<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended DECEMBER 31, 1994
or
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___________________ to ___________________
Commission file number 1-8140
FLEMING COMPANIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Oklahoma 48-0222760
------------------------------------ --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6301 Waterford Boulevard, Box 26647
Oklahoma City, Oklahoma 73126
- -------------------------------------- --------------------------
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 840-7200
--------------------------
Securities registered pursuant to Section 12(b) of the Act:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
------------------- -------------------------
Common Stock, $2.50 Par Value and New York Stock Exchange
Common Stock Purchase Rights Pacific Stock Exchange
Chicago Stock Exchange
9.5% Debentures New York Stock Exchange
- -------------------------------------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act: NONE
-------------------
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K.
------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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As of March 3, 1995, 37,429,000 common shares were outstanding.
The aggregate market value of the common shares (based upon the closing
price of these shares on the New York Stock Exchange) of Fleming Companies,
Inc. held by nonaffiliates was approximately $750 million.
DOCUMENTS INCORPORATED BY REFERENCE
A portion of Part III has been incorporated by reference from the
registrant's proxy statement dated March 17, 1995, in connection with
its annual meeting of shareholders to be held on May 3, 1995.
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PART I
ITEM 1. BUSINESS
Fleming Companies, Inc. (hereinafter referred to as "Fleming," the
"registrant" or the "company") was incorporated in Kansas in 1915 and in 1981
was reincorporated as an Oklahoma corporation. Fleming is engaged primarily
in the food marketing and distribution industry with both wholesale and
retail operations. In July 1994, pursuant to a stock purchase agreement
between the company and Franz Haniel & Cie. GmbH, Fleming acquired all of the
outstanding stock of Haniel Corporation ("Haniel"). Haniel, its sole direct
subsidiary, Scrivner, Inc., and Scrivner, Inc.'s subsidiaries are collectively
referred to herein as "Scrivner." Fleming paid $388 million in cash and
refinanced substantially all of Scrivner's existing indebtedness (approximately
$670 million in aggregate principal and premium). In connection with the
acquisition, Fleming refinanced approximately $340 million in aggregate
principal amount of its own indebtedness.
The company currently serves as the principal source of supply for
approximately 10,000 retail food stores, including approximately 3,700
supermarkets. Company supplied supermarkets have a total area of
approximately 100 million square feet. The company serves food stores of
various sizes operating in a wide variety of formats, including conventional
full-service stores, supercenters, price impact stores (including warehouse
stores), combination stores (which typically carry a higher proportion of
non-food items) and convenience stores. These food stores are predominantly
independent stores, many of which operate and advertise under a common name
to promote greater consumer recognition. Fleming's retail customers also
include national and regional corporate chains. With customers in 43 states
and several international markets, the company services a geographically
diverse area.
The company's food distribution operations offer a wide variety of national
brand and private label products, including groceries, meat, dairy and
delicatessen products, frozen foods, produce, bakery goods and a variety of
general merchandise and related items. In addition, Fleming offers a wide
range of support services to its customers to help them compete more
effectively with other food retailers in their respective market areas.
In addition, the company has a significant presence in food retailing,
owning and operating 350 retail food stores, including 270 supermarkets with
an aggregate of approximately 9.5 million square feet. Company-owned stores
operate under a number of names and vary in format from super warehouse
stores and conventional supermarkets to convenience stores.
The company operates in two segments: food distribution and retail store
operations. Segment information as required by Statement of Financial
Accounting Standards No. 14 is presented in Item 8. Financial Statements and
Supplementary Data.
THE CONSOLIDATION, REORGANIZATION AND RE-ENGINEERING PLAN
Fleming has determined that its performance during the past several years,
along with the performance of a number of its retail customers, has been
unfavorably affected by a number of changes taking place within the food
marketing and distribution industry, which has become increasingly
competitive in an environment of relatively static over-all demand.
Alternative format food stores (such as warehouse stores and supercenters)
have gained retail food market share at the expense of traditional
supermarket operators, including independent grocers, many of whom are
customers of the company. Vendors, seeking to ensure that more of their
promotional dollars are used by retailers to increase sales volume,
increasingly direct promotional dollars to large self-distributing chains.
The company believes that these changes have led to reduced margins and lower
profitability among many of its customers and at the company itself. Having
identified these market forces, Fleming initiated specific actions to respond
to, and help its retail customers respond to, changes in the marketplace.
In January 1994, Fleming announced the details of a plan to improve
operating performance by consolidating facilities, eliminating regional
operations and re-engineering the distribution and pricing of goods and
services. The company believes consolidation, reorganization and
re-engineering will result in significant cost savings through lower product
handling expenses, lower selling and administrative expenses and reduced
staffing of retailer services (or increased income from retailers to offset
the cost of retailer services). Estimated pre-tax cost savings are expected
to grow to at least $65 million per year beginning in 1997 after the plan has
been fully implemented. The company believes these expense savings and income
offsets will allow it to deliver goods and services to its customers at a
lower all-in cost, while increasing the company's profitability. However,
unforeseen events or circumstances could cause the company to alter planned
work force reductions or facilities consolidations, thereby delaying or
reducing expected cost savings.
CONSOLIDATION. In order to improve operating efficiencies, the company
closed four distribution centers, with the closing of one more facility to be
announced. The business formerly conducted through these closed distribution
centers has been transferred to certain other company facilities. During
1994, approximately 450 associate positions were eliminated through
facilities consolidation.
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OPERATIONAL REORGANIZATION. Historically, Fleming's operations were
organized around geographical divisions each of which functioned as a
separate business unit. Each division contained sales, merchandising, human
resources, distribution, procurement, accounting, store development and
management information functions, and provided services to a number of retail
stores of various formats located within a certain geographical area. As the
first step in its organizational realignment, Fleming closed its regional
administrative offices. This resulted in the elimination of approximately 100
associate positions. Staff functions previously performed at the regional
offices were moved to corporate headquarters, moved into the divisions or
eliminated.
RE-ENGINEERING. Fleming commissioned an internal management task force to
re-engineer Fleming's business processes at both the divisional and corporate
level. The task force made specific re-engineering recommendations, which were
approved by Fleming's Board of Directors, to enhance value-added services and
to eliminate non-value-added services.
The company is reorganizing itself around four core business units:
customer management, retailer services, category marketing and product
supply. Customer management, retailer services, and category marketing
represent the marketing functions of the company. Product supply represents
the procurement and distribution functions of the company. A fifth unit,
support services, will provide a variety of administrative support services
to all of the Company's operations.
Through customer management, the company will manage its relationships
with customers primarily on the basis of customer type instead of on the
basis of geography. This will enable the company to be more effective in
serving its diverse customer base. Through retailer services, the company
will offer retailers the same services it currently offers, except that these
services will be offered on a fee basis to those retailers choosing to
purchase such services. In the past, Fleming has offered many services
without a direct charge but has indirectly charged all customers for such
services. Through category marketing, the company will more efficiently
manage its relationships with vendors, manufacturers and other suppliers,
working to obtain the best possible promotional benefits offered by suppliers
and will pass through directly to retailers 100% of those benefits related to
grocery, frozen foods and dairy products. Through product supply, which will
be comprised of all food distribution centers and operations, the company
will work to provide retailers with the lowest possible "landed" cost of
goods (i.e., the total of cost of product and all related charges plus the
company's distribution fee).
A new flexible marketing plan for grocery, frozen foods and dairy products
will be introduced throughout the company's market areas. The flexible
marketing plan will be based on a new pricing policy whereby retailers will
pay the company's actual cost of acquiring goods, receiving 100% of available
promotional benefits from the vendor arranged by the company, including those
derived from forward buying. Customers will pay all costs incurred by the
company for transportation (which currently are often subsidized by the
company). Instead of paying a basic distribution fee, customers will pay
handling and storage charges, which will be higher than the prior
distribution fee. Additionally, retail customers will pay for all other
retailer services purchased.
The company estimates that the re-engineering process will be
substantially completed by the end of 1996. Re-engineering is currently being
implemented at certain of the company's operations in the western United
States and should be implemented throughout the remainder of the company's
operations over the course of 1995 and 1996.
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PRODUCTS
The company supplies its customers with a full line of national brand
products as well as an extensive range of private and controlled label
products, perishables and non-food items. Controlled labels are those which
the company controls and private labels are those which may be offered only
in stores operating under specific banners, which may or may not be under the
company's control. Among the controlled labels offered by the company are
TV-R-, Hyde Park-R-, Marquee-R-, Bonnie Hubbard-R-, Montco-R-, Best Yet-R-
and Rainbow-R-. Among the private labels handled by the company are IGA-R-,
Piggly Wiggly-R-, and Sentry-R-. Controlled label and private label products
offer both the wholesaler and the retailer opportunities for higher margins as
the costs of national advertising campaigns can be eliminated. The controlled
label program is augmented with marketing and promotional support programs
developed by the company.
Certain categories of perishables also offer both the wholesaler and the
retailer opportunities for improved margins as consumers are generally
willing to pay relatively higher prices for produce and bakery goods and high
quality frozen foods. Furthermore, retailers are increasingly competing for
business through an emphasis on perishables and private label products.
SERVICES TO CUSTOMERS
The company offers value-added services to its customers. These services
include, among others, merchandising and marketing assistance, in-house
advertising, consumer education programs, retail electronic services and
employee training. See also "-- Capital Invested in Customers."
In addition, the company provides its customers with assistance in the
development and expansion of retail stores, including retail site selection
and market surveys; store design, layout, and decor assistance; and equipment
and fixture planning. The company also has expertise in developing sales
promotions, including employee and customer incentive programs, such as
"continuity programs" designed to entice the customer to return regularly to
the store.
SALE TERMS
The company charges customers for products based generally on an agreed
price which includes the company's defined "cost" (which does not give effect
to promotional fees and allowances from vendors), to which is added a fee
determined by the volume of the customer's purchase. In some geographic
areas, product charges are based upon a percentage markup over cost. A
delivery charge is usually added based on order size and mileage from the
distribution center to the customer's store. Payment may be received upon
delivery of the order, or within credit terms that generally are weekly or
semi-weekly.
As part of the re-engineering process and pursuant to its new flexible
marketing plan, the company will begin to charge the actual costs of acquiring
its grocery, frozen food and dairy products while passing through to its
customers all promotional fees and allowances received from vendors. In
addition, the company will charge customers for the costs of transportation
and will charge for handling and storage, which charges will be higher than
the previous basic distribution fee. The company will also begin charging
retailers directly for services for which they formerly paid indirectly. As
a result, the company believes it will lower the cost of products to most of
its customers while increasing the company's profitability.
DISTRIBUTION
The company currently operates 38 distribution centers which are
responsible for the distribution of national brand and private label
groceries, meat, dairy and delicatessen products, frozen foods, produce,
bakery goods and a variety of related food and non-food items. Six general
merchandise distribution centers distribute health and beauty care items and
other non-food items. One distribution center serves convenience stores and
one distribution center handles only dairy, delicatessen and fresh meat
products. Substantially all facilities are equipped with modern material
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handling equipment for receiving, storing and shipping large quantities of
merchandise. As a result of the acquisition of Scrivner, the company has
closed four Scrivner distribution centers, and expects to close an additional
five distribution centers during 1995. Pursuant to the consolidation,
reorganization and re-engineering plan, the company has closed four
distribution centers and will close one additional distribution center.
The company's distribution facilities comprise more than 21 million square
feet of warehouse space. Additionally, the company rents, on a short-term
basis, approximately 7 million square feet of off-site temporary storage
space.
Most distribution divisions operate a truck fleet to deliver products to
customers. The company increases the utilization of its truck fleet by
backhauling products from many suppliers, thereby reducing the number of
empty miles traveled. To further increase its fleet utilization, the company
has made its truck fleet available to other firms on a for-hire carriage
basis. During 1994 and early 1995 the company engaged dedicated contract
carriers to deliver its products to customers from certain distribution
centers.
RETAIL STORES SERVED
The company serves approximately 10,000 retail stores ranging in size from
small convenience outlets to conventional supermarkets, combination units,
price impact stores and large supercenters. Among the stores served are
approximately 3,700 supermarkets with an aggregate of approximately 100
million square feet. Fleming's customers are geographically diverse, with
operations in 43 states and several international markets. The company's
principal customers are supermarkets carrying a wide variety of grocery,
meat, produce, frozen food and dairy products. Most customers also handle an
assortment of non-food items, including health and beauty care products and
general merchandise such as housewares, soft goods and stationery. Most
supermarkets also operate one or more specialty departments such as in-store
bakeries, delicatessens, seafood departments and floral departments.
The company believes that its focus on quality service, broad product
offerings, competitive prices and value-added services enables the company to
maintain long-term customer relationships while attracting new customers. The
company has targeted self-distributing chains and operators of alternative
format stores as sources of incremental sales. These operations have gained
increasing market share in the retail food industry in recent years. The
company currently serves 980 chain stores, compared to 810 at year-end 1993.
In late 1993, Fleming signed a six-year supply agreement with Kmart to serve
new Super Kmart Centers in areas where Fleming has distribution facilities.
The company also licenses or grants franchises to retailers to use certain
trade names such as IGA-R-, Piggly Wiggly-R-, Food 4 Less-R-, Big Star-R-, Big
T-R-, Buy-for-Less-R-, Checkers-R-, Festival Foods-R-, Jubilee Foods-R-,
Jamboree Foods-R-, MEGA MARKET-R-, Minimax-R-, Sentry-TM-, Shop 'n Bag-R-, Shop
'n Kart-R-, Super 1 Foods-R-, Super Save-R-, Super Thrift-R-, Thriftway-R-,
United Supers-R-, and Value King-R-. There are approximately 2,200 food stores
operating under company franchises or licenses.
