 and 2.18 hereof, Loans
shall be made ratably by the Lenders in accordance with their respective
Commitments; provided, however, that the failure of any Lender to make any Loan
shall not in itself relieve any other Lender of its obligation to lend
hereunder. The initial Loans shall be made by the Lenders against delivery of
Notes, payable to the order of the Lenders, as referred to in Section 2.04
hereof.
(c) Each Loan shall be either a Base Rate Loan or a Eurodollar Loan
as the Borrowers may request pursuant to Section 2.03 hereof. Each Lender may
fulfill its obligations under this Agreement by causing its Applicable Lending
Office to make such Loan; provided, however, that the exercise of such option
shall not affect the obligation of the Borrowers to repay such Loan in
accordance with the term of the Notes. Not more than six (6) Eurodollar Loans
may be outstanding at any one time.
(d) Subject to the provisions of Sections 2.17 and 2.18 hereof, each
Lender shall make its Loans on the proposed dates thereof by paying the amount
required to the Agent in New York, New York in immediately available funds not
later than 2:00 p.m., New York City time, and the Agent shall as soon as
practicable, but in no event later than 3:00 p.m., New York City time, credit
the amounts so received to the general deposit account of the applicable
Borrower with the Agent in immediately available funds or, if Loans are not to
be made on such date because any condition precedent to a borrowing herein
specified is not met, return the amounts so received to the respective Lenders.
(e) The Borrowers shall have the right at any time upon prior
irrevocable written, telex or facsimile notice (promptly confirmed in writing)
to the Agent given in the manner and at the times specified in Section 2.03
hereof with respect to the Loans into which conversion or continuation is to be
made, to convert all or any portion of Eurodollar Loans into Base Rate Loans, to
convert all or any portion of Base Rate Loans into Eurodollar Loans (specifying
the Interest Period to be applicable thereto) and to continue all or any portion
of any Eurodollar Loans into a subsequent Interest Period selected by the
Borrowers in accordance with the terms hereof, in each instance subject to the
terms and conditions of this Agreement (including the last sentence of
Section 2.02(c) hereof) and to the following:
(i) in the case of a conversion or continuation of fewer than all the
Loans, the aggregate principal amount of Loans (A) converted shall
<PAGE>
not be less than $1,000,000 in the case of Base Rate Loans or (B) converted
or continued shall not be less than $1,000,000 in the case of Eurodollar
Loans and shall be an integral multiple of $1,000,000;
(ii) accrued interest on a Loan (or portion thereof) being converted
or continued shall be paid by the Borrowers at the time of conversion or
continuation;
(iii) if any Eurodollar Loan is converted at any time other than
the end of an Interest Period applicable thereto, the Borrowers shall make such
payments associated therewith as are required pursuant to Section 2.12 hereof;
(iv) any portion of a Eurodollar Loan which is subject to an Interest
Period ending on a date that is less than three (3) months prior to the
Termination Date may not be converted into, or continued as, a Eurodollar Loan
and shall be automatically converted at the end of such Interest Period into a
Base Rate Loan; and
(v) no Default or Event of Default shall have occurred and be
continuing.
The Interest Period applicable to any Eurodollar Loan resulting from a
conversion or continuation shall be specified by Jitney Jungle in the
irrevocable notice of conversion or continuation delivered pursuant to this
Section; provided, however, that if no such Interest Period shall be specified,
the Borrowers shall be deemed to have selected an Interest Period of one (1)
month's duration. If the Borrowers shall not have given timely notice to
continue any Eurodollar Loan into a subsequent Interest Period (and shall not
otherwise have given notice to convert such Loan), such Loan (unless repaid or
required to be repaid pursuant to the terms hereof) shall, subject to (iv)
above, automatically be converted into a Base Rate Loan.
SECTION II.3. Notice of Loans. Jitney Jungle shall, through a
Responsible Officer, give the Agent irrevocable written, telex or facsimile
notice (promptly confirmed in writing) of each borrowing (including, without
limitation, a conversion as permitted by Section 2.02(e) hereof) (i) not later
than 11:00 A.M., New York City time, three (3) Business Days before a proposed
Eurodollar Loan borrowing or conversion and (ii) not later than 1:00 P.M., New
York City time on the Business Day of the requested Base Rate Loan borrowing or
conversion. Such notice shall specify (w) whether the Loans then being
requested are to be Base Rate Loans or Eurodollar Loans, (x) the date of such
borrowing (which shall be a Business Day) and amount thereof, (y) if such Loans
are to be Eurodollar Loans, the Interest Period with respect thereto and (z) the
Borrower for whose account such borrowing is being made. If no election as to
the type of Loan is specified in any such notice, all such Loans shall
<PAGE>
be Base Rate Loans. If no Interest Period with respect to any Eurodollar
Loan is specified in any such notice, then an Interest Period of one (1)
month's duration shall be deemed to have been selected. The Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.03
and of each Lender's portion of the requested borrowing.
SECTION II.4. Notes; Repayment of Loans. (a) All Loans made by a
Lender to the Borrowers shall be evidenced by a single Note, duly executed on
behalf of the Borrowers, dated the Initial Closing Date, in substantially the
form of Exhibit A annexed hereto, delivered and payable to such Lender in a
principal amount equal to its Commitment in respect of the Borrowers on such
date. The outstanding balance of each Loan, as evidenced by any such Note,
shall mature and be due and payable on the Termination Date.
(b) Each Note shall bear interest from its date on the outstanding
principal balance thereof, as provided in Section 2.05 hereof.
(c) Each Lender, or the Agent on its behalf, shall, and is hereby
authorized by the Borrowers to, endorse on the schedule attached to the Notes of
such Lender (or on a continuation of such schedule attached to such Note and
made a part thereof) an appropriate notation evidencing the date and amount of
each Loan to the Borrowers from such Lender, as well as the date and amount of
each payment and prepayment with respect thereto; provided, however, that the
failure of any person to make such a notation on a Note shall not affect any
obligations of the Borrowers under such Note. Any such notation shall be
conclusive and binding as to the date and amount of such Loan or portion
thereof, or payment or prepayment of principal or interest thereon, absent
manifest error.
(d) Each Borrower hereby irrevocably authorizes and directs the Agent
on behalf of itself and the Lenders to charge the accounts of the Borrowers with
the Agent for all amounts which may now or hereafter be due and payable by any
Borrower and its subsidiaries hereunder or under any other Loan Document,
including, without limitation, all amounts of principal and interest, fees and
expenses. If at any time there is not sufficient availability to cover any of
the payments referred to in the prior sentence, and, in any event, upon the
occurrence and during the continuance of any Event of Default, the Borrowers
shall make any such payments to the Agent on demand.
SECTION II.5. Interest on Loans. (a) Subject to the provisions of
Sections 2.05(c) and Section 2.08 hereof, each Base Rate Loan shall bear
interest at a rate per annum equal to the Base Rate plus the Applicable Margin.
(b) Subject to the provisions of Section 2.05(c) and Section 2.08
hereof, each Eurodollar Loan shall bear interest at a rate per annum equal to
the Adjusted LIBO Rate plus the Applicable Margin.
<PAGE>
(c) Interest on each Loan shall be payable in arrears on each
applicable Interest Payment Date and on the maturity thereof (whether as
scheduled, by acceleration or otherwise). Interest on each Base Rate Loan and
each Eurodollar Loan shall be computed based on the number of days elapsed in a
year of 365 days. The Agent shall determine each interest rate applicable to
the Loans and shall promptly advise the Borrowers and the Lenders of the
interest rate so determined (which determination shall be conclusive and binding
on the Borrowers and the Lenders absent manifest error).
SECTION II.6. Fees. (a) The Borrowers shall pay each Lender,
through the Agent, (i) on the last Business Day of each March, June, September
and December in arrears commencing on September 30, 1997, (ii) on the date of
any reduction of the Commitment pursuant to Section 2.07 hereof and (iii) on the
Termination Date, in immediately available funds, a Commitment Fee on the
average amount, calculated on a daily basis, by which the Commitment of such
Lender, during the calendar quarter (or shorter period commencing with the date
hereof or ending with the Termination Date) ending on such date exceeds the
aggregate outstanding principal amount of the Loans made by such Lender and such
Lender's pro rata share of the aggregate undrawn amount of all outstanding
Letters of Credit. The Commitment Fee due to each Lender under this
Section 2.06 shall commence to accrue on the Initial Closing Date and cease to
accrue on the earlier of (i) the Termination Date and (ii) the termination of
the Commitment of such Lender pursuant to Section 2.07 hereof. The Commitment
Fee shall be calculated on the basis of the actual number of days elapsed in a
year of 365 days.
(b) The Borrowers shall pay to the Agent and/or Fleet for their
respective accounts the fees payable in the Fee Letter and other letters to be
entered into when and as such fees are due and payable as therein provided.
(c) All fees payable under or in connection with this Agreement shall
be fully earned upon payment and shall be nonrefundable in all circumstances.
SECTION II.7. Termination of Commitments and Commitment Reductions.
(a) Upon at least ten (10) Business Days' prior irrevocable written notice (or
facsimile notice promptly confirmed in writing) to the Agent, the Borrowers may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment and/or the Supplemental Availability,
ratably among the Lenders in accordance with the amounts of their respective
Commitments; provided, however, that the Total Commitment shall not be reduced
at any time to an amount less than the Loans outstanding under the Commitment
and the Letter of Credit Usage at such time. Each partial reduction of the
Total Commitment and/or the Supplemental Availability shall be in a minimum of
$1,000,000 and an integral multiple of $500,000.
(b) (i) The Supplemental Availability shall be permanently reduced
<PAGE>
on each of the dates set forth below by the amount set forth below opposite such
date (such reduced amount being the Supplemental Availability in effect for the
next succeeding calendar quarter), and on each such date, the Total Commitment
shall be permanently reduced by an amount equal to such reduction:
Supplemental Availability
Reduction Date Amount
September 30, 1998 $1,250,000
December 31, 1998 $1,250,000
March 31, 1999 $1,250,000
June 30, 1999 $1,250,000
September 30, 1999 $1,750,000
December 31, 1999 $1,750,000
March 31, 2000 $1,750,000
June 30, 2000 $1,750,000
September 30, 2000 $2,000,000
December 31, 2000 $2,000,000
March 31, 2001 $2,000,000
June 30, 2001 $2,000,000
September 30, 2001 $2,250,000
December 31, 2001 $2,250,000
March 31, 2002 $2,250,000
June 30, 2002 $2,250,000
<PAGE>
September 30, 2002 $2,750,000
December 31, 2002 $2,750,000
March 31, 2003 $2,750,000
June 30, 2003 $2,750,000
September 30, 2003 $6,500,000
December 31, 2003 $6,500,000
(ii) (A) In addition, on each date that a prepayment of principal of
the Loans is required pursuant to Section 2.09(d)(i), Section 2.09(d)(ii),
Section 2.09(d)(iii) or Section 2.09(d)(iv), the Supplemental Availability under
Section 2.01(a) and the Total Commitment shall each be permanently reduced by an
amount equal to such prepayment.
(B) Within ninety (90) days after the end of each Fiscal Year,
beginning with the Fiscal Year ending on or about May 2, 1998, the Supplemental
Availability and the Total Commitment shall each be permanently reduced in an
amount equal to the lesser of (x) fifty percent (50%) of Excess Cash Flow for
such Fiscal Year calculated on the basis of the audited financial statements for
such Fiscal Year delivered to the Agent and the Lenders pursuant to Section
6.05(a) and (y) $7,000,000; provided, that if such financial statements shall
duly reflect that the Leverage Ratio for the four consecutive fiscal quarters
ending on the last day of such Fiscal Year shall have been equal to or less than
3.5 to 1.0, then no reduction shall be required by this clause (B). Concurrently
with the making of any such reduction, the Borrowers shall deliver to the Agent
and the Lenders a certificate of the Financial Officer of Jitney Jungle
demonstrating the calculation of the amount required to be reduced hereunder.
(C) The Commitment of each Lender shall automatically and
permanently terminate on the Termination Date unless extended as herein
provided, and all Loans still outstanding on such date shall be due and payable
in full together with accrued interest thereon.
(iii) In the event that a prepayment of principal of the Loans is
required pursuant to or is made under Section 2.09(e) and (A) the aggregate
amount of proceeds and awards received under Section 2.09(e) in such calendar
year (including the proceeds received on the date of determination) is less than
$2,000,000, then no reduction of Total Commitment or Supplemental Availability
shall be required under this
<PAGE>
Section 2.07(b); and (B) the aggregate amount of proceeds and awards received
under Section 2.09(e) in such calendar year (including the proceeds received
on the date of determination) is greater than $2,000,000, then the Total
Commitment and the Supplemental Availability shall be reduced by the amount
of the prepayment required by or made under Section 2.09(e).
(iv) Each prepayment of principal of the Loans required to be made in
reduction of the Total Commitment and the Supplemental Availability pursuant to
Section 2.07(ii)(A) or 2.07(ii)(B) above shall be applied to prepay (or reduce)
the scheduled reductions of the Total Commitment and the Supplemental
Availability pursuant to Section 2.07(b)(i) above on a pro rata basis (based
upon the then remaining principal amount of the scheduled reductions thereto
pursuant to Section 2.07(b)(i)) until the Supplemental Availability shall have
been reduced to zero, with each such prepayment (or reduction) being prepaid (or
reduced) by an amount equal to the product of the prepayment or reduction amount
applicable to the Supplemental Availability, multiplied by a fraction the
numerator of which is the scheduled reduction pursuant to Section 2.07(b)(i) (as
reduced by prepayments previously made) and the denominator of which shall be
the remaining Supplemental Availability.
(c) Simultaneously with any termination of the Total Commitment
pursuant to paragraph (a) or (b) of this Section 2.07, the Borrowers shall pay
to each Lender, through the Agent, the Commitment Fee due and owing through and
including the date of such termination or reduction on the amount of the
Commitment of such Lender so terminated or reduced.
SECTION II.8. Interest on Overdue Amounts. (a) If there shall occur
and be continuing any Event of Default, the Borrowers shall on demand from time
to time pay interest, to the extent permitted by law, on principal, interest,
fees and any other amount which is payable hereunder or under any other Loan
Document (whether then due and payable or not) (after as well as before
judgment) at a rate per annum equal to two percent (2%) in excess of the rates
otherwise applicable thereto (or if no rate is applicable thereto, at a rate per
annum equal to four percent (4%) in excess of the Prime Rate).
(b) In the event, and on each occasion, that on the day two
(2) Business Days prior to the commencement of any Interest Period for a
Eurodollar Loan the Agent shall have determined that dollar deposits in the
amount of each Eurodollar Loan are not generally available in the London
interbank market, or that the rate at which dollar deposits are being offered
will not reflect adequately and fairly the cost to one or more Lenders of making
or maintaining such Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate, the Agent
shall as soon as practicable thereafter give written notice (or facsimile notice
promptly confirmed in writing) of such determination to the Borrowers and the
Lenders, and any request by any Borrower for the making of a
<PAGE>
Eurodollar Loan pursuant to Section 2.03 hereof or conversion or continuation
of any Loan into a Eurodollar Loan pursuant to Section 2.02 hereof shall,
until the circumstances giving rise to such notice no longer exist, be deemed
to be a request for a Base Rate Loan. Each determination by the Agent made
hereunder shall be conclusive absent manifest error.
Notwithstanding any other provisions of this Section 2.08, no Lender
shall apply or request that the Agent apply the provisions of subsection (b) of
this Section 2.08 with respect to the Borrower if it shall not at the time be
the general policy or practice of such Lender to apply the provisions of
subsection (b) of this Section 2.08 to other borrowers in substantially similar
circumstances under substantially comparable provisions of other credit
agreements.
SECTION II.9. Prepayment of Loans. (a) Subject to the terms and
conditions contained in this Section 2.09 and elsewhere in this Agreement, the
Borrowers shall have the right to prepay any Loan at any time in whole or from
time to time in part (except in the case of a Eurodollar Loan, only on the last
day of an Interest Period therefor) without penalty (except as otherwise
provided for herein); provided, however, that each such partial prepayment of a
Eurodollar Loan shall be in an integral multiple of $1,000,000.
(b) On the date of any termination of the Total Commitment pursuant
to Section 2.07(a) hereof or elsewhere in this Agreement, the Borrowers shall
pay the aggregate principal amount of all Loans then outstanding, together with
interest to the date of such payment and all fees and other amounts due under
this Agreement and deposit in a cash collateral account with the Agent on terms
satisfactory to the Agent an amount equal to 103% of the amount of the Letter of
Credit Usage. Any prepayments required by this paragraph (b) shall be applied
to outstanding Base Rate Loans up to the full amount thereof before they are
applied to outstanding Eurodollar Loans; provided, however, that the Borrowers
shall not be required to make any prepayment of any Eurodollar Loan pursuant to
this Section until the last day of the Interest Period with respect thereto so
long as an amount equal to such prepayment is deposited by the Borrowers in a
cash collateral account with the Agent to be held in such account on terms
satisfactory to the Agent.
(c) The Borrowers shall make prepayments of the Loans from time to
time (including without limitation prepayments required by any reduction of
Total Commitment and/or the Supplemental Availability) such that the outstanding
principal balance of the Loans plus the Letter of Credit Usage plus the reserves
then in effect under Section 2.01(c) hereof do not exceed the lesser of (i) the
Total Commitment and (ii) the Borrowing Base at such time. Any prepayments
required by this paragraph (c) shall be applied to outstanding Base Rate Loans
up to the full amount thereof before they are applied to outstanding Eurodollar
Loans; provided, however, that the Borrowers shall not be required to make any
prepayment of any Eurodollar Loan
<PAGE>
pursuant to this Section until the last day of the Interest Period with
respect thereto so long as an amount equal to such prepayment is deposited by
the Borrowers in a cash collateral account with the Agent to be held in such
account on terms satisfactory to the Agent. In the event that after the
prepayment in full (or cash collateralization thereof as provided above) of
the Loans, the Letter of Credit Usage plus the reserves then in effect under
Section 2.01(c) hereof shall still exceed the lesser of (i) the Total
Commitment and (ii) the Borrowing Base, the Borrowers shall deposit cash in
the amount of such excess with the Agent in a cash collateral account with
the Agent to be held in such account on terms satisfactory to the Agent.
(d) (i) Within five Business Days of the receipt thereof by any
Borrower, any Grantor, any Guarantor or any subsidiary of any of them of Cash
Proceeds from any Asset Sale (other than an Asset Sale of an FTC Divestiture
Store), the Borrowers shall make a mandatory prepayment of the Loans in an
amount equal to 100% of the Net Cash Proceeds thereof, which proceeds shall be
applied as set forth in paragraph (f) below; provided, that up to an aggregate
of $1,000,000 per fiscal year but not to exceed $5,000,000 of Net Cash Proceeds
from Asset Sales from the Initial Closing Date through the Final Maturity Date
shall not be required to be used to so repay Loans to the extent the Borrowers
elect, as hereinafter provided, to cause such Net Cash Proceeds to be reinvested
in Reinvestment Assets (a "Reinvestment Election"). The Borrowers may exercise
their Reinvestment Election (within the parameters specified in the preceding
sentence) with respect to an Asset Sale if (x) at the time of such election
there is continuing no Default or Event of Default and (y) the Borrowers deliver
a Reinvestment Notice to the Agent no later than the fifteenth Business Day
following the date of the consummation of the respective Asset Sale, with such
Reinvestment Election being effective with respect to the Net Cash Proceeds of
such Asset Sale equal to the Anticipated Reinvestment Amount specified in such
Reinvestment Notice. The Borrowers agree to grant a first priority security
interest (subject only to Liens permitted by clause (a), (b), (c), (d), (f),
(h), (i) or (j) of Section 7.01) in such Reinvestment Assets in favor of the
Agent, such security interest to be granted on the date of acquisition of such
Reinvestment Assets by any Borrower. Nothing contained in this paragraph shall
constitute, or be deemed to constitute, a consent to any such Asset Sale.
(ii) Within five Business Days of (A) the sale, issuance or other
disposition by any Borrower, any Guarantor or any subsidiary of either thereof
of any of its capital stock or other equity interests in such person or any
option, warrant or similar right to acquire any of same (except pursuant to the
Original Acquisition Documents and the Merger Documents and except sales by
Jitney Jungle of its capital stock to employees of the Borrowers following
purchases thereof in an aggregate amount not in excess of $1,000,000 during the
term of this Agreement as permitted by Section 7.04(ii)), (B) the consummation
of the issuance of any debt securities of any Borrower, any Guarantor or any of
their respective subsidiaries (except the Senior Notes and the Senior
Subordinated Notes), (C) the receipt by any Borrower of any
<PAGE>
monies in accordance with the Original Acquisition Documents or the Merger
Agreement (other than indemnification payments made under any Original
Acquisition Document or the Merger Agreement on account of third-party claims
against the Borrowers or any subsidiary thereof), or (D) the incurrence by
any Borrower of any Subordinated Indebtedness (other than pursuant to the
Senior Subordinated Indenture), the Borrower who is the recipient of such
amounts shall make a mandatory prepayment of the Loans in an amount equal to
100% of the proceeds received (net of taxes due and any reasonable expenses
of sale), which proceeds shall be applied as set forth in paragraph (f)
below. Nothing contained in this paragraph shall constitute, or be deemed
to constitute, a consent to any sale of assets or stock or other equity
interests or the issuance or incurrence of any Indebtedness.
(iii) On the Reinvestment Prepayment Date with respect to a
Reinvestment Election, the Borrowers shall make a mandatory prepayment of the
Loans in an amount equal to the Reinvestment Prepayment Amount, if any, for such
Reinvestment Election, which proceeds shall be applied as set forth in paragraph
(f) below.
(iv) In the event that by virtue of an Asset Sale of an FTC
Divestiture Store, a payment would become due and owing under the Senior
Indenture or the Senior Subordinated Indenture in connection therewith, the
Borrowers shall make a mandatory prepayment of the Loans in an amount equal to
100% of the Net Cash Proceeds thereof such that the Borrowers shall have no
obligation to make a prepayment under the Senior Indenture or the Senior
Subordinated Indenture (as applicable), which prepayment shall be applied as set
forth in paragraph (f) below.
(e) (i) Except as provided in clause (ii) below, not later than the
fifth Business Day following the receipt by the Agent or any Borrower, any
Guarantor or any of their respective subsidiaries (x) of any net proceeds of any
insurance required to be maintained pursuant to Section 6.03 hereof on account
of any loss, damage or injury to any asset of any Borrower, any Guarantor or
such subsidiary (including, without limitation, any Collateral) or of any
condemnation or eminent domain awards with respect to any real property or
improvements thereon owned by any Borrower, any Guarantor or any of their
respective subsidiaries, or (y) of any net proceeds of any business interruption
insurance required to be maintained pursuant to Section 6.03 hereof, such
Borrower, such Guarantor or such subsidiary shall notify the Agent of such
receipt in writing or by telephone promptly confirmed in writing, and not later
than the fifth Business Day following receipt by the Agent or such Borrower,
such Guarantor or such subsidiary of any such proceeds or awards, there shall
become due and payable a prepayment of the Loans in an amount equal to 100% of
such proceeds or award. Prepayments from such net proceeds or award shall be
applied as set forth in paragraph (f) below.
(ii) In the case of the receipt of net proceeds or awards
<PAGE>
described in clause (i) above with respect to the loss, damage or injury to any
asset of any Borrower, any Guarantor or any of their respective subsidiaries or
the condemnation or taking by eminent domain of any real property or
improvements thereon owned by any Borrower, any Guarantor or any of their
respective subsidiaries (other than net proceeds of any business interruption
insurance), such Borrower, such Guarantor or such subsidiary may elect, by
written notice delivered to the Agent not later than the day on which a
prepayment would otherwise be required under clause (i), to apply all or a
portion of such net proceeds or award for the purpose of replacing, repairing,
restoring or rebuilding the relevant tangible property, and, in such event, any
required prepayment under clause (i) above shall be reduced dollar for dollar by
the amount of such election. An election under this clause (ii) shall not be
effective unless: (x) at the time of such election there is continuing no
Default or Event of Default; (y) the Borrowers shall have certified to the Agent
that: (1) the net proceeds of the insurance adjustment for such loss, damage or
injury or the amount of such award, together with other funds available to the
Borrowers, shall be substantially sufficient to complete such replacement,
repair, restoration or rebuilding in accordance with all applicable laws,
regulations and ordinances; and (2) to the best knowledge of the Borrowers, no
Default or Event of Default has arisen or will arise as a result of such loss,
damage, injury, condemnation, taking, replacement, repair or rebuilding; and (z)
if the amount of net proceeds or awards in all such cases is equal to or greater
than $1,500,000 in the aggregate in any calendar year (including the proceeds
received on the date of determination), the Borrowers shall have obtained the
written consent of the Agent to such election. In the event that any net
proceeds or awards described in clause (i) above are received with respect to
any equipment or other personal property and are not applied within 90 days of
receipt thereof as provided in this clause (ii), then the full amount of such
proceeds and awards shall be applied as a prepayment of the Loans. In the event
that any net proceeds or awards described in clause (i) above are received with
respect to any real property or improvements thereon, (x) within 90 days of such
loss, damage or injury thereto or the condemnation or taking thereof, the
Borrowers shall deliver plans, specifications and other relevant particulars to
the Agent with respect to the replacement, repair, restoration or rebuilding
thereof, in form and substance reasonably satisfactory to the Agent, (y) the
Agent, at its option, shall be entitled to institute a reserve pursuant to
Section 2.01(c) in an amount equal to the amount of the prepayment required
under clause (i) above with respect to such loss, damage, injury, condemnation
or taking and (z) if such proceeds or awards are not applied within one year of
receipt thereof as provided in this clause (ii) and in accordance with the
foregoing plans, specifications and other relevant particulars, then the full
amount of such proceeds and awards shall be applied as a prepayment of the
Loans. The Borrowers agree to grant a first priority security interest (subject
only to Liens permitted by clause (a), (b), (c), (d), (f), (h), (i) or (j) of
Section 7.01) in such replacement assets in favor of the Agent, such security
interest to be granted on the date of acquisition of such replacement assets by
any Borrower.
(iii) In the event of an election under clause (ii) above,
pending
<PAGE>
application of the net proceeds or award to the required replacement,
repairs, restoration or rebuilding, such Borrower, such Guarantor or such
subsidiary shall not later than the time at which prepayment would have been,
in the absence of such election, required under clause (i) above, apply such
net proceeds or award to the prepayment of the outstanding principal balance,
if any, of the Loans (not in permanent reduction of the Commitment), and
deposit (the "Special Deposit") with the Agent, the balance, if any, of such
net proceeds or award remaining after such application, pursuant to
agreements in form, scope and substance reasonably satisfactory to the Agent.
The Special Deposit, together with all earnings on such Special Deposit,
shall be available to the Borrowers solely for the replacement, repair,
rebuilding or restoration of the tangible property suffering the injury,
loss, damage condemnation or taking by eminent domain in respect of which
such prepayment and Special Deposit were made or to such other purpose as to
which the Agent may consent in writing; provided, however, that at such time
as a Default or Event of Default shall occur, the balance of the Special
Deposit and earnings thereon may be applied by the Agent to repay the
Obligations in such order as the Agent shall elect. The Agent shall be
entitled to require proof, as a condition to the making of any withdrawal
from the Special Deposit, that the proceeds of such withdrawal are being
applied for the purposes permitted hereunder.
(iv) Subject to the provisions of this paragraph (e), promptly
upon the receipt by the Agent or any Borrower, any Guarantor or any of their
respective subsidiaries of any net proceeds of any insurance referred to in
Section 6.03 hereof, there shall become due and payable a prepayment of
principal in respect of the Obligations in an amount equal to 100% of such net
proceeds. All prepayments made pursuant to this clause (iv) shall be applied in
the manner set forth in paragraph (f) below.
(f) When making a prepayment, whether mandatory or otherwise,
pursuant to paragraph (a), (b), (c), (d) or (e) above, the applicable Borrower
shall furnish to the Agent, not later than 12:00 noon (New York City time)
(i) five (5) Business Days prior to the date of such prepayment of Base Rate
Loans and (ii) five (5) Business Days prior to the date of such prepayment of
Eurodollar Loans, written, telex or facsimile notice (promptly confirmed in
writing) of prepayment which shall specify the prepayment date and the principal
amount of each Loan (or portion thereof) to be prepaid, which notice shall be
irrevocable and shall commit the Borrowers to prepay such Loan by the amount
stated therein on the date stated therein. All prepayments shall be accompanied
by accrued interest on the principal amount being prepaid to the date of
prepayment. Prepayments made pursuant to paragraph (d) or (e) above shall be
applied to outstanding Base Rate Loans up to the full amount thereof and then to
Eurodollar Loans up to the full amount thereof; provided, however, that if at
the time of the making of any such prepayment, a Default or an Event of Default
is in existence and there are undrawn Letters of Credit outstanding, then in the
discretion of the Agent, all or a portion of any such prepayment (not to exceed
an amount equal to the
<PAGE>
aggregate undrawn amount of all such outstanding Letters of Credit) shall be
deposited by the Borrower in a cash collateral account to be held by the
Agent for the benefit of the Lenders for application by the Agent to the
payment of any drawing made under any such Letters of Credit (the foregoing
requirement to be in addition to any other cash collateral requirements under
this Agreement); and, provided, further, that the Borrowers shall not be
required to make any prepayment of any Eurodollar Loan required pursuant to
this Section 2.09(f) until the last day of the Interest Period with respect
thereto so long as an amount equal to such prepayment is deposited by the
Borrowers into a cash collateral account with the Agent to be held in such
account pursuant to terms satisfactory to the Agent. All payments made by a
Borrower as described in this clause (f) shall be first deemed to be a
repayment of a Loan (or collateral for Letter of Credit Usage) made for the
account of such Borrower, and to the extent that the Loans and Letter of
Credit Usage for the account of such Borrower is reduced to zero, such
payments shall be deemed to be applied to such Loans and Letter of Credit
Usage as the Agent shall determine in its sole discretion.
(g) All prepayments under this Section 2.09 shall be subject to
Section 2.12 hereof.
(h) Except as otherwise expressly provided in this Section 2.09,
payments with respect to any paragraph of this Section 2.09 are in addition to
payments made or required to be made under any other paragraph of this
Section 2.09.
SECTION II.10. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement (or in the case of any assignee of any Lender, the date such assignee
becomes a Lender hereunder) any change in applicable law or regulation or in the
interpretation or administration thereof by any governmental authority charged
with the interpretation or administration thereof (whether or not having the
force of law) shall (i) subject the Agent or any Lender (which shall for the
purpose of this Section 2.10 include any assignee or lending office or branch of
the Agent or any Lender) to any tax with respect to any amount paid or to be
paid by either the Agent or any Lender with respect to any Eurodollar Loans made
by a Lender to a Borrower (other than (x) taxes imposed on the overall net
income of the Agent or such Lender and (y) franchise taxes imposed on the Agent
or such Lender, in either case by the jurisdiction in which such Lender or the
Agent has its principal office or its lending office with respect to such
Eurodollar Loan or any political subdivision or taxing authority of either
thereof); (ii) change the basis of taxation of payments to any Lender or the
Agent of the principal of or interest on any Eurodollar Loan or any other fees
or amounts payable hereunder (other than taxes imposed on the overall net income
of such Lender or the Agent by the jurisdiction in which such Lender or the
Agent has its principal office or by any political subdivision or taxing
authority therein); (iii) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or loans or loan commitments extended by, such Lender; or (iv)
impose on any Lender or
<PAGE>
the London interbank market any other condition affecting this Agreement or
Eurodollar Loans made by such Lender; and the result of any of the foregoing
shall be to increase the cost to any such Lender of making or maintaining any
Eurodollar Loan, or to reduce the amount of any payment (whether of
principal, interest or otherwise) receivable by such Lender or to require
such Lender to make any payment in respect of any Eurodollar Loan, then the
Borrowers shall pay to such Lender or the Agent, as the case may be, upon
such Lender's or the Agent's demand, such additional amount or amounts as
will compensate such Lender or the Agent for such additional costs or
reduction. The Agent and each Lender agree to give notice to the Borrowers of
any such change in law, regulation, interpretation or administration with
reasonable promptness after becoming actually aware thereof and of the
applicability thereof to the Transactions and, at the request of the
Borrowers, shall set out in reasonable detail the calculations used in
determining such additional amounts. Notwithstanding anything contained
herein to the contrary, nothing in clause (i) or (ii) of this Section 2.10(a)
shall be deemed to (x) permit the Agent or any Lender to recover any amount
thereunder which would not be recoverable under Section 2.15 hereof or (y)
require the Borrowers to make any payment of any amount to the extent that
such payment would duplicate any payment made by the Borrowers pursuant to
Section 2.15 hereof.
Notwithstanding any other provision of this Section 2.10, no Lender
shall demand any payment referred to above if it shall not at the time be the
general policy or practice of such Lender to demand such compensation in
substantially similar circumstances under substantially comparable provisions of
other credit agreements.
(b) If at any time and from time to time after the date of this
Agreement, any Lender shall determine that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change in any
applicable law, rule, regulation or guideline regarding capital adequacy, or any
change in the interpretation or administration of any thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender (or its
lending office or an affiliate) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any such authority, central
bank or comparable agency, has or will have the effect of reducing the rate of
return on such Lender's or its affiliate's capital as a consequence of such
Lender's obligations hereunder to a level below that which such Lender or
affiliate could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or its affiliate's policies with
respect to capital adequacy), then from time to time the Borrowers shall pay to
such Lender such additional amount or amounts as will compensate such Lender or
its affiliate for such reduction.
Notwithstanding any other provision of this Section 2.10, no Lender
shall demand any payment referred to above if it shall not at the time be the
general policy or practice of such Lender to demand such compensation in
substantially similar circumstances under substantially comparable provisions of
other credit agreements.
<PAGE>
(c) A statement of any Lender or the Agent setting forth such amount
or amounts, supported by calculations in reasonable detail, as shall be
necessary to compensate such Lender or its affiliate (or the Agent) as specified
in paragraphs (a) and (b) above shall be delivered to the Borrowers and shall be
conclusive absent manifest error. The Borrowers shall pay each Lender or the
Agent the amount shown as due on any such statement within ten (10) days after
its receipt of the same.
(d) Failure on the part of any Lender or the Agent to demand
compensation for any increased costs, reduction in amounts received or
receivable with respect to any Interest Period or reduction in the rate of
return earned on such Lender's or its affiliate's capital, shall not constitute
a waiver of such Lender's or the Agent's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
rate of return in such Interest Period or in any other Interest Period. The
protection under this Section 2.10 shall be available to each Lender and the
Agent regardless of any possible contention of the invalidity or inapplicability
of any law, regulation or other condition which shall give rise to any demand by
such Lender or the Agent for compensation.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.10 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different Applicable Lending Office if
the making of such a designation would avoid the need for, or reduce the amount
of, any such additional amounts and would not, in the sole judgment of such
Lender, be otherwise disadvantageous to such Lender.
SECTION II.11. Change in Legality. (a) Notwithstanding anything to
the contrary herein contained, if any change in any law or regulation or in the
interpretation thereof by any governmental authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations to
make Eurodollar Loans as contemplated hereby, then, by written notice to
Borrowers and to the Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by
such Lender hereunder, whereupon the Borrowers shall be prohibited
from requesting Eurodollar Loans from such Lender hereunder unless
such declaration is subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to Base Rate Loans, in which event (A) all such Eurodollar
Loans shall be automatically converted to Base Rate Loans as of the
effective date of such notice as provided in paragraph (b) below and
(B) all payments of principal which would otherwise have been applied
to repay the converted Eurodollar Loans shall instead be applied to
repay
<PAGE>
the Base Rate Loans resulting from the conversion of such
Eurodollar Loans.
(b) For purposes of Section 2.11(a) hereof, a notice to the Borrowers
by any Lender shall be effective, if lawful, on the last day of the then current
Interest Period or, if there are then two or more current Interest Periods, on
the last day of each such Interest Period, respectively; otherwise, such notice
shall be effective with respect to the Borrowers on the date of receipt by the
Borrowers.
SECTION II.12. Indemnity. Each Borrower shall indemnify each Lender
against any loss (including, without limitation, loss of anticipated profits) or
expense (including, but not limited to, any loss or expense sustained or
incurred or to be sustained or incurred in liquidating or employing deposits
from third parties acquired to affect or maintain any Loan or part thereof as a
Eurodollar Loan) which such Lender may sustain or incur as a consequence of the
following events (regardless of whether such events occur as a result of the
occurrence of an Event of Default or the exercise of any right or remedy of the
Agent or the Lenders under this Agreement or any other agreement, or at law):
any failure of any Borrower to fulfill on the date of any borrowing of a
Eurodollar Loan hereunder (including, without limitation, any conversion to or
continuation of a Eurodollar Loan or portion thereof) the applicable conditions
set forth in Article V hereof applicable to it; any failure of any Borrower to
borrow a Eurodollar Loan hereunder (including, without limitation, to convert to
or continue a Eurodollar Loan) after irrevocable notice of borrowing pursuant to
Section 2.03 hereof has been given; any payment, prepayment or conversion of a
Eurodollar Loan on a date other than the last day of the relevant Interest
Period; any default in payment or prepayment of the principal amount of any
Eurodollar Loan or any part thereof or interest accrued thereon, as and when due
and payable (at the due date thereof, by irrevocable notice of prepayment or
otherwise); or the occurrence of an Event of Default. Such loss or expense
shall include, without limitation, an amount equal to the excess, if any, of
(i) the amount of interest which would have accrued on the principal amount so
paid, prepaid or converted or not borrowed for the period from the date of such
payment, prepayment or conversion or failure to borrow to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for such Loan which would have commenced on the date of such
failure to borrow), at the applicable rate of interest for such Loan provided
for herein over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid or converted or not borrowed in United States Treasury obligations with
comparable maturities for comparable periods. Any such Lender shall provide to
the Borrowers a statement, signed by an officer of such Lender, explaining any
loss or expense and setting forth, if applicable, the computation pursuant to
the preceding sentence, and such statement shall be conclusive absent manifest
error. The Borrowers shall pay such Lender the amount shown as due on any such
statement within three (3) Business Days after the receipt of the same.
<PAGE>
SECTION II.13. Pro Rata Treatment. Except as otherwise provided
hereunder and subject to the provisions of Sections 2.17 and 2.18 hereof, each
borrowing, each payment or prepayment of principal of the Notes, each payment of
interest on the Notes, each payment of any fee or other amount payable hereunder
and each reduction of the Total Commitment and/or the Supplemental Availability
shall be made pro rata among the Lenders in the proportions that their
respective Commitments bear to the Total Commitment and/or the Supplemental
Availability, as applicable.
SECTION II.14. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against any Borrower, any Guarantor or any of their respective subsidiaries,
including, but not limited to, a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of a Note held by it as a result of which the unpaid
principal portion of the Notes held by it shall be proportionately less than the
unpaid principal portion of the Notes held by any other Lender, it shall be
deemed to have simultaneously purchased from such other Lender a participation
in the Notes held by such other Lender, so that the aggregate unpaid principal
amount of the Notes and participations in Notes held by it shall be in the same
proportion to the aggregate unpaid principal amount of all Notes then
outstanding as the principal amount of the Notes held by it prior to such
exercise of banker's lien, setoff or counterclaim was to the principal amount of
all Notes outstanding prior to such exercise of banker's lien, setoff or
counterclaim; provided, however, that if any such purchase or purchases or
adjustments shall be made pursuant to this Section 2.14 and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or
adjustments shall be rescinded to the extent of such recovery and the purchase
price or prices or adjustments restored without interest. Each Borrower and
each Guarantor expressly consents to the foregoing arrangements and agrees that
any Lender holding a participation in a Note deemed to have been so purchased
may exercise any and all rights of banker's lien, setoff or counterclaim with
respect to any and all moneys owing to such Lender as fully as if such Lender
held a Note in the amount of such participation.
SECTION II.15. Taxes. (a) Any and all payments by the Borrowers
and/or Guarantors hereunder shall be made, in accordance with Section 2.16
hereof, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings in any such
case imposed by the United States or any political subdivision thereof,
excluding:
(i) in the case of the Agent and each Lender, taxes imposed or
based on its net income, and franchise or capital taxes imposed on it,
(A) if the Agent or such Lender is organized under the laws of the
United States or any political subdivision thereof and (B) if the
Agent or such
<PAGE>
Lender is not organized under the laws of the United States or any
political subdivision thereof, and its principal office or
Applicable Lending Office is located in the United States, and in
the case of both (A) and (B), withholding taxes payable with respect
to payments to the Agent or such Lender at its principal office or
Applicable Lending Office under laws (including, without limitation,
any treaty, ruling, determination or regulation) in effect on the
date hereof, but not any increase in withholding tax resulting from
any subsequent change in such laws (other than withholding with
respect to taxes imposed or based on its net income or with respect
to franchise or capital taxes), and
(ii) taxes (including withholding taxes) imposed by reason of the
failure of the Agent or any Lender, in either case that is organized
outside the United States, to comply with Section 2.15(f) hereof (or
the inaccuracy at any time of the certificates, documents and other
evidence delivered thereunder)
(all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings
and liabilities being hereinafter referred to as "Taxes"). If any Borrower or
any Guarantor shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to the Lenders or the Agent, (x) the sum payable shall
be increased by the amount necessary so that after making all required
deductions (including without limitation deductions applicable to additional
sums payable under this Section 2.15) such Lender or the Agent (as the case may
be) receives an amount equal to the sum it would have received had no such
deductions been made, (y) such Borrower and/or such Guarantor shall make such
deductions and (z) such Borrower and/or such Guarantor shall pay the full amount
deducted to the relevant tax authority or other authority in accordance with
applicable law.
(b) In addition, each Borrower and each Guarantor agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement (hereinafter referred to as "Other Taxes").
(c) The Borrowers will indemnify each Lender and the Agent for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction (except as specified in clauses (a)(i)
and (ii)) on amounts payable under this Section 2.15) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. This indemnification shall
be made within 30 days from the date such Lender or the Agent (as the case may
be) makes written demand therefor. If any Lender receives a refund in respect
of any Taxes or Other Taxes for which such Lender has received payment from the
Borrowers hereunder, such Lender
<PAGE>
shall promptly notify the Borrowers of such refund and such Lender shall,
within 30 days of receipt of a request by the Borrowers, repay such refund to
the Borrowers (or if there shall at such time be continuing a Default or
Event of Default, pay the same to the Agent to be applied to the Obligations
in such order and manner as the Agent shall choose in its discretion);
provided, that the Borrowers, upon the request of such Lender, agree to
return such refund (whether returned to the Borrowers or applied to the
Obligations) (plus any penalties, interest or other charges) to such Lender
in the event such Lender is required to repay such refund.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by any Borrower or any Guarantor in respect of any payment to any
Lender, the Borrowers will furnish to the Agent, at its address referred to in
Section 11.01 hereof, such certificates, receipts and other documents as may be
reasonably required to evidence payment thereof.
(e) Without prejudice to the survival of any other agreement
hereunder, the agreements and obligations contained in this Section 2.15 shall
survive the payment in full of principal and interest hereunder.