COMPANY-OWNED STORES
Principally as a result of the acquisition of Scrivner, the number of
company-owned stores increased from 72 at December 25, 1993 to 350 at
December 31, 1994, including 270 supermarkets with an aggregate of
approximately 9.5 million square feet. Company-owned stores are located
in 14 states and are all served by the company's distribution centers.
Formats vary from super warehouse stores and conventional supermarkets to
convenience stores. Generally in the industry, an average super warehouse
store is 58,000 square feet, a conventional supermarket is 23,000 square feet
and a convenience store is 2,500 square feet. All company-owned supermarkets
are designed and equipped to offer a broad selection of both national brands
as well as private label products at attractive prices while maintaining high
levels of service. Most supermarket formats
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have extensive produce sections and complete meat departments together with
one or more specialty departments such as in-store bakeries, delicatessens,
seafood departments and floral departments. Specialty departments generally
produce higher gross margins per selling square foot than general grocery
sections.
The company-owned stores provide added purchasing power as they enable the
company to commit to certain promotional efforts at the retail level. The
company, through its owned stores, is able to retain many of the promotional
savings offered by vendors in exchange for volume increases.
Until recently, the company conducted its retail operations primarily as an
extension of its wholesale business. Each company-owned retail store was managed
by personnel at the distribution center serving such store and did not benefit
from any coordinated retail strategy. The company emphasized wholesale
operations, and many of its retail stores, while making a positive contribution
to overall company profitability through increased wholesale volume, were not
profitable on a stand-alone basis.
In 1993, the company determined that its retail operations were
underperforming and that, as a part of its overall business strategy, the
company would pursue stand-alone profitability in its retail operations. The
company recruited a senior officer to assume responsibility for retail
operating results for all company-owned stores and to focus on the
development of successful retail strategies.
TECHNOLOGY
Fleming has played a leading role in employing technology for internal
operations as well as for its independent retail customers. The company may
enter into agreements with one or more technology partners to maintain this
position.
Over the past three years, Fleming has introduced radio-frequency
terminals in its distribution centers to track inventory, further improve
customer service levels, reduce out-of-stock conditions and obtain other
operational improvements. Most Fleming distribution centers are managed by
computerized inventory control systems, along with warehouse productivity
monitoring and scheduling systems. Fleming intends to add these technological
aids to the Scrivner distribution system. Most of Fleming's truck fleet is
equipped with on-board computers to monitor the efficiency of deliveries to
its customers.
Additonally, the company has developed and is introducing an advanced
on-line communications vehicle, called Visionet, for instant electronic
connection of Fleming with vendors and retailers. Visionet is a retail-driven,
two-way rapid response communication system that ties vendors, product supply,
category managers, local category advisors and retailers together. One of
Visionet's features is the Opportunity Wire, which enables Fleming to
electronically offer retailers unique opportunities to buy products at
advantageous prices as well as assist in coordinating delivery.
SUPPLIERS
The company purchases its products from numerous vendors and growers. As the
largest single customer of many of its suppliers, the company is able to secure
favorable terms and volume discounts on most of its purchases, leading to lower
unit costs. The company purchases products from a diverse group of suppliers and
believes it has adequate and alternative sources of supply for substantially all
of its products.
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CAPITAL INVESTED IN CUSTOMERS
As part of its services to retailers, the company provides capital to
customers in several ways. In making credit and investment decisions, the
company considers many factors, including estimated return on capital, risk
and the benefits to be derived from sustained or increased product sales. Any
equity investment or loan of $250,000 or more must be approved by the
company's business development committee and any investment or loan in excess
of $5 million must be approved by the Board of Directors. For equity
investments, the company has active representation on the customer's board of
directors. The company also conducts periodic credit reviews, receives and
analyzes customers' financial statements and visits customers' locations
regularly. On an ongoing basis, senior management reviews the company's
largest investments and credit exposures.
The company provides capital to certain customers by becoming primarily or
secondarily liable for store leases, by extending credit for inventory
purchases, and by guaranteeing loans and making secured loans to and equity
investments in customers.
STORE LEASES. The company leases stores for sublease to certain customers.
Sublease rentals are generally higher than the base rental to the company. As of
December 31, 1994, the company was the primary lessee of approximately 1,000
retail store locations subleased to and operated by customers. In certain
circumstances, the company also guarantees the lease obligations of certain
customers.
EXTENSION OF CREDIT FOR INVENTORY PURCHASES. The company has supply
agreements with customers in which it invests and, in connection with supplying
such customers, will, in certain circumstances, extend credit for inventory
purchases. Customary trade credits terms are up to seven days; the company has
extended credit for additional periods under certain circumstances.
GUARANTEES AND SECURED LOANS. The company guarantees the obligations of
certain of its customers. Loans are also made to customers primarily for
store expansions or improvements. These loans are typically secured by
inventory and store fixtures, bear interest at rates at or above the prime
rate, and are for terms of up to ten years. During fiscal year 1993 and 1992
Fleming sold, with limited recourse, $68 million and $45 million,
respectively, of notes evidencing such loans. During fiscal years 1993 and
1992, Scrivner sold, with limited recourse, $51 million and $40 million,
respectively, of notes evidencing similar loans. Neither Scrivner nor the
company sold any notes during 1994. The company believes its loans to
customers are illiquid and would not be investment grade if rated.
EQUITY INVESTMENTS. The company has made equity investments in strategic
multi-store customers, which it refers to as Business Development Ventures, and
in smaller operators, referred to as Equity Stores. Equity Store participants
typically retain the right to purchase the company's investment over a five to
ten-year period. Many of the customers in which the company has made equity
investments are highly leveraged, and the company believes its equity
investments are highly illiquid.
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The following table sets forth the components of Fleming's portfolio of
loans to and investments in customers at year end 1994 and 1993.
<TABLE>
<CAPTION>
CUSTOMERS WITH EQUITY INVESTMENTS
---------------------------------------------
TOTAL LOAN
RETAIL TO AND CUSTOMERS
BUSINESS STORES EQUITY IN WITH
DEVELOPMENT EQUITY HELD FOR EQUITY NO EQUITY
VENTURES STORES RESALE CUSTOMERS INVESTMENTS TOTAL
----------- ------ --------- ---------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
1994
- -----
Loans (a) $ 52 $55 $ 1 $108 $267 $375
Equity Investments 45 6 25 76 - 76
---- --- --- ---- ---- ----
Total $ 97 $61 $26 $184 $267 $451
==== === === ==== ==== ====
1993
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Loans (a) $ 78 $55 $ 2 $135 $178 $313
Equity Investments 28 15 12 55 - 55
---- --- --- ---- ---- ----
Total $106 $70 $14 $190 $178 $368
==== === === ==== ==== ====
<FN>
- ------------------------
(a) Includes current portion of loans, which amounts are recorded as
receivables on the company's balance sheet.
</TABLE>
The table does not include the company's investments in customers through
direct financing leases, lease guarantees, operating leases, loan guarantees
or credit extensions for inventory purchases. As of December 31, 1994, the
company's undiscounted obligations under direct financing leases and lease
guarantees were $213 million and $227 million, respectively.
The company has shifted its strategy to emphasize ownership of, rather
than investment in, retail stores. In addition, the company intends to
de-emphasize credit extensions to its customers and to reduce future credit
loss expense by raising the company's financial standards for credit
extensions and by conducting post-financing reviews more frequently and in
more depth. Fleming's credit loss expense, including from receivables as well
as from investments in customers, was $61 million in the year ended
December 31, 1994 and $52 million and $28 million in 1993 and 1992,
respectively.
COMPETITION
Competition in the food marketing and distribution industry is intense. The
company's primary competitors are national chains who perform their own
distribution (such as The Kroger Co. and Albertson's, Inc.), national food
distributors (such as SUPERVALU Inc.) and regional and local food distributors.
The principal competitive factors include price, quality and assortment
of product lines, schedules and reliability of delivery, and the range and
quality of customer services. The sales volume of wholesale food distributors is
dependent on the level of sales achieved by the retail food stores they serve.
Retail stores served by the company compete with other retail food outlets in
their geographic areas on the basis of price, quality and assortment,
store location and format, sales promotions, advertising, availability of
parking, hours of operation and store appeal.
The primary competitors of the company-owned stores are national, regional
and local chains, as well as independent supermarkets and convenience stores.
The principal competitive factors include price, quality and assortment,
store location and format, sales promotions, advertising, availability of
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parking, hours of operation and store appeal.
EMPLOYEES
At year-end 1994, the company had approximately 42,400 full time and
part-time associates. Almost half of the company's associates are covered by
collective bargaining agreements with the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen and Helpers of America, the United Food
and Commercial Workers, the International Longshoremen's and Warehousemen's
Union and the Retail Warehouse and Department Store Union. Most of such
agreements expire at various times throughout the next five years.
The company believes it has satisfactory relationships with its unions.
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ITEM 2. PROPERTIES
The following table sets forth information with respect to
Fleming's major distribution facilities.
<TABLE>
<CAPTION>
SIZE, IN
FOOD THOUSANDS OF OWNED OR
DISTRIBUTION SQUARE FEET LEASED
------------ ------------ --------
<S> <C> <C>
Altoona, PA 164 Owned
Buffalo, NY 540 Leased
Columbus, OH 264 Leased
Concordia, KS 107 Owned
El Paso, TX (1) 465 Leased
Ewa Beach, HI 196 Leased
Fresno, CA 380 Owned
Garland, TX 1,206 Owned
Geneva, AL 345 Leased
Houston, TX 662 Leased
Huntingdon, PA 257 Owned
Johnson City, TN 235 Owned
Kansas City, KS 909 Leased
Knoxville, TN 202 Owned
La Crosse,WI 913 Owned
Lafayette, LA 430 Owned
Laurens, IA 368 Owned
Lincoln, NE 255 Leased
Lubbock, TX (1) 378 Owned
Marshfield, WI 156 Owned
Massillon, OH 547 Owned
Memphis, TN 780 Owned
Miami, FL 763 Owned
Minneapolis, MN (2) 479 Owned
Milwaukee, WI 600 Owned
Nashville, TN 734 Leased
North East, MD (3) 107 Owned
Oklahoma City, OK (4) 966 Owned/Leased
Peoria, KS 325 Owned
Philadelphia, PA (3) 830 Leased
Phoenix, AZ 912 Owned
Portland, OR 323 Owned
Sacramento, CA 681 Owned
Salt Lake City, UT 361 Owned
San Antonio, TX 513 Leased
Sikeston, MO 481 Owned
Superior, WI (2) 371 Owned
Syracuse, NY 284 Leased
Warsaw, NC 716 Owned
York, PA 450 Owned
------
19,655
</TABLE>
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<TABLE>
<CAPTION>
GENERAL MERCHANDISE
-------------------
<S> <C> <C>
Dallas, TX 170 Leased
King of Prussia, PA 377 Leased
La Crosse, WI 162 Owned
Memphis, TN 339 Owned
Sacramento, CA 294 Owned
Topeka, KS 179 Leased
------
1,521
OUTSIDE STORAGE
---------------
Outside storage facilities -
typically rented on a
short-term basis. 6,731
------
Total square feet 27,907
======
<FN>
(1) Comprise the Lubbock distribution operation.
(2) The company plans to consolidate the administrative functions of
these two distribution operations effectively immediately.
(3) Comprise the Philadelphia distribution operation.
(4) The company operates two distribution operations in Oklahoma City.
One is owned and occupies 556,000 square feet and the other is
leased and occupies 410,000 square feet. The administrative
functions of these two distribution operations are consolidated.
</TABLE>
At the end of 1994, Fleming operated a delivery fleet consisting of
approximately 2,300 power units and 4,700 trailers. Most of this
equipment is owned by the company.
Company-operated retail stores occupy approximately 9.5 million
square feet which is primarily leased.
ITEM 3. LEGAL PROCEEDINGS
TROPIN V. THENEN, ET AL., CASE NO. 93-2502-CIV-MORENO, UNITED STATES
DISTRICT COURT, SOUTHERN DISTRICT OF FLORIDA.
WALCO INVESTMENTS, INC., ET AL. V. THENEN, ET AL., CASE NO.
93-2534-CIV-MORENO, UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF
FLORIDA.
On December 21, 1993, these cases were filed in the United States
District Court for the Southern District of Florida. Both cases name
numerous defendants including a former subsidiary of the registrant and four
former employees of former subsidiaries of registrant. The cases contain
similar factual allegations. Plaintiffs allege, among other things, that
former employees of subsidiaries participated in fraudulent activities by
taking money for confirming diverting transactions which had not occurred and
that, in so doing, they acted within the scope of their employment.
Plaintiffs also allege that a former subsidiary allowed its name to be used
in furtherance of the alleged fraud.
The allegations against registrant's former subsidiary include common law
fraud,
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breach of contract and negligence, conversion and civil theft. In addition,
allegations were made against the former subsidiary claiming it violated the
federal Racketeer Influenced and Corrupt Organizations Act and comparable
state law. Plaintiffs seek damages, treble damages, attorneys' fees, costs,
expenses and other appropriate relief. While the amount of damages sought
under most claims is not specified, plaintiffs allege that hundreds of
millions of dollars were lost as the result of the matters complained of.
Registrant denies the allegations and is vigorously defending the actions.
See "Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations."