(f) Each Lender that is organized outside of the United States shall
deliver to the Borrowers on the date hereof (or, in the case of an assignee, on
the date of the assignment) and from time to time as required for renewal under
applicable law duly completed copies of United States Internal Revenue Service
Form 1001 or 4224 (or any successor or additional forms), as appropriate,
indicating in each case that such Lender is entitled to receive payments under
this Agreement without any deduction or withholding of any United States federal
income taxes. The Agent (if the Agent is an entity organized outside the United
States) and each Lender that is organized outside the United States shall
promptly notify the Borrowers and the Agent of any change in its Applicable
Lending Office and such Lender shall, prior to the immediately following due
date of any payment by the Borrowers hereunder, deliver to the Borrowers (with
copies to the Agent), such certificates, documents or other evidence, as
required by the Code or Treasury Regulations issued pursuant thereto, including
without limitation Internal Revenue Service Form 4224, Form 1001 and any other
certificate or statement of exemption required by Treasury Regulation
Section 1.1441-4(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such Lender establishing that such
payment is (i) not subject to withholding under the Code because such payment is
effectively connected with the conduct by such Lender of a trade or business in
the United States or (ii) totally exempt from United States tax under a
provision of an applicable tax treaty. The Borrowers shall be entitled to rely
on such forms in their possession until receipt of any revised or successor form
pursuant to this Section 2.15(f). If the Agent or a Lender fails to provide a
certificate, document or other evidence required pursuant to this
Section 2.15(f), then (i) the Borrowers shall be entitled to deduct or withhold
on payments to the Agent or such Lender as a result of such failure, as required
by law, and (ii) the Borrowers shall not be required to make
<PAGE>
payments of additional amounts with respect to such withheld Taxes pursuant
to clause (x) of Section 2.15(a) to the extent such withholding is required
by reason of the failure of the Agent or such Lender to provide the necessary
certificate, document or other evidence.
SECTION II.16. Payments and Computations. The Borrowers shall make
each payment hereunder and under any instrument delivered hereunder not later
than 12:00 noon (New York City time) on the day when due in lawful money of the
United States (in freely transferable dollars) to the Agent, at its offices at
60 East 42nd Street, New York, New York 10017, Account No. 2-550-00-5458, for
the account of the Lenders, in immediately available funds. The Agent may
charge, when due and payable, Jitney Jungle's account with the Agent (Account
No. 2-550-00-5458) for all interest, principal and Commitment Fees or other fees
owing to the Agent, the Lenders or the Letter of Credit Issuer on or with
respect to this Agreement and/or the Loans and Letters of Credit and other Loan
Documents.
SECTION II.17. Settlement Among Lenders. (a) The Agent shall pay to
each Lender not later than one (1) Business Day after each Interest Payment
Date, its ratable portion, based on the principal amount of the Loans owing to
such Lender, of all interest payments and any other fees received by the Agent
hereunder in respect of the Loans, net of any amounts payable by such Lender to
the Agent, by wire transfer.
(b) It is agreed that each Lender's Loans are intended by the Lenders
to be equal at all times to such Lender's ratable portion (as determined in
accordance with the percentage amounts set forth in Schedule 2.01 hereto) of the
aggregate principal amount of all Loans outstanding. Notwithstanding such
agreement, the Lenders agree that in order to facilitate the administration of
this Agreement and the other Loan Documents, settlement among them shall,
subject to the provisions of clause (d) below, take place on a periodic basis in
accordance with the provisions of clause (c) below.
(c) (i) To the extent and in the manner hereinafter provided in this
Section 2.17, settlement among the Lenders as to Loans shall occur periodically
on Settlement Dates determined from time to time by the Agent, which may occur
before or after the occurrence or during the continuance of a Default or Event
of Default and whether or not all of the conditions to the making of Loans set
forth in Section 5.01 have been met. On each Settlement Date, payments shall be
made to the Agent for the account of the Lenders in the manner provided in this
Section 2.17 in accordance with the Settlement Report delivered by the Agent
pursuant to the provisions of this Section 2.17 in respect of such Settlement
Date so that as of each Settlement Date, and after giving effect to the
transactions on such Settlement Date, each Lender's Loans shall equal such
Lender's ratable portion of the Loans outstanding as determined in accordance
with the percentage amounts set forth in Schedule 2.01 hereto.
<PAGE>
(ii) The Agent shall designate periodic Settlement Dates which may
occur on any Business Day after the Initial Closing Date; provided, however,
that Settlement Dates shall occur on the closest Business Day to the 10th and
25th day of each calendar month or more frequently as determined by the Agent in
its discretion (including, without limitation, under clause (d)(i) hereof). The
Agent shall designate a Settlement Date by delivering to each Lender a
Settlement Report not later than 10:00 a.m. (New York City time) on the proposed
Settlement Date, which Settlement Report shall be with respect to the period
beginning on the next preceding Settlement Date and ending on such designated
Settlement Date.
(iii) Between Settlement Dates, the Agent shall request and Fleet
as a Lender shall, subject to the provisions of clause (d) below, advance to the
Borrowers out of Fleet's own funds, the entire principal amount of any Loan
requested or deemed requested pursuant to Section 2.03 (any such Loan being
referred to as a "Non-Ratable Loan"). The making of each Non-Ratable Loan by
Fleet shall be deemed to be a purchase by Fleet of a 100% participation in each
other Lender's ratable portion of the amount of such Non-Ratable Loan. All
payments of principal, interest and any other amount with respect to such
Non-Ratable Loan shall be payable to and received by the Agent for the account
of Fleet. Any payments received by the Agent between Settlement Dates which in
accordance with the terms of this Agreement are to be applied to the reduction
of the outstanding principal balance of Loans, shall be paid over to and
retained by Fleet for such application, and such payment to and retention by
Fleet shall be deemed, to the extent of each other Lender's ratable portion of
such payment, to be a purchase by each such other Lender of a participation in
the Loans (including the repurchase of participations in Non-Ratable Loans) held
by Fleet immediately prior to the receipt and application of such payment.
(iv) If on any Settlement Date the decrease, if any, in the dollar
amount of any Lender's Loans which is required to comply with the first sentence
of Section 2.17(b) is more than such Lender's ratable portion of amounts
received by the Agent and paid only to Fleet since the next preceding Settlement
Date, such Lender and the Agent, in their respective records, shall apply such
Lender's ratable portion of such amounts to the decrease in such Lender's Loans,
and Fleet shall pay to the Agent, for the account of such Lender, the excess.
(v) If on any Settlement Date the increase, if any, in the dollar
amount of any Lender's Loans which is required to comply with the first sentence
of Section 2.17(b) exceeds such Lender's ratable portion of amounts received by
the Agent and paid only to Fleet since the next preceding Settlement Date, such
Lender and the Agent, in their respective records, shall apply such Lender's
ratable portion of such amounts to the increase in such Lender's Loans, and such
Lender shall pay to the Agent, for the account of Fleet, the excess.
<PAGE>
(vi) If a Settlement Report indicates that no Loans have been made
during the period since the next preceding Settlement Date, then such Lender's
ratable portion of any amounts received by the Agent but paid only to Fleet
shall be paid by Fleet to the Agent, for the account of such Lender. If a
Settlement Report indicates that the increase in the dollar amount of a Lender's
Loans which is required to comply with the first sentence of Section 2.17(b) is
exactly equal to such Lender's ratable portion of amounts received by the Agent
but paid only to Fleet since the next preceding Settlement Date, such Lender and
the Agent, in their respective records, shall apply such Lender's ratable
portion of such amounts to the increase in such Lender's Loans.
(vii) If any amounts received by Fleet in respect of the
Obligations are later required to be returned or repaid by Fleet to the
Borrowers or any other obligor or their respective representatives or successors
in interest, whether by court order, settlement or otherwise, and such amounts
repaid or returned by Fleet are in excess of Fleet's ratable portion of all such
amounts required to be returned by all Lenders, each other Lender shall, upon
demand by Fleet with notice to the Agent, pay to the Agent for the account of
Fleet, an amount equal to the excess of such Lender's ratable portion of all
such amounts required to be returned by all Lenders over the amount, if any,
returned directly by such Lender.
(viii) (x) Payment by any Lender to the Agent shall be made not
later than 1:00 p.m. (New York City time) on the Business Day such payment is
due, provided that if such payment is due on written demand by another
Lender, including pursuant to clause (d) below, such written demand shall be
made on the paying Lender not later than 10:00 a.m. (New York City time) on
such Business Day. Payment by the Agent to any Lender shall be made by wire
transfer, promptly following the Agent's receipt of funds for the account of
such Lender and in the type of funds received by the Agent, provided that if
the Agent receives such funds at or prior to 1:00 p.m. (New York City time),
the Agent shall pay such funds to such Lender by 3:00 p.m. (New York City
time) on such Business Day. If a demand for payment is made after the
applicable time set forth above, the payment due shall be made by 3:00 p.m.
(New York City time) on the first Business Day following the date of such
demand.
(y) If a Lender shall, at any time, fail to make any payment
to the Agent required hereunder, the Agent may, but shall not be required to,
retain payments that would otherwise be made to such Lender hereunder and
apply such payments to such Lender's defaulted obligations hereunder, at such
time, and in such order, as the Agent may elect in its sole discretion.
(z) With respect to the payment of any funds under this Section
2.17(c), whether from the Agent to a Lender or from a Lender to the
<PAGE>
Agent, the party failing to make full payment when due pursuant to the terms
hereof shall, upon written demand by the other party, pay such amount together
with interest on such amount at the Federal Funds Effective Rate.
(d) (i) The Agent shall have the right at any time to require, by
notice to each Lender, that all settlements in respect of advances and
repayments of Loans be made on a daily basis. From and after the giving of such
notice (and until such time, if any, as the Agent notifies the Lenders of its
determination to return to a periodic settlement basis), each Lender shall pay
to the Agent such Lender's ratable portion of the amount of each Loan on the
date such Loan is made in accordance with the provisions of clause (c)(viii)
above and the Agent shall pay to each Lender by wire transfer by 5:00 p.m. (New
York City time) funds received before 1:00 p.m. (New York City time) on such
Business Day by the Agent from the Borrowers and by 3:00 p.m. (New York City
time) funds received after 1:00 p.m. (New York City time) of the preceding
Business Day by the Agent from the Borrowers, by wire transfer, such Lender's
ratable portion of the net amount of all payments received by the Agent
hereunder in respect of the principal of the Loans (after deducting the
principal amount of Loans made on such day) or in respect of interest on the
Loans. Any amount payable pursuant to this subsection which is not paid when
due shall bear interest, payable by the Agent, for each day until paid in full
at the Federal Funds Effective Rate in effect on such day.
(ii) In addition to, and without limiting the right of the Agent
to require daily settlement pursuant to clause (i), upon written demand by Fleet
with notice thereof to the Agent, each other Lender shall pay to the Agent, for
the account of Fleet, as the repurchase of Fleet's participation interest in
such Lender's Loans, an amount equal to 100% of such Lender's ratable portion of
the unpaid principal amount of all Non-Ratable Loans. Payments made pursuant to
this clause (ii) shall be made not later than 5:00 p.m. (New York City time) on
any Business Day if demand for such payment is received by such Lender not later
than 10:00 a.m. (New York City time) on such Business Day; otherwise, any such
payment shall be made on the next Business Day after demand is received
therefor.
SECTION II.18. Making of Loans. (a) Unless the Agent has been
notified in writing to the contrary before 2:00 p.m. New York time on the date
of any borrowing, the Agent may assume that each Lender will make its ratable
portion of any amount to be borrowed available to the Agent in accordance with
Section 2.02(b) hereof, and the Agent may in its discretion, in reliance upon
such assumption, make available to the Borrowers on such date a corresponding
amount. If and to the extent such Lender shall not make such ratable portion
available to the Agent, such Lender and the Borrowers severally agree to repay
to the Agent forthwith on demand such corresponding amount, together with
interest thereon for each day from the date such amount is made available to the
Borrowers until the date such amount is repaid to the Agent, as to the
Borrowers, at the rate of interest applicable to Loans hereunder, and
<PAGE>
as to such other Lender, at the Federal Funds Effective Rate and until so
repaid such amount shall be deemed to constitute a Loan by the Agent to the
Borrowers hereunder entitled to the benefits of the Collateral and the other
provisions hereof applicable to the Loans. If such Lender shall repay to the
Agent such corresponding amount, the amount so repaid shall constitute such
Lender's ratable portion of the Loans made on such borrowing date for
purposes of this Agreement. No Lender shall be responsible for the failure
of any other Lender to make its ratable portion of such Loans available on
the borrowing date.
(b) Without limiting the generality of Article IX, each Lender
expressly authorizes the Agent to determine on behalf of such Lender (i) whether
to make Loans requested or deemed requested by the Borrowers on any borrowing
date (unless the Agent has been notified in writing to the contrary before 2:00
p.m. New York time on such borrowing date), (ii) the creation of any reserves
against the Borrowing Base, (iii) any reduction of advance rates applicable to
the Borrowing Base and (iv) whether specific items of inventory constitute
"Eligible Inventory" in accordance with the definition of such term set forth in
Article I. The Agent shall give prompt notice to the Lenders of any
determinations made pursuant to clause (ii) or (iii) above.
SECTION II.19. Joint and Several Borrowers. The parties hereto agree
and confirm that the obligations of the Borrowers under and/or in connection
with this Agreement and the other Loan Documents (including, without limitation,
with respect to payments of principal, interest, fees and all other amounts with
respect to the Loans) are the joint and several undertaking of each Borrower.
SECTION II.20. Individual Borrowing and Letter of Credit Limit.
Notwithstanding any provision in this Agreement to the contrary, none of the
Borrowers shall be entitled to request Loans, receive Loan advances or request
the issuance of Letters of Credit unless the Maximum Facility Amount of the
applicable Borrower shall be greater than the amount of Loans requested by such
Borrower and not repaid and all Letter of Credit Usage with respect to Letters
of Credit previously issued for the account of such Borrower. In furtherance of
this Section 2.20, (i) all borrowing base and other collateral reporting
material described in Section 6.05(g) and/or Section 6.05(h) of this Agreement
shall be presented on a Borrower by Borrower basis in a manner consistent with
this Section 2.20 and (ii) on the date of delivery of the borrowing base and
other collateral reporting material described in Section 6.05(g) and/or Section
6.05(h) (or at such later date as the Agent shall request), each Borrower shall
repay Loans to the extent that the principal amount of Loans and Letters of
Credit requested by such Borrower shall exceed the Maximum Facility Amount of
such Borrower. Nothing contained in this Section 2.20 shall permit Loans to be
made or Letters of Credit to be issued unless the Borrowers are in compliance
with the other provisions of this Agreement (including, without limitation,
Section 2.01(a)).
IIA. LETTERS OF CREDIT
<PAGE>
SECTION 2A.01. Issuance of Letters of Credit. Upon the request of
Jitney Jungle, and subject to the conditions set forth in Article V hereof and
such other conditions to the opening of Letters of Credit as the Letter of
Credit Issuer requires of its customers generally, the Agent shall cause the
Letter of Credit Issuer from time to time to open trade or standby letters of
credit (each, a "Letter of Credit") for the account of the Borrowers; provided
that the Letter of Credit Usage shall not at any time exceed $30,000,000; and
provided, further, that the face amount of any Letter of Credit that Jitney
Jungle may request to be opened at any time shall not exceed an amount equal to
(A) the lesser of (i) the Total Commitment at such time and (ii) the Borrowing
Base at such time minus (B) the sum of (i) the unpaid principal amount of all
Loans outstanding at such time, (ii) the Letter of Credit Usage at such time and
(iii) the reserves then in effect under Section 2.01(c) hereof. The issuance of
each Letter of Credit shall be made on at least four Business Days' prior
written notice from Jitney Jungle to the Agent, at its Domestic Lending Office,
which written notice shall be an application for a Letter of Credit on the
Letter of Credit Issuer's customary form and shall indicate the Borrower for
whose account the Letter of Credit is to be issued. The expiration date of any
trade Letter of Credit shall not be later than 180 days from the date of
issuance thereof and the expiration date of any standby Letter of Credit shall
not be later than 365 days from the date of issuance thereof and, in any event,
no Letter of Credit shall have an expiration date later than the Termination
Date. The Letters of Credit shall be issued with respect of transactions
occurring in the ordinary course of business of the Borrowers.
SECTION 2A.02. Payment; Reimbursement. Upon the issuance of any
Letter of Credit, the Agent shall notify each Lender of the principal amount,
the number, and the expiration date thereof and the amount of such Lender's
participation therein. By the issuance of a Letter of Credit hereunder and
without further action on the part of the Agent, the Letter of Credit Issuer or
the Lenders, each Lender hereby accepts from the Letter of Credit Issuer a
participation (which participation shall be nonrecourse to the Letter of Credit
Issuer) in such Letter of Credit equal to such Lender's pro rata (based on its
Commitment) share of such Letter of Credit, effective upon the issuance of such
Letter of Credit. Each Lender hereby absolutely and unconditionally assumes, as
primary obligor and not as a surety, and agrees to pay and discharge, and to
indemnify and hold the Letter of Credit Issuer harmless from liability in
respect of, such Lender's pro rata share of the amount of any drawing under a
Letter of Credit. Each Lender acknowledges and agrees that its obligation to
acquire participations in each Letter of Credit issued by the Letter of Credit
Issuer and its obligation to make the payments specified herein, and the right
of the Letter of Credit Issuer to receive the same, in the manner specified
herein, are absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, the occurrence and
continuance of a Default or an Event of Default hereunder, and that each such
payment shall be made without any offset, abatement, withholding or reduction
whatsoever. The Agent and/or the Letter of Credit Issuer shall review, on
behalf of the
<PAGE>
Lenders, each draft and any accompanying documents presented under a Letter
of Credit and shall notify each Lender of any such presentment. Promptly
after the Agent and/or the Letter of Credit Issuer shall have ascertained
that any draft and any accompanying documents presented under such Letter of
Credit appear on their face to be in substantial conformity with the terms
and conditions of the Letter of Credit, the Agent shall give telephonic or
facsimile notice to the Lenders and the Borrowers of the receipt and amount
of such draft and the date on which payment thereon will be made, and the
Lenders shall, by 11:00 a.m., New York City time on the date such payment is
to be made, pay the amounts required to the Agent on behalf of the Letter of
Credit Issuer in New York, New York in immediately available funds, and the
Letter of Credit Issuer, not later than 3:00 p.m. on such day, shall make the
appropriate payment to the beneficiary of such Letter of Credit. If the
Letter of Credit Issuer shall pay any draft presented under a Letter of
Credit, then the Agent and/or the Letter of Credit Issuer, on behalf of the
Lenders, shall charge the general deposit account of the Borrowers with the
Agent and/or the Letter of Credit Issuer, as the case may be, for the amount
thereof, together with the Agent's or the Letter of Credit Issuer's customary
overdraft fee in the event the funds available in such account shall not be
sufficient to reimburse the Lenders for such payment and the Borrowers shall
not otherwise have discharged such reimbursement obligation by 12:00 noon,
New York City time, on the date of such payment. If the Lenders have not
been reimbursed with respect to such drawing as provided above, the Borrowers
shall pay to the Agent, for the account of the Lenders, the amount of the
drawing together with interest on such amount at a rate per annum (computed
on the basis of the actual number of days elapsed over a year of 365 days)
equal to the Prime Rate plus 4%, payable on demand. The obligation of the
Borrowers under this Section 2A.02 to reimburse the Lenders and the Letter of
Credit Issuer for all drawings under Letters of Credit shall be absolute,
unconditional and irrevocable and shall be satisfied strictly in accordance
with their terms, irrespective of:
(a) any lack of validity or enforceability of any Letter of Credit;
(b) the existence of any claim, setoff, defense or other right which
any Borrower or any other person may at any time have against the
beneficiary under any Letter of Credit, the Agent, the Letter of Credit
Issuer or any Lender (other than the defense of payment in accordance with
the terms of this Agreement or a defense based on the gross negligence, bad
faith or willful misconduct of the Agent, the Letter of Credit Issuer or
any Lender) or any other person in connection with this Agreement or any
other transaction;
(c) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(d) payment by the Agent, the Letter of Credit Issuer or any Lender
under any Letter of Credit against presentation of a draft or other
document which does not comply with the terms of such Letter of Credit; and
(e) any other circumstance or event whatsoever, whether or not
similar to any of the foregoing.
It is understood that in making any payment under any Letter of Credit
(x) the Agent's, the Letter of Credit Issuer's and any Lender's exclusive
reliance on the documents presented to it under
<PAGE>
such Letter of Credit as to any and all matters set forth therein, including,
without limitation, reliance on the amount of any draft presented under such
Letter of Credit, whether or not the amount due to the beneficiary equals the
amount of such draft and whether or not any document presented pursuant to
such Letter of Credit proves to be insufficient in any respect, if such
document on its face appears to be in order, and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be
inaccurate or untrue in any respect whatsoever and (y) any noncompliance in
any immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, not be deemed willful misconduct
or bad faith of the Agent, the Letter of Credit Issuer or any Lender.
SECTION 2A.03. The Letter of Credit Issuer's Actions. Any Letter of
Credit may, in the discretion of the Letter of Credit Issuer or its
correspondents, be interpreted by them (to the extent not inconsistent with such
Letter of Credit) in accordance with the Uniform Customs and Practice for
Documentary Credits of the International Chamber of Commerce, as adopted or
amended from time to time, or any other rules, regulations and customs
prevailing at the place where any Letter of Credit is available or the drafts
are drawn or negotiated. The Letter of Credit Issuer and its correspondents may
accept and act upon the name, signature, or act of any party purporting to be
the executor, administrator, receiver, trustee in bankruptcy, or other legal
representative of any party designated in any Letter of Credit in the place of
the name, signature, or act of such party.
SECTION 2A.04. Payments in Respect of Increased Costs. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) or any change in generally accepted accounting principles or regulatory
accounting principles applicable to the Agent, the Letter of Credit Issuer or
any Lender shall (i) impose, modify or make applicable to the Agent, the Letter
of Credit Issuer or any Lender any reserve, special deposit or similar
requirement with respect to its obligations under this Article IIA or any Letter
of Credit, (ii) impose on the Agent, the Letter of Credit Issuer or any Lender
any other condition with respect to its obligations under this Article IIA or
any Letter of Credit, or (iii) subject the Agent, the Letter of Credit Issuer or
any Lender to any tax (other than (x) taxes imposed on the overall net income of
the Agent, the Letter of Credit Issuer or such Lender and (y) franchise taxes
imposed on the Agent, the Letter of Credit Issuer or such Lender, in either case
by the jurisdiction in which the Agent, the Letter of Credit Issuer or such
Lender, as appropriate, has its principal office or lending office or any
political subdivision or taxing authority of any such jurisdiction), charge,
fee, deduction or withholding of any kind whatsoever, and the result of any of
the foregoing shall be to increase the cost to the Agent, the Letter of Credit
Issuer or such Lender of maintaining such Letter of Credit or making any payment
under such Letter of Credit or this Article IIA or to reduce the amount of
principal, interest or any fee or compensation receivable by the Agent, the
Letter of Credit Issuer or such Lender in respect of this Article IIA or such
Letter of Credit, then such additional amount or amounts as will compensate the
Agent, the Letter of Credit Issuer or such Lender for such additional costs or
reduction shall be paid to the Agent for its benefit or the benefit of the
Letter of Credit Issuer or such Lender by the Borrowers. Each Lender agrees to
give notice to the Borrowers and the Agent of any such change in law,
regulation, interpretation or administration with reasonable promptness after
becoming actually aware thereof and
<PAGE>
of the applicability thereof to the transactions contemplated in this Article
IIA.
(b) If, after the date of this Agreement, any Lender or the Letter of
Credit Issuer shall have determined that the adoption of any applicable law,
rule, regulation or guideline regarding capital adequacy, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender or the
Letter of Credit Issuer (or its lending office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the effect of
reducing the rate of return on such Lender's or the Letter of Credit Issuer's
capital as a consequence of its obligations under this Article IIA or with
respect to a Letter of Credit to a level below that which such Lender or the
Letter of Credit Issuer could have achieved but for such adoption, change or
compliance (taking into consideration such Lender's and the Letter of Credit
Issuer's policies with respect to capital adequacy) then from time to time, the
Borrowers shall pay to such Lender or the Agent on behalf of the Letter of
Credit Issuer such additional amount or amounts as will compensate the Letter of
Credit Issuer or such Lender for such reduction. Each Lender agrees to give
notice to the Borrowers and the Agent of any adoption of, change in, or change
in interpretation or administration of, any such law, rule, regulation or
guideline with reasonable promptness after becoming actually aware thereof and
of the applicability thereof to the transactions contemplated hereby.
(c) A certificate of the Agent, the Letter of Credit Issuer or a
Lender setting forth such amount or amounts, supported by calculations in
reasonable detail, as shall be necessary to compensate the Agent, the Letter of
Credit Issuer or such Lender, as appropriate, as specified in paragraphs (a) and
(b) above shall be delivered to the Borrowers and shall be conclusive and
binding upon the Borrowers absent manifest error. The Borrowers shall pay the
Agent on behalf of the Letter of Credit Issuer or such Lender the amount shown
as due on any such certificate within five (5) Business Days after its receipt
of the same.
(d) Failure on the part of any Lender, the Letter of Credit Issuer or
the Agent to demand compensation for any increased costs, reduction in amounts
received or receivable with respect to this Article IIA or any Letter of Credit
or reduction in the rate of return earned on such Lender's or the Letter of
Credit Issuer's capital, in each case pursuant to paragraph (a) or (b) above,
shall not constitute a waiver of the Agent's, the Letter of Credit Issuer's or
such Lender's rights to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in rate of return pursuant to
paragraph (a) or (b) above. The protection under this Section 2A.04 shall be
available to each Lender, the Letter of Credit Issuer and the Agent regardless
of any possible contention of the invalidity or inapplicability of any law,
regulation or other condition which shall give rise to any demand by such
Lender, the Letter of Credit Issuer or the Agent for compensation (but if such
law, regulation or
<PAGE>
other condition is finally determined to be invalid or inapplicable, the
Agent on its behalf and on behalf of the Letter of Credit Issuer or Lenders
shall promptly refund (without interest) all amounts paid under this Section
2A.04 arising from such invalid or inapplicable law, regulation or other
condition).
(e) Notwithstanding any other provision of this Section 2A.04, no
Lender shall demand any payment referred to above if it shall not at the time be
the general policy or practice of such Lender to demand such compensation in
substantially similar circumstances under substantially comparable provisions of
other credit agreements.
SECTION 2A.05. Indemnity as to Letters of Credit. Each Borrower and
each Guarantor hereby agrees to indemnify and hold harmless the Agent, the
Letter of Credit Issuer and the Lenders from and against any and all claims,
damages, losses, liabilities, costs or expenses whatsoever which the Agent, the
Letter of Credit Issuer or the Lenders may incur or suffer by reason of or in
connection with the execution and delivery or assignment of, or payment under,
any Letter of Credit, except only if and to the extent that any such claim,
damage, loss, liability, cost or expense shall be caused by the gross
negligence, willful misconduct or bad faith of the Agent, the Letter of Credit
Issuer or any Lender performing its obligations under this Agreement. Without
limiting the foregoing, each Borrower and each Guarantor further agrees to
indemnify and hold harmless the Agent, the Letter of Credit Issuer, their
respective officers and directors, each person who controls the Agent or the
Letter of Credit Issuer within the meaning of Section 15 of the Securities Act
of 1933 or any applicable state securities law and their respective successors
from and against any and all claims, damages, losses, liabilities, costs or
expenses, joint or several, to which they or any of them may become subject
under any Federal or state securities law, rule or regulation, at common law or
otherwise, insofar as such claims, damages, losses, liabilities, costs or
expenses arise out of or are based upon the execution and delivery by the Letter
of Credit Issuer of any Letters of Credit or the execution and delivery of any
other document in connection therewith (but not including any claims, damages,
losses, liabilities, costs or expenses arising from the gross negligence, bad
faith or willful misconduct of the Letter of Credit Issuer). The Borrowers,
upon demand by the Agent or the Letter of Credit Issuer at any time, shall
reimburse the Agent and the Letter of Credit Issuer for any reasonable legal or
other expenses incurred in connection with investigating or defending against
any of the foregoing. The indemnities contained herein shall survive the
expiration or termination of the Letters of Credit and this Agreement.
SECTION 2A.06. Letter of Credit Fees. The Borrowers agree to pay to
the Agent (a) for the ratable benefit of the Lenders, with respect to any Letter
of Credit, on the last business day of each March, June, September and December
and on the date of the full drawing, cancellation, termination or expiration of
such Letter of Credit, a letter of credit fee for such calendar quarter or
shorter period equal to the then Applicable Margin on Eurodollar Loans on the
average daily undrawn amount thereof
<PAGE>
for such calendar quarter or shorter period, payable to the Agent at its
Domestic Lending Office in immediately available funds and (b) for the sole
benefit of the Letter of Credit Issuer, with respect to any Letter of Credit,
on the same dates as the Letter of Credit fee with respect to such Letter of
Credit is payable under clause (a) above, a fronting fee for such calendar
quarter or shorter period equal to one-quarter of one percent (1/4%) per
annum on the average daily undrawn amount thereof for such calendar quarter
or shorter period, payable to the Agent on behalf of the Letter of Credit
Issuer at the Agent's Domestic Lending Office in immediately available funds.
The foregoing fees shall be computed on the basis of the actual number of
days elapsed over a year of 365 days. Additionally, the Borrowers shall pay
to the Agent at its Domestic Lending Office for the sole account of the
Letter of Credit Issuer upon demand by the Agent or the Letter of Credit
Issuer all of the Letter of Credit Issuer's customary fees and expenses with
respect to the opening, drawing upon, extending, amending, transferring,
canceling or administration of Letters of Credit from time to time in effect.
The Agent shall disburse to each Lender such Lender's pro rata share of any
payment of the letter of credit fees referred to in clause (a) of the first
sentence of this Section 2A.06 in immediately available funds within one (1)
Business Day of the Agent's receipt of such payment.
III. COLLATERAL SECURITY
SECTION III.1. Security Documents. The Obligations shall be secured
by the Collateral described in the Security Documents and are entitled to the
benefits thereof. The Borrowers shall, and shall cause the other Grantors to,
duly execute and deliver the Security Documents, all consents of third parties
necessary to permit the effective granting of the Liens created in such
agreements, financing statements pursuant to the Uniform Commercial Code and
other documents, all in form and substance satisfactory to the Agent, as may be
reasonably required by the Agent to grant to the Agent for the benefit of the
Secured Parties a valid, perfected and enforceable first priority Lien on and
security interest in (subject only to the Liens permitted under Section 7.01
hereof) the Collateral.
SECTION III.2. Filing and Recording. The Borrowers shall, at their
sole cost and expense, cause all instruments and documents given as evidence of
security pursuant to this Agreement to be duly recorded and/or filed or
otherwise perfected in all places necessary, in the opinion of the Agent, and
take such other actions as the Agent may reasonably request, in order to perfect
and protect the Liens of the Agent and the Secured Parties in the Collateral.
Each Borrower and each Guarantor, to the extent permitted by law, hereby
authorizes the Agent to file any financing statement in respect of any Lien
created pursuant to the Security Documents which may at any time be required or
which, in the opinion of the Agent, may at any time be desirable although the
same may have been executed only by the Agent or, at the option of the Agent, to
sign such financing statement on behalf of such Borrower or such Guarantor, as
the
<PAGE>
case may be, and file the same, and each Borrower and each Guarantor hereby
irrevocably designates the Agent, its agents, representatives and designees as
its agent and attorney-in-fact for this purpose. In the event that any
re-recording or refiling thereof (or the filing of any statements of
continuation or assignment of any financing statement) is required to protect
and preserve such Lien, each Borrower shall, at the Borrowers' cost and expense,
cause the same to be recorded and/or refiled at the time and in the manner
requested by the Agent.
SECTION III.3. Real Property; Mortgages; Title Insurance. (a) To
the extent requested prior to the Initial Closing Date by the Agent:
(i) each Borrower and each Guarantor shall duly execute and
deliver to the Agent mortgages or deeds of trust (each such mortgage or
deed of trust, as it may be amended, modified or supplemented from time to
time in accordance with its terms, a "Mortgage") in respect of real
property owned or leased by such Borrower or such Guarantor, together with
consents of third parties to the Mortgages executed and delivered by it,
and such title searches, non-disturbance agreements, lease amendments
and/or consents, landlord's waivers, estoppel certificates and waivers, as
the Agent shall request (in each case in form and substance satisfactory to
the Agent) so as to create in the Agent's favor, for the benefit of the
Secured Parties, upon recordation thereof, a valid, perfected and
enforceable first priority Lien (subject to Liens permitted under
Section 7.01 hereof) on the real property and improvements described
therein, such Mortgages to be in form and substance satisfactory to the
Agent; and
(ii) each Borrower and each Guarantor shall cause the Mortgages
executed and delivered to be duly recorded in the appropriate recording
office or offices and shall pay all fees and taxes payable in connection
therewith.
(b) Each Borrower and each Guarantor shall furnish to the Agent for
the benefit of the Secured Parties, at the Borrowers' cost and expense, one or
more policies of mortgagee title insurance, in form, substance and amount
reasonably satisfactory to the Agent, insuring that each of the Mortgages
executed and delivered by it pursuant hereto is a valid and perfected first
priority Lien (except for the Liens permitted by Section 7.01) in favor of the
Agent, for the benefit of the Secured Parties, on the fee or leasehold interest
of such Borrower or such Guarantor, in the real property and improvements
described therein, and that such Borrower or such Guarantor has good and
marketable title thereto, issued by a title insurance company reasonably
satisfactory to the Agent, together with satisfactory evidence that all title
insurance premiums have been fully paid. The Borrowers shall furnish to the
Agent certified surveys of real property and such other certificates and
documents as the Agent may reasonably request and which are customary in
financing of this type. Each Borrower and each Guarantor shall also provide to
each Lender with respect to any real
<PAGE>
property to be subject to a Mortgage, on or prior to the taking of such
Mortgage, such appraisals of such real property as shall be reasonably
requested by the Agent. If requested by the Agent, each Borrower and each
Guarantor shall, at the Borrowers' cost and expense, furnish to the Agent,
for the benefit of the Secured Parties, flood insurance with respect to any
real property subject to any Mortgage to the extent such flood insurance can
be obtained by such Borrower and such Guarantor on commercially reasonable
terms; provided, however, that, at the Borrowers' cost and expense, each
Borrower and each Guarantor shall in any event maintain and shall furnish to
the Agent flood insurance with respect to any owned or leased real property
subject to any Mortgage to the extent flood insurance with respect to such
real property is required to be maintained by applicable law (whether such
law is applicable to any Lender (including, without limitation, by reason of
such Mortgage), any Borrower, any Guarantor or otherwise).
(c) Upon any Borrower or any Guarantor acquiring any real property
(whether owned or leased) after the Initial Closing Date (including, without
limitation, on the Merger Closing Date) in accordance with the provisions of
this Agreement, such Borrower or such Guarantor shall, to the extent
requested by the Agent, execute and deliver a Mortgage with respect to such
real property and such other documents as may be reasonably requested by the
Lenders with respect thereto and shall, to the extent requested by the Agent,
deliver or cause to be delivered to the Agent each of the documents described
in clause (b) above. This Section 3.03 shall not be deemed to allow any
Borrower or any Guarantor to acquire any property if otherwise prohibited by
this Agreement. Notwithstanding the foregoing, the Borrowers and Guarantors
shall only be obligated to exercise reasonable efforts to comply with the
requirements of this Section 3.03 with respect to the granting of mortgages
on leaseholds.
SECTION III.4. Post-Initial Closing Date Real Property; Further
Assurances. Not later than 60 days after the Initial Closing Date with respect
to any fee property (except with respect to the Alabama fee properties of
Delchamps which shall be not later than 10 days after the Initial Closing Date)
and 90 days after the Initial Closing Date with respect to any leasehold
property, the Agent shall have received (to the extent requested by the Agent,
whether before or after the Initial Closing Date):
(a) fully executed counterparts of Mortgages in respect of real
property owned or leased by such Borrower or such Guarantor (and identified
on Schedule 3.04 annexed hereto), together with consents of third parties
to the Mortgages executed and delivered by it, and such title searches,
non-disturbance agreements, lease amendments and/or consents, landlord's
waivers, estoppel certificates and waivers, as the Agent shall request (in
each case in form and substance satisfactory to the Agent) so as to create
in the Agent's favor, for the benefit of the Secured Parties, upon
recordation thereof, a valid, perfected and enforceable first priority Lien
(subject to Liens permitted under Section 7.01 hereof) on the real property
and improvements described therein, such Mortgages to be in form and
substance satisfactory to the Agent;
<PAGE>
(b) each Borrower and each Guarantor shall cause the Mortgages
executed and delivered to be duly recorded in the appropriate recording
office or offices and shall pay all fees and taxes payable in connection
therewith;
(c) mortgagee title insurance (and, as applicable, endorsements
to existing title insurance policies), in form, substance and amount
reasonably satisfactory to the Agent, insuring that each of the Mortgages
executed and delivered by it pursuant hereto is a valid and perfected first
priority Lien (except for the Liens permitted by Section 7.01) in favor of
the Agent, for the benefit of the Secured Parties, on the fee or leasehold
interest of such Borrower or such Guarantor, in the real property and
improvements described therein, and that such Borrower or such Guarantor
has good and marketable title thereto, together with such other
endorsements reasonably requested by the Agent, issued by a title insurance
company reasonably satisfactory to the Agent, together with satisfactory
evidence that all title insurance premiums have been fully paid; and
(d) a survey, in form and substance satisfactory to the Agent,
to each Mortgaged Property, each certified by a licensed professional
surveyor satisfactory to the Agent and revealing no facts which would
materially interfere with the use of such properties by the Borrower and
its Subsidiaries, or an update of an existing survey provided the title
company will delete the exception for existing facts which a current survey
would disclose.
Notwithstanding the foregoing, the Borrowers and Guarantors shall only be
obligated to exercise reasonable efforts to comply with the requirements of this
Section with respect to the granting of Mortgages on leaseholds.
SECTION III.5. Additional Collateral. Each Borrower and each
Guarantor acknowledges that it is its intention to provide the Agent with a Lien
on all the property (excluding automobiles, but including, without limitation,
any property acquired in connection with the Related Transactions) of the
Borrowers, the Guarantors and their respective subsidiaries (personal, real and
mixed), whether now owned or hereafter acquired (other than as agreed to in
writing by the Agent), subject only to Liens permitted hereunder. Without
limitation of Section 3.03(c) hereof, each Borrower and each Guarantor shall
from time to time promptly notify the Agent of the acquisition by any of them or
any of their respective subsidiaries of any material property in which the Agent
does not then hold a perfected Lien (other than as agreed to in writing by the
Agent), or the creation or existence of any such property, and such person
shall, upon request by the Agent, promptly execute and deliver to the Agent or
cause to be executed and delivered to the Agent pledge agreements, security
agreements, mortgages or other like agreements with respect to such property,
together with such
<PAGE>
other documents, certificates, opinions of counsel and the like as the Agent
shall reasonably request in connection therewith, in form and substance
satisfactory to the Agent, such that the Agent shall receive valid and
perfected first priority Liens (subject to Liens permitted hereby) on all
such property (including property which, on the Initial Closing Date, is not
subject to a Lien in favor of the Agent). In addition, in the event that any
Borrower, any Guarantor or any of their respective subsidiaries acquires or
owns any material trademarks, copyrights, patents or other intellectual
property, the Borrowers shall notify the Agent promptly in writing and shall
execute, or cause the execution of a security agreement and other documents
with respect thereto in form and substance reasonably satisfactory to the
Agent. Notwithstanding the foregoing, the Borrowers and Guarantors shall
only be obligated to exercise reasonable efforts to comply with the
requirements of this Section with respect to the granting of mortgages on
leaseholds.
IV. REPRESENTATIONS AND WARRANTIES
Each of the Borrowers and each of the Guarantors jointly and severally
represents and warrants to each of the Lenders that:
SECTION IV.1. Organization, Legal Existence. Each Borrower, each
Guarantor and each of their respective subsidiaries is a legal entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective organization, has the requisite power and
authority to own their property and assets and to carry on their business as now
conducted and as currently proposed to be conducted and is qualified to do
business in each jurisdiction where the failure to so qualify would not have a
Material Adverse Effect (all such jurisdictions being listed in Schedule 4.01
annexed hereto). Prior to the Initial Closing Date, Acquisition Corp. has not
engaged in any business or incurred any liabilities except for activities,
expenses and liabilities incident to its organization and to the consummation of
the Transactions and the Related Transactions. Each Borrower and each Guarantor
has the corporate power to execute, deliver and perform its obligations under
this Agreement and the other Loan Documents to which it is a party, and, with
respect to each Borrower, to borrow hereunder and to execute and deliver the
Notes.
SECTION IV.2. Authorization. The execution, delivery and performance
by each Borrower and each Guarantor of this Agreement and each of the other Loan
Documents to which it is a party, the borrowings hereunder by each Borrower, the
execution and delivery by each Borrower of the Notes and the grant of security
interests in the Collateral created by the Security Documents (collectively, the
"Transactions") and the consummation by each Borrower, each Guarantor and each
of their respective subsidiaries of the Related Transactions (a) have been duly
authorized by all requisite corporate and, if required, stockholder action and
(b) will not (i) violate (A) any provision of law, statute, rule or regulation
applicable to any Borrower, any
<PAGE>
Guarantor or any of their respective subsidiaries or the certificate or
articles of incorporation or other applicable constitutive documents or the
by-laws of any Borrower, any Guarantor or any of their respective
subsidiaries, as the case may be, (B) any order of any court, or any rule,
regulation or order of any other agency of government binding upon any
Borrower, any Guarantor or any of their respective subsidiaries, or (C) any
provisions of any indenture, agreement or other instrument to which any
Borrower, any Guarantor or any of their respective subsidiaries, or any of
their respective properties or assets are or may be bound (which violation
would reasonably be expected to have a Material Adverse Effect), (ii) be in
conflict with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under any indenture, agreement or other
instrument referred to in (b)(i)(C) above which will remain in effect
following the Initial Closing Date or (iii) result in the creation or
imposition of any Lien of any nature whatsoever (other than in favor of the
Agent, for the benefit of the Secured Parties, as contemplated by this
Agreement and the Security Documents) upon any property or assets of any
Borrower, any Guarantor or any of their respective subsidiaries.
SECTION IV.3. Governmental Approvals. No registration or filing
(other than the filings necessary to perfect the Liens created by the Security
Documents) with, consent or approval of, or other action by, any Federal, state
or other governmental agency, authority or regulatory body is or will be
required on behalf of any Borrower or any Guarantor or any subsidiary of any of
them in connection with the Transactions and the Related Transactions, other
than any which have been made or obtained on the Initial Closing Date and with
respect to the Merger, other than any which will have been made or obtained no
later than the Merger Closing Date, as the case may be, in each case as set
forth on Schedule 4.03.
SECTION IV.4. Binding Effect. This Agreement and each of the other
Loan Documents to which it is a party constitutes, and each of the Notes when
duly executed and delivered will constitute, a legal, valid and binding
obligation of each Borrower and each Guarantor, as appropriate, enforceable in
accordance with its terms, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).
SECTION IV.5. Material Adverse Change. Since the date of its
corporate formation (in the case of the Acquisition Corp.), and since May 3,
1997 (in the case of the Borrowers and their respective subsidiaries), there has
been no change, event or facts that would reasonably be expected to have a
Material Adverse Effect.