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
12
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information concerning the
executive officers of the company as of March 20, 1995:
<TABLE>
<CAPTION>
YEAR FIRST
BECAME
NAME (AGE) PRESENT POSITION AN OFFICER
- ---------- ---------------- ----------
<S> <C> <C>
Robert E. Stauth (50) Chairman, President and
Chief Executive Officer 1987
Gerald G. Austin (57) Executive Vice President-
Operations 1982
E. Stephen Davis (54) Executive Vice President-
Scrivner Group 1981
Glenn E. Mealman (60) Executive Vice President-
National Accounts 1977
Harry L. Winn, Jr. (50) Executive Vice President
and Chief Financial Officer 1994
David R. Almond (55) Senior Vice President-
General Counsel and Secretary 1989
Ronald C. Anderson (52) Senior Vice President-General
Merchandise 1993
Mark K. Batenic (46) Senior Vice President-Customer
Management 1994
Darreld R. Easter (58) Senior Vice President-
Category Marketing 1988
William M. Lawson, Jr. (44) Senior Vice President-Corporate
Development/International
Operations 1994
Dixon E. Simpson (52) Senior Vice President-Retail
Services 1994
Larry A. Wagner (48) Senior Vice President-
Human Resources 1989
Thomas L. Zaricki (50) Senior Vice President-Retail
Operations 1993
Kevin J. Twomey (44) Vice President-Controller 1995
</TABLE>
13
<PAGE>
No family relationship exists among any of the executive officers
listed above.
Executive officers are elected by the board of directors for a term
of one year beginning with the annual meeting of shareholders held in
April or May of each year.
Each of the executive officers has been employed by the company or
its subsidiaries for the preceding five years except for Messrs.
Anderson, Lawson, Winn and Zaricki.
Mr. Anderson joined the company as Vice President-General
Merchandise in July 1993. In March 1995, he was named Senior Vice
President-General Merchandise. Since 1986, until joining the company,
he was vice president of McKesson Corporation, a distributor of
pharmaceutical and related products, where he was responsible for its
service merchandising division.
Mr. Lawson joined the company in his present position in June 1994.
Prior to that, Mr. Lawson was a practicing attorney in Phoenix for 18 years.
Mr. Winn joined the company in his present position in May 1994.
He was with UtiliCorp United in Kansas City, an energy company, where he
was managing senior vice president and chief financial officer from 1990
to 1993.
Mr. Zaricki joined the company in his present position in October
1993. Since 1987, until joining the company, Mr. Zaricki was president
of Arizona Supermarkets, Inc., a regional supermarket chain
headquartered in Phoenix.
14
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
Fleming common stock is traded on the New York, Chicago and Pacific
stock exchanges. The ticker symbol is FLM. As of December 31, 1994, the
37.5 million outstanding shares were owned by 11,500 shareholders of
record and approximately 23,000 beneficial owners whose shares are held
in street name by brokerage firms and financial institutions. According
to the New York Stock Exchange Composite Transactions tables, the high
and low prices of Fleming common stock during each calendar quarter of
the past two years are shown below.
<TABLE>
<CAPTION>
1994 1993
--------------- ---------------
QUARTER HIGH LOW HIGH LOW
------- ------ ------ ------ ------
<S> <C> <C> <C> <C>
First $26.13 $24.25 $34.38 $30.75
Second 29.25 23.50 33.75 31.25
Third 30.00 22.88 33.75 31.13
Fourth 24.50 22.63 33.25 23.75
</TABLE>
Cash dividends on Fleming common stock have been paid for 78
consecutive years. Dividends are generally declared on a quarterly basis
with holders as of the record date being entitled to receive the cash
dividend on the payment date. Record and payment dates are normally as
shown below:
<TABLE>
<CAPTION>
RECORD DATES: PAYMENT DATES:
------------- --------------
<S> <C>
February 20 March 10
May 20 June 10
August 20 September 10
November 20 December 10
</TABLE>
Cash dividends of $.30 per share were paid on each of the above
four payment dates in 1993 and 1994.
15
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS) 1994(a) 1993 1992 1991 1990
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $15,753,487 $13,092,145 $12,893,534 $12,851,129 $11,932,767
Earnings before
extraordinary
loss and
cumulative
effect(b) 56,169 37,480 118,904 64,365 97,256
Net earnings per
common share(b) 1.51 1.02 3.33 1.82 3.06
Total assets 4,608,329 3,102,632 3,117,705 2,958,416 2,767,696
Long-term debt
and capital
leases 1,994,793 1,003,828 1,038,183 951,864 981,488
Cash dividends paid
per common share 1.20 1.20 1.20 1.14 1.03
- -----------------------------------------------------------------------------------------------
<FN>
(a) The results in 1994 reflect the July 1994 acquisition of Scrivner,
Inc.
(b) In 1993 and 1992, the company recorded an after-tax loss of $2.3
million and $5.9 million, respectively, for early retirement of
debt. In 1991, the company changed its method of accounting for
postretirement health care benefits, resulting in a charge to net
earnings of $9.3 million.
The results in 1993 include an after-tax charge of approximately
$62 million for additional facilities consolidations, re-
engineering, impairment of retail-related assets and elimination
of regional operations.
The company instituted a plan late in 1991 to reduce costs and
increase operating efficiency by consolidating four distribution
centers into larger, higher volume and more efficient facilities.
The after-tax charge was $41.4 million.
See notes to consolidated financial statements and the financial
review included in Item 7 and 8.
</TABLE>
16
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
THE CONSOLIDATION, REORGANIZATION AND RE-ENGINEERING PLAN. In January
1994, the company announced the details of a plan to restructure its
organizational alignment, re-engineer its operations and consolidate
facilities. The company's objective is to lower product costs to retail
customers while providing the company with a fair and adequate return for
product supply and value-added services. To achieve this objective,
management is making major organizational changes, introducing a new flexible
marketing plan and investing in technology. The actions contemplated by the
plan will affect the company's food and general merchandise wholesaling
operations as well as certain retail operations and are expected to be
substantially completed by the end of 1996. The acquisition of Scrivner,
described more fully in the next section, has not changed the plan design but
has delayed implementation.
The 1993 fourth quarter results reflect a charge of $101 million to
cover four categories of charges related to the plan: elimination of
regional operations, re-engineering operations, facilities consolidation and
focus on company-owned retail stores. This is in addition to a provision of
$7 million for facilities consolidation in the second quarter of 1993.
Related cash requirements during 1994 were $21 million; additional cash
expenditures necessary to fully implement the plan during 1995 and 1996 are
estimated to be $50 million. Cash requirements have been and are expected to
be met by internally generated cash flows and borrowings under the company's
existing credit agreement. The plan is expected to produce approximate
annual pretax savings of $65 million, net of incremental expenses. These
savings will not be fully realized until after complete implementation.
Unforeseen events or circumstances could cause the company to alter the plan,
thereby delaying or reducing expected cost savings.
Elimination of the company's regional operations resulted in cash
severance payments to approximately 100 associates, as well as the
transfer of approximately 60 associates. The annual savings are
approximately $4 million, principally in payroll costs. The provision
for eliminating regional operations is approximately $8 million,
including the write-down to estimated fair value of certain related
assets.
The re-engineering component of the charge provides for the cash
costs related to the expected termination of approximately 1,500
associates brought about by re-engineering. Annual payroll savings are
projected to be approximately $40 million. The provision for
re-engineering is approximately $25 million. Management believes that
the benefits to operating results will not begin until late 1995.
Facilities consolidation has resulted in the closure of four
distribution centers and is expected to result in the closure of one
additional facility, the relocation of two operations, and consolidation
of administrative functions. During 1994, approximately 450 associate
positions were eliminated through facilities consolidations. Expected
losses on disposition of the related property through sale or sublease
are provided for through the estimated disposal dates.
The total provision for facilities consolidation is approximately
$60 million. Estimated components include: severance costs - $15
million; impaired property and equipment - $13 million; other related
asset impairment and obligations - $11 million; lease and holding costs
- - $10 million; completion of actions contemplated in an earlier
restructuring charge - $7 million; and product handling and damage - $4
million. The actions are not expected to result in a material reduction
in net sales. Transportation expense is expected to increase as the
result of trucks driving farther to serve customers. It is not
practical to estimate reduced depreciation and amortization, labor or
operating costs separately. Management anticipates that, in the
aggregate, a positive annual pretax earnings impact will result from
17
<PAGE>
administrative expense savings and working capital and productivity
improvements once the facilities consolidation plan is fully implemented.
The costs to complete activities, including the consolidation and
closure of distribution facilities contemplated in an earlier
restructuring charge, result principally from additional estimated costs
related to dispositions or related real estate assets. Such costs are
principally the result of the deterioration of the San Francisco Bay
area commercial real estate market since 1991. Increased costs to
complete the earlier facilities consolidation were partially offset by
a change in management's 1993 plans regarding the consolidation of four
existing facilities into a large, new facility to be constructed in the
Kansas City area; the revised plan, which calls for enlarging and
utilizing existing facilities, is expected to result in lower associated
closure costs.
Thirty retail supermarket locations leased or owned by the company
no longer represent viable strategic sites for stores due to size,
location or age. The charge includes the present value of lease
payments on these locations, as well as holding costs until disposition,
the write-off of capital lease assets recorded for certain locations,
and the expected loss on a location closed in 1994. The charge consists
principally of cash costs for lease payments and the write-down of
property. A positive annual pretax benefit will result from this charge
but the annual amount will vary from year to year due to the dynamic
nature of the lease and sublease arrangements. The provision for
retail-related assets is approximately $15 million.
THE ACQUISITION. Results beginning with the third quarter of 1994
have been materially affected by the acquisition of Scrivner. Sales
have increased dramatically and gross margin and selling and
administrative expenses as a percent of sales are significantly higher
due to the increased ratio of retail food operations in Scrivner.
Interest expense increased materially as a result of the increased
borrowing level and higher interest rates and expense for the
amortization of goodwill also significantly increased, both due to the
acquisition.
As of the end of 1994, the company has closed four Scrivner
distribution centers and expects to close five more in 1995. Charges
related to the closing of the distribution centers operated by Scrivner
have been considered a direct cost of the acquisition and are included
in goodwill.
RESULTS OF OPERATIONS
Set forth in the following table is information regarding the company's
net sales and certain components of earnings expressed as a percentage
of net sales, before the effect of early debt retirement in 1993 and
1992.
<TABLE>
<CAPTION>
1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Net sales 100.00% 100.00% 100.00%
Gross margin 7.28 5.85 5.64
Less:
Selling and administrative expense 6.11 4.27 3.84
Interest expense .77 .60 .63
Interest income (.40) (.48) (.46)
Equity investment results .09 .09 .12
Facilities consolidation and
restructuring charge - .82 -
------ ------ ------
Total 6.57 5.30 4.13
Earnings before taxes .71 .55 1.51
Taxes on income .35 .26 .59
------ ------ ------
Earnings before
extraordinary items .36% .29% .92%
====== ====== ======
</TABLE>
18
<PAGE>
1994 AND 1993
NET SALES. Net sales for 1994 increased by $2.66 billion, or
20.3%, to $15.75 billion from $13.09 billion for 1993. The increase in
net sales was attributable to the $2.76 billion of net sales generated
by Scrivner operations since the acquisition. Without Scrivner, net
sales would have declined by $100 million, or .7%, due to several
factors, none of which individually was material to net sales,
including: the expiration of the temporary agreement with Albertson's,
Inc. as its distribution center came on line, the sale of a distribution
center, the loss of a customer at one of the company's distribution
centers and the loss of business due to the bankruptcy of Megafoods
Stores, Inc. These losses were partially offset by the addition of
business from Kmart, Florida retail operations acquired in the fourth
quarter of 1993 ("Hyde Park") and Randall's Food Markets, Inc.
Fleming measures inflation using data derived from the average cost
of a ton of product sold by the company; for 1994 food price inflation
was negligible. Tonnage of food product sold in 1994, without giving
effect to the acquisition, increased .6% compared to 1993, reflecting
the difficult retail environment. Consistent tonnage statistics for
Scrivner are not available.
GROSS MARGIN. Gross margin for 1994 increased by $381 million, or
49.9%, to $1.15 billion from $765 million for 1993 and increased as a
percentage of net sales to 7.28% for 1994 from 5.85% for 1993. The
increase in gross margin was due to retail stores, principally the 179
stores acquired with Scrivner as well as the 21 Hyde Park stores and 24
Consumers stores, which were not included for a full year in 1993.
Retail operations typically have both a higher gross margin and higher
selling expenses than wholesale operations. In addition, product
handling expenses, which consist of warehouse, truck and building
expenses, decreased as a percentage of net sales for 1994 from 1993 due
in part to the positive impact of the company's facilities consolidation
program and to higher fees charged to certain customers. These gross
margin increases were partially offset by charges to income of $6
million resulting from the LIFO method of inventory valuation in 1994
compared to credits to income of $7 million in 1993.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative
expense for 1994 increased by $405 million, or 72.4%, to $962 million
from $558 million for 1993 and increased as a percentage of net sales
to 6.11% for 1994 from 4.27% in 1993. This increase was due primarily
to the acquisition of Scrivner, particularly its retail operations, as
well as the acquisition of 21 Hyde Park stores and 24 Consumers stores
which were not included for a full year in 1993. Retail operations
typically have higher selling expenses than wholesale operations.
Selling and administrative expenses also increased by reason of the
provision for additional goodwill amortization, principally related to
the acquisition and the absence of several non-recurring items that
occurred in 1993. The increase in the operating loss-corporate shown
in the Segment Information note to the consolidated financial statements
is the result of the aforementioned absence of non-recurring items and
the increase in staff expense.
Credit loss expense included in selling and administrative expense
for 1994 increased by $9 million to $61 million from $52 million in
1993. This increase, including the $6.5 million credit loss discussed
below, was primarily due to the continued difficult retail environment
and low levels of food price inflation. Although the company has begun
to de-emphasize credit extensions to and investments in customers and
has adopted more stringent credit practices, there can be no assurance
that credit losses from existing or future investments or commitments
will not have a material adverse effect on results of operations or
financial position.
In August 1994, a customer of the company, Megafoods Stores, Inc.
and certain of its affiliates, filed Chapter 11 bankruptcy proceedings.
As of such date, Megafoods' total indebtedness to Fleming for goods sold
on open account, equipment
19
<PAGE>
leases and loans aggregated approximately $20 million. The company holds
collateral with respect to a substantial portion of these obligations.
Megafoods is also liable to the company under store sublease agreements for
approximately $37 million, and the company is contingently liable on certain
lease guarantees given by the company on behalf of Megafoods. The company is
partially secured as to these obligations. Megafoods has alleged claims
against the company arising from breach of contract, tortious interference
with contracts and business relationships and wrongful set-off of a $12
million cash security deposit and has threatened to seek equitable
subordination of the company's claims. The company denies these allegations
and will vigorously protect its interests.
Based on this event, the company took a charge to earnings of $6.5
million in the third quarter of 1994 to cover its estimated net credit
exposure. However, the exact amount of the ultimate loss may vary
depending upon future developments in the bankruptcy proceedings
including those related to collateral values, priority issues and the
company's ultimate expense, if any, related to certain customer store
leases. An estimate of additional possible loss, or the range of
additional losses, if any, cannot be made at this stage of the
proceedings. The company estimates that its annualized sales to
Megafoods prior to the bankruptcy were approximately $335 million and
currently are approximately $170 million pursuant to a short-term
arrangement.
INTEREST EXPENSE. Interest expense for 1994 increased $42 million
to $120 million from $78 million for 1993. The increase was due to the
indebtedness incurred to finance the acquisition and higher interest
rates imposed on the company as a result thereof. Without these
factors, interest expense for 1994 is estimated to have been
approximately the same as 1993.
The company enters into interest rate hedge agreements to manage
interest costs and exposure to changing interest rates. During July
1994, management terminated all of its outstanding hedge contracts at
an immaterial net gain, which will be amortized over the original term
of each hedge instrument. The credit agreement with the company's banks
requires the company to provide interest rate protection on a
substantial portion of the indebtedness outstanding thereunder. The
company has entered into interest rate swaps and caps covering $1
billion aggregate principal amount of floating rate indebtedness. This
amount exceeds the requirements set forth in the credit agreement.
The average interest rate on the company's floating rate
indebtedness is equal to the London interbank offered interest rate
("LIBOR") plus a margin. The average fixed interest rate paid by the
company on the interest rate swaps is 6.79%, covering $750 million of
floating rate indebtedness. The interest rate swap agreements, which
were implemented through eight counterparty banks, and which have an
average remaining life of 3.5 years, provide for the company to receive
substantially the same LIBOR that the company pays on its floating rate
indebtedness. For the remaining $250 million, the company has purchased
interest rate cap agreements from an additional two counterparty banks
covering $250 million of its floating rate indebtedness. The agreements
cap LIBOR at 7.33% over the next 3.8 years. The company's payment
obligations and receivables under the interest rate swap and cap
agreements meet the criteria for hedge accounting treatment.
Accordingly, the company's payment obligations and receivables are
accounted for as interest expense.
With respect to the interest rate hedging agreements, the company
believes its exposure to potential credit loss expense is minimized
primarily due to the relatively strong credit ratings of the
counterparties for their unsecured long-term debt (A+ or higher from
Standard & Poor's Ratings Group and A1 or higher from Moody's Investors
Service, Inc.) and the size and diversity of the counterparty banks.
The hedge agreements are subject to market risk to the extent that
market interest rates for similar instruments decrease, and the company
terminates the hedges prior to their maturity. However, the company
believes the risk is minimized as it currently foresees no need to
terminate any hedge agreements prior to their maturity. Also,
20
<PAGE>
interest rates for similar instruments have increased.
For 1994, the interest rate hedge agreements contributed $6 million
to interest expense. The estimated fair value of the hedge agreements
at December 31, 1994 was $32 million.
INTEREST INCOME. Interest income for 1994 increased by $1 million to
$64 million from $63 million for 1993. The increase was due to the
acquisition. The company has sold certain notes receivable with limited
recourse in prior years and may do so again in the future.
EQUITY INVESTMENT RESULTS. The company's portion of operating
losses from equity investments for 1994 increased by $3 million to $15
million from $12 million for 1993. The increase resulted primarily from
losses related to the company's investments in small retail operators
under the company's equity store program, offset in part by improved
results from investments in strategic multi-store customers under the
company's business development ventures program.
TAXES ON INCOME. The company's effective tax rate for 1994
increased to 50.0% from 48.0% for 1993 primarily as a result of the
lower than expected earnings for 1994, Scrivner's operations in states
with higher tax rates and increased goodwill amortization with no
related tax deduction.
OTHER. In November 1994, the company announced that Smitty's Super
Valu, a customer based in Arizona, had challenged the enforceability of
its supply contract with the company and may seek alternate
arrangements. Smitty's provided Fleming with the opportunity to match
the terms offered by a competitor. The company has determined that the
competitor's offer incorrectly excludes freight costs and is not a bona
fide offer. The supply contract will expire in 31 months if the company
matches any bona fide competing offer and in 15 months if it does not.
The company intends to comply fully with the supply contract and expects
Smitty's to do likewise. Smitty's purchased approximately $290 million
of products from the company during 1994.
The company has been named in two related legal actions filed in
the U.S. District Court in Miami in December 1993. The litigation is
complex, discovery has not commenced, and the ultimate outcome cannot
presently be determined. Furthermore, the company is unable to predict
a potential range of monetary exposure, if any, to the company. Based
on the recovery sought, an unfavorable judgment could have a material
adverse effect on the company.
Management believes that several factors negatively affecting
earnings in 1994 are likely to continue. Such factors include: flat
wholesale sales; lack of food price inflation; operating losses in
certain company-owned retail stores; increased interest expense,
goodwill amortization and integration costs related to the acquisition;
and a higher effective tax rate.
1993 AND 1992
NET SALES. Net sales in 1993 increased by $199 million, or 1.5%,
to $13.09 billion from $12.89 billion for 1992. The net sales increase
was primarily due to the following items, none of which individually was
material to net sales: the inclusion of a full year of operation of
Baker's Supermarkets Inc. in 1993, compared to 12 weeks in 1992, and the
addition of the Garland, Texas distribution center purchased in August
1993. Also contributing to the 1993 increase were the addition of new
customers, including Kmart. For 1993, the company experienced food
price deflation of 0.1% compared to deflation of 1.0% in 1992.
Tonnage of food product sold in 1993 was essentially the same as
1992. The lower tonnage growth rate reflects sluggish retail food
industry sales and the lack of net expansion of the company's customer
base.
21
<PAGE>
GROSS MARGIN. Gross margin in 1993 increased by $39 million, or
5.3%, to $765 million from $726 million for 1992 and increased as a
percentage of net sales to 5.85% from 5.64% in 1992. The increase in
gross margin was due to increased net sales by company-owned stores
(which included the 10 Baker's Supermarkets Inc. stores acquired in
September 1992). Retail operations typically have a higher gross margin
than wholesale operations. Product handling expense for 1993 decreased
as a percentage of net sales from 1992. The resulting increase in gross
margin was offset in part by lower wholesale margins.
SELLING AND ADMINISTRATIVE EXPENSE. Selling and administrative
expense in 1993 increased $63 million, or 12.8%, to $558 million from
$495 million in 1992 and increased as a percentage of net sales to 4.27%
from 3.84%. The increase was due primarily to the higher selling and
administrative expense associated with a higher number of company-owned
stores (which included 10 Baker's stores acquired at the beginning of
the fourth quarter of 1992). Retail operations generally have higher
selling expenses than wholesale operations. In addition, selling and
administrative expense included credit loss expense of $52 million in
1993 compared with $28 million in 1992. The increase was due to the
combined effects on customers' financial conditions of sluggish retail
sales, intensified retail competition and lack of food price inflation.
These increases were offset in part by reductions in certain other
selling and administrative expense categories.
Furthermore, in 1993, selling and administrative expense was
affected by several non-recurring items. The company recorded $11
million of pre-tax income resulting from cash received from the
favorable resolution of litigation and a $1 million accrual for expected
settlements in other legal proceedings. The company estimated that its
contingent liability for lease obligations exceeded its previously
established reserves by $2 million and recorded this amount as an
expense. A $5 million gain from a real estate transaction was also
recorded.
INTEREST EXPENSE. Interest expense in 1993 declined $3 million,
to $78 million from $81 million in 1992. The decrease in 1993 was due
primarily to lower short-term interest rates and lower average borrowing
levels. The company entered into interest rate hedge agreements to
manage its exposure to interest rates.
INTEREST INCOME. Interest income in 1993 increased by $3 million,
to $63 million from $60 million in 1992. The increase was due to higher
outstanding notes receivable and direct financing leases, partially
offset by a slight decline in interest rates. Interest income consists
primarily of interest earned on notes receivable and income generated
from direct financing leases of retail stores and related equipment.
EQUITY INVESTMENT RESULTS. The company's share of operating losses
from equity investments in certain customers (including customers
participating in the company's equity store program or the business
development venture program) accounted for under the equity method in
1993 decreased by $3 million, to $12 million from $15 million in 1992.
The improvement was due to improved operating performance by certain of
the company's business development ventures partially offset by the
company's share of losses from customers participating in the company's
equity store program.
EARLY DEBT RETIREMENT. In the fourth quarters of 1993 and 1992,
the company recorded extraordinary losses related to the early
retirement of debt. In 1993, the company retired $63 million of the
9.5% debentures at a cost of $2 million, net of tax benefits of $2
million. In 1992, the company recorded a charge of $6 million, net of
tax benefits of $4 million. The 1992 costs related to retiring $173
million aggregate principal amount of convertible notes, $30 million
aggregate principal amount of 9.5% debentures and certain other debt.
TAXES ON INCOME. The effective income tax rate for 1993 increased
to 48% from 39% in 1992. The increase was primarily due to facilities
consolidation and related
22
<PAGE>
restructuring charges. As a result, pre-tax income was reduced, causing
nondeductible items for tax purposes to have a larger impact on the
effective tax rate. In addition, both the federal and state income
tax rates increased by 1% due to a new tax law enacted in 1993. Moreover,
the 1992 effective rate had been reduced due to favorable settlements of
tax assessments recorded in prior years.
CERTAIN ACCOUNTING MATTERS. Statement of Financial Accounting
Standards No. 114 - Accounting by Creditors for Impairment of a Loan (as
amended by Statement of Financial Accounting Standards No. 118 -
Accounting by Creditors for Impairment of a Loan - Income Recognition
and Disclosures) will be effective in the first quarter of 1995. These
statements require that loans that are determined to be impaired must
be measured by the present value of expected future cash flows
discounted at the loan's effective interest rate or collateral values.
The impact on the consolidated statements of earnings and financial
position is expected to be immaterial.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
Capital Structure (In millions) 1994 % 1993 %
------ ----- ------ -----
<S> <C> <C> <C> <C>
Long-term debt $1,752 54.8% $ 728 34.0%
Capital lease obligations 369 11.5 350 16.4
------ ----- ------ -----
Total debt 2,121 66.3 1,078 50.4
Shareholders' equity 1,079 33.7 1,060 49.6
------ ----- ------ -----
Total capital $3,200 100.0% $2,138 100.0%
====== ===== ====== =====
</TABLE>
Includes current maturities of long-term debt and current obligations
under capital leases.
Fleming's capital structure changed significantly as a result of
the July 19, 1994 acquisition of Scrivner. The acquisition was
financed, and a large portion of the existing debt of both Fleming and
Scrivner was refinanced, through a $2.2 billion revolving credit and
term loan agreement entered into with a group of banks. Upon execution
of the new credit agreement the company terminated its $400 million and
$200 million bank credit agreements. In December, the company sold $300
million of 10.625% seven-year senior notes and $200 million of floating
rate seven-year senior notes in a public offering and retired the $500
million two-year loan tranche of the credit agreement with the proceeds.
The company's credit ratings for its senior unsecured long-term
debt were downgraded from investment grade to Ba1 and BB+ by Moody's and
Standard & Poor's, respectively, as a result of the additional debt
incurred in the acquisition. However, in late February 1995, Standard
& Poor's placed its rating of Fleming's senior unsecured long-term debt
on CreditWatch with negative implications. Standard & Poor's expressed
concerns that lower than expected earnings for the third and fourth
quarters of 1994, combined with re-engineering costs that are now
anticipated to reduce 1995 earnings below Standard & Poor's prior
expectations, will limit the company's ability to reduce
acquisition-related debt.
The company's principal sources of liquidity are cash flows from
operating activities and borrowings under the bank credit agreement.
Borrowings under the two remaining tranches of the credit agreement
totaled $1.08 billion at the end of 1994, their maximum level for the
year. Borrowings under the new agreement, excluding the $500 million
two-year tranche, averaged $998 million. At year end, the $800 million
six-year amortizing term loan was fully drawn and $280 million was drawn
on the $900 million five-year revolving credit facility.
Borrowings under the credit agreement are guaranteed by most of the
company's subsidiaries and are secured by the company's accounts
receivable, inventories and a pledge of the stock of most subsidiaries.
These security provisions will terminate
23
<PAGE>
at such time that the company's credit ratings for unsecured senior
long-term debt improve to investment grade status. The company was also
required to pledge its intercompany receivables as security for its
medium-term notes and its 9.5% debentures and to provide guarantees
from most of its subsidiaries. Additionally, it has provided guarantees
from most of its subsidiaries in favor of the senior notes.
The credit agreement and the indentures for the senior notes
contain customary covenants associated with similar facilities. The
bank credit agreement currently contains the following covenants:
maintenance of a consolidated-debt-to-net-worth ratio of not more than
2.45 to 1; maintenance of a minimum consolidated net worth of at least
$857 million; maintenance of a fixed charge coverage ratio of at least
1.40 to 1; a limitation on restricted payments (including dividends and
company stock repurchases); prohibition of certain liens; prohibitions
of certain mergers, consolidations and sales of assets; restrictions on
the incurrence of debt and additional guarantees; limitations on
transactions with affiliates; limitations on acquisitions and
investments; limitations on capital expenditures; and a limitation on
payment restrictions affecting subsidiaries. The company is permitted
to pay dividends or repurchase capital stock in the aggregate amount of
approximately $50 million each year. At year-end 1994 the
consolidated-debt-to-net-worth test would have allowed the company to
borrow an additional $489 million and the fixed charge coverage test
would have allowed the company to incur an additional $22 million of
annual interest expense. Covenants associated with the senior notes are
generally less restrictive than those of the bank facility. At year-end
1994, the company was in compliance with all financial covenants under
the credit agreement and the senior note indentures. Continued
compliance over the near-term will depend on the company's ability to
generate sufficient earnings during the implementation of re-engineering
and integration of Scrivner.