SECTION IV.6. Litigation; Compliance with Laws; etc. (a) There are
not any actions, suits or proceedings at law or in equity or by or before any
governmental instrumentality or other agency or regulatory authority now pending
or, to the knowledge of any Responsible Officer of any Borrower, any Guarantor
or any of their
<PAGE>
respective subsidiaries, threatened, against or affecting any Borrower, any
Guarantor or any of their respective subsidiaries or the businesses, assets
or rights of any Borrower, any Guarantor or any of their respective
subsidiaries (i) which involve any of the Transactions or the Related
Transactions or (ii) as to which it is probable (within the meaning of
Statement of Financial Accounting Standards No. 5) that there will be an
adverse determination and which, if adversely determined, would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) None of the Borrowers, any Guarantor or any of their respective
subsidiaries is in violation of any law in any material respect, or in default
with respect to any judgment, writ, injunction, decree, rule or regulation of
any court or governmental agency or instrumentality which would reasonably be
expected to have a Material Adverse Effect.
SECTION IV.7. Financial Statements. (a) The Borrowers have
heretofore furnished to the Lenders Consolidated balance sheets and statements
of income and cash flows of Jitney Jungle and its Consolidated subsidiaries
dated as of May 3, 1997 audited by and accompanied by the opinion of Deloitte &
Touche, its independent public accountants. Such balance sheets and statements
of income and cash flows present fairly the Consolidated financial condition and
results of operations of Jitney Jungle and its subsidiaries as of the dates and
for the periods indicated, and such balance sheets and the notes thereto
disclose all material liabilities, direct or contingent, of Jitney Jungle and
its subsidiaries, as of the dates thereof to the extent such material
liabilities are required to be disclosed under generally accepted accounting
principles. The Borrowers have heretofore furnished to the Lenders unaudited
Consolidated balance sheets and statements of income and cash flows of Jitney
Jungle and its Consolidated subsidiaries dated as of July 26, 1997, for the
twelve-week fiscal period of Jitney Jungle ending on such date. Such unaudited
balance sheets and statements of income and cash flows present fairly the
Consolidated financial condition and results of operations of Jitney Jungle and
its subsidiaries as of the dates and for the periods indicated, and such balance
sheets and the notes thereto disclose all material liabilities, direct or
contingent, of Jitney Jungle and its subsidiaries as of the dates thereof. The
financial statements referred to in this Section 4.07(a) have been prepared in
accordance with generally accepted accounting principles consistently applied
(with respect to the twelve-week financial statements only, subject to year-end
adjustments).
(b) The Borrowers have, on or about August 21, 1997, furnished to the
Lenders projected income statements, balance sheets, cash flows, Undrawn
Availability forecasts and forecasts as to Excess Cash Flow and as to compliance
with the covenants contained in Sections 7.07, 7.08, 7.09, 7.10 and 7.11 hereof,
in each case of the Borrowers on a Consolidated basis for the period initially
ending May 2, 1998 and for each fiscal year ending thereafter prior to the Final
Maturity Date (which projections shall be on a fiscal month by fiscal month
basis for the fiscal period ending May 2, 1998
<PAGE>
and on a yearly basis thereafter), together with a schedule demonstrating
prospective compliance with all financial covenants contained in this
Agreement, such projections disclosing all material assumptions made by
Jitney Jungle and its subsidiaries in formulating such projections and both
before and after giving effect to the Related Transactions and the
Transactions, as applicable. The projections are based upon reasonable
estimates and assumptions, all of which are reasonable in light of the
conditions which existed at the time the projections were made, have been
prepared on the basis of the assumptions stated therein, and reflect as of
the Initial Closing Date the reasonable estimate of Jitney Jungle and its
subsidiaries of the results of operations and other information projected
therein.
(c) The Borrowers have, on or about the Initial Closing Date,
furnished to the Lenders a Consolidated pro forma balance sheet and a statement
of income and cash flows of Jitney Jungle and its subsidiaries, which are
consistent with the previous balance sheets, statements of income and cash flows
of Jitney Jungle and its subsidiaries in all material respects, and which sets
forth information before and after giving effect to the Transactions and the
Related Transactions.
(d) The Borrowers have heretofore furnished to the Lenders
Consolidated balance sheets and statements of income and cash flows of the
Target Company and its Consolidated subsidiaries dated as of June 28,1997
audited by and accompanied by the opinion of KPMG Peat Marwick LLP, its
independent public accountants. Such balance sheets and statements of income
and cash flows present fairly the Consolidated financial condition and results
of operations of the Target Company and its subsidiaries as of the dates and for
the periods indicated, and such balance sheets and the notes thereto disclose
all material liabilities, direct or contingent, of the Target Company and its
subsidiaries, as of the dates thereof to the extent such material liabilities
are required to be disclosed under generally accepted accounting principles.
The financial statements referred to in this Section 4.07(d) have been prepared
in accordance with generally accepted accounting principles consistently
applied.
SECTION IV.8. Federal Reserve Regulations. (a) None of any
Borrower, any Guarantor or any of their respective subsidiaries is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of the Loans will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock in violation of Regulation G, T, U or X or to
extend credit to others for the purpose of purchasing or carrying Margin Stock
or to refund indebtedness originally incurred for such purpose, or (ii) for any
purpose which entails a violation of, or which is inconsistent with, the
provisions of the Regulations of the Board, including, without limitation,
Regulation G, T, U or X thereof. If requested by any Lender, the Borrowers
<PAGE>
or any of their respective subsidiaries shall furnish to such Lender a
statement on Federal Reserve Form U-1 referred to in said Regulation U.
SECTION IV.9. Taxes. The Borrowers, the Guarantors and each of their
respective subsidiaries have each filed or caused to be filed all Federal,
state, local and foreign tax returns which are required to be filed by them,
other than tax returns in respect of taxes that (x) are not franchise, capital
or income taxes, (y) in the aggregate are not material and (z) would not, if
unpaid, result in the imposition of any material Lien on any property or assets
of any Borrower, any Guarantor or any of their respective subsidiaries. The
Borrowers, the Guarantors and their respective subsidiaries have paid or caused
to be paid all taxes shown to be due and payable on such filed returns or on any
assessments received by them, other than any taxes or assessments the validity
of which the Borrowers, the Guarantors or any of their respective subsidiaries
is contesting in good faith by appropriate proceedings, and with respect to
which the Borrowers, the Guarantors or any of their respective subsidiaries
shall, to the extent required by generally accepted accounting principles
consistently applied, have set aside on its books adequate reserves. As of the
Initial Closing Date, no Federal income tax returns of the Borrowers, the
Guarantors or any of their respective subsidiaries are currently being audited
by the United States Internal Revenue Service. All deficiencies which have been
asserted against the Borrowers, the Guarantors or any of their respective
subsidiaries as a result of such completed examinations have been fully paid or
finally settled and no issue has been raised in any such examination which, by
application of similar principles, reasonably can be expected to result in
assertion of a material deficiency for any other year not so examined which has
not been reserved for in any financial statement of the Borrowers, the
Guarantors or any of their respective subsidiaries delivered to the Lenders.
None of the Borrowers, the Guarantors or any of their respective subsidiaries
has taken any reporting positions for which they do not have a reasonable basis
and none of the Borrowers, the Guarantors or any of their respective
subsidiaries anticipates any further material tax liability with respect to the
years which have not been closed. None of the Borrowers, the Guarantors or any
of their respective subsidiaries has as of the date hereof requested or been
granted any extension of time to file any Federal, state, local or foreign tax
return. None of the Borrowers, the Guarantors or any of their respective
subsidiaries is party to or has any obligation under any tax sharing agreement.
SECTION IV.10. Employee Benefit Plans. With respect to the
provisions of ERISA:
(i) No Reportable Event has occurred or is continuing with respect to
any Pension Plan.
(ii) No prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) has occurred with respect to any Plan subject
to Part 4 of Subtitle B of Title I of ERISA that could subject any Borrower or
any ERISA
<PAGE>
Affiliate thereof to a material civil penalty assessed pursuant to the
provisions of Section 502 of ERISA or a material tax imposed under the
provisions of Section 4975 of the Code.
(iii) None of any Borrower or any ERISA Affiliate thereof is now,
or has been during the preceding five years, obligated to contribute to a
Pension Plan or a Multiemployer Plan. None of any Borrower or any ERISA
Affiliate thereof has (A) ceased operations at a facility so as to
become subject to the provisions of Section 4062(e) of ERISA, (B) withdrawn as a
substantial employer so as to become subject to the provisions of Section 4063
of ERISA, (C) ceased making contributions to any Pension Plan subject to the
provisions of Section 4064(a) of ERISA to which any Borrower, any subsidiary
thereof or any ERISA Affiliate thereof made contributions, (D) incurred or
caused to occur a "complete withdrawal" (within the meaning of Section 4203 of
ERISA) or a "partial withdrawal" (within the meaning of Section 4205 of ERISA)
from a Multiemployer Plan that is a Pension Plan so as to incur withdrawal
liability under Section 4201 of ERISA (without regard to subsequent reduction or
waiver of such liability under Section 4207 or 4208 of ERISA), or (E) been a
party to any transaction or agreement under which the provisions of Section 4204
of ERISA were applicable, in each case, which would result in a Material Adverse
Effect.
(iv) No notice of intent to terminate a Pension Plan (other than a
Multiemployer Plan) has been filed, nor has any Plan been terminated pursuant to
the provisions of Section 4041(e) of ERISA which would result in a Material
Adverse Effect.
(v) The PBGC has not instituted proceedings to terminate (or appoint
a trustee to administer) a Pension Plan and no event has occurred or condition
exists which might constitute grounds under the provisions of Section 4042 of
ERISA for the termination of (or the appointment of a trustee to administer) any
such Plan.
(vi) With respect to each Pension Plan (other than a Multiemployer
Plan) that is subject to the provisions of Title I, Subtitle B, Part 3 of ERISA,
the funding method used in connection with such Plan is acceptable under ERISA,
and the actuarial assumptions and methods used in connection with funding such
Pension Plan satisfy the requirements of Section 302 of ERISA. The assets of
each such Pension Plan (other than the Multiemployer Plans) are at least equal
to the present value of the greater of (i) accrued benefits (both vested and
non-vested) under such Plan, or (ii) "benefit liabilities" (within the meaning
of Section 4001(a)(16) of ERISA) under such Plan, in each case as of the latest
actuarial valuation date for such Plan (determined in accordance with the same
actuarial assumptions and methods as those used by the Plan's actuary in its
valuation of such Plan as of such valuation date). No such Pension Plan has
incurred any "accumulated funding deficiency" (as defined in Section 412 of the
Code), whether or not waived, which would result in a Material Adverse Effect.
(vii) There are no actions, suits or claims pending (other than
routine
<PAGE>
claims for benefits) or, to the knowledge of any Borrower or any ERISA
Affiliate thereof, which could reasonably be expected to be asserted, against
any Plan (other than a Multiemployer Plan) or the assets of any such Plan which
would cause a Material Adverse Effect. No civil or criminal action brought
pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending or
threatened against any fiduciary or any Plan (other than a Multiemployer Plan)
which would have a Material Adverse Effect. None of the Plans or any fiduciary
thereof (in its capacity as such) has been the direct or indirect subject of any
audit, investigation or examination by any governmental or quasi-governmental
agency which would have a Material Adverse Effect.
(viii) All of the Plans substantially comply currently, and have
substantially complied in the past, both as to form and operation, with their
terms and with the provisions of ERISA and the Code, and all other applicable
laws, rules and regulations; all necessary governmental approvals for the Plans
have been obtained and a favorable determination as to the qualification under
Section 401(a) of the Code of each of the Plans which is an employee pension
benefit plan (within the meaning of Section 3(2) of ERISA) has been made by the
Internal Revenue Service and a recognition of exemption from federal income
taxation under Section 501(a) of the Code of each of the funded employee welfare
benefit plans (within the meaning of Section 3(1) of ERISA) has been made by the
Internal Revenue Service, and nothing has occurred since the date of each such
determination or recognition letter that would adversely affect such
qualification.
SECTION IV.11. No Material Misstatements. No information, report,
financial statement, exhibit or schedule prepared or furnished by or on behalf
of any Borrower or any Guarantor or any subsidiary of any of them to the Agent
or any Lender in connection with any of the Transactions, the Related
Transactions or this Agreement, the Security Documents, the Notes or any other
Loan Documents or included therein at the time it was prepared contained any
material misstatement of fact or omitted to state any material fact necessary to
make the statements therein, taken together with all other such statements made
to the Agent or any Lender, in the light of the circumstances under which they
were made, not misleading.
SECTION IV.12. Investment Company Act; Public Utility Holding Company
Act. None of the Borrowers, the Guarantors or any of their respective
subsidiaries is an "investment company" as defined in, or is otherwise subject
to regulation under, the Investment Company Act of 1940. None of the Borrowers,
the Guarantors or any of their respective subsidiaries is a "holding company" as
that term is defined in or is otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION IV.13. Security Interest. The Agent has (and each of the
Borrowers confirms the pledge and grant to the Agent, for the benefit of the
Secured Parties, under the Existing Security Documents of a security interest
in the collateral therein described) a legal, valid and perfected security
interest in and Lien on all of
<PAGE>
such collateral. Without limitation of the foregoing, each of the Security
Documents creates and grants to the Agent, for the benefit of the Secured
Parties, a valid and perfected first (except as permitted pursuant to Section
7.01 hereof) priority security interest in the collateral identified therein.
Such collateral is not subject to any other Liens whatsoever, except Liens
permitted by Section 7.01 hereof. Schedule 4.13 annexed hereto lists the
jurisdictions in which financing statements or mortgages have been filed as
of the Initial Closing Date.
SECTION IV.14. Bank Accounts. Schedule 4.14 hereto sets forth as of
the Initial Closing Date a list of all bank accounts of the Borrowers.
SECTION IV.15. Capitalization. (a) As of the Initial Closing Date,
the authorized capital stock of Jitney Jungle consists of (i) 5,000,000 shares
of common stock, $0.01 par value per share, of which 425,000 shares shall be
issued and outstanding and (ii) 600,000 shares of preferred stock, par value
$0.01 per share, consisting of (A) 225,000 shares of the Series A Preferred
Stock of which 225,000 shall be issued and outstanding, (B) 275,000 shares of
the Series B Preferred Stock of which 274,460.24 shall be issued and outstanding
and (C) 100,000 shares of the Series C Preferred Stock of which 100,000 shall be
issued and outstanding. The owners of the capital stock of Jitney Jungle and
the number of shares of capital stock owned by each such owner on the Initial
Closing Date and after consummation of the Transactions and the Related
Transactions (other than the Merger) is set forth on Schedule 4.15(a) annexed
hereto. On the Initial Closing Date and after consummation of the Transactions
and the Related Transactions (other than the Merger), except as set forth in
Schedule 4.15(a), Jitney Jungle will have no subsidiaries. Except as set forth
on Schedule 4.15(a), upon issuance thereof and payment therefor, all such
Acquisition Securities have been or shall be duly authorized and validly issued,
are or shall be fully paid and nonassessable and are or shall be free of
preemptive rights. The issuance and sale of the Acquisition Securities either
have been registered or qualified under applicable federal and state securities
laws or are exempt therefrom.
(b) As of the Initial Closing Date and after consummation of the
Transactions and the Related Transactions (other than the Merger), Schedule
4.15(b) annexed hereto sets forth, with respect to each Borrower and each
Guarantor (other than Jitney Jungle), its jurisdiction of incorporation, its
capitalization and the ownership of capital stock of each such Borrower or
Guarantor. None of such Borrowers or Guarantors has any subsidiaries, except as
set forth on Schedule 4.15(b) annexed hereto.
SECTION IV.16. Title to Properties; Possession Under Leases;
Trademarks. (a) Each Borrower, each Guarantor and each of their respective
subsidiaries owns good and marketable, indefeasible fee simple title to all of
the real estate described on Schedule 4.16(a-1) annexed hereto as owned by it
and has a valid leasehold interest in all of the real estate described on
Schedule 4.16(a-2) annexed
<PAGE>
hereto as leased by it, in each case (to the best of Borrowers' knowledge
with respect to leases) free and clear of all Liens or other encumbrances of
any kind, except as described in Schedule 4.16(a-2) annexed hereto and except
Liens permitted under Section 7.01 hereof. Schedules 4.16(a-1) and 4.16(a-2)
annexed hereto correctly identify as of the Initial Closing Date, (x) each
parcel of real property owned by such Borrower, such Guarantor or such
subsidiary, together in each case with an accurate street address and
description of the use of such parcel, (y) each parcel of real property
leased by or to such Borrower, such Guarantor or such subsidiary, together in
each case with an accurate street address and description of the use of such
parcel, and (z) each other interest in real property owned, leased or granted
to or held by such Borrower, such Guarantor or such subsidiary. Except as
set forth on Schedules 4.16(a-1) and 4.16(a-2):
(i) no structure owned or leased by any Borrower, any Guarantor
or any of their respective subsidiaries fails to conform in any material
respect with applicable ordinances, regulations, zoning laws and
restrictive covenants (including in any such case and without limitation
those relating to environmental protection) nor encroaches upon property of
others, nor is any such real property encroached upon by structures of
others in any case in any manner that would have or would be reasonably
likely to have a Material Adverse Effect on the Agent's or Lenders' interest
in any Collateral located on the premises or otherwise would have or would
be reasonably likely to have a Material Adverse Effect;
(ii) no charges or violations have been filed, served, made or
threatened, to the knowledge of such Borrower or Guarantor, against or
relating to any such property or structure or any of the operations
conducted at any such property or structure, as a result of any violation or
alleged violation of any applicable ordinances, requirements, regulations,
zoning laws or restrictive covenants (including in any such case and
without limitation those relating to environmental protection) or as a
result of any encroachment on the property of others where the effect of
same would have or would be reasonably likely to have a Material Adverse
Effect on the Agent's or Lenders' interest in any Collateral located on the
premises or otherwise would have or would be reasonably likely have a
Material Adverse Effect;
(iii) other than pursuant to applicable laws, rules,
regulations or ordinances, covenants that run with the land or provisions in
the applicable leases, there exists no restriction on the use, transfer or
mortgaging of any such property;
(iv) such Borrower, such Guarantor and/or such subsidiary each
have adequate permanent rights of ingress to and egress from any such
property used by it for the operations conducted thereon;
<PAGE>
(v) there are no developments affecting any of the real property
or interests therein pending or (to the best of Borrowers' knowledge)
threatened which might reasonably be expected to curtail or interfere in
any material respect with the use of such property for the purposes for
which it is now used; and
(vi) as of the Initial Closing Date, none of the Borrowers, the
Guarantors or any of their respective subsidiaries has any obligation to
acquire any interest in, any real property.
(b) Except as set forth in Schedule 4.16(a-2), each Borrower, each
Guarantor and each of their respective subsidiaries owns and has good and
marketable title to all the owned properties and assets reflected on its most
recent balance sheet and valid leasehold interests in the property it leases
subject to no Liens except Liens permitted under Section 7.01, and all such
leases are in full force and effect and each Borrower, each Guarantor and each
of their respective subsidiaries enjoys peaceful and undisturbed possession
under all such leases, other than assets permitted to be sold under this
Agreement, leases terminated in the ordinary course of business and disputes
with lessors being pursued in good faith.
(c) Each Borrower, each Guarantor and each of their respective
subsidiaries own or control or have the right to use all trademarks, trademark
rights, trade names, trade name rights, copyrights, patents, patent rights and
licenses which are material to the conduct of the business of such Borrower,
such Guarantor or such subsidiary. To the best of such Borrower's or such
Guarantor's knowledge, as applicable, none of such Borrower, such Guarantor or
any of their respective subsidiaries is infringing upon or otherwise acting
adversely to any of such trademarks, trademark rights, trade names, trade name
rights, copyrights, patent rights or licenses owned by any other person or
persons. There is no claim or action by any such other person pending, or to
the knowledge of any Responsible Officer of such Borrower or such Guarantor, as
applicable, threatened against such Borrower or such Guarantor, or any of their
respective subsidiaries with respect to any of the rights or property referred
to in this Section 4.16(c), except as would not reasonably be expected to have a
Material Adverse Effect.
SECTION IV.17. Solvency. Both before and after giving effect to the
Related Transactions,
(a) The fair salable value of the assets of each of Jitney Jungle and
each of its Consolidated subsidiaries is not less than the amount that will be
required to be paid on or in respect of the probable liability on the existing
debts and other liabilities (including contingent liabilities) of Jitney Jungle
and each such Consolidated subsidiary, as they become absolute and mature.
<PAGE>
(b) The assets of each of Jitney Jungle and each of its Consolidated
subsidiaries do not constitute unreasonably small capital for Jitney Jungle and
such Consolidated subsidiaries to carry out their respective businesses as now
conducted and as proposed to be conducted including the capital needs of Jitney
Jungle and such Consolidated subsidiaries, taking into account the particular
capital requirements of the business conducted by Jitney Jungle and each such
Consolidated subsidiary and projected capital requirements and capital
availability thereof.
(c) None of the Borrowers or any of their respective subsidiaries
intends to incur debts beyond its ability to pay such debts as they mature
(taking into account the timing and amounts of cash to be received by the Target
Company and its subsidiaries, and of amounts to be payable on or in respect of
debt of the Target Company and its subsidiaries). The cash flow of each of
Jitney Jungle and its Consolidated subsidiaries, after taking into account all
anticipated uses of the cash of Jitney Jungle and its Consolidated subsidiaries,
will at all times be sufficient to pay all such amounts on or in respect of debt
of Jitney Jungle and its Consolidated subsidiaries when such amounts are
required to be paid.
(d) None of the Borrowers nor any of their respective subsidiaries
believes that final judgments against them in actions for money damages
presently pending will be rendered at a time when, or in an amount such that,
they will be unable to satisfy any such judgments promptly in accordance with
their terms (taking into account the maximum reasonable amount of such judgments
in any such actions and the earliest reasonable time at which such judgments
might be rendered). The cash flow of each of Jitney Jungle and each of its
Consolidated subsidiaries, after taking into account all other anticipated uses
of the cash of Jitney Jungle and its Consolidated subsidiaries (including the
payments on or in respect of debt referred to in paragraph (c) of this Section),
will at all times be sufficient to pay all such judgments promptly in accordance
with their terms.
SECTION IV.18. Permits, etc. Each Borrower, each Guarantor and each
of their respective subsidiaries possesses all licenses, permits, approvals and
consents, including, without limitation, all environmental, health and safety
licenses, permits, approvals and consents of all Federal, state and local
governmental authorities which are required under Environmental Law and are
material to the conduct of its business (collectively, "Permits"), other than as
set forth on Schedule 4.18; each such Permit is and will be in full force and
effect; each Borrower, each Guarantor and each of their respective subsidiaries
is in compliance in all material respects with all such Permits, and, to its
knowledge, no event (including, without limitation, any material violation of
any law, rule or regulation) has occurred which would be likely to lead to the
revocation or termination of any such Permit or any additional restriction
thereon, except as such Permits expire and must be reissued due to the passage
of time.
SECTION IV.19. Compliance with Environmental Laws. (i) The
<PAGE>
operations of each Borrower, each Guarantor and their respective subsidiaries
comply in all material respects with all applicable Environmental Laws;
(ii) none of any Borrower, any Guarantor or any of their respective subsidiaries
and all of their present facilities or operations, as well as to their
knowledge, their past facilities or operations, are subject to any judicial
proceeding, administrative proceeding or written order or agreement with any
governmental authority or private party respecting (a) any Environmental Law,
(b) any Remedial Work, or (c) any Environmental Claims arising from the Release
of a Hazardous Material into the environment, except as would not reasonably be
expected to have a Material Adverse Effect; (iii) none of the operations of any
Borrower, any Guarantor or any of their respective subsidiaries are the subject
of any Federal or state investigation evaluating whether any Remedial Work is
needed to respond to a Release of any Hazardous Material into the environment in
violation of any Environmental Law, except as would not reasonably be expected
to have a Material Adverse Effect; (iv) none of any Borrower, any Guarantor or
any of their respective subsidiaries or any predecessor of any Borrower, any
Guarantor or any of their respective subsidiaries have filed any notice under
any Environmental Law indicating past or present treatment, storage, or disposal
of a Hazardous Material in material violation of any Environmental Law or
reporting a material spill or Release of a Hazardous Material into the
environment in violation of any Environmental Law, except for spills the
responses to which would not collectively reasonably be expected to have a
Material Adverse Effect; (v) to the best of Borrowers' knowledge, none of any
Borrower, any Guarantor or any of their respective subsidiaries have any
contingent liability in connection with any Release of any Hazardous Material
into the environment, except as would not reasonably be expected to have a
Material Adverse Effect; (vi) none of the operations of any Borrower, any
Guarantor or any of their respective subsidiaries involve the generation,
transportation, treatment or disposal of Hazardous Materials except in
compliance with all Environmental Laws, except as would not reasonably be
expected to have a Material Adverse Effect; (vii) none of any Borrower, any
Guarantor or any of their respective subsidiaries has disposed of any Hazardous
Material by placing it in or on the ground or waters of any premises owned,
leased or used by any of them and to the knowledge of such Borrower, such
Guarantor and such subsidiaries, neither has any lessee, prior owner or other
person, except as would not reasonably be expected to have a Material Adverse
Effect; (viii) no underground storage tanks or surface impoundments are on any
property of any Borrower, any Guarantor or any of their respective subsidiaries,
except as would not reasonably be expected to have a Material Adverse Effect;
and (ix) no Lien in favor of any governmental authority for (A) any liability
under any Environmental Law or regulation, or (B) damages arising from or costs
incurred by such governmental authority in response to a Release of a Hazardous
Material into the environment, has been filed or attached to the property of any
Borrower, any Guarantor or any of their respective subsidiaries.
SECTION IV.20. Material Agreements. Schedule 4.20 hereto sets forth
as of the Initial Closing Date a list of all material agreements, contracts and
instruments
<PAGE>
to which each Borrower, each Guarantor and each of their respective
subsidiaries is a party or by which any of such persons is bound and all
amendments, modifications and supplements to each of the foregoing. With
respect to Delchamps, the foregoing representation is being made to the best
of the Borrowers' knowledge.
SECTION IV.21. Acquisition. (a) (i) The execution, delivery and
performance by each party to the Merger Documents have been duly authorized
by all necessary action on the part of each such party, and with respect to
each party other than Acquisition Corp. or any Borrower, (ii) the Merger
Documents constitute the valid, binding and enforceable obligation of each
party thereto, subject to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and are in full force and effect without default or waiver
of any of the conditions thereunder, and (iii) there are no governmental
consents, filings, approvals or notices required to be made or obtained in
connection with the execution, delivery and performance of the Merger
Documents, except such as have been duly made, obtained or delivered or will
on the Initial Closing Date and on the Merger Closing Date, be duly made,
obtained or delivered.
(b) Each of the representations and warranties made by each party to
the Merger Documents is true and correct in all material respects, except
with respect to each party other than Acquisition Corp. or Jitney Jungle, any
which would not reasonably be expected to have a Material Adverse Effect, and
such representations and warranties are hereby incorporated herein by
reference with the same effect as though made by each of Acquisition Corp.
and Jitney Jungle and set forth herein in their entirety.
SECTION IV.22. The Tender Offer and Merger. (a) The Tender Offer
complies with all provisions of all applicable laws and regulations of the
United States and each applicable state thereof, including without limitation
the State of Alabama (including, without limitation, anti-takeover statutes
and regulations).
(b) All consents and approvals of, filings, notices and registrations
with, and all other actions in respect of, all governmental agencies,
authorities or instrumentalities required to be obtained, given, filed or taken
by the Borrowers in order to make or consummate the Tender Offer, to purchase
Tendered Securities pursuant thereto or to consummate the Merger have been or,
prior to the time when required, will have been, obtained, given, filed or taken
and are or will be in full force and effect, and all applicable waiting periods
have, or prior to the time when required, will have expired without, in all
cases, any action being taken which restrains, prevents, imposes or threatens
adverse conditions upon or hinders the consummation of the Tender Offer or the
purchase of Tendered Securities thereunder or the consummation of the Merger.
There does not exist any judgment, order, injunction or other restraint issued
or filed or a hearing seeking injunctive relief or other restraints pending or
noticed with respect to any of the transactions contemplated by the Merger
Documents and the Tender Offer Documents, including without limitation, with
respect to the consummation of the
<PAGE>
Tender Offer or the Merger.
(c) At the time of their dissemination to the public, the Offer to
Purchase and any other Tender Offer Documents and any amendments or
supplements thereto, copies of which have been delivered to the Agent and the
Lenders, did not and will not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION IV.23. Broker's Fees. Except as set forth in Schedule
4.23 annexed hereto, no broker's or finder's fee, commission or similar
compensation has been or will be payable with respect to the issuance and
sale of the Senior Subordinated Notes or any of the Transactions or the
Related Transactions. No other similar fees or commissions will be payable
by any Person for any other services rendered to the Target Company or any
Borrower ancillary to the Transactions or the Related Transactions.
V. CONDITIONS OF CREDIT EVENTS
The obligation of each Lender to make Loans and provide other Credit
Events hereunder shall be subject to the following conditions precedent:
SECTION V.1. All Credit Events. On each date on which a Credit
Event is to occur:
(a) The Agent shall have received a notice of borrowing as required
by Section 2.03 hereof or a notice of the issuance of a Letter of Credit
as required by Section 2A.01 hereof, as appropriate.
(b) The representations and warranties set forth in Article IV
hereof and in any documents delivered herewith, including, without
limitation, the Loan Documents, shall be true and correct in all material
respects with the same effect as though made on and as of such date
(except insofar as such representations and warranties relate expressly
to an earlier date).
(c) The Borrowers shall be in compliance with all the terms and
provisions contained herein on their part to be observed or performed,
and at the time of and immediately after such Credit Event, no Default or
Event of Default shall have occurred and be continuing.
(d) The Agent shall have received a certificate signed by the
Financial Officer of the Borrowers (i) as to the compliance with (b) and
(c) above and (ii) with respect to each Loan and each Letter of Credit,
demonstrating that after
<PAGE>
giving effect thereto the Undrawn Availability is zero or greater and
Section 2.20 has been complied with. In the absence of delivery of the
certificate set forth in this Section 5.01(d), each notice of borrowing
and/or notice of issuance of Letter of Credit under Section 5.01(a) shall
be deemed to include the certification described in this Section 5.01(d).
SECTION V.2. Initial Closing Date. The obligations of the Lenders
in respect of the first Credit Event hereunder are subject to the following
additional conditions precedent:
(a) The Agent and the Lenders shall have received the
favorable written opinion(s) of (i) counsel for each of the Borrowers,
the Guarantors and the Grantors, substantially in the forms of Exhibit B
annexed hereto, dated the Initial Closing Date, addressing such matters
and from such jurisdictions as shall be requested by the Agent
(including, without limitation, opinions from Alabama, Louisiana and
Mississippi counsel to the Borrowers, opinions from counsel licensed in
the relevant jurisdictions of incorporation of each of the Borrowers and
the Guarantors and the Grantors), addressed to the Agent and the Lenders
and satisfactory to the Agent, and (ii) counsel for the Target Company
and its subsidiaries, dated the Initial Closing Date, addressing such
matters as shall be requested by the Agent, addressed to the Agent and
the Lenders and satisfactory to the Agent.
(b) The Agent and the Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive documents, in
each case as amended to date, of each of the Borrowers, the Grantors and
the Guarantors, certified as of a recent date by the Secretary of State
or other appropriate official of the state of its organization, and a
certificate as to the good standing of each from such Secretary of State
or other official, in each case dated as of a recent date; (ii) a
certificate of the Secretary of each of the Borrowers, Grantors and
Guarantors, dated the Initial Closing Date and certifying (A) that
attached thereto is a true and complete copy of such person's By-laws as
in effect on the date of such certificate and at all times since a date
prior to the date of the resolution described in item (B) below, (B) that
attached thereto is a true and complete copy of a resolution adopted by
such person's Board of Directors authorizing the execution, delivery and
performance of this Agreement, the Security Documents, the Notes, the
other Loan Documents, the Credit Events hereunder and the consummation of
the Related Transactions, as applicable, and that such resolution has not
been modified, rescinded or amended and is in full force and effect, (C)
that such person's certificate or articles of incorporation or
constitutive documents has not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished
pursuant to (i) above, and (D) as to the incumbency and specimen
signature of each of such person's officers executing this Agreement, the
Notes, each Security Document or any
<PAGE>
other Loan Document delivered in connection herewith or therewith, as
applicable; (iii) a certificate of another of such person's officers as
to incumbency and signature of its Secretary; and (iv) such other
documents as the Agent or any Lender may reasonably request.
(c) The Agent shall have received a certificate, dated the Initial
Closing Date and signed by the Financial Officer of each of the
Borrowers, confirming compliance with the conditions precedent set forth
in paragraphs (b) and (c) of Section 5.01 hereof and the conditions set
forth in this Section 5.02.
(d) Each Lender shall have received its Note, each duly executed by
the Borrowers, payable to its order and otherwise complying with the
provisions of Section 2.04 hereof.
(e) The Agent shall have received the Security Documents (other
than the Partnership Pledge Agreement), certificates evidencing the
Pledged Stock (including, without limitation, the capital stock of
Acquisition Corp. and the Tendered Securities (other than with respect to
those Tendered Securities which are subject to guaranteed delivery
procedures and which shall be subsequently delivered to the Agent)),
together with undated stock powers executed in blank, each duly executed
by the applicable Grantors, and each of the other documents, instruments,
insurance policies and agreements requested by the Agent.
(f) The Agent shall have received certified copies of requests for
copies or information on Form UCC-11 or certificates satisfactory to the
Lenders of a UCC Reporter Service, listing all effective financing
statements which name as debtor any Borrower, any Guarantor or any
Grantor and which are filed in the appropriate offices in the States in
which are located the chief executive office and other operating offices
of such person or where Collateral is located, together with copies of
such financing statements. With respect to any Liens not permitted
pursuant to Section 7.01 hereof, the Agent shall have received
termination statements, and/or payoff letters which provide further
assurances regarding the provision of termination statements, in form and
substance satisfactory to it.
(g) Each document (including, without limitation, each Uniform
Commercial Code financing statement) required by law or requested by the
Agent to be filed, registered or recorded in order to create in favor of
the Agent for the benefit of the Secured Parties a first priority
perfected security interest in the Collateral shall have been properly
filed, registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested. The
Agent shall have received an acknowledgment copy, or other evidence
satisfactory to it, of each such filing, registration or recordation.
<PAGE>
(h) The Agent shall have received the results of a search of the
Uniform Commercial Code filings made with respect to each Borrower and
each Grantor and Guarantor in the jurisdictions in which Uniform
Commercial Code filings have been made against each Borrower, each
Guarantor and each Grantor pursuant to paragraph (g) above, and such
results shall be satisfactory to the Agent.
(i) The Lenders and the Agent shall have received and determined to
be in form and substance satisfactory to them:
(i) the most recent (dated within thirty (30) days of the
Initial Closing Date) schedule of inventory designations of the
Borrowers together with sales and other financial information
requested by the Agent, in the form attached hereto as Exhibit J;
(ii) evidence that, (A) immediately after giving effect to the
consummation of the Related Transactions on a pro forma basis
(including, without limitation, payment of the aggregate
consideration payable to acquire 100% of the Target Stock on a fully
diluted basis pursuant to the Tender Offer and the Merger) and after
the payment of all anticipated fees, costs and expenses in
connection with the Related Transactions, and with all trade
payables aged in accordance with normal terms, the Borrowers will
have Undrawn Availability plus cash on hand on the Initial Closing
Date in an amount not less than $35,000,000, and (B) at all times
prior to the consummation of the Merger, the Borrowers will have
Undrawn Availability plus cash on hand in an amount sufficient to
acquire all shares of capital stock of the Target Company (except
those Tendered Securities previously acquired by Jitney Jungle or
Acquisition Corp.) and the Agent may reserve from the Undrawn
Availability an amount solely for such purpose and not otherwise
available to the Borrowers;
(iii) copies of the Senior Subordinated Indenture and the
Senior Subordinated Notes, each certified by a Responsible Officer
of Jitney Jungle. The Senior Subordinated Notes shall be issued
pursuant to terms and conditions satisfactory to the Agent and the
Lenders in all respects, and the Agent and the Lenders shall have
received evidence satisfactory to the Agent and the Lenders of the
receipt by the Borrowers of gross cash proceeds of not less than
$200,000,000 thereunder. The entire proceeds of the Senior
Subordinated Notes shall be applied by Acquisition Corp. towards
payment of the purchase price of the Tendered Securities and the
consummation of the Related Transactions (other than the Merger) on
the Initial Closing Date. The aggregate consideration payable under
the Merger Agreement (including cash and all other consideration)
paid by Acquisition Corp. in connection with the Related Transactions
<PAGE>
(other than the initial borrowings under the Commitment on the
Initial Closing Date) shall not exceed $24,500,000;
(iv) a copy of a field examination of the books and records of
Jitney Jungle and its subsidiaries;
(v) evidence of the compliance by the Borrowers with Section
6.03 hereof;
(vi) the financial statements described in Section 4.07 hereof,
and with respect to the financial statements delivered pursuant to
Section 4.07(c), a certificate dated the Initial Closing Date signed
by the Financial Officer of Jitney Jungle, to the effect that such
financial statements have been prepared by such Financial Officer in
accordance with generally accepted accounting principles
consistently applied, and satisfactory in all respects to the Agent,
and confirming that such statements are consistent with drafts
thereof previously delivered to the Agent;
(vii) evidence that the Transactions and the Related
Transactions are in compliance with all applicable laws and
regulations;
(viii) evidence of payment of all fees owed to the Agent and
the Lenders by the Borrowers under this Agreement, the Commitment
Letter, the Fee Letter or otherwise;
(ix) the results of an environmental analysis with respect to
the Target Company and its subsidiaries' properties and operations
conducted by a firm satisfactory to the Agent and the Lenders, and
the scope, methodology and results of such environmental analysis
shall be satisfactory to the Agent and the Lenders in all respects;
(x) the results of surveys and appraisals of the Target
Company's and its subsidiaries' machinery, equipment and real
property (in any event complying with any applicable law, including,
without limitation, FIRREA), conducted by a firm satisfactory to the
Agent and the Lenders, and satisfactory to the Agent and the Lenders
in all respects;
(xi) copies of all major customer and supplier contracts with
respect to the Target Company and its subsidiaries and each
Borrower;
(xii) evidence that all requisite third party consents and
waivers (including, without limitation, consents from the holders of
the Senior Notes) to the Transactions and the Related Transactions,
have been received;
<PAGE>
(xiii) evidence that there has been no material adverse
change in the business, assets, liabilities, properties, prospects,
operations or financial or other condition of (i) (A) Jitney Jungle
and its subsidiaries, taken as a whole, since May 3, 1997 or (B) the
Target Company and its subsidiaries, taken as a whole, since March
29, 1997 or (ii) (A) Jitney Jungle and its subsidiaries, taken as a
whole, or (B) the Target Company and its subsidiaries, taken as a
whole, in each case, from that described in the Pre-Commitment
Information (as defined in the Commitment Letter);
(xiv) evidence that all of the Pre-Commitment Information (as
defined in the Commitment Letter) shall be true and correct in all
material aspects; and no development or change shall have occurred
(A) which has resulted in or could reasonably be expected to result
in a material adverse change in, or material adverse deviation from,
the Pre-Commitment Information or (B) which has had or could
reasonably be expected to have a Material Adverse Effect or a
material adverse effect on the business, assets, liabilities,
properties, prospects, operations or financial condition of the
Target Company and its subsidiaries taken as a whole;
(xv) evidence that there are no actions, suits or proceedings
at law or in equity or by or before any governmental instrumentality
or other agency or regulatory authority now pending or threatened
against or affecting the Target Company, any Borrower, any
Guarantor, any Grantor, any of their respective subsidiaries,
businesses, assets or rights, any of the Collateral, the Agent or
any Lender (A) which could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on the business,
assets, liabilities, properties, prospects, operations or financial
condition of the Target Company and its subsidiaries taken as a
whole or which may materially impair the ability of any Borrower,
any Grantor or any Guarantor to perform its obligations under any
Loan Document to which it is a party or the rights and remedies of
the Agent and the Lenders under this Agreement and the Security
Documents or (B) which purport to adversely affect any of the
Transactions or the Related Transactions; and
(xvi) evidence that (A) immediately prior to the Credit Events
on the Initial Closing Date, the Target Indebtedness shall not
exceed $16,225,000 and (B) there shall be no outstanding
Indebtedness (other than Indebtedness outstanding hereunder and the
Prior Indebtedness), or that such Indebtedness (other than
Indebtedness outstanding hereunder and the Prior Indebtedness) shall
be concurrently with the Credit Events
<PAGE>
on the Initial Closing Date, satisfied in full and that all Liens
securing any obligations arising thereunder shall have been
released.
(j) The Agent and the Lenders shall have had the opportunity, if
they so choose, to examine the books of account and other records and
files of the Target Company, Acquisition Corp., the Borrowers, the
Grantors and the Guarantors and their respective subsidiaries to make
copies thereof, and to conduct a pre-closing audit or perform other due
diligence which shall include, without limitation, verification of
payment of payroll taxes and accounts payable, formulation of an opening
Borrowing Base and review of tax, environmental, employee benefit and
labor issues, and the results of such examination, audit and due
diligence shall have been reasonably satisfactory to the Agent and
Lenders in all respects. None of the information submitted prior to the
Initial Closing Date shall have been or become, taken together with all
other such information submitted prior to the Initial Closing Date,
false, incomplete or inaccurate in any material and adverse respect, and
none of the conditions represented or indicated by BRS, Acquisition
Corp., the Target Company, any Borrower or any of their respective
subsidiaries to exist shall change in any material and adverse respect.
(k) The Agent shall have received and had the opportunity to review
and determine to be in form and substance satisfactory to it:
(i) copies of all lease agreements entered into by the Target
Company, any Borrower, any Guarantor, any Grantor and/or any of
their respective subsidiaries; and
(ii) copies of all loan agreements, notes and other
documentation evidencing Indebtedness for borrowed money of the
Target Company, any Borrower, any Guarantor, any Grantor and/or any
of their respective subsidiaries (including, without limitation,
certified copies of any amendments to or consents under the Senior
Indenture, together with all exhibits and schedules thereto, and all
certificates, documents and opinions delivered in connection
therewith) and of all other material agreements of any of them.
(l) Messrs. Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to
the Agent, shall have received payment in full for all legal fees
charged, and all costs and expenses incurred, by such counsel through the
Initial Closing Date in connection with the transactions contemplated
under this Agreement, the Security Documents and the other Loan Documents
and instruments in connection herewith and therewith.
(m) The Agent and the Lenders shall have:
<PAGE>
(i) received copies of each of the Merger Documents and the
Tender Offer Documents, including all amendments and schedules
thereto, each certified by a Responsible Officer of Jitney Jungle;
(ii) received evidence that Acquisition Corp. shall have
acquired and shall hold the unrestricted right to vote such
percentage of the Target Stock on a fully diluted basis, free and
clear of all Liens (other than the Lien in favor of the Agent), as
may be necessary for shareholder approval by the shareholders of the
Target Company of the Merger (the "Minimum Percentage") and, to the
extent such Target Stock shall have been acquired pursuant to the
Tender Offer, such acquisition shall have occurred upon full
satisfaction, without waiver, of the conditions to purchase
contained in the Offer to Purchase. For purposes of the preceding
sentence, shares acquired which were tendered pursuant to guaranteed
delivery procedures shall not be considered as acquired in
calculating the Minimum Percentage;
(iii) received evidence that the Merger Agreement is in full
force and effect without default thereunder by any party thereto and
all consents, filings and approvals required by applicable law in
connection therewith shall have been obtained and made, except as
set forth on Schedule 4.03 annexed hereto;
(iv) received evidence that (A) the Related Transactions shall
(x) have been duly approved by the Boards of Directors of each of
Acquisition Corp., Jitney Jungle, the Target Company and their
respective subsidiaries, (y) be in compliance in all respects with
the articles of incorporation and by-laws of Acquisition Corp.,
Jitney Jungle, the Target Company and each of their respective
subsidiaries and all applicable laws and regulations of the United
States, any state thereof and any subdivision of any such state and
(z) have been duly approved by the vote of the requisite number of
shareholders of Acquisition Corp., Jitney Jungle, the Target Company
and each of their respective subsidiaries; (B) the Target Company's
"poison pill" provisions, if any, shall be inapplicable to the
Tender Offer and the Merger in a manner satisfactory in all respects
to the Agent; and (C) all conditions precedent to the consummation
of the Related Transactions shall have been satisfied, subject only
to the conditions set forth in the Merger Agreement;
(v) received a table setting forth the sources and uses of
funds in connection with the acquisition of the Target Stock
pursuant to the Tender Offer and the financing thereof and a table
setting forth the capitalization of Jitney Jungle, giving effect to
the acquisition of the Target
<PAGE>
Stock pursuant to the Tender Offer and the financing thereof, each
of the foregoing to be satisfactory to the Agent in all respects;
(vi) (A) determined that the terms of the Tender Offer as set
forth in the Offer to Purchase shall be in form and substance
reasonably satisfactory to the Agent in all respects and received
evidence that none of the principal terms of the Offer to Purchase
and none of the conditions contained therein shall have been
modified, amended, supplemented or waived and none of the conditions
to the Tender Offer contained therein shall remain unsatisfied, and
(B) received evidence that the acceptance of the Tender Offer by the
holders of the Target Stock shall have occurred in accordance with
the terms thereof, without modification, amendment, supplement or
waiver (except with the prior written consent of the Agent);
(vii) (A) received evidence that the Transactions and the
Related Transactions (including, without limitation, the purchases
contemplated by the Tender Offer), shall comply with Regulations G,
T, U and X (as the case may be) and all other regulations of the
Board of Governors of the Federal Reserve System and shall comply
with, and be permitted by, all laws, rules and regulations of the
United States (including, without limitation, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976) or any State thereof (including,
without limitation, environmental laws) and (B) received evidence
that (1) all necessary United States or state governmental and third
party consents in connection therewith shall have been obtained, and
shall be in full force and effect, (2) all applicable waiting
periods under applicable law shall have expired without action being
taken by any competent authority which restrains, prevents or
imposes materially adverse conditions upon the consummation of the
Tender Offer or the Merger, and (3) no law or regulation shall be
applicable in the judgement of the Agent and the Lenders which
restrains, prevents or imposes materially adverse conditions upon
any aspect of the Transactions or the Related Transactions; and
(x) determined that the terms and provisions of all agreements
and documents in connection with the Related Transactions,
including, without limitation, the Merger Documents and the Tender
Offer Documents, and the business, operations and assets being
acquired thereunder and liabilities being assumed thereunder
(including, without limitation, with respect to tax matters,
environmental matters, employee benefit plans and labor plans and
labor relations) are in each instance satisfactory in form and
substance to the Agent and the Lenders and the Agent shall have
received such legal opinions, certificates and copies of necessary
governmental filings and consents as the Agent shall have requested
in connection therewith, and shall have determined to its
<PAGE>
satisfaction that the consummation of the Related Transactions and
other transactions contemplated by the Merger Documents and the
Tender Offer Documents are in compliance with all applicable laws
(including, without limitation, state anti-takeover laws) and
regulations and will not violate any agreements, instruments or
documents to which the Target Company, Acquisition Corp., Jitney
Jungle, any member of the Investor Group or any of their respective
subsidiaries is a party or may be bound. The final terms and
conditions of the Related Transactions (including, without
limitation, the terms and conditions of the Merger Agreement),
including, without limitation, all legal and tax aspects thereof,
shall be as described herein and otherwise consistent in all
material respects with the description thereof received in writing
as part of the Pre-Commitment Information (as defined in the
Commitment Letter).
(n) The Agent and the Lenders shall have received certificates from
the chief financial officer of each Borrower and each Guarantor, in form
and substance satisfactory to the Agent and the Lenders, attesting to the
"solvency" of such Borrower and such Guarantors, as the case may be, in
each case individually and together with its subsidiaries, taken as a
whole, immediately before and immediately after giving effect to the
Transaction, determined on in accordance with generally accepted
accounting principles, consistently applied. As used herein, the term
"solvency" of any person means (i) the fair value of the property of such
person exceeds its total liabilities (including, without limitation,
contingent liabilities), (ii) the present fair saleable value of the
assets of such person is not less than the amount that will be required
to pay its probable liability on its debts as they become absolute and
matured, (iii) such person does not intend to, and does not believe that
it will, incur debts or liabilities beyond its ability to pay as such
debts and liabilities mature and (iv) such person is not engaged, and is
not about to engage, in business or a transaction for which its property
would constitute an unreasonably small capital;
(o) The corporate structure and capitalization of each Borrower,
each Guarantor and each of their respective subsidiaries shall be
reasonably satisfactory to the Agent and the Lenders in all respects.
(p) All legal matters in connection with the Transactions and the
Related Transactions shall be reasonably satisfactory to the Agent, the
Lenders and their respective counsel in their sole discretion.
(q) The Borrowers shall have executed and delivered to the Agent a
disbursement authorization letter with respect to the disbursement of the
proceeds of the Credit Events made on the Initial Closing Date, in form
and substance satisfactory to the Agent.
<PAGE>
(r) The Borrowers shall have entered into blocked account and other
cash management arrangements pursuant to documentation satisfactory in
form and substance to the Agent as contemplated by Section 10.01 hereof.
(s) The Agent shall have received such other documents as the
Lenders or the Agent or Agent's counsel shall reasonably deem necessary.
SECTION V.3. Merger Closing Date. The obligations of the Lenders
on the Merger Closing Date are subject to the following additional conditions
precedent:
(a) The Agent and the Lenders shall have received the favorable
written opinion(s) of counsel for each of the Borrowers, the Guarantors
and the Grantors, dated the Merger Closing Date, from such jurisdictions
and addressing such matters as shall be reasonably requested by the
Agent, addressed to the Agent and the Lenders and satisfactory to the
Agent.
(b) The Agent and the Lenders shall have received (i) a copy of the
certificate or articles of incorporation or constitutive documents, in
each case as amended to date, of each of the Borrowers, the Acquisition
Corp., the Target Company and their respective subsidiaries, certified as
of a recent date by the Secretary of State or other appropriate official
of the state of its organization (or, a certification to the effect set
forth in clause (ii)(C) below), and to the extent requested by the Agent,
a certificate as to the good standing of each from such Secretary of
State or other official, in each case dated as of a recent date; (ii) a
certificate of the Secretary of each of the Borrowers, Acquisition Corp.,
the Target Company and their respective subsidiaries, dated the Merger
Closing Date and certifying (A) that attached thereto is a true and
complete copy of such person's By-laws as in effect on the date of such
certificate and at all times since a date prior to the date of the
resolution described in item (B) below (or, that such By-laws have not
been amended since the Initial Closing Date), (B) that attached thereto
is a true and complete copy of a resolution adopted by such person's
Board of Directors authorizing the consummation of the Related
Transactions, as applicable, and that such resolution has not been
modified, rescinded or amended and is in full force and effect, (C) that
such person's certificate or articles of incorporation or constitutive
documents has not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature of
each of such person's officers executing any document delivered in
connection herewith or contemplated hereby, as applicable (or, a
certification to the effect that the officers authorized to execute
documents in connection with the Initial Closing Date are still
authorized and incumbent officers of such person); and (iii) a
certificate of another of such person's officers as to incumbency and
signature of its Secretary.
<PAGE>
(c) The Agent shall have received a certificate, dated the Merger
Closing Date and signed by the Financial Officer of each of the
Borrowers, confirming compliance with the conditions set forth in this
Section 5.03.
(d) The Lenders and the Agent shall have received and determined to
be in form and substance satisfactory to them:
(i) evidence that the Merger is in compliance with all
applicable laws and regulations; and
(ii) evidence that all requisite third party consents and
waivers required to effect the Merger have been received.
(e) The Agent and the Lenders shall have:
(i) received copies (to the extent not previously delivered on
the Initial Closing Date) of amendments or supplements, if any, to
any of the Merger Documents and/or the Tender Offer Documents, each
certified by a Responsible Officer of Jitney Jungle; and
(ii) received evidence that the Merger Agreement is in full
force and effect and all consents, filings and approvals required by
applicable law in connection therewith (including, without
limitation, from state liquor authorities) shall have been obtained
and made, except as set forth on Schedule 4.03 annexed hereto.
(f) All legal matters in connection with the Merger shall be
reasonably satisfactory to the Agent, the Lenders and their respective
counsel in their sole discretion.
VI. AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees with Agent and each Lender that,
so long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under or with respect to any Letter of
Credit or any fee, expense or amount payable hereunder or in connection with
any of the Transactions shall be unpaid, it will, and will cause each
Guarantor and each of their respective subsidiaries and, with respect to
Section 6.07 hereof, each ERISA Affiliate, to:
SECTION VI.1. Legal Existence. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, except for the mergers and Asset Sales permitted under Section
7.05.
<PAGE>
SECTION VI.2. Businesses and Properties. (a) At all times do or
cause to be done all things necessary to preserve, renew and keep in full
force and effect the rights, licenses, Permits, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its
businesses; (b) comply with all laws, rules, regulations and governmental
orders (whether Federal, state or local) applicable to the operation of such
businesses whether now in effect or hereafter enacted (including, without
limitation, all applicable laws, rules, regulations and governmental orders
relating to public and employee health and safety and all Environmental Laws)
and with any and all other applicable laws, rules, regulations and
governmental orders the lack of compliance with which would have a Material
Adverse Effect; (c) take all actions which may be required to obtain,
preserve, renew and extend all Permits and other authorizations which are
material to the operation of such businesses; and (d) at all times maintain,
preserve and protect all property material to the conduct of such businesses
and keep such property in good repair, working order and condition, ordinary
wear and tear excepted, and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times. Notwithstanding
the foregoing, non-compliance with clauses (a) and (c) above shall not
constitute an Event of Default unless such non-compliance is not cured within
15 days after the occurrence of such non-compliance.
SECTION VI.3. Insurance. (a) Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers
with a rating of "A-" or better, as established by Best's Rating Guide (or an
equivalent rating with such other publications of a similar nature as shall
be in current use), (b) maintain such other insurance, to such extent and
against all risks, including fire and other risks insured against by extended
coverage; provided, however, that such insurance shall insure the property of
the Borrowers and their respective subsidiaries against all risk of physical
damage, including, without limitation, loss by fire, explosion, theft, fraud
and such other casualties as may be reasonably satisfactory to the Agent, but
in no event at any time in an aggregate amount less than the replacement
value of the Collateral, (c) maintain in full force and effect public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by the Borrowers or any of their
respective subsidiaries, in such amount as the Agent shall reasonably deem
necessary, and (d) maintain such other insurance as may be required by law
and against loss or damage of the kinds customarily insured against by
corporations of established reputation engaged in the same or similar
businesses and similarly situated, in such type and in such amounts as is
customarily maintained under similar circumstances by such other
corporations; provided, that with respect to any insurance maintained with
respect to Collateral located at a non-warehouse location owned, occupied or
controlled by any Borrower or any of its subsidiaries, the Borrowers shall
have 15 days to cure any
<PAGE>
non-compliance with this Section 6.03. All insurance covering tangible
personal property subject to a Lien in favor of the Agent for the benefit of
the Lenders granted pursuant to the Security Documents shall provide that, in
the case of each separate loss, the full amount of insurance proceeds shall
be payable to the Agent and shall further provide for at least 30 days' prior
written notice to the Agent of the cancellation or substantial modification
thereof. Unless a Default or an Event of Default has occurred and is
continuing, all claims with respect to the foregoing insurance shall be
settled by the Borrowers in the ordinary cause of its business.
SECTION VI.4. Taxes. Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property before the same shall
become delinquent or in default, as well as all lawful claims for labor,
materials and supplies or otherwise, which, if unpaid, would give rise to
Liens upon such properties or any part thereof, except such taxes,
assessments and governmental charges and levies which are diligently
contested in good faith by appropriate proceedings and as to which adequate
reserves have been established in accordance with generally accepted
accounting principles.
SECTION VI.5. Financial Statements, Reports, etc. Furnish to the
Agent, with copies for each of the Lenders:
(a) within 90 days after the end of each Fiscal Year, (i)
Consolidated balance sheets and Consolidated income statements showing
the financial condition of the Borrowers and their respective
subsidiaries as of the close of such Fiscal Year and the results of their
operations during such year, and (ii) a Consolidated statement of
shareholders' equity and a Consolidated statement of cash flow, as of the
close of such Fiscal Year, all the foregoing financial statements to be
audited by a Big 6 or other independent public accountants reasonably
acceptable to the Agent (which report shall not contain any qualification
except with respect to new accounting principles mandated by the
Financial Accounting Standards Board), and to be in form and substance
reasonably acceptable to the Agent;
(b)(i) within 45 days after the end of each fiscal quarter (except
the fourth fiscal quarter), unaudited Consolidated balance sheets and
Consolidated income statements showing the financial condition and
results of operations of the Borrowers and their respective subsidiaries
as of the end of each such quarter, a Consolidated statement of
shareholders' equity and a Consolidated statement of cash flow as of the
end of each such quarter, together with a statement comparing actual
results for such quarter with the projections set forth in paragraph (f)
below, certified by the Financial Officer of Jitney Jungle as presenting
fairly the financial condition and results of operations of the Borrowers
and their respective subsidiaries and as having been prepared in
accordance with generally accepted accounting principles consistently
applied, setting forth
<PAGE>
in each case in comparative form the corresponding figures for the
corresponding quarter of the preceding year and corresponding figures for
the period beginning with the first day of the relevant Fiscal Year and
ending on the last day of the relevant fiscal quarter and the
corresponding period for the previous Fiscal Year, in each case subject
to normal year-end audit adjustments; and (ii) within 25 days after the
end of each fiscal month, unaudited Consolidated balance sheets and
Consolidated income statements showing the financial condition and
results of operations of the Borrowers and their respective subsidiaries
as of the end of such month, a Consolidated statement of shareholders'
equity and a Consolidated statement of cash flow as of the end of each
such month, together with a statement comparing actual results for such
month with the projections set forth in (f) below, certified by the
Financial Officer of Jitney Jungle as presenting fairly the financial
condition and results of operations of the Borrowers and their respective
subsidiaries and as having been prepared in accordance with generally
accepted accounting principles consistently applied, setting forth in
each case in comparative form the corresponding figures for the
corresponding month of the preceding year and corresponding figures for
the period beginning with the first day of the current Fiscal Year and
ending on the last day of the relevant fiscal month and the corresponding
period for the previous Fiscal Year, in each case subject to normal
year-end audit adjustments;
(c) promptly after the same become publicly available, copies of
such registration statements, annual, periodic and other reports, and
such proxy statements and other information, if any, as shall be filed by
any Borrower or any of their respective subsidiaries with the SEC or any
governmental authority that may be substituted therefor, or any national
securities exchange (including, without limitation, amendments,
modifications and supplements to the Offer to Purchase and any other
Tender Offer Documents) and copies of all proxy statements submitted to
its shareholders;
(d) (i) concurrently with any delivery under (a) or (b) above, a
certificate of the firm or person referred to therein (x) which
certificate shall, in the case of the certificate of the Financial
Officer of Jitney Jungle, certify that to the best of his or her
knowledge no Default or Event of Default has occurred (including
calculations demonstrating compliance, as of the dates of the financial
statements being furnished, with the covenants set forth in Sections
7.07, 7.08, 7.09, 7.10 and 7.11 hereof and setting forth the computation
of Excess Cash Flow for the relevant period) and, if such a Default or
Event of Default has occurred, specifying the nature and extent thereof
and any corrective action taken or proposed to be taken with respect
thereto and (y) which certificate, in the case of the certificate
furnished by the independent public accountants referred in paragraph (a)
above, may be limited to accounting matters and disclaim responsibility
for legal interpretations, but shall in any event certify that
<PAGE>
to the best of such accountants' knowledge based solely on normal audit
procedures, as of the dates of the financial statements being furnished
no Default or Event of Default has occurred under any of the covenants
set forth in Sections 7.07, 7.08, 7.09, 7.10 and 7.11 hereof (such
certificate to include calculations demonstrating compliance with such
covenants and the computation of Excess Cash Flow) and, if such a Default
or Event of Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto, and shall in addition certify that in the course of
preparing the audit and the certificate referred to herein, such
accountants have not become aware of the occurrence of any other Default
or Event of Default and, if such a Default or Event of Default has
occurred, specifying the nature thereof; provided, however, that any
certificate delivered concurrently with (a) above shall be signed by the
Financial Officer of Jitney Jungle in addition to the independent public
accountants;
(e) concurrently with any delivery under (a) above, a management
letter, if any, prepared by the independent public accountants who
reported on the financial statements delivered under (a) above, with
respect to the internal audit and financial controls of the Borrowers and
their respective subsidiaries;
(f) within 30 days after the beginning of each Fiscal Year, a
summary of business plans and financial operation projections (including,
without limitation, with respect to Excess Cash Flow and Capital
Expenditures) for the Borrowers and their respective subsidiaries for
such Fiscal Year (including fiscal month balance sheets, statements of
income and of cash flow, an Undrawn Availability forecast, an Excess Cash
Flow forecast and a forecast as to compliance with the covenants
contained in Sections 7.07, 7.08, 7.09, 7.10 and 7.11 hereof), prepared
by management and in form, substance and detail (including, without
limitation, principal assumptions) reasonably satisfactory to the Agent;
(g) (i) no later than 14 days after the end of each fiscal month,
a certificate, in form, substance and detail reasonably satisfactory to
the Agent, in substantially the form annexed hereto as Exhibit K-1, of
the Financial Officer of each of the Borrowers on a consolidated and
consolidating basis with respect to Jitney Jungle and on a consolidating
basis with respect to each other Borrower, demonstrating compliance as at
the close of business on the last Saturday of such fiscal month with the
Borrowing Base of the Borrowers (including particulars as to the Loans
made and the Letters of Credit Usage during such month with respect to
each of the Borrowers), together with a reconciliation of all collections
made with respect to the Borrowers and the Guarantors during such fiscal
month, on a consolidated and an individual basis and (ii) no later than
Monday of each week, a certificate in form, substance and detail
reasonably satisfactory to the Agent, in substantially the form annexed
hereto as Exhibit K-2,
<PAGE>
of the Financial Officer of each of the Borrowers on a consolidated and
consolidating basis with respect to Jitney Jungle and on a consolidating
basis with respect to each other Borrower (including, without limitation,
the amount of inventory held by such Borrower), demonstrating compliance
as at the close of business on Saturday of the preceding week with the
individual Borrowing Base of such Borrower;
(h) promptly upon the request of the Agent, a certificate, in form,
substance and detail reasonably satisfactory to the Agent, of the
Financial Officer of (i) each of the Borrowers demonstrating compliance
with the individual Borrowing Base of such Borrower as at such previous
date as Agent shall reasonably request, together with a reconciliation of
all collections made with respect to the Borrowers and the Guarantors
since the date of the most recent reconciliation delivered to the Agent
under this clause (h) or clause (g) above through such date and (ii)
Jitney Jungle on a consolidated basis demonstrating compliance with the
Borrowing Base of the Borrowers as at such previous date as Agent shall
reasonably request;
(i) immediately upon becoming aware thereof, notice to the Agent of
the breach beyond any applicable grace period by any party of any
material agreement with any Borrower, any Guarantor or any of their
respective subsidiaries; and
(j) such other information as the Agent or any Lender may
reasonably request, including, without limitation, profit and loss
information on a store by store basis, as well as supplemental expense
information. At the reasonable request of any Lender, the Agent agrees
to promptly forward such request for information to the Borrowers.
SECTION VI.6. Litigation and Other Notices. Give the Agent prompt
written notice of the following:
(a) the issuance by any court or governmental agency or authority
of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the Loans or occurrence
of other Credit Events, or invalidating, or having the effect of
invalidating, any provision of this Agreement, the Notes or the other
Loan Documents, or the initiation of any litigation or similar proceeding
seeking any such injunction, order, decision or other restraint;
(b) the filing or commencement of any action, suit or proceeding
against any Borrower, any Guarantor or any of their respective
subsidiaries, whether at law or in equity or by or before any court or
any Federal, state, municipal or other governmental agency or authority,
(i) which is material and is brought by or on behalf of any governmental
agency or authority, or in which
<PAGE>
injunctive or other equitable relief is sought or (ii) as to which it is
probable (within the meaning of Statement of Financial Accounting
Standards No. 5) that there will be an adverse determination and which,
if adversely determined, would (A) reasonably be expected to result in
liability of any Borrower, any Guarantor or any of their respective
subsidiaries thereof in an aggregate amount of $500,000 or more, not
reimbursable by insurance, or (B) materially impair the right of any
Borrower, any Guarantor or any of their respective subsidiaries to
perform its obligations under this Agreement, any Note or any other Loan
Document to which it is a party;
(c) any Default or Event of Default or any "Default" or "Event of
Default" under the Senior Indenture (as such terms are defined in the
Senior Indenture) or the Senior Subordinated Indenture (as such terms are
defined in the Senior Subordinated Indenture), specifying the nature and
extent thereof and the action (if any) which is proposed to be taken with
respect thereto;
(d) upon the issuance, mailing or delivery thereof, (i) copies of
notice of any redemption or other payment of the Senior Notes under the
Senior Indenture or the Senior Subordinated Notes under the Senior
Subordinated Indenture and copies of any written information,
correspondence or communication under the Senior Indenture or the Senior
Subordinated Indenture or with respect to the Senior Notes or the Senior
Subordinated Notes not otherwise required to be delivered to the Agent or
the Lenders hereunder; and (ii) copies of notice of any redemption,
exchange or other payment with respect to any preferred stock of the
Borrowers; provided, that this clause (d) shall not constitute the
consent of the Agent or any Lender to any such redemption, exchange or
other payment; and
(e) any development in the business or affairs of any Borrower, any
Guarantor or any of their respective subsidiaries which has had or which
is likely, in the reasonable judgment of any Responsible Officer of any
Borrower, to have, a Material Adverse Effect (including, without
limitation, any actual or threatened strike, work stoppage or other labor
action, whether or not authorized by labor unions).
SECTION VI.7. ERISA. (a) Pay and discharge promptly any
liability imposed upon it pursuant to the provisions of Title IV of ERISA;
provided, however, that neither any Borrower nor any ERISA Affiliate thereof
shall be required to pay any such liability if (1) the amount, applicability
or validity thereof shall be diligently contested in good faith by
appropriate proceedings, and (2) such person shall have set aside on its
books reserves which are required by generally accepted accounting
principles consistently applied.
(b) Deliver to the Agent, promptly, and in any event within 30
days, after
<PAGE>
(i) the occurrence of any Reportable Event, a copy of the materials
that are filed with the PBGC, (ii) any Borrower or any ERISA Affiliate
thereof or an administrator of any Pension Plan files with participants,
beneficiaries or the PBGC a notice of intent to terminate any such Plan,
a copy of any such notice, (iii) the receipt of notice by any Borrower or
any ERISA Affiliate thereof or an administrator of any Pension Plan from
the PBGC of the PBGC's intention to terminate any Pension Plan or to
appoint a trustee to administer any such Plan, a copy of such notice,
(iv) the filing thereof with the Internal Revenue Service, copies of each
annual report that is filed on Treasury Form 5500 with respect to any
Plan, together with certified financial statements (if any) for the Plan
and any actuarial statements on Schedule B to such Form 5500, (v) any
Borrower or any ERISA Affiliate thereof knows or has reason to know of
any event or condition which might constitute grounds under the
provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Plan, an explanation
of such event or condition, (vi) the receipt by any Borrower or any ERISA
Affiliate thereof of an assessment of withdrawal liability under Section
4201 of ERISA from a Multiemployer Plan, or any other notice from such
Multiemployer Plan of any action or event involving or in connection with
insolvency, reorganization or termination (each as defined in ERISA) a
copy of such assessment, or notice, (vii) any Borrower or any ERISA
Affiliate thereof knows or has reason to know of any event or condition
which might cause any one of them to incur a liability under Section
4062, 4063, 4064 or 4069 of ERISA or Section 412(n) or 4971 of the Code,
an explanation of such event or condition, and (viii) any Borrower or any
ERISA Affiliate thereof knows or has reason to know that an application
is to be, or has been, made to the Secretary of the Treasury for a waiver
of the minimum funding standard under the provisions of Section 412 of
the Code, a copy of such application, and in each case described in
clauses (i) through (iii) and (v) through (vii) together with a statement
signed by the Financial Officer of such Borrower setting forth details as
to such Reportable Event, notice, event or condition and the action which
such Borrower or such ERISA Affiliate thereof proposes to take with
respect thereto which, whether individually or in the aggregate, would
cause a Material Adverse Effect.
(c) Within 30 days after the end of any fiscal quarter in which any
Borrower becomes aware, directly or indirectly, of any fact or
information that materially changes the status of such Borrower with
respect to the Multiemployer Plans, give notice thereof to the Agent.
SECTION VI.8. Maintaining Records; Access to Properties and
Inspections; Right to Audit. Maintain financial records in accordance with
accepted financial practices and, upon reasonable notice (which may be
telephonic), at all reasonable times and as often as any Agent may request,
permit any authorized representative designated by such Agent to visit and
inspect the properties and financial records of each of the Borrowers and
their respective subsidiaries and to make extracts from such financial
records, at the Borrowers' cost and expense, and permit any authorized
representative designated by such Agent to discuss the affairs,
<PAGE>
finances and condition of each of the Borrowers and their respective
subsidiaries with the appropriate Financial Officer and such other officers
as such Agent shall deem appropriate and the Borrowers' independent public
accountants, as applicable. An authorized representative of each of the
Lenders may accompany the Agent on such visits and inspections (and during
such visit or inspection, discuss the affairs, finances and condition of each
of the Borrowers and their respective subsidiaries with the appropriate
Financial Officer, such other officer or the Borrowers' independent public
accountants, as applicable). The Agent shall have the right to audit, as
often as it may request, the existence and condition of the inventory, books
and records of the Borrowers and their respective subsidiaries and to review
their compliance with the terms and conditions of this Agreement and the
other Loan Documents. The Borrowers shall pay Agent's customary per diem
rates, all out-of-pocket expenses of Agent's auditors and all costs of Agent
with respect to third-party examiners, but at all times prior to a Default or
Event of Default, the obligations of the Borrowers with respect to this
sentence shall be limited to $50,000 per calendar year.
SECTION VI.9. Fiscal Year-End. Cause its Fiscal Year to end on the
Saturday nearest to April 30 of each year.
SECTION VI.10. Further Assurances. Promptly execute any and all
further documents and take all further actions which may be required under
applicable law, or which the Agent may reasonably request, to grant,
preserve, protect and perfect the first priority security interest created by
the Security Documents in the Collateral.
SECTION VI.11. Additional Grantors and Guarantors. Promptly inform
the Agent of the creation or acquisition of any direct or indirect subsidiary
(subject to the provisions of Section 7.05 hereof) and cause each direct or
indirect subsidiary not in existence on the date hereof to become a Guarantor
hereunder pursuant to an agreement in form and substance reasonably
satisfactory to the Agent, and to execute the Security Documents, as
applicable, as a Grantor, and cause the direct parent of each such subsidiary
to pledge all of the capital stock of such subsidiary pursuant to the Pledge
Agreement and cause each such subsidiary to pledge its inventory and all
other owned assets pursuant to the Security Agreement.
SECTION VI.12. Environmental Laws. (a) Comply, and cause each of
its subsidiaries to comply, in all material respects with the provisions of
all Environmental Laws, and shall keep the properties which it and its
subsidiaries own free of any Lien imposed pursuant to any Environmental Law,
except where such Liens are being contested in good faith by appropriate
proceedings in accordance with applicable law, and, with respect to any
properties it or any of its subsidiaries occupies but does not own, it or its
subsidiaries shall not conduct any activities or allow any condition to
remain which would reasonably be expected to cause the imposition of any Lien
under any Environmental Law. Each Borrower and each Guarantor shall not cause
or suffer or permit, and shall not suffer or permit any of their respective
<PAGE>
subsidiaries to cause or suffer or permit, the property of such Borrower,
such Guarantor or their respective subsidiaries to be used for the use,
generation, production, processing, handling, storage, transporting or
disposal of any Hazardous Material, except for the use, generation, handling,
storage or transportation of fuel, raw materials and inventory held or
generated in the ordinary course of operating its business, refrigerants,
wastes and routine cleaning and maintenance products.
(b) Supply to the Agent copies of all material submissions by each
Borrower, each Guarantor or any of their respective subsidiaries to any
governmental body and of the final reports of all environmental audits and of
all other environmental tests, studies or assessments (including the data
derived from any sampling or survey of asbestos, soil, or subsurface or other
materials or conditions) that may be conducted or performed (by or on behalf
of such Borrower, such Guarantor or any of their respective subsidiaries) on
or regarding the properties owned, operated, leased or occupied by such
Borrower, such Guarantor or any of their respective subsidiaries or regarding
any conditions that might have been affected by Hazardous Materials on or
Released or removed from such properties. Each Borrower and each Guarantor
shall also permit and authorize, and shall cause its subsidiaries to permit
and authorize, the consultants or other persons that prepare such submissions
or reports or perform such audits, tests, studies or assessments to discuss
such submissions, reports or audits with the Agent and the Lenders; provided,
that attorneys for such Borrower, such Guarantor or such subsidiary or such
consultants or other persons shall be entitled to participate in such
discussions.
(c) Promptly (and in no event more than ten Business Days after the
applicable Borrower or the applicable Guarantor becomes aware or is otherwise
informed of such event) provide written notice to the Agent upon the
happening of any of the following:
(i) such Borrower, such Guarantor or any of their respective
subsidiaries, or any tenant or other occupant of any property of
such Borrower, such Guarantor or any of their respective
subsidiaries receives written notice of any claim, complaint, charge
or notice of a violation or potential violation of any Environmental
Law;
(ii) there has been a Release of Hazardous Materials upon,
under or about or affecting any of the properties owned, operated,
leased or occupied by such Borrower, such Guarantor or any of their
respective subsidiaries, or Hazardous Materials at levels or in
amounts that may have to be reported, remedied or responded to under
Environmental Law are detected on or in the soil or groundwater;
(iii) such Borrower, such Guarantor or any of their respective
subsidiaries is or may be liable for any material costs of cleaning
up or otherwise responding to a Release of Hazardous Materials;
<PAGE>
(iv) any part of the properties owned, operated, leased or
occupied by such Borrower, such Guarantor or any of their respective
subsidiaries is or may be subject to a Lien under any Environmental
Law; or
(v) such Borrower, such Guarantor or any of their respective
subsidiaries undertakes any material Remedial Work with respect to
any Hazardous Materials.
(d) Timely undertake and complete any Remedial Work required to be
undertaken by such Borrower or such Guarantor by any Environmental Law,
except to the extent that such requirement is being diligently contested in
good faith by appropriate proceedings in accordance with applicable law.
(e) Without in any way limiting the scope of Section 11.04(c) and
in addition to any obligations thereunder, each Borrower hereby indemnifies
and agrees to hold the Agent and the Lenders harmless from and against any
liability, loss, damage, suit, action or proceeding arising out of its
business or the business of its subsidiaries pertaining to Hazardous
Materials, including, but not limited to, claims of any governmental body or
any third person arising under any Environmental Law or under tort, contract
or common law, except for any liability, loss, damage, suit or proceeding to
the extent that it results from the gross negligence, bad faith or willful
misconduct of the Agent or any Lender. To the extent laws of the United
States or any state or local jurisdiction in which property owned, operated,
leased or occupied by any Borrower, any Guarantor or any of their respective
subsidiaries is located provide that a Lien upon such property of such
Borrower, such Guarantor or such subsidiary may be obtained for the costs of
removal by a governmental body of Hazardous Materials which have been
Released and a Release has occurred with respect to which such Borrower, such
Guarantor or such subsidiary is required to provide notice to the Agent
pursuant to Section 6.12(c), no later than ninety days after notice is given
by the Agent to such Borrower, such Guarantor or such subsidiary, such
Borrower, such Guarantor or such subsidiary shall deliver to the Agent a
report issued by a qualified third party engineer providing an assessment of
such Hazardous Materials which were Released upon or beneath the specified
property. To the extent any Hazardous Materials located therein or
thereunder either subject the property to a Lien or require a response
pursuant to any applicable Environmental Laws, the response specified in
Section 6.12(f) shall be an affirmative covenant of the Borrowers hereunder.
(f) In the event that any Remedial Work is required to be performed
by any Borrower, any Guarantor or any of their respective subsidiaries under
any applicable Environmental Law, any judicial order, or by any governmental
entity, such Borrower, such Guarantor or such subsidiaries shall commence all
such Remedial Work at or prior to the time required therefor under such
Environmental Law or
<PAGE>
applicable judicial orders and thereafter diligently prosecute to completion
all such Remedial Work in accordance with and within the time allowed under
such applicable Environmental Laws or judicial orders, except to the extent
that such requirement is being diligently contested in good faith by
appropriate proceedings in accordance with applicable law.
SECTION VI.13. Pay Obligations to Lenders and Perform Other
Covenants. (a) Make full and timely payment of the Obligations, whether now
existing or hereafter arising, (b) duly comply with all the terms and
covenants contained in this Agreement (including, without limitation, the
borrowing limitations and mandatory prepayments in accordance with Article II
hereof) in each of the other Loan Documents, all at the times and places and
in the manner set forth therein, and (c) except for the filing of
continuation statements and the making of other filings by the Agent as
secured party or assignee, at all times take all actions necessary to
maintain the Liens and security interests provided for under or pursuant to
this Agreement and the Security Documents as valid and perfected first Liens
on the property intended to be covered thereby (subject only to Liens
expressly permitted hereunder) and supply all requested information to the
Agent necessary for such maintenance.
SECTION VI.14. Maintain Operating Accounts. Maintain its principal
disbursement accounts, operating accounts and other depository accounts as
set forth on Schedule 4.14 annexed hereto or as otherwise contemplated by
Section 10.01, and notify the Agent promptly of the closing of any account
specified in Schedule 4.14 annexed hereto and the opening up of any new
accounts, in detail satisfactory to the Agent and with respect to any such
new account, provide the Agent with such agreements, in form and substance
satisfactory to the Agent, as the Agent shall request.
SECTION VI.15. Amendments. Promptly supply to the Agent certified
copies of any amendments to the Original Acquisition Documents, the Merger
Documents, the Tender Offer Documents, the Capitalization Documents, the
Senior Indenture, the Senior Notes, the Senior Subordinated Indenture, the
Senior Subordinated Notes or any Subordinated Indebtedness (subject to
Section 7.18 hereof).
SECTION VI.16. Use of Proceeds. Use all proceeds of the initial
borrowing under the Commitment to refinance the outstanding Indebtedness
under the Existing Credit Agreement on the Initial Closing Date, to
consummate the Related Transactions, to refinance the outstanding Target
Indebtedness on the Initial Closing Date and use all proceeds of each
borrowing under the Commitment thereafter to provide for working capital
requirements and the general corporate purposes of the Borrowers to the
extent that such purposes are permitted hereunder.
SECTION VI.17. Voting Control of Target Company; No Sale of Stock,
<PAGE>
Etc. At all times from and after the Initial Closing Date to but not
including the Merger Closing Date, own at least the Minimum Percentage of the
outstanding shares of capital stock of the Target Company. From and after
the Initial Closing Date, none of the Borrowers, the Guarantors or any of
their respective subsidiaries will sell, assign, transfer, convey or encumber
any Target Stock except in accordance with the terms of the Pledge Agreement.
SECTION VI.18. Merger. Use its best efforts to cause the Merger to
be consummated as promptly as practical but in no event later than the 180th
day from the Initial Closing Date.
VII. NEGATIVE COVENANTS
Each Borrower covenants and agrees with Agent and each Lender that,
so long as this Agreement shall remain in effect or the principal of or
interest on any Note, any amount under or with respect to any Letter of
Credit, or any fee, expense or amount payable hereunder or in connection with
any of the Transactions shall be unpaid, it will not and will not cause or
permit any Guarantor or any of their respective subsidiaries and, in the case
of Section 7.16 hereof, any ERISA Affiliate thereof to, either directly or
indirectly:
SECTION VII.1. Liens. Incur, create, assume or permit to exist any
Lien on any of its property or assets (including the stock of any direct or
indirect subsidiary), whether owned at the date hereof or hereafter acquired,
or assign or convey any rights to or security interests in any future
revenues, except:
(a) Liens incurred and pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance, old-age pensions and other social security benefits (not
including any lien described in Section 412(m) of the Code);
(b) Liens imposed by law, such as landlord, carriers',
warehousemen's, mechanics', materialmen's and vendors' liens and other
similar liens, incurred in good faith in the ordinary course of business
and securing obligations which are not overdue or which are being
contested in good faith by appropriate proceedings as to which the
applicable Borrower or any of its subsidiaries, as the case may be,
shall, to the extent required by generally accepted accounting principles
consistently applied, have set aside on its books adequate reserves;
(c) Liens securing the payment of taxes, assessments and
governmental charges or levies, that are not delinquent or are being
diligently contested in good faith by appropriate proceedings and as to
which adequate
<PAGE>
reserves have been established in accordance with generally accepted
accounting principles; provided, however, that in no event shall the
aggregate amount of such reserves be less than the aggregate amount
secured by such Liens;
(d) zoning restrictions, easements, licenses, reservations,
provisions, covenants, conditions, waivers, restrictions on the use of
real property or minor irregularities of title (and with respect to
leasehold interests, mortgages, obligations, liens and other encumbrances
incurred, created, assumed or permitted to exist and arising by, through
or under a landlord, ground lessor or owner of the leased property, with
or without consent of the lessee) which do not in the aggregate
materially detract from the value of its property or assets or materially
impair the use thereof in the operation of its business or with respect
to leasehold interests permitted to exist under any Mortgage, as
permitted by such Mortgage or with respect to leasehold interests on real
property not subject to any Mortgage, of the types permitted by, and
containing the same general terms and limitations of, any of the
Mortgages delivered on the Original Closing Date;
(e) Liens upon any equipment acquired through the purchase or lease
by any Borrower or any of its subsidiaries which are created or incurred
by such Borrower as a condition to the financing of such acquisition to
secure or provide for the payment of any part of the purchase price of,
or lease payments on, such equipment (but no other amounts and not in
excess of the purchase price or lease payments); provided, however, that
any such Lien shall not apply to any other property of such Borrower or
any of its subsidiaries; and provided, further, that after giving effect
to such purchase or lease, compliance is maintained with Section 7.07
hereof;
(f) Liens created in favor of the Letter of Credit Issuer for the
benefit of the Secured Parties with respect to Letters of Credit;
(g) Liens existing on the date of this Agreement and set forth in
Schedule 7.01 annexed hereto or set forth in Schedule B to each of the
title policies referred to in Section 3.03 hereof;
(h) Liens created in favor of the Agent for the benefit of the
Secured Parties (including, without limitation, Liens securing interest
rate protection agreements and other similar arrangements entered into
with Fleet);
(i) Liens securing the performance of bids, tenders, leases,
contracts (other than for the repayment of borrowed money), statutory
obligations, surety, customs and appeal bonds and other obligations of
like nature, incurred as an incident to and in the ordinary course of
business;
<PAGE>
(j) Liens for judgments which would not result in an Event of Default
under Article VIII (l);
(k) Liens in respect of Capitalized Lease Obligations;
(l) Liens in favor of A.I. Credit Corp. securing payment of amounts
due under a Premium Finance Agreement, Disclosure Statement and Security
Agreement dated as of May 29, 1997; provided, however, that compliance is
maintained with Section 7.03(xii) hereof; or
(m) Liens on property in connection with transactions permitted
pursuant to Section 7.02 hereof.
SECTION VII.2. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby any Borrower,
any Guarantor or any of their respective subsidiaries shall sell or transfer
any property, real or personal, and used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property
or other property which such Borrower, such Guarantor or such subsidiary
intends to use for substantially the same purpose or purposes as the property
being sold or transferred, except that so long as no Default or Event of
Default exists at such time or immediately after giving effect thereto, upon
thirty (30) days' prior written notice by the Borrowers to the Agent, the
Borrowers may enter into such arrangements with respect to real property with
the prior written consent of the Agent and the Required Lenders (such consent
not to be unreasonably withheld).
SECTION VII.3. Indebtedness. Incur, create, assume or permit to
exist any Indebtedness other than (i) Indebtedness (including, without
limitation, Capitalized Lease Obligations) secured by Liens permitted under
Section 7.01, (ii) Indebtedness (including, without limitation, Guarantees)
existing on the date hereof and listed in Schedule 7.03 annexed hereto, but
(except for extensions or renewals of the IRB Indebtedness) not the increase,
extension, renewal or refunding thereof, (iii) Indebtedness incurred
hereunder and under the other Loan Documents, (iv) Indebtedness incurred with
respect to interest rate protection agreements and other similar arrangements
entered into with Fleet, (v) Guarantees constituting the endorsement of
negotiable instruments for deposit or collection in the ordinary course of
business, (vi) Guarantees of the Obligations, (vii) Indebtedness under the
Senior Indenture or the Senior Notes, but not the increase, extension,
renewal or refunding thereof, (viii) Indebtedness under the Senior
Subordinated Indenture, but not the increase, extension, renewal or refunding
thereof, (ix) other Subordinated Indebtedness, but not the increase,
extension, renewal or refunding thereof, (x) Indebtedness to trade creditors
incurred in the ordinary course of business, (xi) Intercompany Indebtedness,
(xii) Indebtedness to A.I. Credit Corp. incurred in connection with a Premium
Finance Agreement, Disclosure Statement and Security Agreement dated as of
May 29, 1997 in a maximum amount of $16,000,000, (xiii) Indebtedness with
respect to
<PAGE>
unsecured letters of credit not issued under this Agreement in a maximum
amount of $5,000,000, plus any amount by which the maximum amount of Letters
of Credit under this Agreement (presently $30,000,000) is permanently
reduced, and (xiv) Indebtedness permitted to be incurred under Section 7.02
hereof.
SECTION VII.4. Dividends, Distributions and Payments. Declare or
pay, directly and indirectly, any cash dividends or make any other
distribution, whether in cash, property, securities (other than
payment-in-kind payments or non-cash accretions to liquidation preference
made with respect to any preferred stock of Jitney Jungle) or a combination
thereof, with respect to (whether by reduction of capital or otherwise) any
shares of its capital stock or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any subsidiary to purchase
or acquire) any shares of any class of its capital stock or set aside any
amount for any such purpose, other than (i) the issuance of warrants to
purchase up to 15%, on a fully diluted basis, of the common stock of Jitney
Jungle and (ii) dividends or other distributions by any subsidiary of Jitney
Jungle to Jitney Jungle or a subsidiary thereof and purchases by Jitney
Jungle of the capital stock of Jitney Jungle from retiring employees of the
Borrowers pursuant to the Securities Purchase and Holders Agreement in an
aggregate amount for all such employees not in excess of $1,000,000 during
the term of this Agreement (as such amount may from time to time be reduced
by purchases of such capital stock by Jitney Jungle from such employees and
increased by any sales by Jitney Jungle of such capital stock to other
employees; provided, that such purchased capital stock shall be sold within
180 days of such purchase to one or more employees of the Borrowers for a
cash consideration equal to or greater than the consideration paid by Jitney
Jungle for such capital stock).