Pricing under the credit agreement automatically increases with
respect to certain rating declines. Despite the effect of reduced
earnings and the CreditWatch action by Standard & Poor's, the company
believes that appropriate means are available to maintain adequate
liquidity for the foreseeable future at acceptable rates.
The credit agreement may be terminated in the event of a defined
change of control. Under the indentures for the senior notes, the
noteholders may require the company to repurchase the notes in the event
of a defined change of control and defined decline in credit ratings.
In October 1994, the company acquired $33 million of a $97 million
series of medium-term notes pursuant to an offer to purchase which
resulted from the Scrivner acquisition and the related downgrade of the
company's long-term credit ratings. This redemption was funded by
borrowings under the credit agreement.
At year-end 1994 the company had $130 million of contingent
obligations under undrawn letters of credit, primarily related to
insurance reserves associated with its normal risk management
activities. To the extent that any of these letters of credit would be
drawn, payments would be financed by borrowings under the credit
agreement.
Operating activities generated $333 million of net cash flows for
1994 compared to $209 million in 1993. The increase is principally due
to the Scrivner acquisition, lower working capital requirements
(excluding Scrivner) and higher deferred taxes. Working capital was
$496 million at year end, an increase from $442 million at year-end
1993. The current ratio decreased to 1.38 to 1, from 1.48 to 1 at
year-end 1993. Management believes that cash flows from operating
activities and the company's ability to borrow under the credit
agreement will be adequate to meet working capital needs, capital
expenditures and cash needs of approximately $50 million for the
facilities consolidation and restructuring plan.
Capital expenditures for 1994 were approximately $140 million. The
increase over prior year is due to expansion projects at several
distribution centers and
24
<PAGE>
additions of normal Scrivner expenditures subsequent to the acquisition.
Management expects that 1995 capital expenditures, excluding acquisitions,
if any, will approximate $100 million.
Uncommitted bank lines were used prior to the Scrivner acquisition
when rates were lower than commercial paper rates. During 1994,
borrowings under these lines averaged $115 million and ranged up to $280
million. There were no borrowings outstanding at year-end 1994.
Commercial paper borrowings, which ceased prior to the Scrivner
acquisition, averaged $41 million during 1994 and ranged up to $166
million.
Fleming makes investments in and loans to its retail customers,
primarily in conjunction with the establishment of long-term supply
agreements. At year-end 1994 these investments and loans of $471
million, combined with trade receivables of $297 million, totaled $768
million, a $157 million net increase from 1993 due primarily to the
Scrivner acquisition. Net investments and loans increased $92 million,
from $379 million to $471 million. However, there was no sale of notes
in 1994, compared to a $67 million sale in 1993. In addition, net trade
receivables increased $65 million, from $232 million to $297 million.
These increases primarily resulted from the Scrivner acquisition.
Trade receivables in 1994 had a turnover rate of 50.4 times, up
from 45.3 times the prior year. Inventory turns increased slightly to
13.2 times in 1994 compared to 13.1 times the year before. Both of these
changes were influenced by the large mix of retail operations of
Scrivner.
Long-term debt and capital lease obligations increased $1.04
billion to $2.12 billion during 1994 as a result of the acquisition.
Shareholders' equity at the end of 1994 was $1.08 billion.
The year-end debt-to-capital ratio increased to 66.3%, above last
year's ratio of 50.4%. The company's long-term target ratio is
approximately 50%. Total capital was $3.2 billion at year end, up $1.06
billion from the prior year.
The composite interest rate for total funded debt (excluding
capital lease obligations) before the effect of interest rate hedges was
7.6% at year end, versus 4.8% a year earlier, principally due to higher
interest rates and to a lesser extent refinancing activities associated
with the Scrivner acquisition. Including the effect of interest rate
hedges, the composite interest rate of debt was 8.4% and 4.9% at the end
of 1994 and 1993, respectively. See the Long-Term Debt note to
consolidated financial statements for additional discussion regarding
derivatives.
The dividend payments of $1.20 per common share in 1994 and 1993
were 79% and 125% of primary net earnings per share in 1994 and 1993
respectively. The payout ratio would have been 44% in 1993 before
fourth quarter charges for facilities consolidation and restructuring
and debt prepayment.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Part IV, Item 14(a) 1. Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
25
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to pages 3 through 6 of the
company's proxy statement dated March 17, 1995, in connection with its
annual meeting of shareholders to be held on May 3, 1995. Information
concerning Executive Officers of the company is included in Part I
herein which is incorporated in this Part III by reference.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated herein by reference to pages 11 through 20 of the
company's proxy statement dated March 17, 1995, in connection with its
annual meeting of shareholders to be held on May 3, 1995.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to pages 9 and 10 of the company's
proxy statement dated March 17, 1995, in connection with its annual
meeting of shareholders to be held on May 3, 1995.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
26
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements: Page No.
--------
- Consolidated Statements of Earnings -
For the years ended December 31, 1994,
December 25, 1993, and December 26, 1992 28
- Consolidated Balance Sheets -
At December 31, 1994, and December 25, 1993 29
- Consolidated Statements of Shareholders' Equity -
For the years ended December 31, 1994,
December 25, 1993, and December 26, 1992 30
- Consolidated Statements of Cash Flows -
For the years ended December 31, 1994,
December 25, 1993, and December 26, 1992 31
- Notes to Consolidated Financial Statements -
For the years ended December 31, 1994,
December 25, 1993, and December 26, 1992 32
- Independent Auditors' Report 50
- Quarterly Financial Information (Unaudited) 51
(a) 2. Financial Statement Schedule:
- Schedule II - Valuation and Qualifying Accounts 53
All other financial statement schedules are omitted because they
are not applicable, or not required, or because the required
information is included in the consolidated financial statements
or notes thereto.
27
<PAGE>
CONSOLIDATED STATEMENTS OF EARNINGS
For the years ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
================================================================================
1994 1993 1992
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $15,753,487 $13,092,145 $12,893,534
Costs and expenses:
Cost of sales 14,606,963 12,326,778 12,166,858
Selling and administrative 962,929 558,470 494,983
Interest expense 120,408 78,029 81,102
Interest income (63,943) (62,902) (59,477)
Equity investment results 14,793 11,865 15,127
Facilities consolidation and - 107,827 -
restructuring
- --------------------------------------------------------------------------------
Total costs and expenses 15,641,150 13,020,067 12,698,593
- --------------------------------------------------------------------------------
Earnings before taxes 112,337 72,078 194,941
Taxes on income 56,168 34,598 76,037
- --------------------------------------------------------------------------------
Earnings before extraordinary loss 56,169 37,480 118,904
Extraordinary loss from early - 2,308 5,864
retirement of debt
- --------------------------------------------------------------------------------
Net earnings $ 56,169 $ 35,172 $ 113,040
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net earnings per share:
Primary before extraordinary loss $1.51 $1.02 $3.33
Extraordinary loss - .06 .16
- --------------------------------------------------------------------------------
Primary $1.51 $ .96 $3.16
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fully diluted before extraordinary $1.51 $1.02 $3.21
loss
Extraordinary loss - .06 .15
- --------------------------------------------------------------------------------
Fully diluted $1.51 $ .96 $3.06
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Weighted average shares outstanding 37,254 36,801 35,759
================================================================================
</TABLE>
Sales to customers accounted for under the equity method were approximately $1.6
billion, $1.6 billion and $1.3 billion in 1994, 1993 and 1992, respectively.
See notes to consolidated financial statements.
28
<PAGE>
CONSOLIDATED BALANCE SHEETS
At December 31, 1994, and December 25, 1993
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
================================================================================
Assets 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 28,352 $ 1,634
Receivables 364,884 301,514
Inventories 1,301,980 923,280
Other current assets 124,865 134,229
- --------------------------------------------------------------------------------
Total current assets 1,820,081 1,360,657
Investments and notes receivable 402,603 309,237
Investment in direct financing leases 230,357 235,263
Property and equipment:
Land 66,702 49,580
Buildings 366,109 268,317
Fixtures and equipment 656,068 466,904
Leasehold improvements 199,713 133,897
Leased assets under capital leases 167,362 143,207
- --------------------------------------------------------------------------------
1,455,954 1,061,905
Less accumulated depreciation and amortization 467,830 426,846
- --------------------------------------------------------------------------------
Net property and equipment 988,124 635,059
Other assets 179,332 90,633
Goodwill 987,832 471,783
- --------------------------------------------------------------------------------
Total assets $4,608,329 $3,102,632
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
- --------------------------------------------------------------------------------
Current liabilities:
Accounts payable $ 960,333 $ 682,988
Current maturities of long-term debt 110,321 61,329
Current obligations under capital leases 15,780 13,172
Other current liabilities 237,197 161,043
- -------------------------------------------------------------------------------
Total current liabilities 1,323,631 918,532
Long-term debt 1,641,390 666,819
Long-term obligations under capital leases 353,403 337,009
Deferred income taxes 51,279 27,500
Other liabilities 160,071 92,366
Shareholders' equity:
Common stock, $2.50 par value, authorized -
100,000 shares, issued and outstanding -
37,480 and 36,940 shares 93,705 92,350
Capital in excess of par value 494,966 489,044
Reinvested earnings 503,962 492,250
Cumulative currency translation adjustment (2,972) (288)
- -------------------------------------------------------------------------------
1,089,661 1,073,356
Less ESOP note 11,106 12,950
- -------------------------------------------------------------------------------
Total shareholders' equity 1,078,555 1,060,406
- -------------------------------------------------------------------------------
Total liabilities and shareholders' equity $4,608,329 $3,102,632
================================================================================
</TABLE>
Receivables include $37 million and $48 million in 1994 and 1993, respectively,
due from customers accounted for under the equity method.
See notes to consolidated financial statements.
29
<PAGE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
For the years ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands)
<TABLE>
<CAPTION>
==========================================================================================
1994 1993 1992
---------------- ---------------- ---------------
Shares Amount Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Common stock:
Beginning of year 36,940 $ 92,350 36,698 $ 91,746 35,433 $ 88,584
Incentive stock and
stock ownership plans 540 1,355 242 604 191 478
Stock issued for acquisition - - - - 1,074 2,684
- ------------------------------------------------------------------------------------------
End of year 37,480 93,705 36,940 92,350 36,698 91,746
====== ------ ====== ------ ====== ------
Capital in excess of par value:
Beginning of year 489,044 482,107 445,501
Incentive stock and
stock ownership plans 5,922 6,937 5,165
Stock issued for acquisition - - 31,441
- ------------------------------------------------------------------------------------------
End of year 494,966 489,044 482,107
- ------------------------------------------------------------------------------------------
Reinvested earnings:
Beginning of year 492,250 501,231 431,120
Net earnings 56,169 35,172 113,040
Cash dividends, $1.20 per share (44,457) (44,153) (42,929)
- ------------------------------------------------------------------------------------------
End of year 503,962 492,250 501,231
- ------------------------------------------------------------------------------------------
Cumulative currency translation adjustment:
Beginning of year (288) -
Currency translation adjustments (2,684) (288)
- ------------------------------------------------------------------------------------------
End of year (2,972) (288)
- ------------------------------------------------------------------------------------------
ESOP note:
Beginning of year (12,950) (14,650) (16,218)
Payments 1,844 1,700 1,568
- ------------------------------------------------------------------------------------------
End of year (11,106) (12,950) (14,650)
- ------------------------------------------------------------------------------------------
Total shareholders' equity, end of year $1,078,555 $1,060,406 $1,060,434
==========================================================================================
</TABLE>
See notes to consolidated financial statements.
30
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, 1994, December 25, 1993, and December 26, 1992
(In thousands)
<TABLE>
<CAPTION>
========================================================================================
1994 1993 1992
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 56,169 $ 35,172 $ 113,040
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization 145,910 101,103 93,827
Credit losses 61,218 52,018 28,258
Deferred income taxes 30,430 (24,471) 11,343
Equity investment results 14,793 11,865 15,128
Consolidation and reserve activities, net (29,304) 87,211 (31,226)
Change in assets and liabilities, excluding
effect of acquisitions:
Receivables 1,964 (16,420) (75,924)
Inventories 57,689 58,625 (440)
Other assets 13,346 (48,984) (10,218)
Accounts payable 30,691 (38,472) (41,285)
Other liabilities (50,083) (10,883) (16,566)
Other adjustments, net 39 1,779 3,918
- -----------------------------------------------------------------------------------------
Net cash provided by operating activities 332,862 208,543 89,855
- -----------------------------------------------------------------------------------------
Cash flows from investing activities:
Collections on notes receivable 111,149 82,497 88,851
Notes receivable funded (122,206) (130,846) (168,814)
Notes receivable sold - 67,554 44,970
Businesses acquired (387,488) (51,110) (8,233)
Proceeds from sale of businesses 6,682 - -
Purchase of property and equipment (150,057) (55,554) (66,376)
Proceeds from sale of property and equipment 14,917 2,955 3,603
Investments in customers (12,764) (37,196) (17,315)
Proceeds from sale of investments 4,933 7,077 9,763
Other investing activities (2,793) 197 (353)
- -----------------------------------------------------------------------------------------
Net cash used in investing activities (537,627) (114,426) (113,904)
- -----------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from long-term borrowings 2,225,751 331,502 462,726
Principal payments on long-term debt (1,912,717) (373,693) (383,188)
Principal payments on capital lease obligations (13,990) (11,316) (10,904)
Sale of common stock under incentive stock and
stock ownership plans 7,277 7,541 5,653
Dividends paid (44,457) (44,153) (42,929)
Redemption of preferred stock - - (19,100)
Other financing activities (30,381) (7,076) (4,587)
- -----------------------------------------------------------------------------------------
Net cash provided by (used in)
financing activities 231,483 (97,195) 7,671
- -----------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 26,718 (3,078) (16,378)
Cash and cash equivalents, beginning of year 1,634 4,712 21,090
- -----------------------------------------------------------------------------------------
Cash and cash equivalents, end of year $ 28,352 $ 1,634 $ 4,712
=========================================================================================
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, 1994, December 25, 1993, and December 26, 1992
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR: The company's fiscal year ends on the last Saturday in
December. Fiscal year 1994 was 53 weeks; 1993 and 1992 were 52 weeks. The
impact of the additional week in 1994 is not material to the results of
operations or financial position.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements
include all material subsidiaries. Material intercompany items have been
eliminated. The equity method of accounting is used for investments in
certain entities in which the company has an investment in common stock of
between 20% and 50%. Under the equity method, original investments are
recorded at cost and adjusted by the company's share of earnings or losses of
these entities and for declines in estimated realizable values deemed to be
other than temporary.