SECTION VII.5. Consolidations, Merger and Sales of Assets.
Consolidate with or merge into any other person, or sell, lease, transfer or
assign to any persons or otherwise dispose of (whether in one transaction or
a series of transactions) any portion of its assets (whether now owned or
hereafter acquired), or permit another person to merge into it, or acquire
all or substantially all the capital stock or assets of any other person,
except that (i) the Borrowers and their respective subsidiaries may sell any
of their inventory in the ordinary course of their business; (ii) the
Borrowers and their respective subsidiaries may consummate the Related
Transactions; (iii) the Borrowers may sell automobiles used by employees in a
manner consistent with the Borrowers' past practices; (iv) any Borrower may
sell obsolete equipment in the ordinary course of business; provided, that
the Net Cash Proceeds of any such sale are applied to repay the Loans to the
extent required by Section 2.09(d)(i); (v) any Borrower (other than
Acquisition Corp. or Jitney Jungle) or Guarantor (other than Acquisition
Corp. or Jitney Jungle) may merge into any other Borrower or Guarantor; (vi)
the Borrowers and their respective subsidiaries may sell assets (other than
inventory or as otherwise permitted hereby) that constitute properties of any
Borrower or any subsidiary thereof no longer necessary for the proper conduct
of their respective businesses, for fair consideration and having a sales
price of not greater than
<PAGE>
$1,000,000 in any single transaction; provided, that the aggregate sales
price of all assets permitted to be sold pursuant to this clause (vi) shall
not exceed $5,000,000 during the term of this Agreement; and provided;
further that the Net Cash Proceeds of any such sale are applied to repay the
Loans to the extent required by Section 2.09(d)(i); (vii) the Borrowers and
their respective subsidiaries may lease or sublease real property covered by
a Mortgage in the ordinary course of business, such lease or sublease to be
for an initial term of up to seven and one-half years; provided, that the
real property covered by any such lease or sublease shall not exceed 5,000
square feet.; (viii) the Borrowers and their respective subsidiaries may sell
assets permitted to be sold by Section 7.02 hereof; (ix) the Borrowers and
their respective subsidiaries may sell the FTC Divestiture Stores; and (x)
Acquisition Corp. may merge with and into the Target Company on the Merger
Closing Date.
SECTION VII.6. Investments. Own, purchase or acquire any stock,
obligations, assets or securities of, or any interest in, or make any capital
contribution or loan or advance to, any other person, or make any other
investments, except:
(a) certificates of deposit in dollars of any commercial banks
registered to do business in any state of the United States (i) having
capital and surplus in excess of $1,000,000,000 and (ii) whose long-term
debt rating is at least investment grade as determined by either Standard
& Poor's Ratings Services, a division of McGraw Hill, Inc. ("S&P") or
Moody's Investors Service, Inc. ("Moody's");
(b) readily marketable direct obligations of the United States
government or any agency thereof which are backed by the full faith and
credit of the United States;
(c) commercial paper at the time of acquisition having the highest
rating obtainable from either S&P or Moody's;
(d) federally tax exempt securities rated A or better by either S&P
or Moody's;
(e) investments in the stock of any subsidiary existing on the
Initial Closing Date, but not any additional investments therein;
(f) loans to employees in connection with the purchase of capital
stock of the Borrowers and/or for other purposes not in excess of $750,000
in the aggregate outstanding at any time for all loans under this clause
(f);
(g) so long as no Default or Event of Default shall exist at the
time of acquisition (or after giving effect thereto) and subject to
Section 7.13, acquisitions by any Borrower or any subsidiary thereof of
assets of a business of
<PAGE>
a non-Affiliated person not to exceed in purchase price (whether in the form
of cash, property, stock, Indebtedness, assumption of liabilities or
otherwise) $1,000,000 individually or $5,000,000 in the aggregate for all
such acquisitions during the term of this Agreement;
(h) acquisitions of new stores for the conduct of the Borrowers'
business to the extent permitted under this Agreement;
(i) Intercompany Loans; and
(j) investments in the Target Stock;
provided, that, in each case mentioned in (a), (b), (c) and (d) above, such
obligations shall mature not more than one year from the date of acquisition
thereof; provided, further, that Loans may not be used to purchase or
otherwise fund the investments described in clauses (a) through and including
(d) above.
SECTION VII.7. Capital Expenditures and Other Expenditures. Permit
the aggregate amount of payments made, without duplication, for Capital
Expenditures, Capitalized Lease Obligations and Indebtedness secured by Liens
permitted under Section 7.01(e) and/or Section 7.01(k) hereof (excluding
Capital Expenditures in respect of Reinvestment Assets to the extent funded
with the Net Cash Proceeds of Asset Sales), at the end of each fiscal
quarter, for the four most recent consecutive fiscal quarters of the
Borrowers and their respective Consolidated subsidiaries to exceed 50% of
EBITDA for such fiscal period.
SECTION VII.8. Fixed Charge Coverage Ratio. If Undrawn
Availability at any time (each, a "Fixed Charge Test Date") is less than
$22,500,000, permit the Fixed Charge Coverage Ratio at the end of each fiscal
quarter, commencing with the fiscal quarter following the fiscal quarter in
which such Fixed Charge Test Date occurred, to be less than 1.00:1.00.
SECTION VII.9. Leverage Ratio. Permit the Leverage Ratio at the
end of each fiscal quarter set forth below to be greater than:
Date of Determination Ratio
--------------------- ------
Each Fiscal Quarter ending 5.00:1.00
in Fiscal Year 1998
Each Fiscal Quarter ending 4.40:1.00
in Fiscal Year 1999
<PAGE>
Each Fiscal Quarter ending 4.30:1.00
in Fiscal Year 2000
Each Fiscal Quarter ending 3.90:1.00
in Fiscal Year 2001
Each Fiscal Quarter ending 3.60:1.00
in Fiscal Year 2002
Each Fiscal Quarter ending 3.40:1.00
in Fiscal Year 2003
SECTION VII.10. Interest Coverage Ratio. Permit the Interest
Coverage Ratio at the end of each fiscal quarter set forth below to be less
than:
Date of Determination Ratio
--------------------- ------
Each Fiscal Quarter ending 1.65:1.00
in Fiscal Year 1998
Each Fiscal Quarter ending 1.80:1.00
in Fiscal Year 1999
Each Fiscal Quarter ending 1.85:1.00
in Fiscal Year 2000
Each Fiscal Quarter ending 2.00:1.00
in Fiscal Year 2001 and
thereafter
SECTION VII.11. EBITDA. Permit EBITDA at the end of each fiscal
quarter for the four most recent consecutive fiscal quarters ending on or
prior to the date of determination to be less than the following amounts;
provided, that for the fiscal quarters ending October 18, 1997, January 10,
1998 and May 2, 1998, EBITDA shall be calculated, with respect to Jitney
Jungle and its subsidiaries (other than Delchamps and its subsidiaries), for
the number of fiscal quarters that shall have elapsed since May 3, 1997 and
with respect to Delchamps and its subsidiaries, for the period commencing
June 29, 1997 through the date of determination:
Date of Determination Ratio
--------------------- ------
<PAGE>
Fiscal Quarter ending $38,000,000
October 18, 1997
Fiscal Quarter ending $59,000,000
January 10, 1998
Fiscal Quarter ending $90,000,000
May 2, 1998
Each Fiscal Quarter ending $112,000,000
in Fiscal Year 1999
Each Fiscal Quarter ending $114,000,000
in Fiscal Year 2000
Each Fiscal Quarter ending $124,000,000
in Fiscal Year 2001
Each Fiscal Quarter ending $135,000,000
in Fiscal Year 2002
Each Fiscal Quarter ending $148,000,000
in Fiscal Year 2003
SECTION VII.12. Interest Rate Protection Arrangements. Enter into
any interest rate protection agreement, interest rate swap agreement, hedge
contract or any other agreement, arrangement, device or instrument designed
or intended to protect the applicable Borrower against fluctuations in the
rate of interest on its Indebtedness with any person other than Fleet or an
Affiliate thereof (subject to market competition).
SECTION VII.13. Business. Alter the nature of its business as
operated on the date of this Agreement in any material respect.
SECTION VII.14. Sales of Receivables. Sell, assign, discount,
transfer, or otherwise dispose of any accounts receivable, promissory notes,
drafts or trade acceptances or other rights to receive payment held by it,
with or without recourse, except for the purpose of collection or settlement
in the ordinary course of business.
SECTION VII.15. Use of Proceeds. Permit the proceeds of any Credit
Event to be used for any purpose which entails a violation of, or is
inconsistent with, Regulation G, T, U or X of the Board, or for any purpose
other than those set forth in Section 6.16 hereof.
<PAGE>
SECTION VII.16. ERISA. (a) Engage in any transaction in
connection with which any Borrower or any ERISA Affiliate thereof could be
subject to either a material civil penalty assessed pursuant to the
provisions of Section 502 of ERISA or a material tax imposed under the
provisions of Section 4975 of the Code.
(b) Terminate any Pension Plan in a "distress termination" under
Section 4041 of ERISA which could result in a material liability of any
Borrower or any ERISA Affiliate thereof to the PBGC, or take any other action
which could result in a material liability of any Borrower or any ERISA
Affiliate thereof to the PBGC.
(c) Fail to make payment when due of all amounts which, under the
provisions of any Plan, any Borrower or any ERISA Affiliate thereof is
required to pay as contributions thereto (other than a failure by reason of
inadvertent error that is corrected as soon as practicable after discovery of
such error if the effect of such failure would reasonably be expected to
result in a Material Adverse Effect), or, with respect to any Pension Plan,
permit to exist any "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code), whether or not waived,
with respect thereto.
(d) Adopt an amendment to any Pension Plan requiring the provision
of security under Section 307 of ERISA or Section 401(a)(29) of the Code.
SECTION VII.17. Accounting Changes. Make, or permit any subsidiary
to make, any material change in its accounting treatment or financial
reporting practices except as required or permitted by generally accepted
accounting principles in effect from time to time.
SECTION VII.18. Prepayment or Modification of Indebtedness;
Modification of Charter and Other Documents. (a) Directly or indirectly
prepay, redeem, purchase, defease or retire in advance of its scheduled
maturity any Indebtedness (for borrowed money or under capital leases) other
than (i) Indebtedness incurred hereunder, (ii) Indebtedness in respect of
Capitalized Lease Obligations relating to real property, (iii) Indebtedness
in respect of Capitalized Lease Obligations relating to personal property
(such prepayments, redemptions, purchases or retirements under this clause
(iii) not to exceed $2,500,000 in the aggregate during the term of this
Agreement), or pay any Indebtedness in violation of any subordination
provisions with respect thereto, or (iv) Indebtedness under certain insurance
policies maintained with Aon Risk Services with respect to the premiums
payable under such policies, as contemplated by the financing arrangements
with A.I. Credit Corp. pursuant to a Premium Finance Agreement, Disclosure
Statement and Security Agreement dated as of May 29, 1997.
(b) Directly or indirectly prepay, redeem, purchase, decrease or
retire in advance of its scheduled maturity any Indebtedness issued under the
Senior Indenture, the Senior Subordinated Indenture or any of the Senior
Notes or the Senior Subordinated Notes or any Subordinated Indebtedness.
<PAGE>
(c) Directly or indirectly modify, amend or otherwise alter the
terms and provisions of the Senior Indenture or the Senior Notes or of the
Senior Subordinated Indenture or the Senior Subordinated Notes or any
Subordinated Indebtedness.
(d) Directly or indirectly modify, amend or alter their
certificates or articles of incorporation (except in connection with
issuances of capital stock permitted by Section 7.23(iv)), preferred
stock/certificates of designations or by-laws.
(e) Directly or indirectly modify, amend or otherwise alter the
terms and provisions of any of the Original Acquisition Documents, the Merger
Documents, the Tender Offer Documents or the Capitalization Documents (except
any stockholders agreement between or among the holders of the Acquisition
Securities to the extent such would not reasonably be expected to have a
Material Adverse Effect).
(f) Directly or indirectly modify, amend or otherwise alter the
terms and provisions of the SunTrust LC without the written consent of the
Agent.
SECTION VII.19. Transactions with Affiliates. Except as otherwise
specifically permitted in this Agreement, including fees permitted in Section
7.20 and the transactions contemplated under the Original Acquisition
Documents, the Merger Documents, the Tender Offer Documents and the
Capitalization Documents, directly or indirectly purchase, acquire or lease
any property from, or sell, transfer or lease any property to, or enter into
any other transaction with, any stockholder, Affiliate or agent of any
Borrower, any subsidiary thereof or any relative thereof, except at prices
and on any terms not less favorable to it than that which would have been
obtained in an arm's-length transaction with a non-affiliated third party.
SECTION VII.20. Consulting Fees. Pay any management, consulting or
other fees of any kind to any Affiliate of any Borrower or any subsidiary
thereof, other than salaries to employees consistent with industry practice,
legal fees and consulting and investment banking fees, except as specified in
Schedule 7.20 annexed hereto.
SECTION VII.21. Limitations on Dividends and Other Payments.
Create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any subsidiary of any Borrower
to (a) pay dividends or make any other distributions on its capital stock or
any other equity interest or participation in, or measured by, its profits,
owned by any other Borrower or any subsidiary thereof, or pay any
indebtedness owed to, any other Borrower or any subsidiary thereof, (b) make
loans or advances to any other Borrower or any subsidiary thereof, or (c)
transfer any of its properties or assets to any other Borrower or any
subsidiary thereof, except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) this Agreement, (iii) the
Senior Indenture as in effect on the Initial Closing Date or (iv) the Senior
Subordinated Indenture as in effect on the Initial Closing Date.
<PAGE>
SECTION VII.22. Limitation on Creation of Subsidiaries. Establish,
create or acquire, or permit any subsidiary of any Borrower to establish,
create or acquire, any new subsidiary, without the prior written consent of
the Agent.
SECTION VII.23. Limitation on Issuance of Capital Stock. Issue, or
permit any subsidiary to issue, any capital stock (including by way of sales
of treasury stock) or any options or warrants to purchase, or securities
convertible into, capital stock, except (i) to effect the Merger on the
Merger Closing Date, (ii) to qualify directors to the extent required by
applicable law, (iii) upon the formation of any new subsidiary to the extent
permitted by this Agreement, such newly formed subsidiary may issue capital
stock to the applicable Borrower so long as the capital stock so issued is
immediately pledged to the Agent for the benefit of the Secured Parties under
the applicable Pledge Agreement, and (iv) the issuance by Jitney Jungle of
capital stock (including by way of treasury stock) or any options or warrants
to purchase, or securities convertible into, capital stock of Jitney Jungle.
VIII. EVENTS OF DEFAULT
In case of the happening of any of the following events (herein
called "Events of Default"):
(a) any representation or warranty made or deemed made in or in
connection with this Agreement, any of the Security Documents, the Notes or
other Loan Documents or any Credit Events hereunder, shall prove to have
been incorrect in any material respect when made or deemed to be made;
(b) default shall be made in the payment of any principal of any Note
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any Note,
any fee or any other amount payable hereunder, or under or with respect to
the Notes, Letters of Credit, or any other Loan Document or in connection
with any other Credit Event or any of the Transactions when and as the same
shall become due and payable;
(d) default shall be made in the due observance or performance of any
covenant, condition or agreement to be observed or performed on the part of
any Borrower, any Guarantor, any Grantor or any of their respective
subsidiaries pursuant to the terms of this Agreement, any of the Notes, any
of the Security Documents or any other Loan Document (and, with respect to
defaults under
<PAGE>
Sections 6.04, 6.06, 6.07 and 6.12 hereof, such default shall continue for
fifteen (15) days);
(e) any Borrower, any Guarantor, any Grantor or any subsidiary of
any thereof shall (i) voluntarily commence any proceeding or file any
petition seeking relief under Title 11 of the United States Code or any
other Federal, state or foreign bankruptcy, insolvency, liquidation or
similar law, (ii) consent to the institution of, or fail to contravene in
a timely and appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for such
Borrower, such Guarantor, such Grantor or such subsidiary or for a
substantial part of its property or assets, (iv) file an answer
admitting the material allegations of a petition filed against it in any
such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take corporate
action for the purpose of effecting any of the foregoing;
(f) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of any Borrower, any Guarantor, any Grantor or any
subsidiary of any thereof, or of a substantial part of the property or
assets of any Borrower, any Guarantor, any Grantor or any subsidiary of
any thereof, under Title 11 of the United States Code or any other
Federal state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator
or similar official for any Borrower, any Guarantor, any Grantor or any
subsidiary of any thereof or for a substantial part of the property of
any Borrower, any Guarantor, any Grantor or any subsidiary of any thereof
or (iii) the winding-up or liquidation of any Borrower, any Guarantor,
any Grantor or any subsidiary of any thereof; and such proceeding or
petition shall continue undismissed for 30 days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and in
effect for 60 days;
(g) default shall be made with respect to any Indebtedness
(excluding Indebtedness outstanding hereunder and Indebtedness covered by
clause (h) or (i) of this Article VIII) or any obligations under a
capitalized lease relating to any personal property of any Borrower, any
Guarantor, any Grantor or any subsidiary of any thereof, and, with
respect to such lease, whose unpaid principal amount exceeds (together
with all other Indebtedness or capitalized leases in default under this
clause (g)) $250,000 in the aggregate at any time, if the effect of any
such default shall be to accelerate, or to permit the holder or obligee
of any such Indebtedness or obligations under a capitalized lease (or any
trustee on behalf of such holder or obligee) at its option to accelerate,
the maturity of such Indebtedness or such obligations under a
capitalized lease, or if any such Indebtedness or such obligations under
a capitalized lease shall not be paid
<PAGE>
when scheduled to be due and payable (taking into account any grace
periods);
(h) default shall be made with respect to any obligations under a
capitalized lease relating to any real property of any Borrower, any
Guarantor, any Grantor or any subsidiary of any thereof, whose principal
amount exceeds (together with all other capitalized leases in default
under this clause (h)) $2,250,000 in the aggregate at any time, if the
effect of any such default shall be to accelerate the maturity of such
obligations under such capitalized lease;
(i) default shall be made with respect to any IRB Indebtedness
(including, without limitation, under the Letter of Credit Reimbursement
Agreement, dated as of December 1, 1995, between McCarty-Holman Co., Inc.
and Sun Trust Bank, Atlanta (or any successor or replacement agreement),
pursuant to which an irrevocable letter of credit in favor of the IRB
Trustee relating to such Indebtedness, was issued) by the City of
Jackson, Mississippi or any Borrower, and Guarantor, any Grantor or any
subsidiary of any thereof, if the effect of any such default shall be to
accelerate, or to permit the holder or obligee of any such Indebtedness
(or any trustee on behalf of such holder or obligee) at its option to
accelerate, the maturity of such Indebtedness or if any such Indebtedness
shall not be paid when scheduled to be due and payable (taking into
account any grace periods);
(j) (i) a Reportable Event shall have occurred with respect to a
Pension Plan, (ii) the filing by any Borrower, any ERISA Affiliate, or an
administrator of any Plan of a notice of intent to terminate such a Plan
in a "distress termination" under the provisions of Section 4041 of
ERISA, (iii) the receipt of notice by any Borrower, any ERISA Affiliate,
or an administrator of a Plan that the PBGC has instituted proceedings to
terminate (or appoint a trustee to administer) such a Pension Plan, (iv)
any other event or condition exists which constitutes grounds under the
provisions of Section 4042 of ERISA for the termination of (or the
appointment of a trustee to administer) any Pension Plan by the PBGC, (v)
a Pension Plan shall fail to maintain the minimum funding standard
required by Section 412 of the Code for any plan year or a waiver of such
standard is sought or granted under the provisions of Section 412(d) of
the Code, (vi) any Borrower or any ERISA Affiliate thereof has incurred,
or is likely to incur, a liability under the provisions of Section 4062,
4063, 4064, 4201 or 4203 of ERISA, (vii) any Borrower or any ERISA
Affiliate thereof fails to pay the full amount of an installment required
under Section 412(m) of the Code, (viii) the occurrence of any other
event or condition with respect to any Plan which would constitute an
event of default under any other agreement entered into by any Borrower
or any ERISA Affiliate, and in each case in clauses (i) through (viii) of
this subsection (h), such event or condition, together with all other
such events or conditions, if any, could subject any Borrower or any
ERISA Affiliate thereof to any taxes, penalties or other liabilities
which, in the reasonable opinion of the
<PAGE>
Agent, would have a Material Adverse Effect on the financial condition of
any Borrower or any ERISA Affiliate;
(k) any Borrower or any ERISA Affiliate thereof (i) shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred any
material withdrawal liability to such Multiemployer Plan, and (ii) does
not have reasonable grounds for contesting such withdrawal liability and
is not in fact contesting such withdrawal liability in a timely and
appropriate manner;
(l) a judgment (not reimbursed by insurance policies of any
Borrower, any Guarantor, any Grantor or any subsidiary of any thereof) or
decree for the payment of money, a fine or penalty which when taken
together with all other such judgments, decrees, fines and penalties
shall exceed $500,000 shall be rendered by a court or other tribunal
against any Borrower, any Guarantor, any Grantor or any subsidiary of any
thereof and (i) shall remain undischarged or unbonded for a period of 30
consecutive days during which the execution of such judgment, decree,
fine or penalty shall not have been stayed effectively or (ii) any
judgment creditor or other person shall legally commence actions to
collect on or enforce such judgment, decree, fine or penalty;
(m) this Agreement, any Note, any of the Security Documents or any
of the other Loan Documents shall for any reason cease to be, or shall be
asserted by any Borrower, any Guarantor or any Grantor not to be, a
legal, valid and binding obligation of such Borrower, such Guarantor or
such Grantor, as applicable, enforceable in accordance with its terms, or
the security interest or Lien purported to be created by any of the
Security Documents shall for any reason cease to be, or be asserted by
any Borrower, any Guarantor or any Grantor not to be, a valid, first
priority perfected security interest in any Collateral (except to the
extent otherwise permitted under this Agreement or any of the Security
Documents);
(n) a Change of Control shall occur;
(o) any of the Related Transactions (other than the initial
borrowing under the Commitment, the acquisition of all of the Target
Stock and the Merger) shall not have been duly and validly consummated on
the Initial Closing Date, without modification, amendment or waiver
(except for de minimis modifications, amendments and waivers of which the
Agent shall have received prior notification and except for other
modifications, amendments or waivers as shall have been approved in
writing by the Agent), in accordance with the terms, conditions and
provisions of the Merger Documents, the Tender Offer Documents or the
Senior Subordinated Indenture, as the case may be; or
(p) the Merger shall not have been duly and validly consummated no
<PAGE>
later than the 180th day after the date hereof, without modification,
amendment or waiver (except for de minimis modifications, amendments and
waivers of which the Agent shall have received prior notification and
except for other modifications, amendments or waivers as shall have been
approved in writing by the Agent), in accordance with the terms,
conditions and provisions of the Merger Documents and the Tender Offer
Documents;
then, and in any such event (other than an event described in paragraph (e)
or (f) above), and at any time thereafter during the continuance of such
event, the Agent may, and upon the written request of the Required Lenders
shall, by written notice (or facsimile notice promptly confirmed in writing)
to the Borrowers, take any or all of the following actions at the same or
different times: (i) terminate forthwith all or any portion of the Total
Commitment and the obligations of the Letter of Credit Issuer to issue
Letters of Credit hereunder; and (ii) declare the Notes, any amounts then
owing to the Lenders or the Letter of Credit Issuer on account of drawings
under any Letters of Credit and all other Obligations to be forthwith due and
payable, whereupon the principal of such Notes, together with accrued
interest and fees thereon and any amounts then owing to the Lenders or the
Letter of Credit Issuer on account of drawings under any Letters of Credit
and other liabilities of the Borrowers accrued hereunder and all other
Obligations, shall become forthwith due and payable, without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived by each Borrower and each Guarantor, anything contained
herein or in the Notes to the contrary notwithstanding; provided, however,
that with respect to a default described in paragraph (e) or (f) above, the
Total Commitment and the obligation of the Letter of Credit Issuer to issue
Letters of Credit shall automatically terminate and the principal of the
Notes, together with accrued interest and fees thereon and any amounts then
owing to the Lenders and the Letter of Credit Issuer on account of drawings
under any Letters of Credit and any other liabilities of any Borrower accrued
hereunder and all other Obligations shall automatically become due and
payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by each Borrower and each Guarantor,
anything contained herein or in the Notes to the contrary notwithstanding.
During the continuance of an Event of Default, the Agent shall have
and may exercise all rights and remedies of a mortgagee or a secured party
under the Uniform Commercial Code in effect in the State of New York at such
time, whether or not applicable to the affected Collateral, and otherwise,
including, without limitation, the right to foreclose the Liens granted
herein or in any of the Security Documents by any available judicial
procedure and/or to take possession of any or all of the Collateral, the
other security for the Obligations and the books and records relating
thereto, with or without judicial process; for the purposes of the preceding
sentence, the Agent may enter upon any or all of the premises where any of
the Collateral, such other security or books or records may be situated and
take possession and remove the same therefrom.
<PAGE>
The Agent shall have the right, in its sole discretion, to determine
which rights, Liens or remedies it shall at any time pursue, relinquish,
subordinate, modify or take any other action with respect thereto, without in
any way modifying or affecting any of them or any of the Lenders', the Letter
of Credit Issuer's or the Agent's rights hereunder or under any other Loan
Documents; and any moneys, deposits, accounts, balances or other property
which may come into any Lender's, the Letter of Credit Issuer's or the
Agent's hands at any time or in any manner, may be retained by such Lender,
the Letter of Credit Issuer or the Agent and applied to any of the
Obligations.
In case any one or more Events of Default shall occur and be
continuing, the Agent may proceed to protect and enforce its rights or
remedies either by suit in equity or by action at law, or both, whether for
the specific performance of any covenant, agreement or other provision
contained herein or in any document or instrument delivered in connection
with or pursuant to this Agreement or any other Loan Document, or to enforce
the payment of the Obligations or any other legal or equitable right or
remedy.
No right or remedy herein conferred upon the Lenders, the Letter of
Credit Issuer or the Agent is intended to be exclusive of any other right or
remedy contained herein or in any instrument or document delivered in
connection with or pursuant to this Agreement or any other Loan Document, and
every such right or remedy shall be cumulative and shall be in addition to
every other such right or remedy contained herein and therein or now or
hereafter existing at law or in equity or by statute, or otherwise.
No course of dealing between any Borrower or any Grantor or
Guarantor and any Lender, the Letter of Credit Issuer or the Agent or any
failure or delay on the part of any Lender, the Letter of Credit Issuer or
the Agent in exercising any rights or remedies hereunder or under any other
Loan Document shall operate as a waiver of any rights or remedies of the
Lenders, the Letter of Credit Issuer or the Agent and no single or partial
exercise of any rights or remedies hereunder or under any other Loan Document
shall operate as a waiver or preclude the exercise of any other rights or
remedies hereunder or under any other Loan Document or of the same right or
remedy on a future occasion.
After the occurrence of an Event of Default and acceleration of the
Obligations as herein provided, the proceeds of the Collateral and of
property of persons other than the Borrowers and the Grantors securing the
Obligations and collections from each Guarantee of the Obligations shall be
applied by the Agent to payment of the Obligations in the following order,
unless a court of competent jurisdiction shall otherwise direct or if
otherwise provided in a Security Document:
(i) FIRST, to payment of all reasonable costs and expenses of
the Agent, the Letter of Credit Issuer and the Lenders incurred in
connection with
<PAGE>
the preservation, collection and enforcement of the Obligations or any
Guarantee thereof, or of any of the Liens granted to the Agent pursuant
to the Security Documents or otherwise, including, without limitation,
any amounts advanced by the Agent, the Letter of Credit Issuer or the
Lenders to protect or preserve the Collateral;
(ii) SECOND, to payment of that portion of the Obligations
constituting accrued and unpaid interest and fees and indemnities due and
payable under Section 2 hereof, ratably amongst the Agent, the
Letter of Credit Issuer and the Lenders in accordance with the
proportion which the accrued interest and fees and indemnities due
and payable under Section 2 hereof constituting the Obligations
owing to the Agent, the Letter of Credit Issuer and each such Lender
at such time bears to the aggregate amount of accrued interest and
fees and indemnities payable under Section 2 hereof constituting the
Obligations owing to the Agent, the Letter of Credit Issuer and all of
the Lenders at such time until such interest, fees and indemnities shall
be paid in full;
(iii) THIRD, to the Agent on behalf of the Letter of Credit
Issuer in an amount equal to 103% of the then aggregate undrawn amount of
all outstanding Letters of Credit to be held by the Agent for the payment
of the Obligations with respect thereto when and if due and payable;
(iv) FOURTH, to payment of the principal of the Obligations
(which shall exclude all Obligations with respect to the undrawn amount
of Letters of Credit), ratably amongst the Lenders and the Letter of
Credit Issuer in accordance with the proportion which the principal
amount of the Obligations (which shall exclude all Obligations with
respect to the undrawn amount of Letters of Credit) owing to each such
Lender and the Letter of Credit Issuer bears to the aggregate
principal amount of the Obligations (which shall exclude all
Obligations with respect to the undrawn amount of Letters of Credit)
owing to all of the Lenders and the Letter of Credit Issuer until
such principal of the Obligations shall be paid in full;
(v) FIFTH, to the payment of all other Obligations, ratably
amongst the Lenders in accordance with the proportion which the amount of
such other Obligations owing to each such Lender bears to the aggregate
principal amount of such other Obligations owing to all of the Lenders
until such other Obligations shall be paid in full; and
(vi) SIXTH, the balance, if any, after all of the Obligations
have been satisfied, shall, except as otherwise provided in the Security
Documents, be deposited by the Agent in an operating account of the
Borrowers with the Agent designated by the Borrowers, or paid over
to such other person or
<PAGE>
persons as may be required by law.
In the event that the amount of monies received by the Agent under clause
(iii) above with respect to a Letter of Credit for which there are undrawn
amounts at the time of the Agent's receipt of such monies shall exceed the
amount of actual payments the Letter of Credit Issuer shall have made with
respect to drawings under such Letter of Credit after the Agent's receipt of
such monies, which determination shall be made after such Letter of Credit
has been terminated or has expired, then the Agent shall apply such excess
monies and cash collateral in accordance with paragraphs (iv), (v) and (vi)
of the immediately preceding paragraph.
Each of the Borrowers and the Guarantors acknowledges and agrees that
they shall remain jointly and severally liable to the extent of any
deficiency between the amount of the proceeds of the Collateral and
collections under the Guarantees of the Obligations and the aggregate amount
of the sums referred to in the first through fifth clauses above.
IX. AGENT
In order to expedite the transactions contemplated by this Agreement,
Fleet Capital Corporation is hereby appointed to act as Agent on behalf of
the Lenders. Each of the Lenders and each subsequent holder of any Note or
issuer of any Letter of Credit by its acceptance thereof, irrevocably
authorizes the Agent to take such action on its behalf and to exercise such
powers hereunder and under the Security Documents and other Loan Documents as
are specifically delegated to or required of the Agent by the terms hereof
and the terms thereof together with such powers as are reasonably incidental
thereto. Neither the Agent nor any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted to be taken by
it or them hereunder or under any of the Security Documents and other Loan
Documents or in connection herewith or therewith (a) at the request or with
the approval of the Required Lenders (or, if otherwise specifically required
hereunder or thereunder, the consent of all the Lenders) or (b) in the
absence of its or their own gross negligence, bad faith or willful
misconduct.
The Agent is hereby expressly authorized on behalf of the Lenders,
without hereby limiting any implied authority, (a) to receive on behalf of
each of the Lenders any payment of principal of or interest on the Notes
outstanding hereunder and all other amounts accrued hereunder paid to the
Agent, and promptly to distribute to each Lender its proper share of all
payments so received, (b) to distribute to each Lender copies of all notices,
agreements and other material as provided for in this Agreement or in the
Security Documents and other Loan Documents as received by such Agent and (c)
to take all actions with respect to this Agreement and the Security Documents
and other Loan Documents as are specifically delegated to the Agent.
<PAGE>
The Lenders hereby designate DLJ Capital Funding, Inc. as Documentation
Agent. The Documentation Agent, in its capacity as documentation agent,
shall have no rights, responsibilities, duties or obligations under this
Agreement or any other Loan Document.
In the event that (a) the Borrowers fail to pay when due the principal of
or interest on any Note, any amount payable under or with respect to any
Letter of Credit, or any fee payable hereunder or (b) the Agent receives
written notice of or otherwise becomes aware of the occurrence of a Default
or an Event of Default, the Agent shall promptly give written notice thereof
to the Lenders, and shall take such action with respect to such Event of
Default or other condition or event as it shall be directed to take by the
Required Lenders (but shall not be required to take any such actions which
violate any law or any term of this Agreement or any other Loan Document);
provided, however, that, unless and until the Agent shall have received such
directions, the Agent may take such action or refrain from taking such action
hereunder or under the Security Documents or other Loan Documents with
respect to a Default or Event of Default as it shall deem advisable in the
best interests of the Lenders.
Neither the Agent nor the Documentation Agent shall be responsible in any
manner to any of the Lenders for the effectiveness, enforceability,
perfection, value, genuineness, validity or due execution of this Agreement,
the Notes or any of the other Loan Documents or Collateral or any other
agreements or certificates, requests, financial statements, notices or
opinions of counsel or for any recitals, statements, warranties or
representations contained herein or in any such instrument or be under any
obligation to ascertain or inquire as to the performance or observance of any
of the terms, provisions, covenants, conditions, agreements or obligations of
this Agreement or any of the other Loan Documents or any other agreements on
the part of any Borrower or any Guarantor and, without limiting the
generality of the foregoing, the Agent shall, in the absence of knowledge to
the contrary, be entitled to accept any certificate furnished pursuant to
this Agreement or any of the other Loan Documents as conclusive evidence of
the facts stated therein and shall be entitled to rely on any note, notice,
consent, certificate, affidavit, letter, telegram, teletype message,
statement, order or other document which it believes in good faith to be
genuine and correct and to have been signed or sent by the proper person or
persons. It is understood and agreed that the Agent may exercise its rights
and powers under other agreements and instruments to which it is or may be a
party, and engage in other transactions with any Borrower or any Guarantor,
as though it were not Agent of the Lenders hereunder.
Neither the Agent, the Documentation Agent nor any of their respective
directors, officers, employees or agents shall have any responsibility to any
Borrower or any Guarantor on account of the failure or delay in performance
or breach by any Lender other than the Agent of any of its obligations
hereunder or to any Lender on account of the failure of or delay in
performance or breach by any other Lender or any
<PAGE>
Borrower or any Guarantor of any of their respective obligations hereunder or
in connection herewith.
The Agent may consult with legal counsel selected by it in connection
with matters arising under this Agreement or any of the other Loan Documents
and any action taken or suffered in good faith by it in accordance with the
opinion of such counsel shall be full justification and protection to it.
The Agent may exercise any of its powers and rights and perform any duty
under this Agreement or any of the other Loan Documents through agents or
attorneys.
The Agent and the Borrowers may deem and treat the payee of any Note as
the holder thereof until written notice of transfer shall have been delivered
as provided herein by such payee to the Agent and the Borrowers.
With respect to the Loans made hereunder, the Notes issued to it and any
other Credit Event applicable to it, the Agent in its individual capacity and
not as an Agent and the Documentation Agent in its individual capacity and
not as Documentation Agent shall have the same rights, powers and duties
hereunder and under any other Loan Document executed in connection herewith
as any other Lender and may exercise the same as though it were not the Agent
or the Documentation Agent, as the case may be, and the Agent, the
Documentation Agent and their respective affiliates may accept deposits from,
lend money to and generally engage in any kind of business with any Borrower,
any Guarantor or other affiliate thereof as if it were not the Agent or the
Documentation Agent, as the case may be.
Each Secured Party agrees (i) to reimburse the Agent and the
Documentation Agent in the amount of such Lender's pro rata share (based on
its Total Commitment hereunder) of any expenses incurred for the benefit of
the Secured Parties by the Agent or the Documentation Agent (as applicable),
including counsel fees and compensation of agents paid for services rendered
on behalf of the Secured Parties, not reimbursed by the Borrowers and (ii) to
indemnify and hold harmless the Agent, the Documentation Agent and any of
their respective directors, officers, employees or agents, on demand, in the
amount of its pro rata share, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against it or such directors, officers,
employees or agents in its or their capacity as, or acting on behalf of, the
Agent or the Documentation Agent (as applicable) in any way relating to or
arising out of this Agreement or any of the other Loan Documents or any
action taken or omitted by it or any of them under this Agreement or any of
the other Loan Documents, to the extent not reimbursed by the Borrowers;
provided, however, that no Secured Party shall be liable to the Agent or the
Documentation Agent's (as applicable) for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgment, suits, costs,
expenses or disbursements resulting from the gross negligence or willful
misconduct of the Agent, the
<PAGE>
Documentation Agent or any of their respective directors, officers, employees
or agents.
Each Lender acknowledges that it has, independently and without reliance
upon the Agent, the Documentation Agent, Fleet, DLJ or any other Lender and
based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter into this Agreement and any
other Loan Document to which such Lender is party. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent,
the Documentation Agent, Fleet, DLJ or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own decisions in taking or not taking action under or based upon
this Agreement, any other Loan Document, any related agreement or any
document furnished hereunder.
Subject to the appointment and acceptance of a successor Agent as
provided below, the Agent may resign at any time by notifying the Lenders and
the Borrowers. Upon any such resignation, the Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so
appointed by such Lenders and shall have accepted such appointment within 30
days after the retiring Agent gives notice of its resignation, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent which
shall be a financial institution with an office (or an affiliate with an
office) in New York, New York, having a combined capital and surplus of at
least $500,000,000. Upon the acceptance of any appointment as Agent
hereunder by a successor financial institution, such successor shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent and the retiring Agent shall be
discharged from its duties and obligations hereunder and under each of the
other Loan Documents. After any Agent's resignation hereunder, the
provisions of this Article shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting
as Agent.
The Documentation Agent may resign as Documentation Agent at any time by
giving written notice thereof to the Agent. The Agent (and only the Agent)
may appoint a successor Documentation Agent, which Documentation Agent shall
be a Lender or an Affiliate of a Lender; provided, however, that the Agent
shall have no obligation to appoint a successor Documentation Agent.
The Lenders hereby acknowledge that the Agent shall be under no duty to
take any discretionary action permitted to be taken by the Agent pursuant to
the provisions of this Agreement or any of the other Loan Documents unless it
shall be requested in writing to do so by the Required Lenders (and the Agent
shall not be obligated to take any such requested action which violates
applicable law or any terms of this Agreement or any other Loan Document).
The Lenders hereby acknowledge that neither the Agent nor the Documentation
Agent is acting as the fiduciary of, or trustee for, any of the Lenders.
<PAGE>
X. CASH RECEIPTS COLLECTION
SECTION X.1. Collection of Cash. (a) (i) The Borrowers will, at
their own cost and expense, cause all payments received by the Borrowers from
any source, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders, credit card payments, debit card payments or
otherwise (referred to herein as "Payments"), (ii) to be deposited daily in
precisely the form received (but with any endorsements of the Borrowers
necessary for deposit or collection) in one or more bank accounts maintained
by the Borrowers and acceptable to the Agent in which only the Payments owned
by the Borrowers will be deposited, (iii) to be transferred daily from the
accounts referred to in clause (ii) to one or more concentration accounts
designated by the Agent with a bank acceptable to the Agent in which only the
Payments owned by the Borrowers will be deposited, and (iv) cause the
Payments to be transferred daily from the concentration accounts referred to
in clause (iii) to an account of the Agent, such Payments to be subject to
withdrawal by the Agent only, as hereinafter provided. Until such Payments
are deposited with the Agent in accordance with the prior sentence, such
Payments shall be deemed to be held in trust by the Borrowers for and as the
Agent's property. All Payments that are deposited with the Agent in
accordance with the foregoing will, if deposited on or before 1:00 p.m. (New
York time), be applied by the Agent on such Business Day (or, if deposited
after 1:00 p.m. (New York time), within one Business Day after receipt
thereof by the Agent) to reduce the outstanding balance of the Loans and
thereafter other Obligations then due and payable, subject to final
collection in cash of the item deposited. Each bank at which an account
referred to in clause (ii) of the first sentence of this Section 10.01(a) is
maintained and each bank at which a concentration account referred to in
clause (iii) of such sentence shall execute and deliver to the Agent such
agreements, in form and substance satisfactory to the Agent, as the Agent
shall request with respect to such accounts, including, without limitation,
with respect to prohibitions on the Borrowers withdrawing funds from such
accounts or otherwise directing or modifying actions with respect to such
accounts; provided, that with respect to each account referred to in clause
(ii) of the first sentence of this Section 10.01(a) which is maintained by
Delchamps or any subsidiary thereof, such agreements shall be delivered to
the Agent within forty-five (45) days of the Initial Closing Date; provided,
however, that such agreements shall permit the Borrowers to maintain the
maximum balance set forth in Schedule III annexed hereto in each account
referred to in clauses (ii) and (iii) of the first sentence of this Section
10.01(a).
Upon the occurrence and continuance of an Event of Default, the Agent may
send a notice of assignment and/or notice of the Agent's security interest to
any and all third parties holding or otherwise concerned with any of the
Collateral, and thereafter the Agent shall have the sole right to collect
and/or take possession of the Collateral and the books and records relating
thereto.
<PAGE>
(b) (i) Each Borrower hereby constitutes the Agent or the Agent's
designee as such person's attorney-in-fact with power to endorse its name
upon any notes, acceptances, checks, drafts, money orders or other evidences
of payment or Collateral that may come into its possession; upon the
occurrence of an Event of Default, to open and dispose of all mail received
by such Borrower and to notify the Postal Service authorities to change the
address for delivery of mail addressed to such person to such address as the
Agent may designate; and to do all other acts and things necessary to carry
out this Agreement. All acts of said attorney or designee are hereby
ratified and approved, and said attorney or designee shall not be liable for
any acts of omission or commission, for any error of judgment or for any
mistake of fact or law; provided, that the Agent or its designee shall not be
relieved of liability to the extent it is determined by a final judicial
decision that its act, error or mistake constituted gross negligence, bad
faith or willful misconduct. This power of attorney being coupled with an
interest is irrevocable until all of the Obligations are paid in full and
this Agreement and the Total Commitment is terminated.
(ii) The Agent, without notice to or consent of any Borrower, shall have
the right to receive, endorse, assign and/or deliver in its name or the name
of any Borrower any and all checks, drafts and other instruments for the
payment of money relating to the Collateral, and each Borrower hereby waives
notice of presentment, protest and non-payment of any instrument so endorsed.
(c) Nothing herein contained shall be construed to constitute any
Borrower as agent of the Agent for any purpose whatsoever, and neither the
Agent nor any Lender shall be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral
wherever the same may be located and regardless of the cause thereof (except
to the extent it is determined by a final judicial decision that the Agent's
or a Lender's act or omission constituted gross negligence, bad faith or
willful misconduct). The Agent and the Lenders shall not, under any
circumstances or in any event whatsoever, have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or
payment of any of the Collateral or for any damage resulting therefrom
(except to the extent it is determined by a final judicial decision that the
Agent's or such Lender's error, omission or delay constituted gross
negligence, bad faith or willful misconduct). The Agent and the Lenders do
not, by anything herein or in any assignment or otherwise, assume any
Borrower's obligations under any contract or agreement assigned to the Agent
or the Lenders, and the Agent and the Lenders shall not be responsible in any
way for the performance by any Borrower of any of the terms and conditions
thereof.
(d) If any of the Collateral includes a charge for any tax payable to
any governmental tax authority, the Agent is hereby authorized (but in no
event obligated) in its discretion to pay the amount thereof to the proper
taxing authority for the account of the Borrowers and to charge the
Borrowers' account therefor. The Borrowers shall
<PAGE>
notify the Agent if any Collateral includes any tax due to any such taxing
authority and, in the absence of such notice, the Agent shall have the right
to retain the full proceeds of such Collateral and shall not be liable for
any taxes that may be due from the Borrowers by reason of the sale of any of
the Collateral.
SECTION X.2. Monthly Statement of Account. The Agent shall render to
the Borrowers each calendar month a statement of the Borrowers' account,
which shall constitute an account stated and shall be deemed to be correct
and accepted by and be binding upon the Borrowers unless the Agent receives a
written statement of the Borrowers' exceptions within 30 days after such
statement was rendered to the Borrowers.
SECTION X.3. Collateral Custodian. Upon the occurrence and continuance
of an Event of Default, the Agent may at any time and from time to time
employ and maintain in the premises of the Borrowers a custodian selected by
the Agent who shall have full authority to do all acts necessary to protect
the Agent's and Lenders' interests and to report to the Agent thereon. Each
Borrower hereby agrees to cooperate with any such custodian and to do
whatever the Agent may reasonably request to preserve the Collateral. All
costs and expenses incurred by the Agent by reason of the employment of the
custodian shall be charged to the Borrowers' account and added to the
Obligations.
XI. MISCELLANEOUS
SECTION XI.1. Notices. Notices, consents and other communications
provided for herein shall be in writing and shall be delivered or mailed by
certified mail return receipt requested (or in the case of telex or facsimile
communication, delivered by telex, graphic scanning, telecopier or other
telecommunications equipment, with receipt confirmed with a copy mailed as
aforesaid) addressed,
(a) if to any Borrower, Guarantor or Grantor, at 1770 Ellis Avenue,
Jackson, MS 39204, Attention: Michael E. Julian, President, with copies
to Bruckmann, Rosser, Sherrill & Co., Inc., 126 East 56th Street, New
York, NY 10022, Attention: Harold Rosser, Managing Director; and
Dechert, Price & Rhoads, 4000 Bell Atlantic Tower, 1717 Arch Street,
Philadelphia, PA 19103, Attention: Gary L. Green, Esq.;
(b) if to the Agent, at Fleet Capital Corporation, 60 East 42nd
Street, New York, NY 10017, Attention: Mr. Thomas Maiale, with a copy to
Kaye, Scholer, Fierman, Hays & Handler, LLP, 425 Park Avenue, New York, NY
10022, Attention: Albert M. Fenster, Esq.; and
(c) if to any Lender, at the address set forth below its name in
<PAGE>
Schedule 2.01 annexed hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on
the date of receipt if hand delivered or three days after being sent by
registered or certified mail, postage prepaid, return receipt requested, if
by mail, or upon receipt if by any telex, facsimile or other
telecommunications equipment, in each case addressed to such party as
provided in this Section 11.01 or in accordance with the latest unrevoked
direction from such party.
SECTION XI.2. Survival of Agreement. All covenants, agreements,
representations and warranties made by any Borrower, any Guarantor or any of
their respective subsidiaries herein and in the certificates or other
instruments prepared or delivered in connection with this Agreement, any of
the Security Documents or any other Loan Document, shall be considered to
have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans and the execution and delivery to the Lenders of the
Notes and occurrence of any other Credit Event and shall continue in full
force and effect as long as the principal of or any accrued interest on the
Notes or any other fee or amount payable under the Notes or this Agreement or
any other Loan Document is outstanding and unpaid and so long as the Total
Commitment has not been terminated.
SECTION XI.3. Successors and Assigns; Participations. (a) Whenever in
this Agreement any of the parties hereto is referred to, such reference shall
be deemed to include the successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of any Borrower, any
Guarantor, any Grantor, any ERISA Affiliate, any subsidiary of any thereof,
the Agent or the Lenders, that are contained in this Agreement shall bind and
inure to the benefit of their respective successors and assigns. Without
limiting the generality of the foregoing, each Borrower specifically confirms
that any Lender may at any time and from time to time pledge or otherwise
grant a security interest in any Loan or any Note (or any part thereof) to
any Federal Reserve Bank. The Borrowers may not assign or transfer any of
their rights or obligations hereunder without the written consent of all the
Lenders.
(b) Each Lender, without the consent of the Borrowers, may sell
participations to one or more banks or other entities in all or a portion of
its rights and obligations under this Agreement (including, without
limitation, all or a portion of its Commitment) and the Loans owing to it and
interest in undrawn Letters of Credit and the Notes held by it); provided,
however, that (i) such Lender's obligations under this Agreement (including,
without limitation, its Commitment), shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the banks or other entities buying
participations shall be entitled to the cost protection provisions contained
in Sections 2.10(a) (except to the extent that application of such Section
2.10(a) to such banks and entities would
<PAGE>
cause any Borrower to make duplicate payments thereunder), 2.11, 2.12 and
2A.04 hereof, but only to the extent any of such Sections would be available
to the Lender which sold such participation, and (iv) the Borrowers, the
Agent and the other Lenders shall continue to deal solely and directly with
such Lender in connection with such Lender's rights and obligations under
this Agreement; provided, further, however, that each Lender shall retain the
sole right and responsibility to enforce the obligations of the Borrowers,
the Grantors and the Guarantors relating to the Loans, including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement, other than amendments, modifications or waivers
with respect to any fees payable hereunder or the amount of principal or the
rate of interest payable on, or the dates fixed for any payment of principal
of or interest on, the Loans in which such entity is participating or the
release of all Collateral.
(c) Each Lender may assign and delegate to an Eligible Assignee
with the prior written consent of the Borrowers (such consent not to be
unreasonably withheld or delayed) and with the prior written consent of the
Agent (such consent not to be unreasonably withheld or delayed), all or a
portion of its interests, rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, all or a portion of its
Commitment and the same portion of the Loans and interest in undrawn Letters
of Credit at the time owing to it and the Note or Notes held by it);
provided, however, that (i) each such assignment shall be of a constant, and
not a varying, percentage of all of the assigning Lender's rights and
obligations under this Agreement, which shall include the same percentage
interest in the Loans, interest in undrawn and unreimbursed Letters of Credit
and Notes, (ii) the amount of the Commitment of the assigning Lender being
assigned pursuant to each such assignment (determined as of the date the
Assignment and Acceptance with respect to such assignment is delivered to the
Agent) shall be in a minimum principal amount of $10,000,000 and (iii) the
parties to each such assignment shall execute and deliver to the Agent, for
its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with any Note subject to such assignment
and a processing and recordation fee of $3,000. Upon such execution,
delivery, acceptance and recording and after receipt of the written consent
of the Agent, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five (5) Business Days
after the execution thereof, (x) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have
the rights and obligations of a Lender hereunder and under the other Loan
Documents and (y) the Lender which is assignor thereunder shall, to the
extent provided in such Assignment and Acceptance, be released from its
obligations under this Agreement with respect to the period after the date of
such assignment (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of an assigning Lender's rights and obligations
under this Agreement, such Lender shall cease to be a party hereto).
Notwithstanding any other provisions of this Section 11.03(c), no transfer or
assignment of the interests or obligations of any Lender hereunder or any
grant of participation therein shall be permitted prior to the
<PAGE>
Syndication Date.
(d) By executing and delivering an Assignment and Acceptance, the
Lender which is assignor thereunder and the assignee thereunder confirm to,
and agree with, each other and the other parties hereto as follows: (i)
other than the representation and warranty that it is the legal and
beneficial owner of the interest being assigned thereunder free and clear of
any adverse claim, such Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the
execution, legality, validity, enforceability, perfection, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any
Collateral with respect thereto or any other instrument or document furnished
pursuant hereto or thereto; (ii) such Lender makes no representation or
warranty and assumes no responsibility with respect to the financial
condition of any Borrower, or any Grantor or Guarantor or the performance or
observance by any Borrower, Grantor or the Guarantor of any of their
respective obligations under this Agreement, any of the other Loan Documents
or any other instrument or document furnished pursuant hereto or thereto;
(iii) such assignee confirms that it has received a copy of this Agreement
and of the other Loan Documents, together with copies of financial statements
and such other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such assignee will, independently and without reliance upon
the Agent, such Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement; (v)
such assignee appoints and authorizes the Agent to take such action as the
Agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(e) The Agent shall maintain at its address referred to in Section
11.01 hereof a copy of each Assignment and Acceptance delivered to it and a
register for the recordation of the names and addresses of the Lenders and
the Commitment of, and principal amount of the Loans owing to, each Lender
from time to time (the "Register"). The entries in the Register shall be
conclusive, in the absence of manifest error, and the Borrowers, the Agent
and the Lenders may treat each person whose name is recorded in the Register
as a Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrowers or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an assignee together with any Note or Notes subject to
such assignment and the written consent to such assignment, the Agent shall,
if such
<PAGE>
Assignment and Acceptance has been completed and is in substantially the form
of Exhibit E annexed hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give
prompt notice thereof to the Lenders and the Borrowers. Within five (5)
Business Days after receipt of such notice, the Borrowers, at their own
expense, shall execute and deliver to the Agent in exchange for each
surrendered Note or Notes a new Note or Notes to the order of such assignee
in an amount equal to its portion of the Commitment assumed by it pursuant to
such Assignment and Acceptance and, if the assigning Lender has retained any
Commitment hereunder, a new Note or Notes to the order of the assigning
Lender in an amount equal to the Commitment retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be
in substantially the form of Exhibit A. Notes surrendered to the Borrowers
shall be canceled by the Borrowers.
(g) Notwithstanding any other provision herein, any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 11.03, disclose to the assignee or
participant or proposed assignee or participant, any information, including,
without limitation, any Information, relating to any Borrower, any Grantor or
any Guarantor furnished to such Lender by or on behalf of any Borrower in
connection with this Agreement; provided, however, that prior to any such
disclosure, each such assignee or participant or proposed assignee or
participant shall agree to preserve the confidentiality of any confidential
Information relating to the Borrowers received from such Lender.
SECTION XI.4. Expenses; Indemnity. (a) Each Borrower agrees to
pay all out-of-pocket expenses incurred by the Agent in connection with the
preparation of this Agreement, the Security Documents, the Notes and the
other Loan Documents or with any amendments, modifications, waivers,
extensions, renewals, renegotiations or work-outs of the provisions hereof or
thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Agent, the Documentation Agent, the Letter of
Credit Issuer or any of the Lenders in connection with the enforcement or
protection of its rights in connection with this Agreement or any of the
other Loan Documents or with the Loans made or the Notes or Letters of Credit
issued hereunder, or in connection with any pending or threatened action,
proceeding, or investigation relating to the foregoing, including but not
limited to the reasonable fees and disbursements of counsel for the Agent,
the Documentation Agent, the Letter of Credit Issuer and each Lender and
ongoing field examination expenses and charges. Without limitation of the
foregoing, each Borrower hereby agrees to reimburse the Agent for any and all
reasonable costs and expenses incurred in connection with audits and field
exams of the Borrowers' and their subsidiaries' properties, assets, business
and operations performed at the request of the Agent by an independent party
selected by the Agent (provided that as long as the Default or Event of
Default is in existence, the obligations of the Borrowers under this sentence
shall not exceed
<PAGE>
$50,000 per calendar year). Each Borrower further indemnifies the Lenders
and the Letter of Credit Issuer from and agrees to hold them harmless against
any documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement, the
Notes or the making of any Credit Events.
(b) Each Borrower indemnifies the Agent, the Documentation Agent,
the Letter of Credit Issuer and each Lender and their respective directors,
officers, employees and agents against, and agrees to hold the Agent, the
Letter of Credit Issuer, each Lender and each such person harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees and expenses, incurred by or asserted against the
Agent, the Documentation Agent, the Letter of Credit Issuer, the Lender or
any such person arising out of, in any way connected with, or as a result of
(i) the use of any of the proceeds of the Loans or of any Letter of Credit,
(ii) this Agreement, any of the Security Documents, or the other documents
contemplated hereby or thereby, except, as to any Lender, as a result of a
breach thereof by such Lender (iii) the performance by the parties hereto and
thereto of their respective obligations hereunder and thereunder (including
but not limited to the making of the Total Commitment) and consummation of
the transactions contemplated hereby and thereby, (iv) breach of any
representation or warranty, or (v) any claim, litigation, investigation or
proceedings relating to the Related Transactions and/or any of the foregoing,
whether or not the Agent, the Documentation Agent, the Letter of Credit
Issuer, any Lender or any such person is a party thereto; provided, however,
that such indemnity shall not, as to the Agent, the Documentation Agent, the
Letter of Credit Issuer or any Lender, apply to any such losses, claims,
damages, liabilities or related expenses to the extent that they result from
the gross negligence, bad faith or willful misconduct of the Agent, the
Documentation Agent, the Letter of Credit Issuer or any Lender.
(c) Each Borrower indemnifies, and agrees to defend and hold
harmless the Agent, the Letter of Credit Issuer and the Lenders and their
respective officers, directors, shareholders, agents and employees
(collectively, the "Indemnitees") from and against any loss, cost, damage,
liability, lien, deficiency, fine, penalty or expense (including, without
limitation, reasonable attorneys' fees and reasonable expenses for
investigation, removal, cleanup and remedial costs and modification costs
incurred to permit, continue or resume normal operations of any property or
assets or business of any Borrower or any subsidiary thereof) arising from a
violation of, or failure to comply with any Environmental Law and to remove
any Lien arising therefrom except to the extent caused by the gross
negligence, bad faith or willful misconduct of any Indemnitee, which any of
the Indemnitees may incur or which may be claimed or recorded against any of
the Indemnitees by any person.
(d) The provisions of this Section 11.04 shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the
<PAGE>
Loans, the invalidity or unenforceability of any term or provision of this
Agreement or the Notes, or any investigation made by or on behalf of the
Agent, the Letter of Credit Issuer or any Lender. All amounts due under this
Section 11.04 shall be payable on written demand therefor (which demand shall
include a reasonable description of such amounts).
SECTION XI.5. Applicable Law. THIS AGREEMENT AND THE NOTES SHALL
BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW
YORK (OTHER THAN THE CONFLICTS OF LAWS PRINCIPLES THEREOF).
SECTION XI.6. Right of Setoff. If an Event of Default shall have
occurred and be continuing, upon the request of the Required Lenders, each
Lender and the Letter of Credit Issuer shall and is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time
owing by such Lender or the Letter of Credit Issuer to or for the credit or
the account of the Borrowers against any and all of the Obligations, the
Notes held by such Lender or any other Loan Document, irrespective of whether
or not such Lender or the Letter of Credit Issuer shall have made any demand
under this Agreement, the Notes or such other Loan Document and although such
obligations may be unmatured. Each Lender agrees to notify promptly the
Agent and the Borrowers after any such setoff and application made by such
Lender, but the failure to give such notice shall not affect the validity of
such setoff and application. The rights of each Lender and the Letter of
Credit Issuer under this Section are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which may be
available to such Lender or the Letter of Credit Issuer.
SECTION XI.7. Payments on Business Days. (a) Should the principal
of or interest on the Notes or any fee or other amount payable hereunder
become due and payable on other than a Business Day, payment in respect
thereof may be made on the next succeeding Business Day (except as otherwise
specified in the definition of "Interest Period"), and such extension of time
shall in such case be included in computing interest, if any, in connection
with such payment.
(b) All payments by any Borrower and any Guarantor hereunder and
all Loans made by the Lenders hereunder shall be made in lawful money of the
United States of America in immediately available funds at the office of the
Agent set forth in Section 11.01 hereof.
SECTION XI.8. Waivers; Amendments; Final Maturity Date. (a) No
failure or delay of the Agent, any Lender, Fleet or the Letter of Credit Issuer
in exercising any power or right hereunder or under any other Loan Document
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or
<PAGE>
power, or any abandonment or discontinuance of steps to enforce such right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Agent, the Lenders,
Fleet and the Letter of Credit Issuer hereunder or under any other Loan
Document are cumulative and not exclusive of any rights or remedies which
they may otherwise have. No waiver of any provision of this Agreement or the
Notes nor consent to any departure by any Borrower or any Guarantor therefrom
shall in any event be effective unless the same shall be authorized as
provided in paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice to or demand on any Borrower or any Guarantor in any case shall
entitle it to any other or further notice or demand in similar or other
circumstances. Each holder of any of the Notes shall be bound by any
amendment, modification, waiver or consent authorized as provided herein,
whether or not such Note shall have been marked to indicate such amendment,
modification, waiver or consent.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrowers and the Required Lenders; provided, however,
(i) that no such agreement shall (A) change the principal amount of, or
extend or advance the maturity of or the dates for the payment of principal
of or interest on, any Note or fees payable hereunder or reduce the rate of
interest on any Note or fees payable hereunder, without the consent of each
holder affected thereby, (B) change the Commitment of any Lender or amend or
modify the provisions of this Section 11.08, Section 2.01, Section 2.06,
Section 2.13, Section 11.04 or Section 2A.06 hereof or the definition of
"Required Lenders" or the dollar amount contained in the definition of
"Supplemental Availability ", or (C) release any substantial portion of the
Collateral, in each case without the prior written consent of each Lender
affected thereby except that the Agent may, without the prior written consent
of any Lender, release Collateral permitted to be sold pursuant to the terms
of Section 7.05 hereof and (ii) that no such agreement shall amend, modify or
otherwise affect the rights or duties of the Agent, Fleet or the Letter of
Credit Issuer under this Agreement or the other Loan Documents without the
written consent of the Agent. Each Lender and holder of any Note shall be
bound by any modification or amendment authorized by this Section regardless
of whether its Notes shall be marked to make reference thereto, and any
consent by any Lender or holder of a Note pursuant to this Section shall bind
any person subsequently acquiring a Note from it, whether or not such Note
shall be so marked.
SECTION XI.9. Severability. In the event any one or more of the
provisions contained in this Agreement or in the Notes should be held
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein or therein shall
not in any way be affected or impaired thereby. The parties shall endeavor
in good-faith negotiations to replace the invalid, illegal or unenforceable
provisions with valid provisions the economic effect of which comes as close
as possible to that of the invalid, illegal or unenforceable provisions.
<PAGE>
SECTION XI.10. Entire Agreement; Waiver of Jury Trial, etc. (a)
This Agreement, the Notes, the Fee Letter and the other Loan Documents
constitute the entire contract between the parties hereto relative to the
subject matter hereof. Any previous agreement among the parties hereto with
respect to the Transactions is superseded by this Agreement, the Notes, the
Fee Letter and the other Loan Documents. Except as expressly provided herein
or in the Notes, the Fee Letter or the Loan Documents (other than this
Agreement), nothing in this Agreement, the Notes, the Fee Letter or in the
other Loan Documents, expressed or implied, is intended to confer upon any
party, other than the parties hereto, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, the Notes or the other Loan
Documents.
(b) EXCEPT AS PROHIBITED BY LAW, EACH PARTY HERETO HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT, THE NOTES, ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS.
(c) Except as prohibited by law, each party hereto hereby waives
any right it may have to claim or recover in any litigation referred to in
paragraph (b) of this Section 11.10 any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages.
(d) Each party hereto (i) certifies that no representative, agent
or attorney of any Lender has represented, expressly or otherwise, that such
Lender would not, in the event of litigation, seek to enforce the foregoing
waivers and (ii) acknowledges that it has been induced to enter into this
Agreement, the Notes or the other Loan Documents, as applicable, by, among
other things, the mutual waivers and certifications herein.
SECTION XI.11. Confidentiality. The Agent and the Lenders agree to
keep confidential (and to cause their respective officers, directors,
employees, agents, advisors, consultants and representatives to keep
confidential) all information, materials and documents furnished by or on
behalf of the Guarantors, the Borrowers, the Grantors or any of their
respective subsidiaries to the Agent or any Lender (the "Information").
Notwithstanding the foregoing, the Agent and each Lender shall be permitted
to disclose Information (i) to such of its officers, counsel, directors,
employees, agents, advisors, consultants and representatives as need to know
such Information in connection with its participation in any of the
Transactions or the administration of this Agreement or the other Loan
Documents with instructions to maintain the confidentiality thereof; (ii) to
the extent required by applicable laws and regulations or by any subpoena or
similar legal process, or requested by any governmental agency or authority
(the Agent and each Lender receiving such
<PAGE>
subpoena or similar legal process agrees to use reasonable efforts to
promptly furnish the Borrowers with a copy thereof); (iii) to the extent such
Information (A) becomes publicly available other than as a result of a breach
of this Agreement, (B) becomes available to the Agent or such Lender on a
non-confidential basis from a source other than any Borrower, any Guarantor,
any Grantor or any of their respective subsidiaries or (C) was available to
the Agent or such Lender on a non-confidential basis prior to its disclosure
to the Agent or such Lender by any Borrower, any Guarantor, any Grantor or
any of their respective subsidiaries; (iv) to the extent any Borrower, any
Guarantor or any of their respective subsidiaries shall have consented to
such disclosure in writing; (v) in connection with the sale of any Collateral
pursuant to the provisions of any of the other Loan Documents; or (vi)
pursuant to Section 11.03(g) hereof.
SECTION XI.12. Submission to Jurisdiction. (a) Any legal action
or proceeding with respect to this Agreement or the Notes or any other Loan
Document may be brought in state courts located in the City of New York or of
the United States of America for the Southern District of New York, and, by
execution and delivery of this Agreement, each of the Borrowers and each of
the Guarantors hereby accept for themselves and in respect of their property,
generally and unconditionally, the jurisdiction of the aforesaid courts.
(b) Each of the Borrowers and each of the Guarantors hereby
irrevocably waives, in connection with any such action or proceeding, any
objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non convenience, which they may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions.
(c) Each of the Borrowers and each of the Guarantors hereby
irrevocably consents to the service of process of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to each such person, as the
case may be, at its address set forth in Section 11.01 hereof.
(d) Nothing herein shall affect the right of the Agent or any
Lender to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against any Borrower or any Guarantor
in any other jurisdiction.
SECTION XI.13. Counterparts; Facsimile Signature. This Agreement
may be executed in counterparts, each of which shall constitute an original
but all of which when taken together shall constitute but one contract, and
shall become effective when copies hereof which, when taken together, bear
the signatures of each of the parties hereto shall be delivered to the Agent.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed signature
page hereto.
SECTION XI.14. Headings. Article and Section headings and the Table
<PAGE>
of Contents used herein are for convenience of reference only and are not to
affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
SECTION XI.15. Defaulting Lender. (a) Notwithstanding anything to
the contrary contained herein, in the event that any Lender (x) refuses
(which refusal constitutes a breach by such Lender of its obligations under
this Agreement and which has not been retracted) to make available its
portion of any Loan or (y) notifies the Agent and/or any Borrower that it
does not intend to make available its portion of any Loan (if the actual
refusal would constitute a breach by such Lender of its obligations under
this Agreement and which has not been retracted) (each, a "Lender Default"),
all rights and obligations hereunder of the Lender (a "Defaulting Lender") as
to which a Lender Default is in effect and of the other parties hereto shall
be modified to the extent of express provisions of this Section 11.15 while
such Lender Default remains in effect.
(b) Loans shall be incurred pro rata from the Lenders (the
"Non-Defaulting Lenders") which are not Defaulting Lenders based on their
respective Commitments, and no Commitment of any Lender or any pro rata share
of any Loans required to be advanced by any Lender shall be increased as a
result of such Lender Default. Amounts received in respect of principal of
the Loans shall be applied to reduce the Loans of each of the Lenders pro
rata based on the aggregate of the outstanding Loans of all of the Lenders at
the time of such application; provided that, such amount shall not be applied
to any Loan of a Defaulting Lender at any time when, and to the extent that,
the aggregate amount of Loans of any Non-Defaulting Lender exceeds such
Non-Defaulting Lenders' pro rata share of all Loans then outstanding.
(c) The Lenders shall participate in Letters of Credit on the basis
of their respective pro rata shares, and no participation or reimbursement
obligation of any Lender shall be increased as a result of a failure of any
Defaulting Lender to reimburse the Agent on the Letter of Credit Issuer's
behalf with respect to any amounts drawn on or otherwise payable with respect
to any Letters of Credit (the amount that any such Defaulting Lender has
failed to reimburse is hereinafter referred to as such Defaulting Lender's
"Unreimbursed Amount"). Until such Defaulting Lender has reimbursed the
Agent on the Letter of Credit Issuer's behalf for any Unreimbursed Amount
owed by it, all payments and other amounts received from any source with
respect to the Obligations or otherwise under or in connection with the
Agreement (including any letter of credit fees) which would otherwise be
payable to such Defaulting Lender will instead be paid to the Agent for the
benefit of the Letter of Credit Issuer for application to such Unreimbursed
Amount until such Unreimbursed Amount has been paid in full. A Defaulting
Lender shall not be entitled to receive any portion of the Commitment Fee,
the letter of credit fees or any other fees payable in connection with this
Agreement, or any indemnity arising from its commitment to make Loans and/or
participate in Letters of Credit.
(d) A Defaulting Lender shall not be entitled to give instructions to
the
<PAGE>
Agent or to approve, disapprove, consent to or vote on any matters relating
to this Agreement and the Loan Documents. All amendments, waivers and other
modifications of this Agreement and the Loan Documents may be made without
regard to a Defaulting Lender and, for purposes of the definition of
"Required Lenders", a Defaulting Lender shall be deemed not to be a Lender,
not to have a Commitment, not to have a Term Commitment and not to have Loans
outstanding.
(e) Other than as expressly set forth in this Section 11.15, the
rights and obligations of a Defaulting Lender (including the obligation to
indemnify the Agent) and the other parties hereto shall remain unchanged.
Nothing in this Section 11.15 shall be deemed to release any Defaulting
Lender from its Commitment hereunder, shall alter such Commitment, shall
operate as a waiver of any default by such Defaulting Lender hereunder, or
shall prejudice any rights which the Borrowers, the Agent or any Lender may
have against any Defaulting Lender as a result of any default by such
Defaulting Lender hereunder.
(f) In the event the Defaulting Lender is able to retroactively
cure to the satisfaction of the Agent and with the consent of the Borrowers
(which shall not be unreasonably withheld) the breach which caused a Lender
to become a Defaulting Lender, such Defaulting Lender shall upon notice to
Borrowers, no longer be a Defaulting Lender and shall be treated as a Lender
hereunder.
SECTION XI.16. LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY
ANY BORROWER, ANY GUARANTOR, ANY SPECIFIED PERSON, OR ANY OTHER PERSON
AGAINST THE AGENT, ANY LENDER, FLEET CAPITAL CORPORATION, FLEET BANK, N.A. OR
THE AFFILIATES, DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF THE
AGENT, SUCH LENDER, FLEET CAPITAL CORPORATION OR FLEET BANK, N.A. FOR ANY
SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES OR, TO THE FULLEST EXTENT
PERMITTED BY LAW, FOR ANY PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM OR CAUSE
OF ACTION (WHETHER BASED ON CONTRACT, TORT, STATUTORY LIABILITY, OR ANY OTHER
GROUND) BASED ON, ARISING OUT OF OR RELATED TO ANY LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR ANY ACT, OMISSION OR EVENT OCCURRING IN
CONNECTION THEREWITH, AND EACH BORROWER (FOR ITSELF AND ON BEHALF OF EACH
GUARANTOR AND EACH SPECIFIED PERSON) HEREBY WAIVES, RELEASES AND AGREES NEVER
TO SUE UPON ANY CLAIM FOR ANY SUCH DAMAGES, WHETHER SUCH CLAIM NOW EXISTS OR
HEREAFTER ARISES AND WHETHER OR NOT IT IS NOW KNOWN OR SUSPECTED TO EXIST IN
ITS FAVOR.
XII. GUARANTEES
Each Guarantor unconditionally guarantees, as a primary obligor and
not
<PAGE>
merely as a surety, jointly and severally with each other Guarantor, the due
and punctual payment of the principal of and interest on each of the Notes,
when and as due, whether at maturity, by acceleration, by notice of
prepayment or otherwise, and the due and punctual performance of all other
Obligations. Each Guarantor further agrees that the Obligations may be
extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Obligations.
Each Guarantor waives presentment to, demand of payment from and
protest to the Borrowers of any of the Obligations, and also waives notice of
acceptance of its guarantee and notice of protest for nonpayment. The
obligations of a Guarantor hereunder shall not be affected by (a) the failure
of any Lender, the Letter of Credit Issuer or the Agent to assert any claim
or demand or to enforce any right or remedy against the Borrowers or any
other Guarantor under the provisions of this Agreement, the Notes or any of
the other Loan Documents or otherwise; (b) any rescission, waiver, amendment
or modification of any of the terms or provisions of this Agreement, the
Notes, any of the other Loan Documents, any guarantee or any other agreement;
(c) the release of any security held by the Agent for the Obligations or any
of them; or (d) the failure of any Lender, the Agent or the Letter of Credit
Issuer to exercise any right or remedy against any other Guarantor of the
Obligations.
Each Guarantor further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by any Lender, the Agent or the Letter of
Credit Issuer to any security (including, without limitation, any Collateral)
held for payment of the Obligations or to any balance of any deposit account
or credit on the books of any Lender, the Agent or the Letter of Credit
Issuer in favor of any Borrower or any other person.
The obligations of each Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the
invalidity, illegality or unenforceability of the Obligations or otherwise.
Without limiting the generality of the foregoing, the obligations of each
Guarantor hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Agent, the Letter of Credit Issuer or any Lender to
assert any claim or demand or to enforce any remedy under this Agreement, the
Notes or under any other Loan Document, any guarantee or any other agreement,
by any waiver or modification of any provision thereof, by any default,
failure or delay, willful or otherwise, in the performance of the
Obligations, or by any other act or omission which may or might in any manner
or to any extent vary the risk of such Guarantor or otherwise operate as a
discharge of such Guarantor as a matter of law or equity.
Each Guarantor further agrees that its guarantee shall continue to
be
<PAGE>
effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of or interest on any Obligation is rescinded
or must otherwise be returned by the Agent, the Letter of Credit Issuer or
any Lender upon the bankruptcy or reorganization of any Borrower or otherwise.
Each Guarantor hereby subordinates all rights of subrogation against
any Borrower and its property and all rights of indemnification, contribution
and reimbursement from any Borrower and its property, in each case in
connection with this guarantee and any payments made hereunder, and
regardless of whether such rights arise by operation of law, pursuant to
contract or otherwise, to the prior payment in full in cash of all
Obligations.
<PAGE>
IN WITNESS WHEREOF, the Borrowers, the Guarantors, the Agent and the
Lenders have caused this Agreement to be duly executed by their respective
authorized officers as of the day and year first above written.
JITNEY-JUNGLE STORES OF AMERICA, INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
SOUTHERN JITNEY JUNGLE COMPANY,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
McCARTY- HOLMAN CO., INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
<PAGE>
Title:
JITNEY- JUNGLE BAKERY, INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
PUMP AND SAVE, INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
INTERSTATE JITNEY JUNGLE STORES, INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
DELTA ACQUISITION CORPORATION,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
<PAGE>
DELCHAMPS, INC.,
as Borrower and as Guarantor
By:_____________________________
Name:
Title:
<PAGE>
SUPERMARKET CIGARETTE SALES, INC.,
as Guarantor
By:_____________________________
Name:
Title:
FLEET CAPITAL CORPORATION, as Agent
By:_____________________________
Name:
Title:
FLEET CAPITAL CORPORATION, as Lender
By:_____________________________
Name:
Title:
BTM CAPITAL CORPORATION, as Lender
By:_____________________________
Name:
Title:
HELLER FINANCIAL INC., as Lender
By:_____________________________
Name:
Title:
<PAGE>
IBJ SCHRODER BUSINESS CREDIT CORP., as Lender
By:_____________________________
Name:
Title:
NATIONAL BANK OF CANADA,
a Canadian Chartered Bank, as Lender
By:_____________________________
Name:
Title:
NATIONAL CITY BANK, as Lender
By:_____________________________
Name:
Title:
DEUTSCHE FINANCIAL SERVICES HOLDING
CORPORATION, as Lender
By:_____________________________
Name:
Title:
DLJ CAPITAL FUNDING, INC., as Lender
By:_____________________________
Name:
Title:
<PAGE>
DLJ CAPITAL FUNDING, INC., as
Documentation Agent
By:_____________________________
Name:
Title:
FLEET BANK, N.A., as a Letter of Credit
Issuer
By:_____________________________
Name:
Title:
<PAGE>
SCHEDULE II
FISCAL REPORTING PERIODS OF THE BORROWERS
FISCAL FY FY FY FY FY FY FY
MONTH 1998 1999 2000 2001 2002 2003 2004
- ------- -------- -------- -------- -------- -------- -------- --------
1 5/31/97 5/30/98 5/29/99 5/27/00
2 6/28/97 6/27/98 6/26/99 6/24/00
3 7/26/97 7/25/98 7/24/99 7/22/00
4 8/23/97 8/22/98 8/21/99 8/19/00
5 9/20/97 9/19/98 9/18/99 9/16/00
61 10/18/97 10/17/98 10/16/99 10/14/00
7 11/15/97 11/14/98 11/13/99 11/11/00
8 12/13/97 12/12/98 12/11/99 12/9/00
91 1/10/98 1/9/99 1/8/00 1/6/01
10 2/10/98 2/6/99 2/5/00 2/3/01
11 3/7/98 3/6/99 3/4/00 3/3/01
12 4/4/98 4/3/99 4/1/00 3/31/01
13 5/2/98 5/1/99 4/29/00 4/28/01
<PAGE>
TABLE OF CONTENTS
PAGE
----
I. DEFINITIONS 2
IA. AMENDMENT AND RESTATEMENT OF CREDIT AGREEMENT 21
SECTION 1A.01. (a) Existing Loans and Existing Letters of Credit. 21
II. THE LOANS 23
SECTION 2.01. Commitments 23
SECTION 2.02. Loans 24
SECTION 2.03. Notice of Loans 26
SECTION 2.04. Notes; Repayment of Loans 26
SECTION 2.05. Interest on Loans 27
SECTION 2.06. Fees 27
SECTION 2.07. Termination of Commitments and Commitment Reductions 27
SECTION 2.08. Interest on Overdue Amounts 30
SECTION 2.09. Prepayment of Loans 31
SECTION 2.10. Reserve Requirements; Change in Circumstances 35
SECTION 2.11. Change in Legality 37
SECTION 2.12. Indemnity 37
SECTION 2.13. Pro Rata Treatment 38
SECTION 2.14. Sharing of Setoffs 38
SECTION 2.15. Taxes 39
SECTION 2.16. Payments and Computations 41
SECTION 2.17. Settlement Among Lenders 41
SECTION 2.18. Making of Loans 44
SECTION 2.19. Joint and Several Borrowers 45
SECTION 2.20. Individual Borrowing and Letter of Credit Limit 45
IIA. LETTERS OF CREDIT 46
SECTION 2A.01. Issuance of Letters of Credit 46
SECTION 2A.02. Payment; Reimbursement 46
SECTION 2A.03. The Letter of Credit Issuer's Actions 48
SECTION 2A.04. Payments in Respect of Increased Costs 48
SECTION 2A.05. Indemnity as to Letters of Credit 50
SECTION 2A.06. Letter of Credit Fees 50
III. COLLATERAL SECURITY 51
SECTION 3.01. Security Documents 51
SECTION 3.02. Filing and Recording 51
SECTION 3.03. Real Property; Mortgages; Title Insurance 51
SECTION 3.04. Additional Collateral 53
<PAGE>
IV. REPRESENTATIONS AND WARRANTIES 53
SECTION 4.01. Organization, Legal Existence 53
SECTION 4.02. Authorization 54
SECTION 4.03. Governmental Approvals 54
SECTION 4.04. Binding Effect 54
SECTION 4.05. Material Adverse Change 55
SECTION 4.06. Litigation; Compliance with Laws; etc. 55
SECTION 4.07. Financial Statements 55
SECTION 4.08. Federal Reserve Regulations 57
SECTION 4.09. Taxes 57
SECTION 4.10. Employee Benefit Plans 58
SECTION 4.11. No Material Misstatements 59
SECTION 4.12. Investment Company Act; Public Utility Holding
Company Act 59
SECTION 4.13. Security Interest 60
SECTION 4.14. Bank Accounts 60
SECTION 4.15. Capitalization 60
SECTION 4.16. Title to Properties; Possession Under Leases;
Trademarks 60
SECTION 4.17. Solvency 62
SECTION 4.18. Permits, etc. 63
SECTION 4.19. Compliance with Environmental Laws 63
SECTION 4.20. Material Agreements 64
SECTION 4.21. Acquisition 64
SECTION 4.22. The Tender Offer and Merger 65
SECTION 4.23. Broker's Fees 65
V. CONDITIONS OF CREDIT EVENTS 66
SECTION 5.01. All Credit Events 66
SECTION 5.02. Initial Closing Date 66
SECTION 5.03. Merger Closing Date 75
VI. AFFIRMATIVE COVENANTS 81
SECTION 6.01. Legal Existence 81
SECTION 6.02. Businesses and Properties 82
SECTION 6.03. Insurance 82
SECTION 6.04. Taxes 83
SECTION 6.05. Financial Statements, Reports, etc. 83
SECTION 6.06. Litigation and Other Notices 86
SECTION 6.07. ERISA 87
SECTION 6.08. Maintaining Records; Access to Properties and
Inspections; Right to Audit 88
SECTION 6.09. Fiscal Year-End 89
SECTION 6.10. Further Assurances 89
SECTION 6.11. Additional Grantors and Guarantors 89
SECTION 6.12. Environmental Laws 89
<PAGE>
SECTION 6.13. Pay Obligations to Lenders and Perform Other
Covenants 91
SECTION 6.14. Maintain Operating Accounts 92
SECTION 6.15. Amendments 92
SECTION 6.16. Use of Proceeds 92
SECTION 6.17. Voting Control of Target Company; No Sale of
Stock, Etc 92
SECTION 6.18. Merger 92
VII. NEGATIVE COVENANTS 93
SECTION 7.01. Liens 93
SECTION 7.02. Sale and Lease-Back Transactions 94
SECTION 7.03. Indebtedness 94
SECTION 7.04. Dividends, Distributions and Payments 95
SECTION 7.05. Consolidations, Merger and Sales of Assets 95
SECTION 7.06. Investments 96
SECTION 7.07. Capital Expenditures and Other Expenditures 97
SECTION 7.08. Fixed Charge Coverage Ratio 97
SECTION 7.09. Leverage Ratio 97
SECTION 7.10. Interest Coverage Ratio 98
SECTION 7.11. EBITDA 98
SECTION 7.12. Interest Rate Protection Arrangements 99
SECTION 7.13. Business 99
SECTION 7.14. Sales of Receivables 99
SECTION 7.15. Use of Proceeds 99
SECTION 7.16. ERISA 99
SECTION 7.17. Accounting Changes 99
SECTION 7.18. Prepayment or Modification of Indebtedness;
Modification of Charter and Other Documents 100
SECTION 7.19. Transactions with Affiliates 100
SECTION 7.20. Consulting Fees 100
SECTION 7.21. Limitations on Dividends and Other Payments 101
SECTION 7.22. Limitation on Creation of Subsidiaries 101
SECTION 7.23. Limitation on Issuance of Capital Stock 101
SECTION 7.24. Conduct of Business by Target Company 101
VIII. EVENTS OF DEFAULT 103
IX. AGENT 110
X. CASH RECEIPTS COLLECTION 113
SECTION 10.01. Collection of Cash 113
SECTION 10.02. Monthly Statement of Account 114
SECTION 10.03. Collateral Custodian 115
XI. MISCELLANEOUS 115
<PAGE>
SECTION 11.01. Notices 115
SECTION 11.02. Survival of Agreement 115
SECTION 11.03. Successors and Assigns; Participations 116
SECTION 11.04. Expenses; Indemnity 119
SECTION 11.05. Applicable Law 120
SECTION 11.06. Right of Setoff 120
SECTION 11.07. Payments on Business Days 120
SECTION 11.08. Waivers; Amendments; Final Maturity Date 121
SECTION 11.09. Severability 121
SECTION 11.10. Entire Agreement; Waiver of Jury Trial, etc. 122
SECTION 11.11. Confidentiality 122
SECTION 11.12. Submission to Jurisdiction 123
SECTION 11.13. Counterparts; Facsimile Signature 123
SECTION 11.14. Headings 123
SECTION 11.15. Defaulting Lender 123
SECTION 11.16. LIMITATION OF LIABILITY 125
XII. GUARANTEES 125
Exhibits and Schedules were typed in manually in Table of Contents and will
not be generated with the TOC.
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Opinion of Counsel
EXHIBIT C-1 Form of Pledge Agreement
EXHIBIT C-2 Form of Partnership Pledge Agreement
EXHIBIT D Form of Security Agreement
EXHIBIT E Form of Assignment and Acceptance
EXHIBIT F Form of Security Agreement--Patents and Trademarks
EXHIBIT G Form of Assignment of Contract
EXHIBIT H Form of Landlord Waiver
EXHIBIT I Form of Settlement Report
EXHIBIT J Form of Inventory Designation
EXHIBIT K-1 Form of Monthly Borrowing Base Certificate
EXHIBIT K-2 Form of Weekly Borrowing Base Certificate
<PAGE>
SCHEDULES
SCHEDULE 2.01 Commitments
SCHEDULE 2.02 Domestic Lending Offices
SCHEDULE 2.03 Eurodollar Lending Offices
SCHEDULE 4.01 Qualified Jurisdictions
SCHEDULE 4.03 Consents
SCHEDULE 4.13 Filing Jurisdictions
SCHEDULE 4.14 List of Bank Accounts
SCHEDULE 4.15(a) Ownership of Jitney Jungle
SCHEDULE 4.15(b) Subsidiaries
SCHEDULE 4.16(a-1) Owned Real Property
SCHEDULE 4.16(a-2) Leased Real Property
SCHEDULE 4.18 Permits
SCHEDULE 4.20 Material Agreements
SCHEDULE 4.23 Broker's Fees
SCHEDULE 7.01 Existing Liens
SCHEDULE 7.03 Existing Indebtedness
SCHEDULE 7.20 Consulting Fees
SCHEDULE I Certain Investors
SCHEDULE II Fiscal Reporting Periods of the Borrowers
SCHEDULE III Maximum Retained Balance in each Blocked Account
SCHEDULE IV Outstanding Letters of Credit
SCHEDULE V FTC Divestiture Stores
- ------------------------
(1) Also, Fiscal Quarter-End.
(2) Also, Fiscal Quarter-End and Fiscal Year-End.
<PAGE>
Exhibit 10.1
EXECUTION COPY
================================================================================
JITNEY-JUNGLE STORES OF AMERICA, INC.