CASH AND CASH EQUIVALENTS: Cash equivalents consist of liquid
investments readily convertible to cash with a maturity of three months or
less. The carrying amount for cash equivalents is a reasonable estimate of
fair value.
RECEIVABLES: Receivables include the current portion of customer notes
receivable of $68 million (1994) and $70 million (1993). Receivables are
shown net of allowance for credit losses of $40 million (1994) and $44
million (1993). The company extends credit to its retail customers located
over a broad geographic base. Regional concentrations of credit risk are
limited.
INVENTORIES: Inventories are valued at the lower of cost or market. Most
grocery and certain perishable inventories are valued on a last-in, first-out
(LIFO) method. Other inventories are valued on a first-in, first-out (FIFO)
method.
PROPERTY AND EQUIPMENT: Property and equipment are recorded at cost or,
for leased assets under capital leases, at the present value of minimum lease
payments. Depreciation, as well as amortization of assets under capital
leases, are based on the estimated useful asset lives using the straight-line
method. Asset impairments are recorded when events or changes in
circumstances indicate that the carrying amount of the assets may not be
recoverable. Such impairment losses are measured by the excess of the
carrying amount of the asset over the fair value of the related asset.
The estimated useful lives used in computing depreciation and
amortization are: buildings and major improvements - 20 to 40 years;
warehouse, transportation and other equipment - 3 to 10 years; mechanized
warehouse equipment - 15 years; and data processing equipment - 5 to 7 years.
GOODWILL: The excess of purchase price over the value of net assets of
businesses acquired is amortized on the straight-line method over periods not
exceeding 40 years. Goodwill is shown net of accumulated amortization of $97
million (1994) and $74 million (1993). Goodwill is written down if it is
probable that estimated undiscounted operating income generated by the
related assets will be less than the carrying amount.
FINANCIAL INSTRUMENTS: Interest rate hedge transactions and other
financial instruments are utilized to manage interest rate exposure. The
difference between amounts to be paid or received is accrued and recognized
over the life of the contracts. The methods and assumptions used to estimate
the fair value of significant financial instruments are discussed in the
Investments and Notes Receivable and Long-Term Debt notes.
TAXES ON INCOME: Deferred income taxes arise from temporary differences
between financial and tax bases of certain assets and liabilities.
FOREIGN CURRENCY TRANSLATION: Net exchange gains or losses resulting
from the translation of assets and liabilities of an international investment
are included in shareholders' equity.
NET EARNINGS PER SHARE: Primary earnings per share are computed based on
net earnings divided by the weighted average shares outstanding. The impact
of common stock options on primary earnings per common share is not
materially dilutive. Fully diluted earnings per share in 1992 assume
conversion of convertible subordinated notes redeemed that year.
32
<PAGE>
ACQUISITIONS
As of July 1994, the company completed the acquisition of all the
outstanding stock of Haniel Corporation, the parent of Scrivner Inc.
("Scrivner"). The company paid $388 million in cash and refinanced
substantially all of Scrivner's existing indebtedness (approximately $670
million in aggregate principal and premium). In connection with the
acquisition, the company refinanced approximately $340 million in aggregate
principal amount of its own indebtedness.
The acquisition has been accounted for as a purchase and the results of
operations of Scrivner have been included in the consolidated financial
statements since the beginning of the third quarter of 1994. The purchase
price was allocated based on estimated fair values at the date of the
acquisition. At December 31, 1994, the excess of purchase price over assets
acquired was $540 million and is being amortized on a straight-line basis
over 40 years.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the company and Scrivner as if the
acquisition had occurred at the beginning of 1993, with pro forma adjustments
to give effect to amortization of goodwill, interest expense on acquisition
debt and certain other adjustments, together with related income tax effects.
<TABLE>
<CAPTION>
=============================================================================
Dec. 31, Dec. 25,
(In thousands, except per share amounts) 1994 1993
- -----------------------------------------------------------------------------
<S> <C> <C>
Net sales $18,977,000 $19,109,000
Net earnings $43,000 $19,000
Net earnings per share $1.15 $.53
=============================================================================
</TABLE>
33
<PAGE>
In 1994, the company acquired the remaining common stock of a
supermarket operator of a 24-store chain with locations in Missouri and
Kansas. The acquisition was accounted for as a purchase. The results are not
material to the company.
In 1993, the company acquired the assets or common stock of three
businesses. In August, the company purchased distribution center assets
located in Garland, Texas. In September and November, the company purchased
certain assets and the common stock, respectively, of two supermarket
operators in southern Florida. The acquisitions were accounted for as
purchases. The results of these entities are not material to the company.
In 1992, the company acquired the common stock of Baker's Supermarkets,
the operator of 10 supermarkets located in Omaha, Nebraska. The acquisition
was accounted for as a purchase. The results of Baker's operations are not
material to the company.
INVENTORIES
Inventories are valued as follows:
<TABLE>
<CAPTION>
==============================================================================
Dec. 31, Dec. 25,
(In thousands) 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
LIFO method $1,014,381 $638,383
FIFO method 287,599 284,897
- ------------------------------------------------------------------------------
Inventories $1,301,980 $923,280
==============================================================================
</TABLE>
Current replacement cost of LIFO inventories were greater than the
carrying amounts by approximately $19 million at December 31, 1994, and $13
million at December 25, 1993.
INVESTMENTS AND NOTES RECEIVABLE
Investments and notes receivable consist of the following:
<TABLE>
==============================================================================
Dec. 31, Dec. 25,
(In thousands) 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
Investments in and advances to customers $ 163,090 $ 164,292
Notes receivable from customers 219,852 133,935
Other investments and receivables 19,661 11,010
- ------------------------------------------------------------------------------
Investments and notes receivable $402,603 $309,237
==============================================================================
</TABLE>
The company extends long-term credit to certain retail customers. Loans
are primarily collateralized by inventory and fixtures. Investments and notes
receivable are shown net of allowance for credit losses of $9 million and $18
million in 1994 and 1993, respectively. Interest rates are above prime with
terms up to 10 years. The carrying amount of notes receivable approximates
fair value because of the variable interest rates charged on the notes.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards (SFAS) No. 114 - Accounting by Creditors for
Impairment of a Loan (as amended by SFAS No. 118 - Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures). These new
statements require that loans determined to be impaired be measured by the
present value of expected future cash flows discounted at the loan's
effective interest rate or collateral values. The new standards are effective
for the first quarter of 1995. The impact on the consolidated statements of
earnings and financial position is expected to be immaterial.
34
<PAGE>
The company has sold certain notes receivable at face value with limited
recourse. The outstanding balance at year-end 1994 on all notes sold is $162
million, of which the company is contingently liable for $29 million should
all the notes become uncollectible.
LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
==============================================================================
Dec. 31, Dec. 25,
(In thousands) 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C>
Term bank loans, due 1995 to 2000,
average interest rates of 6.6% and 3.7% $ 800,000 $160,000
10.625% senior notes due 2001 300,000 -
Revolving bank credit, average interest
rate of 6.6% 280,000 -
Floating rate senior notes due 2001, annual
payments of $1,000 in 1999 and 2000,
current rate of 8.7% 200,000 -
Medium-term notes, due 1995 to 2003,
average interest rates of 6.9% and 7.5% 155,950 222,450
Commercial paper, average interest
rate of 3.3% - 165,866
Unsecured credit lines, average
interest rates of 3.3% - 145,000
9.5% debentures, due 2010, annual
sinking fund payments of
$5,000 commencing in 1997 7,000 7,000
Guaranteed bank loan of employee
stock ownership plan - 12,950
Mortgaged real estate notes and other debt,
varying interest rates from 4% to
14.35%, due 1995 to 2003 8,761 14,882
- ------------------------------------------------------------------------------
1,751,711 728,148
Less current maturities 110,321 61,329
- ------------------------------------------------------------------------------
Long-term debt $1,641,390 $666,819
==============================================================================
</TABLE>
FIVE YEAR MATURITIES: Aggregate maturities of long-term debt for the
next five years are as follows: 1995-$110 million; 1996-$58 million;
1997-$136 million; 1998-$191 million and 1999-$234 million.
35
<PAGE>
REVOLVING CREDIT AND TERM LOAN AGREEMENT: In 1994, in connection with the
acquisition of Scrivner, the company redeemed a portion of its medium-term
notes and repaid all of its borrowings under uncommitted credit lines,
commercial paper programs, all term bank loans, the employee stock ownership
plan loan and certain other debt. The company also repaid substantially all
the debt of Scrivner and its parent. The debt redemptions and repayments, as
well as the purchase price of $388 million for the common stock, were
financed by borrowing $1.6 billion under a new $2.2 billion committed
revolving credit and term loan agreement with a group of banks. Upon
execution of the credit agreement, the company terminated its $400 million
and $200 million bank credit agreements.
The credit agreement carries an annual facility fee and a commitment fee
on any unused amount for the revolving credit portion. Interest rates are
based on various money market rate options selected by the company at the
time of borrowing. Borrowings under the revolving credit portion of the
credit agreement mature in 1999 and the term bank loans mature in 2000.
In December 1994, the company repaid $500 million of term bank loans
under the credit agreement upon the sale of the 10.625% $300 million senior
notes and $200 million floating rate senior notes.
The credit agreement and senior note indentures contain customary
covenants associated with similar facilities. The credit agreement currently
contains the following financial covenants: maintenance of a
consolidated-debt-to-net-worth ratio of not more than 2.45 to 1; maintenance
of a minimum consolidated net worth of at least $857 million; and maintenance
of a fixed charge coverage ratio of at least 1.40 to 1. The company is
currently in compliance with all financial covenants under the credit
agreement and senior note indentures. As of December 31, 1994, the restricted
payments test would have allowed the company to pay dividends or repurchase
capital stock in the aggregate amount of $50 million. The
consolidated-debt-to-net-worth test would have allowed the company to borrow
an additional $489 million. The fixed charge coverage test would have allowed
the company to incur an additional $22 million of annual interest expense.
The credit agreement and the senior note indentures also place
significant restrictions on the company's ability to incur additional
indebtedness, to create liens or other encumbrances, to make certain
payments, investments, loans and guarantees and to sell or otherwise dispose
of a substantial portion of assets to, or merge or consolidate with, an
unaffiliated entity.
The credit agreement contains a provision that, in the event of a
defined change of control, the agreement may be terminated. The indentures
for the senior notes provide an option for the noteholders to require the
company to repurchase the notes in the event of a defined change of control
and defined decline in credit ratings.
Prior to the acquisition of Scrivner, the company employed a financing
program for variable financing needs consisting of uncommitted bank credit
lines and two commercial paper programs supported by committed bank credit.
The agreement effectively restricts borrowings under these facilities.
MEDIUM-TERM NOTES: The company has registered $565 million in medium-term
notes. Of this, $290 million may be issued from time to time, at fixed or
floating rates, as determined at the time of issuance. The agreement effectively
limits any new issues to debt with maturities after December 2000. The security
provisions for the agreement required the company to equitably and ratably
secure the medium-term notes. Security for the medium-term notes consists of
guarantees from most of the company's subsidiaries and a pledge of intercompany
receivables.
The carrying value of assets collateralized under mortgaged real estate
notes and other debt is not material.
36
<PAGE>
INTEREST EXPENSE: Components of interest expense are as follows:
<TABLE>
<CAPTION>
===============================================================================
(In thousands) 1994 1993 1992
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest costs incurred:
Long-term debt $ 83,748 $44,628 $50,524
Capital lease obligations 33,718 31,355 29,103
Other 3,306 2,046 1,475
- -------------------------------------------------------------------------------
Total incurred 120,772 78,029 81,102
Less interest capitalized 364 - -
- -------------------------------------------------------------------------------
Interest expense $120,408 $78,029 $81,102
===============================================================================
</TABLE>
EARLY RETIREMENT OF DEBT: In 1993 and 1992, the company recorded
extraordinary losses for early retirement of debt. In 1993, the company
retired $63 million of the 9.5% debentures. The extraordinary loss was
$2 million, after income tax benefits of $2 million, or $.06 per share. The
funding source for the early redemption was the sale of notes receivable. In
1992, the company retired the $173 million of convertible subordinated notes,
$30 million of the 9.5% debentures and certain other debt. The extraordinary
loss was $6 million, after income tax benefits of $4 million, or $.15 per
share. Funding sources related to the 1992 early retirement were bank lines,
medium-term notes, sale of notes receivable and commercial paper.