$200,000,000 of
103/8% Senior Subordinated Notes due 2007
Purchase Agreement
September 10, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CREDIT SUISSE FIRST BOSTON
================================================================================
<PAGE>
JITNEY-JUNGLE STORES OF AMERICA, INC.
$200,000,000
103/8% Senior Subordinated Notes due 2007
PURCHASE AGREEMENT
------------------
September 10, 1997
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
CREDIT SUISSE FIRST BOSTON
c/o Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Dear Sirs:
Jitney-Jungle Stores of America, Inc., a Mississippi corporation (the
"COMPANY"), proposes to issue and sell to Donaldson, Lufkin & Jenrette
Securities Corporation ("DLJ") and Credit Suisse First Boston ("FIRST BOSTON"
and, together with DLJ, the "INITIAL PURCHASERS") an aggregate of $200,000,000
in principal amount of its 103/8% Senior Subordinated Notes due 2007 (the
"SENIOR SUBORDINATED NOTES"), subject to the terms and conditions set forth
herein. The Senior Subordinated Notes are to be issued pursuant to the
provisions of an indenture (the "INDENTURE"), to be dated as of the Closing Date
(as defined below), among the Company, the Guarantors (as defined below) and
Marine Midland Bank, as trustee (the "TRUSTEE"). The Senior Subordinated Notes
and the New Senior Subordinated Notes (as defined below) issuable in exchange
therefor are collectively referred to herein as the "NOTES." The Notes will be
guaranteed (the "SUBSIDIARY GUARANTEES") by each of the entities listed on
Schedule A hereto (each, a "GUARANTOR" and collectively the "GUARANTORS").
Capitalized terms used but not defined herein shall have the meanings given to
such terms in the Indenture.
Pursuant to the terms of an Agreement and Plan of Merger (the "MERGER
AGREEMENT") entered into on July 8, 1997, Delta Acquisition Corporation ("DAC"),
an Alabama corporation and a wholly-owned subsidiary of the Company, commenced a
tender offer (the "DELCHAMPS TENDER OFFER") to purchase all of the issued and
outstanding shares of common stock and associated preferred share purchase
rights of Delchamps, Inc., an Alabama corporation ("DELCHAMPS"). Following the
Delchamps Tender Offer and subject to certain conditions and other provisions
contained in the Merger Agreement, DAC will be merged with and into Delchamps
(the "DELCHAMPS MERGER" and, together with the Delchamps Tender Offer, the
"DELCHAMPS ACQUISITION"), Delchamps will continue as the surviving corporation
in the Delchamps Merger and will be a wholly-owned subsidiary of the Company.
1
<PAGE>
The aggregate consideration expected to be paid to current stockholders of
Delchamps in the Delchamps Acquisition will be approximately $218.2 million (the
"DELCHAMPS PURCHASE PRICE"). For purposes of this Agreement, the term
"Consummation" as used with respect to the Delchamps Tender Offer shall refer to
the payment for the shares and preferred share purchase rights of Delchamps
tendered in the Tender Offer.
The Company intends to use the gross proceeds from the sale to the
Initial Purchasers of the Senior Subordinated Notes, together with initial
borrowings under a senior credit facility (the "SENIOR CREDIT FACILITY"), to (i)
pay the Delchamps Purchase Price, (ii) repay certain of Delchamps' outstanding
indebtedness, (iii) make change of control payments to certain Delchamps
executives pursuant to the requirements of existing contractual provisions and
(iv) pay related fees and expenses.
1. OFFERING MEMORANDUM. The Senior Subordinated Notes will be
offered and sold to the Initial Purchasers pursuant to one or more exemptions
from the registration requirements under the Securities Act of 1933, as
amended (the "ACT"). The Company and the Guarantors (other than Delchamps
and Supermarket Cigarette Sales, Inc., a Louisiana corporation ("SCSI")) have
prepared a preliminary offering memorandum, dated August 25, 1997 (the
"PRELIMINARY OFFERING MEMORANDUM"), and a final offering memorandum, dated
September 10, 1997 (the "OFFERING MEMORANDUM"), relating to the Senior
Subordinated Notes and the Subsidiary Guarantees.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Senior Subordinated Notes (and
all securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE
U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE
HEREOF. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
(B) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IS OTHERWISE
PERMITTED TO PURCHASE THE NOTES PURSUANT TO THE REQUIREMENTS OF CLAUSE
(2) BELOW, (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO
A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER
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THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT (AN "IAI") THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE
TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE OBTAINED
FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN AGGREGATE
PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS NOTE OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION"
AND "UNITED STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION
REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING.
2. AGREEMENTS TO SELL AND PURCHASE. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and the Initial Purchasers agree,
severally and not jointly, to purchase from the Company, the principal amounts
of Senior Subordinated Notes set forth opposite the name of such Initial
Purchaser on Schedule B hereto at a purchase price equal to 97.25% of the
principal amount thereof (the "PURCHASE PRICE").
3. TERMS OF OFFERING. The Initial Purchasers have advised the
Company that the Initial Purchasers will make offers (the "EXEMPT RESALES") of
the Senior Subordinated Notes purchased hereunder on the terms set forth in the
Offering Memorandum, as amended or supplemented, solely to (i) persons whom the
Initial Purchasers reasonably believe to be "qualified institutional buyers" as
defined in Rule 144A under the Act ("QIBS") and (ii) to persons permitted to
purchase the Senior Subordinated Notes in offshore transactions in reliance upon
Regulation S under the Act (each, a "REGULATION S PURCHASER") (such persons
specified in clauses (i) and (ii) being referred to herein as the "ELIGIBLE
PURCHASERS"). The Initial Purchasers will offer the Senior Subordinated Notes
to Eligible Purchasers initially at a price equal to 100% of the principal
amount thereof. Such price may be changed at any time without notice.
Holders (including subsequent transferees) of the Senior Subordinated
Notes will have the registration rights set forth in the registration rights
agreement (the "REGISTRATION RIGHTS AGREEMENT"), to be executed on and dated the
Closing Date, in substantially the form of Exhibit
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A hereto, for so long as such Senior Subordinated Notes constitute "Transfer
Restricted Securities" (as defined in the Registration Rights Agreement).
Pursuant to the Registration Rights Agreement, the Company and the Guarantors
will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein, (i) a registration
statement under the Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating
to the Company's 103/8% new Senior Subordinated Notes due 2007 (the "NEW SENIOR
SUBORDINATED NOTES"), identical in all material respects to the Senior
Subordinated Notes (except that the New Senior Subordinated Notes shall have
been registered pursuant to such Exchange Offer Registration Statement), to be
offered in exchange for the Senior Subordinated Notes (such offer to exchange
being referred to as the "EXCHANGE OFFER") and the Subsidiary Guarantees thereof
and (ii) a shelf registration statement pursuant to Rule 415 under the Act (the
"SHELF REGISTRATION STATEMENT" and, together with the Exchange Offer
Registration Statement, the "REGISTRATION STATEMENTS") relating to the resale by
certain holders of the Senior Subordinated Notes, and to use its best efforts to
cause such Registration Statements to be declared and remain effective and
usable for the periods specified in the Registration Rights Agreement. This
Agreement, the Indenture, the Notes, the Subsidiary Guarantees and the
Registration Rights Agreement are hereinafter sometimes referred to collectively
as the "OPERATIVE DOCUMENTS."
4. DELIVERY AND PAYMENT.
(a) Delivery of, and payment of the Purchase Price for, the
Senior Subordinated Notes shall be made at the offices of Dechert Price & Rhoads
at 30 Rockefeller Plaza, New York, New York 10112, or such other location as may
be mutually acceptable. Such delivery and payment shall be made at 9:00 a.m.
New York City time, on September 15, 1997 or at such other time as shall be
agreed upon by the Initial Purchasers and the Company. The time and date of
such delivery and payment are herein called the "CLOSING DATE."
(b) One or more of the Senior Subordinated Notes in definitive
global form, registered in the name of Cede & Co., as nominee of the Depository
Trust Company ("DTC"), having an aggregate principal amount corresponding to the
aggregate principal amount of the Senior Subordinated Notes (collectively, the
"GLOBAL NOTE"), shall be delivered by the Company to the Initial Purchasers (or
as the Initial Purchasers direct) in each case with any transfer taxes thereon
duly paid by the Company against payment by the Initial Purchasers of the
Purchase Price thereof by wire transfer in federal (same day) funds to an
account or accounts designated by the Company or such other manner of payment as
may be designated by the Company and agreed to by the Initial Purchasers. The
Global Note shall be made available to the Initial Purchasers for inspection not
later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
5. AGREEMENTS OF THE COMPANY AND THE GUARANTORS. As of the date
hereof, the Company and each of the Guarantors (other than Delchamps and SCSI)
and, as of the Consummation of the Delchamps Tender Offer, Delchamps and SCSI,
hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly after obtaining
knowledge (and, if requested by the Initial Purchasers, confirm such advice in
writing) of (i) the issuance by any state securities commission of any stop
order suspending the qualification or exemption from qualification of any Senior
Subordinated Notes for offering or sale in any jurisdiction designated by the
Initial Purchasers pursuant to Section 5(e) hereof, or the initiation
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of any proceeding by any state securities commission or any other federal or
state regulatory authority for such purpose and (ii) the happening of any event
during the period referred to in Section 5(c) below that makes any statement of
a material fact made in the Offering Memorandum untrue or that requires any
additions to or changes in the Offering Memorandum in order to make the
statements therein not misleading. The Company shall use its best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Senior Subordinated Notes under any state securities or Blue
Sky laws and, if at any time any state securities commission or other federal or
state regulatory authority shall issue an order suspending the qualification or
exemption of any Senior Subordinated Notes under any state securities or Blue
Sky laws, the Company shall use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company as many copies of the
Offering Memorandum, and any amendments or supplements thereto, as the Initial
Purchasers may reasonably request. Subject to the Initial Purchasers'
compliance with its representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers or market-making
activities of the Initial Purchasers with respect to Senior Subordinated Notes,
not to make any amendment or supplement to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which the
Initial Purchasers shall reasonably object within five Business Days after being
so advised and to prepare promptly upon the Initial Purchasers' reasonable
request, any amendment or supplement to the Offering Memorandum which may be
necessary or advisable in connection with such Exempt Resales or such
market-making activities. Notwithstanding any other provision of this Agreement
to the contrary, the obligations of the Company which arise under this paragraph
5(c) as a result of market-making activities of the Initial Purchasers with
respect to Senior Subordinated Notes will terminate 30 days after written notice
by the Company to DLJ stating that the Company no longer needs the Initial
Purchasers to act as "market makers" with respect to the Notes.
(d) If, during the period referred to in Section 5(c) above (as
such period may be adjusted pursuant to the last sentence thereof), any event
shall occur or condition shall exist as a result of which, in the opinion of
counsel to the Initial Purchasers, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in the light of
the circumstances existing when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, to prepare promptly upon the
Initial Purchasers' reasonable request an appropriate amendment or supplement to
such Offering Memorandum so that the statements therein, as so amended or
supplemented, will not, in the light of the circumstances existing when it is so
delivered, be misleading, or so that such Offering Memorandum will comply with
applicable law, and to furnish to the Initial Purchasers and such other persons
as the Initial Purchasers may designate such number of copies thereof as the
Initial Purchasers may reasonably request.
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(e) Prior to the sale of all Senior Subordinated Notes pursuant
to Exempt Resales as contemplated hereby, to cooperate with the Initial
Purchasers and counsel to the Initial Purchasers in connection with the
registration or qualification of the Senior Subordinated Notes for offer and
sale to the Initial Purchasers and pursuant to Exempt Resales under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchasers may
reasonably request and to continue such qualification in effect so long as
required for Exempt Resales and to file such consents to service of process or
other documents as may be necessary in order to effect such registration or
qualification; PROVIDED, HOWEVER, that neither the Company nor any Guarantor
shall be required in connection therewith to register or qualify as a foreign
corporation in any jurisdiction in which it is not now so qualified or to take
any action that would subject it to general consent to service of process or
taxation in any jurisdiction in which it is not now so subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, a
consolidated balance sheet, a consolidated statement of operations and a
consolidated statement of cash flows (and similar financial reports of all
unconsolidated subsidiaries, if any) as of the end of and for such period, and
for the period from the beginning of such year to the close of such quarterly
period, together with comparable information for the corresponding periods of
the preceding year.
(g) During the period of five years after the date of this
Agreement, furnish to the Initial Purchasers as soon as available copies of all
reports or other communications made publicly available by the Company or any of
the Guarantors to their security holders or filed with the Commission or any
national securities exchange on which any class of securities of the Company or
any of the Guarantors is listed and such other publicly available information
concerning the Company and/or its subsidiaries as the Initial Purchasers may
reasonably request.
(h) So long as any of the Senior Subordinated Notes remain
outstanding and during any period in which the Company and the Guarantors are
not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), to make available to any holder of Senior
Subordinated Notes in connection with any sale thereof and any prospective
purchaser of such Senior Subordinated Notes from such holder, the information
("RULE 144A INFORMATION") required by Rule 144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Senior Subordinated Notes to the Initial Purchasers, and all other fees or
expenses in connection with the preparation, printing, filing and distribution
of the Preliminary
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Offering Memorandum, the Offering Memorandum and all amendments and supplements
to any of the foregoing (including financial statements) specified in Section
5(c) and 5(d) prior to or during the period specified in Section 5(c), including
the mailing and delivering of copies thereof to the Initial Purchasers and
persons designated by it in the quantities specified herein, (ii) all costs and
expenses related to the sale and delivery of the Senior Subordinated Notes to
the Initial Purchasers, including any transfer or other taxes payable thereon,
(iii) all costs of printing or producing this Agreement, the other Operative
Documents and any other agreements or documents in connection with the offering,
purchase, sale or delivery of the Senior Subordinated Notes, (iv) all expenses
in connection with the registration or qualification of the Senior Subordinated
Notes and the Subsidiary Guarantees for offer and sale under the securities or
Blue Sky laws of the several states and all costs of printing or producing any
preliminary and supplemental Blue Sky memoranda in connection therewith
(including the filing fees and the reasonable fees and disbursements of counsel
for the Initial Purchasers in connection with such registration or qualification
and memoranda relating thereto), (v) the cost of printing certificates
representing the Senior Subordinated Notes and the Subsidiary Guarantees, (vi)
all expenses and listing fees in connection with the application for quotation
of the Senior Subordinated Notes in the National Association of Securities
Dealers, Inc. ("NASD") Automated Quotation System - PORTAL ("PORTAL"), (vii) the
fees and expenses of the Trustee and the Trustee's counsel in connection with
the Indenture, the Notes and the Subsidiary Guarantees, (viii) the costs and
charges of any transfer agent, registrar and/or depositary (including DTC), (ix)
any fees charged by rating agencies for the rating of the Notes, (x) all costs
and expenses of the Exchange Offer and any Registration Statement, as set forth
in the Registration Rights Agreement, and (xi) and all other costs and expenses
incident to the performance of the obligations of the Company and the Guarantors
hereunder for which provision is not otherwise made in this Section. Delchamps
and SCSI shall not be responsible for any of the fees and expenses described in
this paragraph unless and until the Delchamps Tender Offer is Consummated.
(j) To use its best efforts to effect the inclusion of the
Senior Subordinated Notes in PORTAL and to maintain the listing of the Senior
Subordinated Notes on PORTAL for so long as the Senior Subordinated Notes are
outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of
the Notes, and to comply with all of its agreements set forth in the
representation letters of the Company and the Guarantors to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
any Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or any Guarantor substantially similar to
the Notes and the Subsidiary Guarantees (other than (i) the Notes and the
Subsidiary Guarantees and (ii) commercial paper issued in the ordinary course of
business, it being understood that the Company and the Guarantors will enter
into the Senior Credit Facility on the Closing Date), without the prior written
consent of the Initial Purchasers.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Senior Subordinated Notes to the
Initial Purchasers or pursuant to Exempt Resales in a
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manner that would require the registration of any such sale of the Senior
Subordinated Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes.
(o) To cause the Exchange Offer to be made on the appropriate
form to permit New Senior Subordinated Notes and guarantees thereof by the
Guarantors registered pursuant to the Act to be offered in exchange for the
Senior Subordinated Notes and the Subsidiary Guarantees and to comply with all
applicable federal and state securities laws in connection with the Exchange
Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by it prior
to the Closing Date and to satisfy or obtain the waiver of all conditions
precedent to the delivery of the Senior Subordinated Notes and the Subsidiary
Guarantees.
(r) Not to use any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) in connection
with the offer and sale of the Senior Subordinated Notes pursuant hereto,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising.
6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
GUARANTORS. As of the date hereof, the Company and each of the Guarantors
(other than Delchamps and SCSI) and, upon Consummation of the Delchamps Tender
Offer, Delchamps and SCSI, represents and warrants to, and agrees with, the
Initial Purchasers as set forth below, it being understood that the
representations and warranties set forth in subparagraphs (d), (e), (h), (i),
(j) and (l) shall not be deemed to have been made in respect of Delchamps or
SCSI until the Consummation of the Delchamps Tender Offer.
(a) The Offering Memorandum does not, and any supplement or
amendment to it will not, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
contained in this paragraph (a) shall not apply to statements in or omissions
from the Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Offering Memorandum, or any amendment or supplement
thereto, or any order asserting that any of the transactions contemplated by
this Agreement are subject to the registration requirements of the Act, has been
issued.
(b) Each of the Company and each of its subsidiaries has been,
and immediately after Consummation of the Delchamps Tender Offer will have been,
duly
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incorporated, is, and immediately after Consummation of the Delchamps Tender
Offer will be, validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation and has, and immediately after Consummation
of the Delchamps Tender Offer will have, the corporate power and authority to
carry on its business as described in the Offering Memorandum and to own, lease
and operate its properties as described in the Offering Memorandum, and each is,
and immediately after Consummation of the Delchamps Tender Offer will be, duly
qualified and in good standing as a foreign corporation authorized to do
business in each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect. As used
herein, "MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, any
effect or group of related or unrelated effects that (i) would be reasonably
expected, individually or in the aggregate, to result in a material adverse
effect on the assets, properties, business, results of operations, condition
(financial or otherwise) or prospects of such Person and its subsidiaries, taken
as a whole or (ii) would materially interfere with or adversely affect (A) the
issuance of the Senior Subordinated Notes or the consummation of this Agreement,
(B) the performance by such Person and each of its subsidiaries of its
respective agreements and obligations under this Agreement or the consummation
of the transactions contemplated thereby or (C) the consummation of the
Delchamps Acquisition.
(c) Immediately following the Consummation of the Delchamps
Tender Offer, the entities listed on Schedule A hereto will be the only
subsidiaries, direct or indirect, of the Company. All of the outstanding shares
of capital stock of each of the Company's subsidiaries have been duly authorized
and validly issued and are fully paid and non-assessable, and are owned by the
Company, directly or indirectly through one or more subsidiaries, free and clear
of any security interest, claim, lien, encumbrance or adverse interest of any
nature (each, a "LIEN") other than as described in the Offering Memorandum.
(d) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and is a valid and binding
agreement of the Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms except as the enforcement hereof may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy.
This Agreement conforms as to legal matters to the description thereof contained
in the Offering Memorandum.
(e) The Indenture has been duly authorized by the Company and
each of the Guarantors and, on the Closing Date, will have been validly executed
and delivered by the Company and each of the Guarantors. When the Indenture has
been duly executed and delivered by the Company and each of the Guarantors, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing and except as rights
to indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy. The Indenture conforms in all
material
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respects to the requirements of the Trust Indenture Act of 1939, as amended (the
"TIA" or"TRUST INDENTURE ACT"), and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
(f) The Senior Subordinated Notes have been duly authorized by
the Company for issuance and sale to the Initial Purchasers pursuant to this
Agreement and, on the Closing Date, will have been validly executed and
delivered by the Company. When the Senior Subordinated Notes have been issued,
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, the Senior Subordinated Notes will be entitled to the
benefits of the Indenture and will be the valid and binding obligations of the
Company, enforceable in accordance with their terms except as the enforcement
thereof may be limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally, general equitable principles
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing and except as rights to indemnity and
contribution thereunder may be limited by Federal or state securities laws or
principles of public policy.
(g) On the Closing Date, the New Senior Subordinated Notes will
have been duly authorized by the Company. When the New Senior Subordinated
Notes are issued, executed and authenticated in accordance with the terms of the
Exchange Offer and the Indenture, the New Senior Subordinated Notes will be
entitled to the benefits of the Indenture and will be the valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing and except as rights
to indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
(h) The Subsidiary Guarantee to be endorsed on the Senior
Subordinated Notes by each Guarantor has been duly authorized by such Guarantor
and, on the Closing Date, will have been duly executed and delivered by each
such Guarantor. When the Senior Subordinated Notes have been issued, executed
and authenticated in accordance with the Indenture and delivered to and paid for
by the Initial Purchasers in accordance with the terms of this Agreement, the
Subsidiary Guarantee of each Guarantor endorsed thereon will be entitled to the
benefits of the Indenture and will be the valid and binding obligation of such
Guarantor, enforceable against such Guarantor in accordance with its terms,
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing and except as rights to
indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
(i) The Subsidiary Guarantee to be endorsed on the New Senior
Subordinated Notes by each Guarantor has been duly authorized by such Guarantor
and, when issued, will have been duly executed and delivered by each such
Guarantor. When the New Senior Subordinated Notes have been issued, executed
and authenticated in accordance with the
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terms of the Exchange Offer and the Indenture, the Subsidiary Guarantee of each
Guarantor endorsed thereon will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, except as the enforcement thereof
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy.
(j) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, on the Closing Date, will have
been duly executed and delivered by the Company and each of the Guarantors.
When the Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be the valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing and except as rights to indemnity and contribution thereunder may be
limited by Federal or state securities laws or principles of public policy.
(k) The Merger Agreement has been duly authorized, executed and
delivered by the Company and DAC and is a valid and binding agreement of the
Company and DAC, enforceable against the Company and DAC in accordance with its
terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles (whether considered in a proceeding in equity or at
law) and an implied covenant of good faith and fair dealing and except as rights
to indemnity and contribution thereunder may be limited by Federal or state
securities laws or principles of public policy.
(l) The Senior Credit Facility has been duly authorized by the
Company and the subsidiaries of the Company that are obligors thereunder and, on
the Closing Date, will have been duly executed and delivered by the Company and
each of the subsidiaries of the Company that are obligors thereunder. When the
Senior Credit Facility has been duly executed and delivered, the Senior Credit
Facility will be the valid and binding agreement of the Company and each of the
subsidiaries of the Company that are obligors thereunder, enforceable against
the Company and each subsidiary of the Company that is an obligor thereunder in
accordance with its terms, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally, general equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair dealing and
except as rights to indemnity and contribution thereunder may be limited by
Federal or state securities laws or principles of public policy.
(m) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), and except for such of the
following as would not have a Material Adverse Effect, neither the Company nor
any of its subsidiaries is, and after
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consummation of the Delchamps Tender Offer will be, in violation of its
respective charter or by-laws or in default in the performance of any
obligation, agreement or condition contained in any material bond, debenture,
note or any other evidence of material indebtedness or in any other material
agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party.
(n) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto) and except for such of the
following as would not have a Material Adverse Effect, the execution, delivery
and performance of the Merger Agreement, this Agreement and the other Operative
Documents by the Company and each of the Guarantors, compliance by the Company
and each of the Guarantors with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will not
require any consent (other than the Consent Solicitation (as defined herein)),
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body (except as such may be required
under (1) the Securities Act and state securities or "blue sky" laws and
regulations, (2) the Trust Indenture Act of 1939, as amended, (3) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (4) applicable Environmental Laws (as defined below), (5) the filings
with and approvals by the Secretary of State of the States of Mississippi and
Alabama, as applicable, of the articles of and certificates of merger, relating
to the Delchamps Acquisition, and (6) state and local law with respect to the
obtaining of new permits or licenses for the sale of tobacco, alcohol and
similar regulated items) and will not conflict with or constitute a breach of
any of the terms or provisions of, or a default under, the charter or by-laws of
the Company, the Guarantors or any of their respective subsidiaries or any
agreement, indenture or other instrument to which the Company, the Guarantors or
any of their respective subsidiaries is a party or by which the Company, the
Guarantors or any of their respective subsidiaries or their respective
properties are bound, or violate or conflict with any laws, administrative
regulations or rulings or court decrees applicable to the Company, any Guarantor
or any of their respective subsidiaries or their respective properties.
(o) Except as disclosed in the Offering Memorandum or that would
not reasonably be expected to have a Material Adverse Effect, there are, and
immediately after Consummation of the Delchamps Tender Offer there will be, no
legal or governmental proceedings pending to which the Company or any of its
subsidiaries is a party or to which any of their respective properties is the
subject, and, to the best of the Company's knowledge, no such proceedings are
threatened or contemplated.
(p) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), neither the Company nor any of
its subsidiaries has, and immediately after Consummation of the Delchamps Tender
Offer will have, violated any foreign, federal, state or local law or regulation
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("ENVIRONMENTAL LAWS") or any federal or state law relating to discrimination in
the hiring, promotion or pay of employees or any applicable federal or state
wages and hours laws, or any provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the rules and regulations
promulgated thereunder, except for such violations which, singly or in the
aggregate, would not have a Material Adverse Effect.
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(q) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), or as otherwise disclosed in
the Offering Memorandum, there are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(r) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), or as otherwise disclosed in
the Offering Memorandum, each of the Company and its subsidiaries has, and
immediately after Consummation of the Delchamps Tender Offer will have, such
permits, licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an "AUTHORIZATION") of, and has made all filings with and
notices to, all governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including without limitation,
under any applicable Environmental Laws, as are necessary to own, lease, license
and operate its respective properties and to conduct its business in the manner
described in the Offering Memorandum, except where the failure to have any such
Authorization or to make any such filing or notice would not, singly or in the
aggregate, have a Material Adverse Effect. Except as otherwise disclosed in the
Merger Agreement (including, without limitation, Annex B thereto), or as
otherwise disclosed in the Offering Memorandum, each such Authorization is, and
after consummation of the Delchamps Tender Offer will be, valid and in full
force and effect and each of the Company and its subsidiaries is in compliance
with all the terms and conditions thereof and with the rules and regulations of
the authorities and governing bodies having jurisdiction with respect thereto;
and no event has occurred (including, without limitation, the receipt of any
notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any
such Authorization or results or, after notice or lapse of time or both, would
result in any other impairment of the rights of the holder of any such
Authorization; and such Authorizations contain no restrictions that are
burdensome to the Company or any of its subsidiaries; except where such failure
to be valid and in full force and effect or to be in compliance, the occurrence
of any such event or the presence of any such restriction would not, singly or
in the aggregate, have a Material Adverse Effect.
(s) In connection with the Delchamps Acquisition, the Company
has reviewed the effect of Environmental Laws and the disposal of hazardous or
toxic substances or wastes, pollutants or contaminants on (i) the business,
assets, operations and properties of the Company and its subsidiaries and (ii)
the business, assets, operations and properties of the Company and its
subsidiaries immediately following the Delchamps Tender Offer, and identified
and evaluated associated costs and liabilities (including, without limitation,
all material capital and operating expenditures required for clean-up, closure
of properties and compliance with Environmental Laws, all permits, licenses and
approvals, all related constraints on operating activities and all potential
liabilities to third parties). On the basis of such reviews, the Company has
reasonably concluded that such associated costs and liabilities would not,
immediately subsequent to and giving effect to the Delchamps Tender Offer, have
a Material Adverse Effect.
(t) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), the Company and each of its
subsidiaries has, and immediately after Consummation of the Delchamps Tender
Offer will have, good and marketable title, free and clear of all liens, claims,
encumbrances and restrictions except liens for
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taxes not yet due and payable, to all property and assets described in the
Offering Memorandum as being owned by it, except as described in the Offering
Memorandum or as would not have a Material Adverse Effect. Except as otherwise
disclosed in the Merger Agreement (including, without limitation, Annex B
thereto), all leases to which any of the Company or any of its subsidiaries is,
and immediately after Consummation of the Delchamps Tender Offer will be, a
party are valid and binding and no default has occurred or is continuing
thereunder which would have a Material Adverse Effect, and the Company and its
subsidiaries enjoy peaceful and undisturbed possession under all such leases to
which any of the Company and its subsidiaries is, and immediately after
Consummation of the Delchamps Tender Offer will be, a party as lessee with such
exceptions as do not materially interfere with the use currently made by the
Company or such subsidiary, as the case may be.
(u) The Company and its subsidiaries maintain, and immediately
after Consummation of the Delchamps Tender Offer will maintain, reasonably
adequate insurance.
(v) The accountants, Deloitte & Touche L.L.P. and KPMG Peat
Marwick, L.L.P., that have certified the financial statements and supporting
schedules included in the Offering Memorandum are independent public accountants
with respect to the Company and the Guarantors, as required by the Act and the
Exchange Act. The historical financial statements, together with related
schedules and notes, set forth in the Offering Memorandum comply as to form in
all material respects with the requirements applicable to registration
statements on Form S-1 under the Act.
(w) The historical financial statements of the Company and its
subsidiaries, together with related schedules and notes forming part of the
Offering Memorandum (and any amendment or supplement thereto), present fairly
the consolidated financial position, results of operations and changes in
financial position of the Company and its subsidiaries on the basis stated in
the Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein and, with respect to interim financial statements, except for the
absence of footnote presentation and normal year-end adjustments; and the other
financial and statistical information and data of the Company and its
subsidiaries set forth in the Offering Memorandum (and any amendment or
supplement thereto) are, in all material respects, accurately presented and
prepared on a basis consistent with such financial statements and the books and
records of the Company. The representations set forth in this clause (w) shall
be deemed to be made with respect to the historical financial statements and
other financial and statistical data of Delchamps and its subsidiaries
immediately upon Consummation of the Delchamps Tender Offer.
(x) In the Company's opinion, the assumptions used in the
preparation of the PRO FORMA financial statements included in the Offering
Memorandum are reasonable and the adjustments used therein are appropriate to
give effect to the transactions or circumstances referred to therein. The other
PRO FORMA financial and statistical information and data included in the
Offering Memorandum are accurately presented and prepared on a basis consistent
with the PRO FORMA financial statements.
(y) The Company is not and, after immediately giving effect to
the offering and sale of the Senior Subordinated Notes and the application of
the net proceeds thereof
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as described in the Offering Memorandum will not be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(z) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), or as otherwise disclosed in
the Offering Memorandum, there are no holders of securities of the Company or
any of the Guarantors who, by reason of the execution by the Company and the
Guarantors of the Registration Rights Agreement or the consummation of the
transactions contemplated thereby, have the right to request or demand that the
Company or any of the Guarantors, as the case may be, register under the Act
securities held by them.
(aa) The Company has delivered to the Initial Purchasers true and
correct executed copies of the Merger Agreement, including all schedules and
exhibits thereto, and there have been no amendments, alterations, modifications
or waivers thereto or in the exhibits or schedules thereto, except as have been
delivered to the Initial Purchasers.
(ab) The Company and each of its subsidiaries has complied, and
immediately after Consummation of the Delchamps Tender Offer will have complied,
with all provisions of Section 517.075, Florida Statutes (Chapter 92-198, Laws
of Florida).
(ac) There are, and immediately after Consummation of the
Delchamps Tender Offer there will be, no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or liens
related to or entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest in, any of the
Company's subsidiaries, except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), or as otherwise disclosed in
the Offering Memorandum.
(ad) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto) or as otherwise set forth in
the Offering Memorandum, there is, and immediately after Consummation of the
Delchamps Tender Offer there will be, (i) no significant unfair labor practice
complaint pending against the Company any of its subsidiaries or, to the best
knowledge of the Company, threatened against any of them, before the National
Labor Relations Board or any state or local labor relations board, and no
significant grievance or more significant arbitration proceeding arising out of
or under any collective bargaining agreement is so pending against the Company
or any of its subsidiaries or, to the best knowledge of the Company, threatened
against any of them, and (ii) no significant strike, labor dispute, slowdown or
stoppage pending against the Company any of its subsidiaries, or, to the best
knowledge of the Company, threatened against it or any of its subsidiaries
except for such actions specified in clause (i) or (ii) above, which, singly or
in the aggregate, would not have a Material Adverse Effect.
(ae) Each of the Company and each of its subsidiaries maintains,
and immediately after Consummation of the Delchamps Acquisition will maintain, a
system of internal accounting controls sufficient to provide reasonable
assurance that: (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded
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<PAGE>
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(af) Except as otherwise disclosed in the Merger Agreement
(including, without limitation, Annex B thereto), all material tax returns
required to be filed by the Company and its subsidiaries in any jurisdiction
have been, and immediately after Consummation of the Delchamps Tender Offer will
have been, filed, other than those filings being contested in good faith, and
all material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or pursuant to
any assessment received by the Company or any of its subsidiaries have been, and
immediately after Consummation of the Delchamps Tender Offer will have been,
paid, other than those being contested in good faith and for which adequate
reserves have been provided.
(ag) The Offering Memorandum, as of its date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4) under
the Act.
(ah) When the Senior Subordinated Notes and the Subsidiary
Guarantees are issued and delivered pursuant to this Agreement, neither the
Senior Subordinated Notes nor the Subsidiary Guarantees will be of the same
class (within the meaning of Rule 144A under the Act) as any security of the
Company or the Guarantors that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a United
States automated inter-dealer quotation system.
(ai) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the Guarantors
or any of their respective representatives (other than the Initial Purchasers,
as to whom the Company and the Guarantors make no representation) in connection
with the offer and sale of the Senior Subordinated Notes contemplated hereby,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees have been invited
by any general solicitation or general advertising. No securities of the same
class as the Senior Subordinated Notes have been issued and sold by the Company
within the six-month period immediately prior to the date hereof.
(aj) Assuming (i) the accuracy of and compliance with the Initial
Purchasers' representations, warranties and agreements set forth in Section 7
hereof and (ii) compliance by the Initial Purchasers with the offering and
transfer procedures and restrictions described elsewhere in this Agreement and
the Offering Memorandum, prior to the effectiveness of any Registration
Statement, the Indenture is not required to be qualified under the TIA.
(ak) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("REGULATION S") with respect
to the Senior Subordinated Notes or the Subsidiary Guarantees.
(al) The Company has not, and will not, offer or sell the Senior
Subordinated Notes in reliance on Regulation S except in offshore transactions.
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<PAGE>
(am) The Company has not, and will not, offer or sell the Senior
Subordinated Notes as part of a plan or scheme to evade the registration
provisions of the Act.
(an) The Company, the Guarantors and their respective affiliates
and all persons acting on their behalf (other than the Initial Purchasers, as to
whom the Company and the Guarantors make no representation) have complied with
and will comply with the offering restrictions requirements of Regulation S in
connection with the offering of the Senior Subordinated Notes outside the United
States and, in connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(h).
(ao) The Company is a "reporting issuer" as defined in Rule 902
under the Act.
(ap) Assuming (i) the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof and
(ii) compliance by the Initial Purchasers with the offering and transfer
procedures and restrictions described elsewhere in this Agreement and the
Offering Memorandum, no registration under the Act of the Senior Subordinated
Notes or the Subsidiary Guarantees is required for the sale of the Senior
Subordinated Notes and the Subsidiary Guarantees to the Initial Purchasers as
contemplated hereby or for the Exempt Resales.
(aq) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or any Guarantor that it is considering
imposing) any condition (financial or otherwise) on the Company's or any
Guarantor's retaining any rating assigned as of the date hereof to the Company,
any Guarantor or any securities of the Company or any Guarantor or (ii) has
indicated to the Company or any Guarantor that it is considering (a) the
downgrading, suspension or withdrawal of, or any review for a possible change
that does not indicate the direction of the possible change in, any rating so
assigned or (b) any change in the outlook for any rating of the Company or any
Guarantor.
The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. INITIAL PURCHASERS' REPRESENTATIONS AND WARRANTIES. Each of the
Initial Purchasers, severally and not jointly, represents and warrants to the
Company and the Guarantors, and agrees that:
(a) Such Initial Purchaser is either a QIB or an institutional
"accredited investor" (as defined in rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) (an "Accredited Institution"), in either
case, with such knowledge and experience in financial and business matters as is
necessary in order to evaluate the merits and risks of an investment in the
Senior Subordinated Notes.
(b) Such Initial Purchaser (A) is not acquiring the Senior
Subordinated Notes with a view to any distribution thereof or with any present
intention of offering or selling any of the Senior Subordinated Notes in a
transaction that would violate the
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Act or the securities laws of any state of the United States or any other
applicable jurisdiction and (B) will be reoffering and reselling the Senior
Subordinated Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Senior Subordinated
Notes pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Senior
Subordinated Notes only from, and will offer to sell the Senior Subordinated
Notes only to, Eligible Purchasers. Each Initial Purchaser further agrees that
it will offer to sell the Senior Subordinated Notes only to, and will solicit
offers to buy the Senior Subordinated Notes only from (A) Eligible Purchasers
that agree that (x) the Senior Subordinated Notes purchased by them may be
resold, pledged or otherwise transferred prior to the expiration of the time
period referred to under Rule 144(k) (taking into account the provisions of Rule
144(d) under the Act, if applicable) under the Act, as in effect on the date of
the transfer of such Senior Subordinated Notes, only (I) to the Company or any
of its subsidiaries, (II) to a person whom the seller reasonably believes is a
QIB purchasing for its own account or for the account of a QIB in a transaction
meeting the requirements of Rule 144A under the Act, (III) in an offshore
transaction (as defined in Rule 902 under the Act) meeting the requirements of
Rule 904 of the Act, (IV) in a transaction meeting the requirements of Rule 144
under the Act, (V) to an Accredited Institution that, prior to such transfer,
furnishes the Trustee a signed letter containing certain representations and
agreements relating to the registration of transfer of such Senior Subordinated
Note and, if such transfer is in respect of an aggregate principal amount of
Senior Subordinated Notes less than $250,000, an opinion of counsel acceptable
to the Company that such transfer is in compliance with the Act, (VI) in
accordance with another exemption from the registration requirements of the Act
(and based upon an opinion of counsel acceptable to the Company) or (VII)
pursuant to an effective registration statement and, in each case, in accordance
with the applicable securities laws of any state of the United States or any
other applicable jurisdiction and (y) they will deliver to each person to whom
such Senior Subordinated Notes or an interest therein is transferred a notice
substantially to the effect of the foregoing.
(e) None of such Initial Purchasers nor any of its affiliates or
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Senior Subordinated Notes or the Subsidiary Guarantees.
(f) The Senior Subordinated Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S have been and will
be offered and sold only in offshore transactions.
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<PAGE>
(g) The sale of the Senior Subordinated Notes offered and sold
by such Initial Purchaser pursuant hereto in reliance on Regulation S is not
part of a plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Senior Subordinated Notes in the United
States or to, or for the benefit or account of, a U.S. Person (other than a
distributor), in each case, as defined in Rule 902 under the Act (i) as part of
its distribution at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering of the Senior Subordinated Notes pursuant
hereto and the Closing Date, other than in accordance with Regulation S of the
Act or another exemption from the registration requirements of the Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not
cause any advertisement with respect to the Senior Subordinated Notes (including
any "tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Senior Subordinated Notes, except such advertisements as are permitted by and
include the statements required by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Senior Subordinated Notes by it to any distributor,
dealer or person receiving a selling concession, fee or other remuneration
during the 40-day restricted period referred to in Rule 903(c)(2) under the Act,
it will send to such distributor, dealer or person receiving a selling
concession, fee or other remuneration a confirmation or notice to substantially
the following effect:
"The Senior Subordinated Notes covered hereby have not been registered
under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered and sold within the United States or to,
or for the account or benefit of, U.S. persons (i) as part of your
distribution at any time or (ii) otherwise until 40 days after the
later of the commencement of the Offering and the Closing Date, except
in either case in accordance with Regulation S under the Securities
Act (or Rule 144A or to Accredited Institutions in transactions that
are exempt from the registration requirements of the Securities Act),
and in connection with any subsequent sale by you of the Senior
Subordinated Notes covered hereby in reliance on Regulation S during
the period referred to above to any distributor, dealer or person
receiving a selling concession, fee or other remuneration, you must
deliver a notice to substantially the foregoing effect. Terms used
above have the meanings assigned to them in Regulation S."
(j) Such Initial Purchaser further represents and agrees that
(1) it has not offered or sold and will not offer or sell any Senior
Subordinated Notes to persons in the United Kingdom prior to the expiration of
the period of six months from the issue date of the Senior Subordinated Notes,
except to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes of
their business or otherwise in circumstances which have not resulted and will
not result in an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995, (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Senior Subordinated Notes in,
from or otherwise involving the United Kingdom and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received
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by it in connection with the issuance of the Senior Subordinated Notes to a
person who is of a kind described in Article 11(3) of the Financial Services Act
of 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom the document may otherwise lawfully be issued or passed on.
(k) Such Initial Purchaser agrees that it will not offer, sell
or deliver any of the Senior Subordinated Notes in any jurisdiction outside the
United States except under circumstances that will result in compliance with the
applicable laws thereof, and that it will take at its own expense whatever
action is required to permit its purchase and resale of the Senior Subordinated
Notes in such jurisdictions. Such Initial Purchaser understands that no action
has been taken to permit a public offering in any jurisdiction outside the
United States where action would be required for such purpose.
The Initial Purchasers acknowledge that the Company and the
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchasers, will rely upon the accuracy
and truth of the foregoing representations and the Initial Purchasers hereby
consent to such reliance.
8. INDEMNIFICATION.
(a) As of the date hereof, the Company and each of the
Guarantors (other than Delchamps and SCSI) and, as of the Consummation of the
Delchamps Tender Offer, Delchamps and SCSI, agrees, jointly and severally, to
indemnify and hold harmless each Initial Purchaser, its directors, its officers
and each person, if any, who controls such Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses reasonably incurred in connection with
investigating or defending any matter, including any action, that could give
rise to any such losses, claims, damages, liabilities or judgments) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Offering Memorandum (or any amendment or supplement thereto), the
Preliminary Offering Memorandum or any Rule 144A Information provided by the
Company or any Guarantor to any holder or prospective purchaser of Senior
Subordinated Notes pursuant to Section 5(h) or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are (i) caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to an Initial Purchaser furnished in writing to the Company
by such Initial Purchaser (and not with respect to the information provided by
any other Initial Purchaser) or (ii) caused by any untrue statement or omission,
or any alleged untrue statement or omission, made in the Preliminary Offering
Memorandum, but eliminated or remedied in the Offering Memorandum, if (A) the
Company shall have previously furnished copies thereof to the Initial Purchasers
in accordance with this agreement, (B) a copy of the Offering Memorandum was not
sent or given to such person at or prior to the written confirmation of such
sale, (C) the Offering Memorandum would have completely corrected such untrue
statement or omission and (D) such allegations are upheld by a final judgement.