37
<PAGE>
SUBSIDIARY GUARANTEE OF SENIOR NOTES: The senior notes are guaranteed by
all direct and indirect subsidiaries of the company (except for certain
inconsequential subsidiaries), all of which are wholly owned. The guarantees
are joint and several, full, complete and unconditional. There are currently
no restrictions on the ability of the subsidiary guarantors to transfer funds
to the company in the form of cash dividends, loans or advances. Full
financial statements for the subsidiary guarantors are not presented herein
because management does not believe such information would be material.
The following summarized financial information for the combined
subsidiary guarantors has been prepared from the books and records maintained
by the subsidiary guarantors and the company. Intercompany transactions are
eliminated. The summarized financial information may not necessarily be
indicative of the results of operations or financial position had the
subsidiary guarantors been operated as independent entities. The summarized
financial information includes allocations of material amounts of expenses
such as corporate services and administration, interest expense on
indebtedness and taxes on income. The allocations are generally based on
proportional amounts of sales or assets, and taxes on income are allocated
consistent with the asset and liability approach used for consolidated
financial statement purposes. Management believes these allocation methods
are reasonable.
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
Current assets $754,000 $1,168,000
Noncurrent assets $1,405,000 $1,579,000
Current liabilities $501,000 $764,000
Noncurrent liabilities $875,000 $936,000
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $3,318,000 $11,759,000 $11,488,000
Costs and expenses $3,341,000 $11,674,000 $11,321,000
Earnings (loss) before
extraordinary items $(12,000) $44,000 $102,000
Net earnings (loss) $(12,000) $42,000 $97,000
==============================================================================
</TABLE>
During 1994, the company merged a significant number of subsidiaries,
resulting in a substantial reduction in the amounts appearing in the
summarized financial information.
EMPLOYEE STOCK OWNERSHIP PLAN: The company's employee stock ownership
plan (ESOP) allows substantially all associates to participate. ln 1989, the
ESOP purchased 640,000 shares of common stock from the company at $31.25 per
share, resulting in proceeds of $20 million. The ESOP borrowed the money from
a bank. The company guaranteed the bank loan until 1994, when the company
paid off the loan and the ESOP entered into a note with the company. The note
terms are the same as the bank loan. The receivable from the ESOP is
presented as a reduction of shareholders' equity. The ESOP will repay to the
company the remaining loan balance with proceeds from company contributions.
The company makes contributions based on fixed debt service requirements of
the ESOP note. The ESOP used approximately $.5 million of common stock dividends
for debt service in each of 1994, 1993 and 1992. During 1994, 1993 and 1992, the
company recognized $1 million each year in compensation expense. Interest
expense of $.8 million, $.5 million and $.7 million was recognized at average
rates of 4.2%, 3.7% and 4.4% in 1994, 1993 and 1992, respectively.
38
<PAGE>
DERIVATIVES: The company enters into interest rate hedge agreements with
the objective of managing interest costs and exposure to changing interest
rates. The classes of derivative financial instruments used include interest
rate swaps and caps. The credit agreement requires the company to provide
interest rate protection on a substantial portion of the indebtedness
outstanding thereunder. Strategies for achieving the company's objectives
have resulted in the company entering into interest rate swaps and caps
covering $1 billion aggregate principal amount of floating rate indebtedness
at year-end 1994. This amount exceeds the requirements set forth in the
credit agreement.
The average interest rate on the company's floating rate indebtedness is
equal to the London interbank offered rate ("LIBOR") plus a margin. The
average fixed interest rate paid by the company on the interest rate swaps is
6.79%, covering $750 million of floating rate indebtedness. The interest rate
swap agreements, which were implemented through eight counterparty banks, and
which have an average remaining life of 3.5 years, provide for the company to
receive substantially the same LIBOR that the company pays on its floating
rate indebtedness. For the remaining $250 million, the company has purchased
interest rate cap agreements from an additional two counterparty banks
covering $250 million of its floating rate indebtedness. The agreements cap
LIBOR at 7.33% over the next 3.8 years.
The company believes its exposure to potential credit loss expense is
minimized primarily due to the relatively strong credit ratings of the
counterparty banks for their unsecured long-term debt (A+ or higher from
Standard & Poor's Ratings Group and A1 or higher from Moody's Investor
Service, Inc.) and the size and diversity of the counterparty banks.
The hedge agreements are subject to market risk to the extent that
market interest rates for similar instruments decrease, and the company
terminates the hedges prior to maturity. However, the company believes this
risk is minimized as it currently foresees no need to terminate any hedge
agreements prior to their maturity. Also, interest rates for similar
instruments have increased.
At year-end 1994 and 1993, hedge agreements were in place that
effectively fixed rates on $1 billion (referenced above) and $70 million,
respectively, of the company's floating rate debt. Additionally, for 1993,
$60 million of agreements converted fixed rate debt to floating and a $100
million transaction hedged the company's risk of fluctuation between prime
rate and LIBOR. The maturities for hedge agreements covering $1 billion of
debt range from 1995 to 2000. The counterparties to these agreements are
major national and international financial institutions.
39
<PAGE>
Derivative financial instruments are reported in the balance sheet where
the company has made a cash payment upon entering into the transaction. The
carrying amount is amortized over the initial life of the hedge agreement.
The company has a financial basis of $6.8 million in the interest rate cap
agreements at year-end 1994. In addition, accrued interest payable or
receivable for the interest rate agreements is included in the balance sheet.
At year-end 1993, the company did not have any financial basis in the hedge
agreements other than accrued interest payable or receivable.
The company's payment obligations under the interest rate swap and cap
agreements meet the criteria for hedge accounting treatment. Accordingly, the
company's payment obligations and receivables are accounted for as interest
expense.
FAIR VALUE OF FINANCIAL INSTRUMENTS: The fair value of long-term debt as
of year-end 1994 and 1993 was determined using valuation techniques that
considered cash flows discounted at current market rates and management's
best estimate for instruments without quoted market prices. At year-end 1994,
the carrying value of debt exceeded the fair value by $14 million. At
year-end 1993, the fair value of debt exceeded the carrying amount by $14
million.
For interest rate agreements, the fair value was estimated using
termination cash values. At year-end 1994, the fair value of interest rate
hedge agreements was $32 million. At year-end 1993, swap agreements had no
fair value.
LEASE AGREEMENTS
CAPITAL AND OPERATING LEASES: The company leases certain distribution
facilities with terms generally ranging from 20 to 30 years, while lease
terms for other operating facilities range from 1 to 15 years. The leases
normally provide for minimum annual rentals plus executory costs and usually
include provisions for one to five renewal options of five years.
The company leases company-owned retail store facilities with terms
generally ranging from 3 to 20 years. These agreements normally provide for
contingent rentals based on sales performance in excess of specified
minimums. The leases usually include provisions for one to three renewal
options of two to five years. Certain other equipment is leased under
agreements ranging from 2 to 8 years with no renewal options.
Accumulated amortization related to leased assets under capital leases
was $45 million and $42 million at year-end 1994 and 1993, respectively.
Future minimum lease payment obligations for leased assets under capital
leases as of year-end 1994 are set forth below:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) Lease
Years Obligations
- ------------------------------------------------------------------------------
<S> <C>
1995 $ 21,199
1996 21,005
1997 20,491
1998 20,058
1999 19,733
Later 175,078
- ------------------------------------------------------------------------------
Total minimum lease payments 277,564
Less estimated executory costs 285
- ------------------------------------------------------------------------------
Net minimum lease payments 277,279
Less interest 129,646
- ------------------------------------------------------------------------------
Present value of net minimum lease payments 147,633
Less current obligations 7,463
- ------------------------------------------------------------------------------
Long-term obligations $140,170
==============================================================================
</TABLE>
40
<PAGE>
Future minimum lease payments required at year-end 1994 under operating
leases that have initial noncancelable lease terms exceeding one year are
presented in the following table:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) Facility Facilities Equipment Equipment Net
Years Rentals Subleased Rentals Subleased Rentals
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1995 $ 162,677 $ 80,440 $33,121 $ 6,419 $ 108,939
1996 151,015 71,572 24,693 6,314 97,822
1997 139,247 64,395 14,241 4,182 84,911
1998 128,031 55,231 8,266 2,126 78,940
1999 112,932 44,338 5,106 1,404 72,296
Later 781,195 208,948 2,451 1,290 573,408
- ------------------------------------------------------------------------------
Total lease
payments $1,475,097 $524,924 $87,878 $21,735 $1,016,316
==============================================================================
</TABLE>
The following table shows the composition of total annual rental expense
under noncancelable operating leases and subleases with initial terms of one
year or greater:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Minimum rentals $160,065 $126,040 $123,189
Contingent rentals 866 182 247
Less sublease income 77,684 57,308 54,348
- ------------------------------------------------------------------------------
Rental expense $ 83,247 $ 68,914 $ 69,088
==============================================================================
</TABLE>
DIRECT FINANCING LEASES: The company leases retail store facilities for
sublease to customers with terms generally ranging from 5 to 25 years. Most
leases provide for a contingent rental based on sales performance in excess
of specified minimums. Sublease rentals are generally higher than the rental
paid. The leases and subleases usually contain provisions for one to four
renewal options of two to five years.
41
<PAGE>
The following table shows the future minimum rentals receivable under
direct financing leases and future minimum lease payment obligations under
capital leases in effect at December 31, 1994:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) Lease Rentals Lease
Years Receivable Obligations
- ------------------------------------------------------------------------------
<S> <C> <C>
1995 $ 43,306 $ 29,234
1996 41,964 29,294
1997 40,136 29,357
1998 37,415 29,339
1999 33,247 29,314
Later 273,566 258,304
- ------------------------------------------------------------------------------
Total minimum lease payments 469,634 404,842
Less estimated executory costs 1,948 1,941
- ------------------------------------------------------------------------------
Net minimum lease payments 467,686 402,901
Less unearned income 222,848 -
Less interest - 181,351
- ------------------------------------------------------------------------------
Present value of net minimum
lease payments 244,838 221,550
Less current portion 14,481 8,317
- ------------------------------------------------------------------------------
Long-term portion $230,357 $213,233
==============================================================================
</TABLE>
Contingent rental income and contingent rental expense is not material.
FACILITIES CONSOLIDATION AND RESTRUCTURING
The results in 1993 include a charge of $108 million for facilities
consolidations, re-engineering, impairment of retail-related assets and
elimination of regional operations. Facilities consolidations has resulted in
the closure of four distribution centers and is expected to result in the
closure of one additional facility the relocation of two operations and the
consolidation of a center's administrative function. The related charge
provides for severance costs, impaired property and equipment, product
handling and damage, and impaired other assets. The re-engineering component
of the charge provides for severance costs of terminating associates
displaced by the re-engineering plan. Impairment of retail-related assets
provides for the present value of lease payments and assets associated with
certain retail supermarket locations leased or owned by the company.
The table presented below reflects changes to the facilities
consolidation and restructuring reserves recorded in the balance sheets.
<TABLE>
<CAPTION>
==============================================================================
Re-engineering/ Consolidation
Severance Costs/Assets
(In thousands) Total Costs Impairments
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, December 28, 1991 $54,000 $11,000 $43,000
Expenditures and write-offs (24,108) (2,852) (21,256)
- ------------------------------------------------------------------------------
Balance, December 26, 1992 29,892 8,148 21,744
Charged to costs and expenses 107,827 25,136 82,691
Expenditures and write-offs (52,198) (8,148) (44,050)
- ------------------------------------------------------------------------------
Balance, December 25, 1993 85,521 25,136 60,385
Expenditures and write-offs (31,142) (2,686) (28,456)
- ------------------------------------------------------------------------------
Balance, December 31, 1994 $54,379 $22,450 $31,929
==============================================================================
</TABLE>
42
<PAGE>
TAXES ON INCOME
Components of taxes on income (tax benefit) are as follows:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 18,536 $48,742 $55,473
State 7,202 10,327 11,814
- ------------------------------------------------------------------------------
Total current 25,738 59,069 67,287
- ------------------------------------------------------------------------------
Deferred:
Federal 22,188 (20,160) 7,280
State 8,242 (4,311) 1,470
- ------------------------------------------------------------------------------
Total deferred 30,430 (24,471) 8,750
- ------------------------------------------------------------------------------
Taxes on income $56,168 $34,598 $76,037
==============================================================================
</TABLE>
Deferred tax expense (benefit) relating to temporary differences
includes the following components:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation and amortization $ (4,967) $ 516 $ 2,161
Asset valuations and reserves 20,396 (28,849) 14,807
Equity investment results 6,255 (6,767) (4,292)
Credit losses 11,728 (5,417) (4,539)
Prepaid expenses 374 3,200 -
Lease transactions (1,448) (2,307) (230)
Noncompete agreement 388 2,170 2,552
Associate benefits (3,665) 10,979 (2,977)
Note sales (2,547) 1,880 623
Other 3,916 124 645
- ------------------------------------------------------------------------------
Deferred tax expense (benefit) $30,430 $(24,471) $ 8,750
==============================================================================
</TABLE>
43
<PAGE>
Temporary differences that give rise to deferred tax assets and
liabilities as of December 31, 1994 and December 25, 1993 are as follows:
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993
- ------------------------------------------------------------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Depreciation and amortization $ 6,028 $ 4,333
Asset valuations and
reserve activities 78,622 57,522
Associate benefits 68,595 33,447
Credit losses 26,775 22,579
Equity investment results 10,969 13,848
Lease transactions 11,009 8,857
Inventory 14,993 7,743
Acquired loss carryforwards 10,690 4,514
Other 18,533 7,385
- ------------------------------------------------------------------------------
Gross deferred tax assets 246,214 160,228
Less valuation allowance (4,514) (6,514)
- ------------------------------------------------------------------------------
Total deferred tax assets 241,700 153,714
- ------------------------------------------------------------------------------
DEFERRED TAX LIABILITIES:
Depreciation and amortization 154,688 88,609
Equity investment results 4,036 1,758
Lease transactions 1,743 1,623
Inventory 63,666 18,401
Associate benefits 18,287 16,568
Asset valuations 6,552 -
Note sales 3,373 3,555
Prepaid expenses 3,799 3,200
Other 15,476 8,582
- ------------------------------------------------------------------------------
Total deferred tax liabilities 271,620 142,296
- ------------------------------------------------------------------------------
Net deferred tax asset (liability) $ (29,920) $ 11,418
==============================================================================
</TABLE>
The effect of the 1993 increase in the federal statutory rate to 35% on
deferred tax assets and liabilities was immaterial. The valuation allowance
contains $4 million of acquired loss carryforwards that, if utilized, will be
reversed to goodwill in future years.