(b) The Initial Purchasers agree, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, and their respective
directors and
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officers and each person, if any, who controls (within the meaning of Section 15
of the Act or Section 20 of the Exchange Act) the Company or any Guarantor, to
the same extent as the foregoing indemnity from the Company and the Guarantors
to each Initial Purchaser but only with reference to information relating to an
Initial Purchaser furnished in writing to the Company by such Initial Purchaser
(and not with respect to the information provided by any other Initial
Purchaser) expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum or any amendment or supplement thereto.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "INDEMNIFIED PARTY"), the indemnified party shall promptly notify the
person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the indemnified
party and the payment of all fees and expenses of such counsel, as incurred
(except that in the case of any action in respect of which indemnity may be
sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers shall not
be required to assume the defense of such action pursuant to this Section 8(c),
but may employ separate counsel and participate in the defense thereof, but the
fees and expenses of such counsel, except as provided below, shall be at the
expense of the Initial Purchasers). Any indemnified party shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless (i) the employment of such counsel shall have been
specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall not be liable for any settlement of any such action
or proceeding effected without its prior written consent (not to be unreasonably
withheld) and if settled with its written consent or if there is a final
judgment for the plaintiff, the indemnifying party agrees to indemnify and hold
harmless the indemnified party to the extent provided herein. Notwithstanding
the immediately preceding sentence, if in any case where the fees and expenses
of counsel are at the expense of the indemnifying party and an indemnified party
shall have requested the indemnifying party to reimburse the indemnified party
for such fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of any action effected without its written
consent if (i) such settlement is entered into more than thirty business days
after the receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall have failed to reimburse the indemnified party in
accordance with such request for reimbursement prior to the date of such
settlement (unless the reasonableness of such fees and expenses of counsel is
being contested in good faith). No indemnifying party shall,
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without the prior written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of judgment with respect
to, any pending or threatened action in respect of which the indemnified party
is or could have been a party and indemnity or contribution may be or could have
been sought hereunder by the indemnified party, unless such settlement,
compromise or judgment includes an unconditional release of the indemnified
party from all liability on claims that are or could have been the subject
matter of such action.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to herein, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers on the
other hand from the offering of the Senior Subordinated Notes or (ii) if the
allocation provided by clause 8(d)(i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause 8(d)(i) above but also the relative fault of the Company
and the Guarantors, on the one hand, and the Initial Purchasers, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand and the Initial Purchasers, on the other hand, shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Senior Subordinated Notes (before deducting expenses) received
by the Company, and the total discounts and commissions received by the Initial
Purchasers bear to the total price to investors of the Senior Subordinated
Notes, in each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Guarantors, on the one
hand, or the Initial Purchasers, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Company and the Guarantors, and the Initial Purchasers agree
that it would not be just and equitable if contribution pursuant to this Section
8(d) were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, the Initial Purchasers shall not be required to contribute any amount
in excess of the amount by which the total price of the Senior Subordinated
Notes sold by them to investors in Exempt Resales exceeds the amount of any
damages which the Initial Purchasers have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such
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fraudulent misrepresentation. The Initial Purchasers' obligations to contribute
pursuant to this Section 8(d) are several in proportion to the respective
principal amount of Senior Subordinated Notes purchased by each of the Initial
Purchasers hereunder and not joint.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The obligations
of the Initial Purchasers to purchase the Senior Subordinated Notes under this
Agreement are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and
the Guarantors contained in this Agreement and all the representations and
warranties of the Company contained in the Merger Agreement shall be true and
correct on the Closing Date with the same force and effect as if made on and as
of the Closing Date.
(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Company or any Guarantor or any securities of the Company or any
Guarantor (including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or under review
with an uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act, (ii) there shall not have occurred any change, nor shall notice have been
given of any potential or intended change, in the outlook for any rating of the
Company or any Guarantor by any such rating organization and (iii) no such
rating organization shall have given notice that it has assigned (or is
considering assigning) a lower rating to the Notes than that on which the Notes
were marketed.
(c) Since the respective dates as of which information is given
in the Offering Memorandum, other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any material adverse change
or any development involving a prospective material adverse change in the
condition, financial or otherwise, or the earnings, business, management or
operations of the Company and its subsidiaries, taken as a whole, (ii) there
shall not have been any material adverse change or any development involving a
prospective material adverse change in the capital stock or in the long-term
debt of the Company and its subsidiaries, taken as a whole, and (iii) neither
the Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Senior Subordinated Notes on the terms and in the manner contemplated in the
Offering Memorandum.
(d) The Initial Purchasers shall have received on the Closing
Date a certificate dated the Closing Date, signed by the President and the Chief
Financial Officer of the Company, confirming the matters set forth in Sections
9(a), 9(b) and 9(c).
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(e) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to you and counsel for the Initial Purchasers),
dated the Closing Date, of Dechert Price & Rhoads, counsel for the Company and
the Guarantors, to the effect that:
(i) When the Senior Subordinated Notes are duly
executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of the Purchase
Agreement, the Senior Subordinated Notes will be entitled to the
benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their
terms;
(ii) When the Senior Subordinated Notes are duly
executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of the Purchase
Agreement, the Subsidiary Guarantees endorsed thereon will be
entitled to the benefits of the Indenture and will be valid and
binding obligations of the Guarantors, enforceable in accordance
with their terms;
(iii) When the Indenture is duly executed and delivered
by the Company and each Guarantor, the Indenture will be a valid
and binding agreement of the Company and each Guarantor,
enforceable against the Company and each Guarantor in accordance
with its terms;
(iv) When the Registration Rights Agreement is duly
executed and delivered by the Company and each Guarantor, the
Registration Rights Agreement will be a valid and binding
agreement of the Company and each Guarantor, enforceable against
the Company and each Guarantor in accordance with its terms;
(v) To our knowledge, there are no legal or
governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of
their respective properties is subject which, if determined
adversely to the Company or any such subsidiary, would be
reasonably expected, individually or in the aggregate, to result
in a Material Adverse Effect;
(vi) The Company is not an "investment company" as such
term is defined in the Investment Company Act of 1940, as
amended;
(vii) Except as contemplated by the Registration Rights
Agreement, to our knowledge there are no holders of securities of
the Company or any of the Guarantors who, by reason of the
execution by the Company and the Guarantors of the Registration
Rights Agreement or the consummation by the Company and the
Guarantors of the transactions contemplated thereby, have the
right to request or demand that the Company or any of the
Guarantors, as the case may be, register under the Act securities
held by them; and
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(viii) Assuming (i) the accuracy of, and compliance with,
the representations, warranties and agreements of the Company
and the Guarantors set forth in Sections 5(h), 5(m) and 5(r) and
6(ah), (ai), (ak), (al), (am), (an) and (ao) of the Purchase
Agreement, (ii) the accuracy of, and compliance with, the
representations, warranties and agreements of the Initial
Purchasers set forth in Section 7 of the Purchase Agreement,
(iii) compliance by the Initial Purchasers with the offering and
transfer procedures and restrictions described elsewhere in the
Purchase Agreement and the Offering Memorandum and (iv) the
accuracy of, and compliance with, the representations, warranties
and agreements made in accordance with the Purchase Agreement,
the Offering Memorandum and the Indenture by Eligible Purchasers
to whom the Initial Purchasers initially resell Senior
Subordinated Notes in Exempt Resales, it is not necessary in
connection with the offer, sale and delivery of the Senior
Subordinated Notes to the Initial Purchasers in the manner
contemplated by the Purchase Agreement or in connection with
Exempt Resales to register the Senior Subordinated Notes under
the Act or to qualify the Indenture under the TIA.
The opinion of Dechert Price & Rhoads described in Section 9(e) above
shall be rendered to the Initial Purchasers at the request of the Company and
the Guarantors and shall so state therein.
The Initial Purchasers shall have received on the Closing Date a
letter (satisfactory to the Initial Purchasers and counsel for the Initial
Purchasers) dated the Closing Date, from Dechert Price & Rhoads, counsel for the
Company and the Guarantors, to the effect that such counsel has no reason to
believe that, as of the date of the Offering Memorandum or as of the Closing
Date, the Offering Memorandum, as amended or supplemented, if applicable (except
for the financial statements and the notes related thereto and other financial,
statistical and accounting data included therein, as to which such counsel need
not express any belief) contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. In writing such letter with respect to the matters covered by this
paragraph, Dechert Price & Rhoads may state that their belief is based upon
their participation in the preparation of the Offering Memorandum and any
amendments or supplements thereto and review and discussion of the contents
thereof, but are without independent check or verification except as specified.
Additionally, the Initial Purchasers shall have received on the
Closing a letter (satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers) dated the Closing Date, from Dechert Price & Rhoads, counsel
for the Company and the Guarantors, to the effect that the Initial Purchasers
may rely on the opinions of Dechert Price & Rhoads rendered pursuant to the
Senior Credit Facility.
(f) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers), dated the Closing Date, of Butler, Snow, O'Mara, Stevens &
Cannada, PLLC, counsel to the Company and the Guarantors (other than Delchamps,
SCSI, Interstate Jitney-Jungle Stores, Inc. ("Interstate") and DAC),
substantially to the effect that:
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(i) each of the Company and each of the Guarantors
(other than Delchamps, SCSI, Interstate and DAC) is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Mississippi and has the corporate power and
authority to carry on its business as it is currently being
conducted as described in the Offering Memorandum and to own,
lease and operate its properties as described in the Offering
Memorandum;
(ii) to such counsel's knowledge, and based solely on
certificates to such effect examined by such counsel as issued by
the Secretary of State for each of the states identified in
writing to such counsel as jurisdictions where the failure by the
Company and the Guarantors (other than Delchamps, SCSI,
Interstate and DAC) to be qualified to do business as a foreign
corporation would have a Material Adverse Effect on the Company
and its subsidiaries, taken as a whole (as set forth on a
schedule to this opinion), each of the Company and the Guarantors
(other than Delchamps, SCSI, Interstate and DAC) is duly
qualified and in good standing as a foreign corporation
authorized to do business in each such jurisdiction;
(iii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid, non-assessable;
(iv) all of the outstanding shares of capital stock of
each of the Guarantors (other than Delchamps, SCSI, Interstate
and DAC) have been duly authorized and validly issued and are
fully paid and non-assessable;
(v) the Senior Subordinated Notes have been duly
authorized by the Company;
(vi) the Subsidiary Guarantees have been duly
authorized by the Guarantors (other than Delchamps, SCSI,
Interstate and DAC);
(vii) the Indenture has been duly authorized, executed
and delivered by the Company and the Guarantors (other than
Delchamps, SCSI, Interstate and DAC);
(viii) this Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors (other than
Delchamps, SCSI, Interstate and DAC);
(ix) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the
Guarantors (other than Delchamps, SCSI, Interstate and DAC);
(x) the New Senior Subordinated Notes have been duly
authorized by the Company;
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(xi) the Subsidiary Guarantees to be endorsed on the
New Senior Subordinated Notes have been duly authorized by the
Guarantors (other than Delchamps, SCSI, Interstate and DAC);
(xii) the Merger Agreement has been duly authorized,
executed and delivered by the Company;
(xiii) the Senior Credit Facility has been duly
authorized, executed and delivered by the Company and the
Guarantors (other than Delchamps, SCSI, Interstate and DAC);
(xiv) to such counsel's knowledge, neither the Company
nor any of the Guarantors (other than Delchamps, SCSI, Interstate
and DAC) is in violation of its respective articles of
incorporation or by-laws or in default in the performance of any
agreement, indenture or other instrument to which the Company or
any Guarantor (other than Delchamps, SCSI, Interstate and DAC) is
a party or by which any of their respective properties are bound
that would result in any Material Adverse Effect on the conduct
of the business of the Company and its subsidiaries, taken as a
whole; and
(xv) the execution, delivery and performance of the
Merger Agreement, this Agreement and the other Operative
Documents by the Company and each of the Guarantors (other than
Delchamps, SCSI, Interstate and DAC) will not (A) require any
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental
body, except as specifically referenced in Section 3.4 of the
Merger Agreement and the related Disclosure Schedule attached
thereto and except for such consents, approvals, authorizations
or orders under (1) the Securities Act and state securities or
"blue sky" laws and regulations, (2) the Trust Indenture Act of
1939, as amended, (3) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (4)
applicable Environmental Laws (as defined below), (5) the filings
with and approvals by the Secretary of State of the State of
Alabama of the articles of and certificates of merger, relating
to the Delchamps Acquisition, and (6) state and local law with
respect to the obtaining of new permits or licenses for the sale
of tobacco, alcohol, pharmaceuticals, lottery tickets, food
services and health and similar regulated items, (B) conflict
with the articles of incorporation or by-laws of the Company or
any of the Guarantors (other than Delchamps, SCSI, Interstate and
DAC), (C) to such counsel's knowledge, conflict with or
constitute a breach of the terms or provisions of, or a default
under, any material agreement, indenture or other instrument to
which the Company or any of the Guarantors (other than Delchamps,
SCSI, Interstate and DAC) is a party or by which any of their
respective properties are bound, except as would not have a
Material Adverse Effect on the Company and its subsidiaries,
taken as a whole, (D) to such counsel's knowledge, result in a
material violation or conflict with any laws or administrative
regulations or rulings that are
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<PAGE>
applicable to the Company or any Guarantor (other than Delchamps,
SCSI, Interstate and DAC) or to their respective properties, or
(E) result in a material violation of any court decrees which
have been identified by certificate of the Company to such
counsel as specifically applicable to the Company or any of the
Guarantors (other than Delchamps, SCSI, Interstate and DAC) or to
their respective properties which would have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole;
except that the opinions set forth in the within clauses (A) and
(D) are based on only those statutes, rules or regulations which,
in the opinion of such counsel, are customarily applicable to
securities underwriting and merger transactions; and except that
the opinions set forth in this paragraph 9(f)(xv) will not
include any opinion as to the enforceability of the Merger
Agreement, this Agreement or the other Operative Documents.
(g) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers), dated the Closing Date, of Maynard, Cooper & Gale, P.C.,
counsel to Interstate and DAC, substantially to the effect that:
(i) each of Interstate and DAC is a corporation duly
incorporated, validly existing and in good standing under the
laws of the State of Alabama and has the corporate power and
authority to carry on its business as described in the Offering
Memorandum and to own, lease and operate its properties as
described in the Offering Memorandum;
(ii) this Agreement, the Indenture, the Registration
Rights Agreement and the Senior Credit Facility have each been
duly authorized, executed and delivered by Interstate and DAC,
and the DAC Senior Note Guaranty, the DAC Supplemental Indenture
and the Merger Agreement have been duly authorized, executed and
delivered by DAC;
(iii) the Subsidiary Guarantees have been duly
authorized by Interstate and DAC;
(iv) all of the outstanding shares of capital stock of
DAC have been duly authorized and validly issued and are fully
paid, non-assessable and not subject to any preemptive or similar
rights; and
(v) the execution and delivery by Interstate of the
Operative Documents, and by DAC of the Operative Documents and
the Merger Agreement, does not and, if Interstate or DAC, as the
case may be, were to perform on the date hereof its obligations
under the Operative Documents, such performance would not, (i)
conflict with the Articles of Incorporation or Bylaws of
Interstate or DAC, as the case may be, or (ii) to such counsel's
actual knowledge with independent investigation, (A) require any
consent, approval, authorization or other order of any court,
regulatory body, administrative agency or other governmental body
of the State of Alabama (except as for such consents, approvals,
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authorizations or orders required under state securities or "blue
sky" laws and regulations, and, with respect to performance only,
required for the normal ordinary conduct of the business of
Interstate or DAC, as the case may be, such as permits or
licenses for the sale of tobacco, alcohol, pharmaceuticals, food
and food services, health permits, environmental permits and
zoning approvals), or (B) violate or conflict with any laws or
administrative regulations or rulings of the State of Alabama
that are applicable to Interstate or DAC, as the case may be;
except that the opinions set forth pursuant to this paragraph
9(g)(v) will not include any opinion as to the enforceability of
the Operative Documents.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion (satisfactory to the Initial Purchasers and counsel for the
Initial Purchasers), dated the Closing Date, of Hand Arendall, L.L.C., counsel
to Delchamps, substantially to the effect that:
(i) Delchamps is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Alabama and has the corporate power and authority to carry on
its business as currently conducted;
(ii) Delchamps is duly qualified and in good standing
as a foreign corporation authorized to do business in each of the
states of Florida, Louisiana and Mississippi;
(iii) the Subsidiary Guarantee of Delchamps has been
duly authorized by Delchamps;
(iv) the Indenture has been duly authorized, executed
and delivered by Delchamps;
(v) this Agreement has been duly authorized, executed
and delivered by Delchamps;
(vi) the Registration Rights Agreement has been duly
authorized, executed and delivered by Delchamps;
(vii) the Subsidiary Guarantees to be endorsed on the
New Senior Subordinated Notes have been duly authorized by
Delchamps;
(viii) the Senior Credit Facility has been duly
authorized, executed and delivered by Delchamps;
(ix) the Supplemental Indenture dated September 15,
1997 between Delchamps and Marine Midland Bank has been duly
authorized by Delchamps;
(x) the Senior Guarantee dated as of September 15,
1997 has been duly authorized by Delchamps;
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(xi) to such counsel's knowledge (and without
expressing an opinion with respect to the effect of the Merger
Agreement contemplated by the Operative Documents), Delchamps is
not in violation of its Articles of Incorporation or Bylaws and,
based solely on the Officer's Certificate, Delchamps is not in
default in the performance of any obligation, agreement or
condition contained in any material bond, debenture, note or any
other evidence of material indebtedness or in any other material
agreement, indenture or instrument (A) material to the conduct of
the business of Delchamps and its subsidiaries, taken as a whole,
(B) material to the conduct of the business of Delchamps and its
subsidiaries, taken as a whole, immediately following the
Delchamps Acquisition, (C) by which Delchamps', or any of its
subsidiaries' property is bound or (D) by which any of
Delchamps', or any of its subsidiaries' property will be bound
following the Delchamps Acquisition; and
(xii) the execution, delivery and performance of the
Operative Documents by Delchamps, compliance by Delchamps with
all provisions thereof (except that such counsel expresses no
opinion with respect to the Merger contemplated thereby) and the
consummation of the transactions contemplated thereby will not
require any consent, approval, authorization or other order of
any court, regulatory body, administrative agency or other
governmental body of the State of Alabama (except as such may be
required under state securities or "blue sky" laws and
regulations) and will not conflict with or constitute a breach of
the terms or provisions of, or a default under, the Articles of
Incorporation or Bylaws of Delchamps or, based solely on the
Officer's Certificate, of any material agreement, indenture or
other instrument to which Delchamps is a party or by which
Delchamps or its properties are bound, or violate or conflict
with any laws or administrative rulings or court decrees
applicable to Delchamps or its properties, which violations or
conflicts would reasonably be expected to have a Material Adverse
Effect. The opinions in this paragraph 9(h)(xii) are subject to
the fact that such counsel have done no independent research of
Alabama law with regard to the legal opinions in this opinion and
same are based solely on such counsel's knowledge of Alabama law
and without further research or inquiry.
With respect to all opinions of such counsel expressed pursuant
to paragraphs 9(e), (f), (g) and (h), such opinions are to be based upon the
assumption that no actions, events, occurrences or circumstances by, affecting
or concerning any of the Company or Guarantors occurred or existed prior to the
effective time of the Delchamps Tender Offer which would cause any inaccuracy
in, conflict with, or contravention of, in whole or in part, any of the opinions
expressed.
With respect to the opinions of counsel expressed pursuant to
paragraphs 9(e), (f), (g) and (h) as "within the knowledge of such counsel,"
such opinions are to be interpreted as conveying that, during the participation
of such counsel in the preparation, negotiation, execution and performance of
the Merger Agreement, in connection with such
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counsel's representation of the Company and the Guarantors, but without making
any independent investigation or verification, no information has come to the
attention of the attorneys of such firm that have had substantive involvement in
the preparation, negotiation, execution and performance of the Merger Agreement
to give any such attorney conscious awareness and actual knowledge of any facts
or law contrary to the statements and opinions so expressed. To the extent the
knowledge of such counsel is qualified by "after reasonable inquiry," such
inquiry is limited to the appropriate officers and records of the Company and
the Guarantors.
In rendering the opinions set forth in paragraphs 9(f)(xv),
9(g)(xiii) and 9(h)(xiii), such counsel may state that the opinions, with your
permission, assume that all courts of competent jurisdiction would enforce all
agreements, indentures or other instruments as written but for all purposes
would apply the internal laws of the State of Mississippi or Alabama, as
applicable, without giving effect to any choice of law provisions contained
therein or any choice of law principles which would result in application of the
internal laws of any other state.
(i) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(j) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers from (i) Deloitte & Touche L.L.P., independent public
accountants for the Company and (ii) KPMG Peat Marwick L.L.P., independent
public accountants for Delchamps, in each case containing the information and
statements of the type ordinarily included in accountants' "comfort letters" to
the Initial Purchasers with respect to the financial statements and certain
financial information contained in the Offering Memorandum.
(k) The Senior Subordinated Notes shall have been approved by
the NASD for trading and duly listed in PORTAL.
(l) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company, the Guarantors and the Trustee (provided, that with respect to
Delchamps and SCSI, such counterpart may be delivered subject to the
Consummation of the Delchamps Tender Offer).
(m) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company and the Guarantors
(provided, that with respect to Delchamps and SCSI, such counterpart may be
delivered subject to the Consummation of the Delchamps Tender Offer).
(n) The Company and the Guarantors shall have executed this
Agreement and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company and the Guarantors (provided, that with
respect to Delchamps and SCSI, such counterpart may be delivered subject to the
Consummation of the Delchamps Tender Offer).
(o) The Company and the subsidiaries of the Company that are
obligors thereunder shall have entered into the Senior Credit Facility (the form
and substance of
31
<PAGE>
which shall be reasonably acceptable to the Initial Purchasers) and the Initial
Purchasers shall have received counterpart, conformed as executed, thereof and
of all other documents and agreements entered into in connection therewith
(provided, that with respect to Delchamps and SCSI, such counterparts may be
delivered subject to the Consummation of the Delchamps Tender Offer).
(p) The Initial Purchasers shall have received a copy of the
Merger Agreement, with all schedules, exhibits and amendments thereto, certified
by an executive officer of the Company as a true, correct and complete copy as
of the date hereof.
(q) Each condition to the closing contemplated by the Senior
Credit Facility (other than the issuance and sale of the Senior Subordinated
Notes and Subsidiary Guarantees pursuant hereto) shall have been satisfied or
waived. There shall exist at and as of the Closing Date (after giving effect to
the transactions contemplated by this Agreement and the Merger Agreement) no
conditions that would constitute a default (or an event that with notice or the
lapse of time, or both, would constitute a default) under the Senior Credit
Facility. On the Closing Date, the closing under the Senior Credit Facility
shall have been consummated on terms that conform in all material respects to
the description thereof in the Offering Memorandum and the Initial Purchasers
shall have received evidence satisfactory to the Initial Purchasers of the
consummation thereof.
(r) Each condition to the closing of the Delchamps Tender Offer
contemplated by the Merger Agreement (other than the issuance and sale of the
Senior Subordinated Notes and the Subsidiary Guarantees pursuant hereto and the
closing under the Senior Credit Facility) shall have been satisfied or waived.
There shall exist at and as of the Closing Date (after giving effect to the
transactions contemplated by this Agreement and the Senior Credit Facility) no
conditions that would constitute a default (or an event that with notice or the
lapse of time, or both, would constitute a default) under the Merger Agreement.
On the Closing Date, the Delchamps Tender Offer shall have been consummated on
terms that conform in all material respects to the description thereof in the
Offering Memorandum and the Initial Purchasers shall have received evidence
satisfactory to the Initial Purchasers of the consummation thereof.
(s) The Company shall have received the consent of the holders of
at least a majority in principal amount of the outstanding 12% Senior Notes due
2006 of the Company (the "Senior Notes"), excluding any Senior Notes owned by
the Company, any Guarantor or any affiliate of the Company or any Guarantor, to
approve certain amendments to the indenture, dated March 5, 1996 among the
Company, the guarantors named therein and Marine Midland Bank, as trustee,
governing the Senior Notes (the "Consent Solicitation").
(t) Latham & Watkins shall have been furnished with such
documents, in addition to those set forth above, as they may reasonably require
for the purpose of enabling them to review or pass upon the matters referred to
in this Section 9 and in order to evidence the accuracy, completeness or
satisfaction in all material respects of any of the representations, warranties
or conditions herein contained.
(u) Prior to the Closing Date, the Company shall have furnished
to the Initial Purchasers such further information, certificates and documents
as the Initial Purchasers may reasonably request.
32
<PAGE>
(v) The Company shall not have failed at or prior to the Closing
Date to perform or comply with any of the agreements herein contained and
required to be performed or complied with by the Company at or prior to the
Closing Date.
10. CONDITIONS OF THE COMPANY'S AND THE GUARANTORS' OBLIGATIONS. The
obligations of the Company and the Guarantors to sell the Senior Subordinated
Notes and issue the Subsidiary Guarantees under this Agreement are subject to
the satisfaction to each of the following conditions:
(a) Each condition to the closing of the Delchamps Tender Offer
contemplated by the Merger Agreement (other than the issuance and sale of the
Senior Subordinated Notes and Subsidiary Guarantees pursuant hereto and the
closing of the Senior Credit Facility) shall have been satisfied or waived.
There shall exist at and as of the Closing Date (after giving effect to the
transactions contemplated by this Agreement and the Senior Credit Facility) no
conditions that would constitute a default (or an event that with notice or the
lapse of time, or both, would constitute a default) under the Merger Agreement.
On the Closing Date, the Delchamps Tender Offer shall have been consummated on
terms that conform in all material respects to the description thereof in the
Offering Memorandum and the Company shall have received evidence satisfactory to
the Company of the consummation thereof.
(b) The Consent Solicitation shall have been consummated.
(c) The Initial Purchasers shall have delivered payment to the
Company for the Senior Subordinated Notes pursuant to Section 4 of this
Agreement.
(d) All of the representations and warranties of the Initial
Purchasers shall be true and correct in all material respects at and as of the
Closing Date and the Initial Purchasers shall not have failed at or prior to the
Closing Date to perform or comply with any of the agreements herein contained
and required to be performed or complied with by the Initial Purchasers at or
prior to the Closing Date.
(e) No injunction, restraining order, action, statute, rule or
regulation of any Governmental Authority shall have been issued as of the
Closing Date that would prevent or interfere with the issuance of the Senior
Subordinated Notes hereunder or subject the Company to any material penalty if
the Senior Subordinated Notes were to be issued and sold hereunder.
11. EFFECTIVENESS OF AGREEMENT AND TERMINATION. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto other than Delchamps and SCSI.
This Agreement may be terminated at any time prior to the Closing Date
by the Initial Purchasers by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchasers' judgment, is material and adverse and, in the Initial Purchasers'
judgment, makes it impracticable to market the Senior Subordinated Notes on the
terms and in the manner contemplated in the Offering Memorandum, (ii) the
suspension or material limitation of trading in securities or other instruments
on the New York Stock Exchange, the American Stock
33
<PAGE>
Exchange, the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange, the Chicago Board of Trade or the Nasdaq National Market or limitation
on prices for securities or other instruments on any such exchange or the Nasdaq
National Market, (iii) the suspension of trading of any securities of the
Company or any Guarantor on any exchange or in the over-the-counter market, (iv)
the enactment, publication, decree or other promulgation of any federal or state
statute, regulation, rule or order of any court or other governmental authority
which in your opinion materially and adversely affects, or will materially and
adversely affect, the business, prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, (v) the
declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date either of the Initial Purchasers shall fail or
refuse to purchase the Senior Subordinated Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Senior
Subordinated Notes which such defaulting Initial Purchaser or Initial
Purchasers, as the case may be, agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of the Senior Subordinated
Notes to be purchased on such date by all Initial Purchasers, each
non-defaulting Initial Purchaser shall be obligated severally, in the proportion
which the principal amount of the Senior Subordinated Notes set forth opposite
its name in Schedule B bears to the aggregate principal amount of the Senior
Subordinated Notes which all the non-defaulting Initial Purchasers, as the case
may be, have agreed to purchase, or in such other proportion as you may specify,
to purchase the Senior Subordinated Notes which such defaulting Initial
Purchaser or Initial Purchasers, as the case may be, agreed but failed or
refused to purchase on such date; PROVIDED that in no event shall the aggregate
principal amount of the Senior Subordinated Notes which any Initial Purchaser
has agreed to purchase pursuant to Section 2 hereof be increased pursuant to
this Section 11 by an amount in excess of one-ninth of such principal amount of
the Senior Subordinated Notes without the written consent of such Initial
Purchaser. If on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase the Senior Subordinated Notes and the aggregate
principal amount of the Senior Subordinated Notes with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of the
Senior Subordinated Notes to be purchased by all Initial Purchasers and
arrangements satisfactory to the Initial Purchasers and the Company for purchase
of such the Senior Subordinated Notes are not made within 48 hours after such
default, this Agreement will terminate without liability on the part of any
non-defaulting Initial Purchaser and the Company. In any such case which does
not result in termination of this Agreement, either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Offering
Memorandum or any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Initial Purchaser
from liability in respect of any default of any such Initial Purchaser under
this Agreement.
12. MISCELLANEOUS. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or any
Guarantor, to 1770 Ellis Avenue, Suite 200, Jackson, Mississippi 39204 and (ii)
if to the Initial Purchasers, Donaldson, Lufkin & Jenrette Securities
Corporation, 277 Park Avenue, New York, New York 10172, Attention: Syndicate
Department, or in any case to such other address as the person to be notified
may have requested in writing.
34
<PAGE>
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Senior Subordinated Notes, regardless of (i) any investigation, or
statement as to the results thereof, made by or on behalf of the Initial
Purchasers, the officers or directors of the Initial Purchasers, any person
controlling the Initial Purchasers, the Company, any Guarantor, the officers or
directors of the Company or any Guarantor, or any person controlling the Company
or any Guarantor, (ii) acceptance of the Senior Subordinated Notes and payment
for them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the Initial Purchasers
because of any failure or refusal on the part of the Company or the Guarantors
to comply with the terms or to fulfill any of the conditions of this Agreement,
the Company and the Guarantors, jointly and severally, agree to reimburse the
Initial Purchasers for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them (provided that Delchamps
and SCSI shall not be responsible for any of the fees and expenses described in
this paragraph unless and until the Delchamps Tender Offer is Consummated).
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof.
The Company and each Guarantor also agree, jointly and severally, to reimburse
each Initial Purchaser and its officers, directors and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation its rights under this Section 12).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Guarantors,
the Initial Purchasers, the Initial Purchasers' directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Senior Subordinated Notes from the Initial
Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
35
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers as of the date
first above written.
Very truly yours,
JITNEY-JUNGLE STORES OF AMERICA, INC.
By:
-----------------------------------
Name:
Title:
SOUTHERN JITNEY JUNGLE COMPANY
By:
-----------------------------------
Name:
Title:
MCCARTY-HOLMAN CO., INC.
By:
-----------------------------------
Name:
Title:
INTERSTATE JITNEY-JUNGLE STORES, INC.
By:
-----------------------------------
Name:
Title:
PUMP AND SAVE, INC.
By:
-----------------------------------
Name:
Title:
<PAGE>
DELTA ACQUISITION CORPORATION
By:
-----------------------------------
Name:
Title:
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written
by Donaldson, Lufkin & Jenrette
Securities Corporation on behalf
of the Initial Purchasers.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: ----------------------------------
Name:
Title:
<PAGE>
The foregoing Purchase Agreement
is hereby agreed to and accepted
as of the Consummation of the Delchamps Tender Offer by
Delchamps, Inc. and Supermarket Cigarette
Sales, Inc., each a Guarantor, it
being understood that the provisions
thereof applicable to and binding
upon the Guarantors shall be applicable
to and binding upon Delchamps, Inc. and
Supermarket Cigarette Sales, Inc.
as of and effective immediately upon
Consummation of the Delchamps Tender Offer.
DELCHAMPS, INC.
By: ----------------------------------
Name:
Title:
SUPERMARKET CIGARETTE SALES, INC.
By: ----------------------------------
Name:
Title:
<PAGE>
SCHEDULE A
GUARANTORS
Southern Jitney Jungle Company
McCarty-Holman Co., Inc.
Interstate Jitney-Jungle Stores, Inc.
Pump and Save, Inc.
Delta Acquisition Corporation
Delchamps, Inc. (simultaneously upon Consummation of the Delchamps Tender Offer)
Supermarket Cigarette Sales, Inc. (simultaneously upon Consummation of the
Delchamps Tender Offer)
S-1
<PAGE>
SCHEDULE B
Principal Amount
Initial Purchaser of Notes
----------------- ------------
Donaldson, Lufkin & Jenrette
Securities Corporation.................................... $140,000,000
Credit Suisse First Boston.................................... $ 60,000,000
Total..................................................... $200,000,000
============
S-2
<PAGE>
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
A-1
<PAGE>
Exhibit 12.1
Calculation of Ratio of Earnings to Fixed Charges (dollars in thousands)
<TABLE>
<CAPTION>
12 WEEKS
FISCAL YEAR ENDED ENDED
----------------------------------------------------------- ---------
MAY 1, APRIL 30, APRIL 29, APRIL 27, MAY 3, JULY 20,
1993 1994 1995 1996 1997 1996
--------- ----------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Earnings:
Income before taxes................................... 26,471 27,135 30,220 22,655 1,085 2,473
Add fixed charges..................................... 12,658 14,756 14,183 16,519 40,763 9,190
Earnings........................................... 39,129 41,891 44,403 39,174 41,848 11,663
Fixed Charges:
Interest expense...................................... 9,920 11,626 10,823 13,000 36,215 8,378
Amort of deferred financing costs..................... 963
Other adjustments (a)................................. 2,738 3,130 3,360 3,519 3,585 812
Fixed charges...................................... 12,658 14,756 14,183 16,519 40,763 9,190
Ratio of earnings to fixed charges.................... 3.1 2.8 3.1 2.4 1.0 1.3
<CAPTION>
JULY 26,
1997
---------
<S> <C>
Earnings:
Income before taxes................................... 3,443
Add fixed charges..................................... 9,290
Earnings.............................................. 12,733
Fixed Charges:
Interest expense...................................... 8,241
Amort of deferred financing costs..................... 222
Other adjustments (a)................................. 827
Fixed charges......................................... 9,290
Ratio of earnings to fixed charges.................... 1.4
</TABLE>
(a) Other adjustments includes a portion of rent expense that manatement
considers to be interest.
Note: The ratio of earnings to fixed charges is computed by adding fixed
charges to earnings (loss) before taxes on income and dividing that sum by
the fixed charges. Fixed charges consist of interest (including
amortization costs) and a portion of rent expense that management
considers to be interest.
<PAGE>
Exhibit 21.1
JITNEY-JUNGLE STORES OF AMERICA, INC.
Subsidiaries
State or Other
Jurisdiction of
Name Incorporation
- ---- ---------------
Interstate Jitney-Jungle Stores, Inc. Alabama
McCarty-Holman Co., Inc. Mississippi
Southern Jitney Jungle Company Mississippi
Pump And Save, Inc. Mississippi
Delta Acquisition Corporation Alabama
Supermarket Cigarette Sales, Inc. Louisiana
Jitney-Jungle Bakery, Inc. Mississippi
Delchamps, Inc. Alabama
II-
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Jitney-Jungle Stores
of America, Inc. on Form S-4 of our report dated July 10, 1997, appearing in
the Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
-----------------------
Jackson, Mississippi
October 23, 1997
<PAGE>
EXHIBIT 23.4
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
Jitney-Jungle Stores of America, Inc.
We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Atlanta, Georgia
October 29, 1997
<PAGE>
Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST
INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
----------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
----------------------
MARINE MIDLAND BANK
(Exact name of trustee as specified in its charter)
New York 16-1057879
(Jurisdiction of incorporation (I.R.S. Employer
or organization if not a U.S. Identification No.)
national bank)
140 Broadway, New York, N.Y. 10005-1180
(212) 658-1000 (Zip Code)
(Address of principal executive offices)
Charles E. Bauer
Vice President
Marine Midland Bank
140 Broadway
New York, New York 10005-1180
Tel: (212) 658-1792
(Name, address and telephone number of agent for service)
JITNEY-JUNGLE STORES OF AMERICA, INC.
(Exact name of obligor as specified in its charter)
Mississippi 64-0280539
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1770 Ellis Avenue, Suite 200
Jackson, Mississippi 39204
(601) 965-8600 (Zip Code)
(Address of principal executive offices)
10_%SENIOR SUBORDINATED NOTES DUE 2007
(Title of Indenture Securities)
<PAGE>
General
Item 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervisory
authority to which it is subject.
State of New York Banking Department.
Federal Deposit Insurance Corporation, Washington, D.C.
Board of Governors of the Federal Reserve System,
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. AFFILIATIONS WITH OBLIGOR.
If the obligor is an affiliate of the trustee, describe
each such affiliation.
None
<PAGE>
Item 16. LIST OF EXHIBITS.
EXHIBIT
- -------
T1A(i) * - Copy of the Organization Certificate of
Marine Midland Bank.
T1A(ii) * - Certificate of the State of New York Banking
Department dated December 31, 1993 as to the
authority of Marine Midland Bank to commence
business.
T1A(iii) - Not applicable.
T1A(iv) * - Copy of the existing By-Laws of Marine
Midland Bank as adopted on January 20, 1994.
T1A(v) - Not applicable.
T1A(vi) * - Consent of Marine Midland Bank required by
Section 321(b) of the Trust Indenture Act of
1939.
T1A(vii) - Copy of the latest report of condition of the
trustee (June 30, 1997), published pursuant
to law or the requirement of its supervisory
or examining authority.
T1A(viii) - Not applicable.
T1A(ix) - Not applicable.
* Exhibits previously filed with the Securities and Exchange Commission
with Registration No. 33-53693 and incorporated herein by reference
thereto.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Marine Midland Bank, a banking corporation and trust company organized under the
laws of the State of New York, has duly caused this statement of eligibility to
be signed on its behalf by the undersigned, thereunto duly authorized, all in
the City of New York and State of New York on the 16th day of October, 1997.
MARINE MIDLAND BANK
By: /s/ Frank J. Godino
----------------------------------
Frank J. Godino
Assistant Vice President
<PAGE>
EXHIBIT T1A (vii)
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL Expires March 31, 1999
- --------------------------------------------------------------------------------
1 This financial information has not /1/
been reviewed, or confirmed for accuracy
or relevance, by the Federal Reserve System. Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES--FFIEC 031
<TABLE>
<CAPTION>
REPORT AT THE CLOSE OF BUSINESS JUNE 30, 1997
<S> <C>
This report is required by law; 12 U.S.C. Section 324 This report form is to be filed by banks with branches
(State member banks); 12 U.S.C. Section 1817 (State and consolidated subsidiaries in U.S. territories and
nonmember banks); and 12 U.S.C. Section 161 (National possessions, Edge or Agreement subsidiaries, foreign
banks). branches, consoli-dated foreign subsidiaries, or
International Banking Facilities.
- ---------------------------------------------------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed The Reports of Condition and Income are to be prepared in
by an authorized officer and the Report of Condition must accordance with Federal regulatory authority
be attested to by not less than two directors (trustees) instructions. NOTE: These instructions may in some cases
for State nonmember banks and three directors for State differ from generally accepted accounting principles.
member and National Banks.
We, the undersigned directors (trustees), attest to the
I, Gerald A. Ronning, Executive VP & Controller correctness of this Report of Condition (including the
--------------------------------------------- supporting schedules) and declare that it has been
Name and Title of Officer Authorized to Sign Report examined by us and to the best of our knowledge and
belief has been prepared in conformance with the
of the named bank do hereby declare that these Reports of instructions issued by the appropriate Federal regulatory
Condition and Income (including the supporting schedules) authority and is true and correct.
have been prepared in conformance with the instructions
issued by the appropriate Federal regulatory authority /s/ James H. Cleave
and are true to the best of my knowledge and believe. -------------------------------------
Director (Trustee)
/s/ Gerald A. Ronning
------------------------------------------- /s/ Bernard J. Kennedy
Signature of Officer Authorized to Sign Report -------------------------------------
Director (Trustee)
7/25/97
- ----------------------------------------------- /s/ Malcolm Burnett
Date of Signature -------------------------------------
Director (Trustee)
- ---------------------------------------------------------------------------------------------------------------------------
FOR BANKS SUBMITTING HARD COPY REPORT FORMS:
STATE MEMBER BANK: Return the original and one copy to
the appropriate Federal Reserve District Bank. NATIONAL BANKS: Return the original only in the SPECIAL
RETURN ADDRESS ENVELOPE PROVIDED. If express mail is
STATE NONMEMBER BANKS: Return the original only in the used in lieu of the special return address envelope,
SPECIAL RETURN ADDRESS ENVELOPE PROVIDED. If express return the original only to the FDIC, c/o Quality Data
mail is used in lieu of the special return address Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
envelope, return the original only to the FDIC, c/o
Quality Data Systems, 2127 Espey Court, Suite 204,
Crofton, MD 21114.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
FDIC Certificate Number / 0 / 0 / 5 / 8 / 9 /
----------------------
(RCRI 9030)
<PAGE>
NOTICE
This form is intended to assist institutions with state publication
requirements. It has not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your state publication
requirements.
REPORT OF CONDITION
Consolidating domestic and foreign subsidiaries of the
Marine Midland Bank of Buffalo
Name of Bank City
in the state of New York, at the close of business June 30, 1997
ASSETS
Thousands of dollars
Cash and balances due from depository
institutions:
Noninterest-bearing balances
currency and coin.................................... $1,044,050
Interest-bearing balances ........................... 2,065,434
Held-to-maturity securities.......................... 0
Available-for-sale securities........................ 3,576,879
Federal funds sold and securities purchased
under agreements to resell........................... 3,311,653
Loans and lease financing receivables:
Loans and leases net of unearnedincome............... 20,801,413
LESS: Allowance for loan and lease losses............ 429,338
LESS: Allocated transfer risk reserve................ 0
Loans and lease, net of unearned
income, allowance, and reserve....................... 20,372,075
Trading assets....................................... 982,806
Premises and fixed assets (including
capitalized leases).................................. 221,952
Other real estate owned................................. 8,293
Investments in unconsolidated
subsidiaries and associated companies................... 0
Customers' liability to this bank on
acceptances outstanding................................. 26,490
Intangible assets....................................... 495,034
Other assets............................................ 530,288
Total assets............................................ 32,634,954
LIABILITIES
Deposits:
In domestic offices.................................. 20,705,098
Noninterest-bearing.................................. 4,382,353
<PAGE>
Interest-bearing..................................... 16,322,745
In foreign offices, Edge, and Agreement
subsidiaries, and IBFs.................................. 3,458,100
Noninterest-bearing.................................. 0
Interest-bearing..................................... 3,458,100
Federal funds sold and securities purchased
under agreements to resell........................... 3,784,599
Demand notes issued to the U.S. Treasury................ 300,000
Trading Liabilities..................................... 169,194
Other borrowed money:
With a remaining maturity of one year or less........ 878,716
With a remaining maturity of more than
one year through three years......................... 133,670
With a remaining maturity of more than three years... 112,907
Bank's liability on acceptances executed and
outstanding............................................. 26,490
Subordinated notes and debentures....................... 497,648
Other liabilities....................................... 336,900
Total liabilities....................................... 30,403,322
Limited-life preferred stock and related surplus........ 0
EQUITY CAPITAL
Perpetual preferred stock and related surplus........... 0
Common Stock............................................ 205,000
Surplus................................................. 1,983,530
Undivided profits and capital reserves.................. 38,878
Net unrealized holding gains (losses)
on available-for-sale securities........................ 4,224
Cumulative foreign currency translation adjustments..... 0
Total equity capital.................................... 2,231,632
Total liabilities, limited-life
preferred stock, and equity capital..................... 32,634,954