The effective income tax rates are different from the statutory federal
income tax rates for the following reasons:
<TABLE>
<CAPTION>
==============================================================================
1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
State income taxes, net of
federal tax benefit 8.9 5.4 4.4
Acquisition-related differences 7.1 6.6 2.3
Possible assessments - - (1.4)
Other (1.0) 1.0 (.3)
- ------------------------------------------------------------------------------
Effective rate 50.0% 48.0% 39.0%
==============================================================================
</TABLE>
SHAREHOLDERS' EQUITY
The company offers a Dividend Reinvestment and Stock Purchase Plan which
offers shareholders the opportunity to automatically reinvest their dividends
in common stock at a 5% discount from market value. Shareholders also may
purchase shares at market value by making cash payments up to $5,000 per
calendar quarter. Shareholders reinvested dividends in 242,000 and 174,000
new shares in 1994 and 1993, respectively. Additional shares totaling 28,000
and 9,000 in 1994 and 1993, respectively, were purchased at market value by
shareholders. In 1994, the company registered an additional 600,000 shares
pursuant to this plan.
The company has a shareholder rights plan designed to protect
shareholders should the company become the target of coercive and unfair
takeover tactics. Shareholders have one right for each share of stock held.
When exercisable, each right entitles shareholders to buy one share of common
stock at a specific price in the event of certain defined actions that
constitute a change of control. The rights expire on July 6, 1996.
The company has severance agreements with certain management
associates. The agreements generally provide two years' salary to these
associates if the associate's employment terminates within two years after a
change of control. In the event of a change of control, a supplemental trust
will be funded to provide these salary obligations.
44
<PAGE>
SEGMENT INFORMATION
The following table sets forth, for each of the last three years the
composition of the company's net sales and operating earnings.
<TABLE>
<CAPTION>
==============================================================================
(In thousands) 1994 1993 1992
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES
- ------------------------------------------------------------------------------
Marketing and distribution $15,680,925 $13,174,214 $13,125,801
Less: Elimination 1,976,984 954,810 876,441
- ------------------------------------------------------------------------------
Net marketing and distribution 13,703,941 12,219,404 12,249,360
Retail food 2,123,146 943,972 692,839
Corporate (73,600) (71,231) (48,665)
- ------------------------------------------------------------------------------
Total $15,753,487 $ 13,092,145 $12,893,534
- ------------------------------------------------------------------------------
OPERATING EARNINGS
- ------------------------------------------------------------------------------
Marketing and distribution $222,951 $200,179 $222,335
Retail food 7,905 9,371 6,868
Corporate (47,261) (2,653) 2,490
- ------------------------------------------------------------------------------
Total operating earnings 183,595 206,897 231,693
Interest expense 120,408 78,029 81,102
Interest income (63,943) (62,902) (59,477)
Equity investment results 14,793 11,865 15,127
Facilities consolidation and
restructuring - 107,827 -
- ------------------------------------------------------------------------------
Earnings before taxes $112,337 $ 72,078 $194,941
- ------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
- ------------------------------------------------------------------------------
Marketing and distribution $ 98,806 $ 80,540 $75,885
Retail food 33,455 14,922 9,135
Corporate 13,649 5,641 8,807
- ------------------------------------------------------------------------------
Total $145,910 $101,103 $93,827
- ------------------------------------------------------------------------------
CAPITAL EXPENDITURES
- ------------------------------------------------------------------------------
Marketing and distribution $107,550 $ 42,045 $52,092
Retail food 25,647 8,134 7,933
Corporate 7,274 3,005 2,206
- ------------------------------------------------------------------------------
Total $140,471 $53,184 $62,231
- ------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
- ---------------------------------------------------------------
Marketing and distribution $3,261,711 $2,185,861
Retail food 547,019 177,891
Corporate 799,599 738,880
- ---------------------------------------------------------------
Total $4,608,329 $3,102,632
===============================================================
</TABLE>
INCENTIVE STOCK PLANS
The company's stock option plans allow the granting of nonqualified
stock options and incentive stock options, with or without stock appreciation
rights (SARs), to key associates.
45
<PAGE>
In 1994 and 1993, options with SARs were exercisable for 20,000 and
35,000 shares, respectively. Options without SARs were exercisable for 790,000
shares in 1994 and 841,000 shares in 1993. At year-end 1994, there were
208,000 shares available for grant under the stock option plans.
Stock option transactions are as follows:
<TABLE>
<CAPTION>
=============================================================================
(Shares in thousands) Options Price Range
- -----------------------------------------------------------------------------
<S> <C> <C>
Outstanding, December 28, 1991 1,168 $4.72 - 42.13
Granted 4 $30.00
Exercised (28) $12.88 - 29.81
Canceled and forfeited (60) -
- -----------------------------------------------------------------------------
Outstanding, December 26, 1992 1,084 $4.72 - 42.13
Exercised (59) $20.33 - 31.75
Canceled and forfeited (42)
- -----------------------------------------------------------------------------
Outstanding, December 25, 1993 983 $4.72 - 42.13
Granted 1,782 $24.81 - 29.75
Exercised (7) $4.72 - 25.19
Canceled and forfeited (288)
- -----------------------------------------------------------------------------
Outstanding, December 31, 1994 2,470 $10.29 - 42.13
=============================================================================
</TABLE>
The company has a stock incentive plan that allows awards to key
associates of up to 400,000 restricted shares of common stock and phantom
stock units. At year-end 1994, 62,000 shares were available for grant under
the stock incentive plan. Certain restricted common shares issued in 1991
were forfeited and returned to the company since the performance objectives
contained in the plans were not met and the plan expired. These shares were
recorded at the market value when issued, $4 million, and were amortized to
expense as earned. No amounts were expensed in 1993 or 1994, since objectives
in those years were not met. In 1993, the $2 million unamortized portion was
netted against capital in excess of par value within shareholders' equity.
This unamortized portion was eliminated upon expiration of the plan. The
shares reverted to treasury shares and $2 million is netted against capital
in excess of par value within shareholders' equity.
During 1994, 262,000 restricted shares were awarded. These shares were
recorded at market value when issued, $6 million, and will be amortized to
expense as earned. Approximately $500,000 of compensation expense was
recognized during 1994. The unamortized portion is netted against capital in
excess of par value within shareholders' equity.
In the event of a change of control, the company may accelerate the
vesting and payment of any award or make a payment in lieu of an award.
46
<PAGE>
ASSOCIATE RETIREMENT PLANS
The company sponsors retirement and profit sharing plans for
substantially all nonunion and some union associates. The company also has
nonqualified, unfunded supplemental retirement plans for selected associates.
These plans comprise the company's defined benefit pension plans.
Contributory profit sharing plans maintained by the company are for
associates who meet certain types of employment and length of service
requirements. Company contributions under these defined contribution plans
are made at the discretion of the board of directors. Expenses for these
plans were $6 million, $2 million and $1 million in 1994, 1993 and 1992,
respectively.
Benefit calculations for the company's defined benefit pension plans are
primarily a function of years of service and final average earnings at the
time of retirement. Final average earnings are the average of the highest
five years of compensation during the last 10 years of employment. The
company funds these plans by contributing the actuarially computed amounts
that meet funding requirements.
The following table sets forth the company's defined benefit pension
plans' funded status and the amounts recognized in the statements of
earnings. Substantially all the plans' assets are invested in listed stocks,
short-term investments and bonds. The significant actuarial assumptions used
in the calculation of funded status for 1994 and 1993 are: discount rate -
8.75% and 7.5%, respectively; compensation increases - 4.5% and 4%,
respectively; and return on assets - 9.5% for both years.
<TABLE>
<CAPTION>
======================================================================================
December 31, 1994 December 25, 1993
----------------- -----------------
Assets Exceed Accumulated Assets Exceed Accumulated
Accumulated Benefits Accumulated Benefits
(In thousands) Benefits Exceed Assets Benefits Exceed Assets
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present
value of accumulated
benefit obligations:
Vested $169,132 $ 9,126 $166,474 $ 9,587
Total $176,380 $15,469 $174,332 $16,577
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
Projected benefit
obligations $191,637 $17,342 $187,833 $18,302
Plan assets at
fair value 185,180 - 176,307 -
- --------------------------------------------------------------------------------------
Projected benefit
obligation in
excess of
plan assets 6,457 17,342 11,526 18,302
Unrecognized net
loss (37,980) (5,034) (42,195) (7,672)
Unrecognized prior
service cost (1,684) (667) (2,293) (777)
Unrecognized
net asset (obligation) 159 - 291 (216)
- --------------------------------------------------------------------------------------
Pension liability (asset) $(33,048) $11,641 $(32,671) $ 9,637
======================================================================================
</TABLE>
Net pension expense includes the following components:
<TABLE>
<CAPTION>
============================================================================
(In thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 7,476 $ 5,323 $ 4,997
Interest cost 16,583 14,792 13,503
Actual (return) loss
on plan assets 5,064 (19,103) (8,159)
Net amortization
and deferral (20,611) 8,039 (5,030)
- ----------------------------------------------------------------------------
Net pension expense $ 8,512 $ 9,051 $ 5,311
============================================================================
</TABLE>
47
<PAGE>
Certain associates have pension and health care benefits provided under
collectively bargained multiemployer agreements. Expenses for these benefits
were $56 million, $44 million and $40 million for 1994, 1993 and 1992,
respectively
ASSOCIATE POSTRETIREMENT HEALTH CARE BENEFITS
The company offers a comprehensive major medical plan to eligible
retired associates who meet certain age and years of service requirements.
This unfunded defined benefit plan generally provides medical benefits until
Medicare insurance commences.
Components of postretirement benefits expense are as follows:
<TABLE>
<CAPTION>
============================================================================
(In thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 223 $ 140 $ 108
Interest cost 1,542 1,628 1,430
Amortization of net loss 196 138 -
- ----------------------------------------------------------------------------
Postretirement expense $1,961 $1,906 $1,538
============================================================================
</TABLE>
The composition of the accumulated postretirement benefit obligation
(APBO) and the amounts recognized in the balance sheets are presented below.
<TABLE>
<CAPTION>
============================================================================
(In thousands) 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C>
Retirees $16,385 $13,299
Fully eligible actives 1,046 1,916
Others 2,569 1,680
- ----------------------------------------------------------------------------
APBO 20,000 16,895
Unrecognized net loss 2,010 3,333
- ----------------------------------------------------------------------------
Accrued postretirement benefit cost $17,990 $13,562
============================================================================
</TABLE>
During 1993, a postretirement benefit obligation was settled. No
additional benefit payments will be made for this terminated obligation.
48
<PAGE>
The weighted average discount rate used in determining the APBO was
8.75% and 7.5% for 1994 and 1993, respectively. For measurement purposes in
1994 and 1993, a 14% annual rate of increase in the per capita cost of
covered medical care benefits was assumed. In both years, the rate was
assumed to decrease to 8% by 2000, then to 7.5% in 2001 and thereafter. If
the assumed health care cost increased by 1% for each future year the current
cost and the APBO would have increased by 3% to 5% for all periods presented.
The company also provides other benefits for certain inactive
associates. Expenses related to these benefits are immaterial.
SUPPLEMENTAL CASH FLOWS INFORMATION
<TABLE>
<CAPTION>
============================================================================
(In thousands) 1994 1993 1992
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Acquisitions:
Fair value of assets acquired $1,575,323 $111,077 $88,721
Less:
Liabilities assumed or created 1,198,050 9,057 39,781
Existing company investment (15,281) 50,628 -
Common stock issued - - 34,125
Cash acquired 5,066 282 6,582
- ----------------------------------------------------------------------------
Cash paid, net of cash acquired $ 387,488 $ 51,110 $ 8,233
Cash paid during the year for:
Interest, net of
amounts capitalized $98,254 $79,634 $82,051
Income taxes $40,414 $74,320 $65,884
Direct financing leases
and related obligations $15,640 $33,594 $27,507
Property and equipment
additions by capital leases $30,606 $21,011 $22,513
============================================================================
</TABLE>
LITIGATION AND CONTINGENCIES
In December 1993, the company and numerous other defendants were named
in two suits filed in U.S. District Court in Miami. The plaintiffs allege
liability on the part of the company as a consequence of an alleged
fraudulent scheme conducted by Premium Sales Corporation and others in which
unspecified but large losses in the Premium-related entities occurred to the
detriment of a purported class of investors which has brought one of the
suits. The other suit is by the receiver/trustee of the estates of Premium
and certain of its affiliated entities. Plaintiffs seek damages, treble
damages, attorney's fees, costs, expenses and other appropriate relief. While
the amount of damages sought under most claims is not specified, plaintiffs
allege that hundreds of millions of dollars were lost as the result of the
allegations contained in the complaint.
The litigation is complex, discovery has not commenced and the ultimate
outcome cannot presently be determined. Furthermore, management is unable to
predict a potential range of monetary exposure, if any, to the company. Based
on the large recovery sought, an unfavorable judgment could have a material
adverse effect on the company. Management believes, however, that a material
adverse effect on the company's consolidated financial position is not likely.
The company intends to vigorously defend the actions.
The company's facilities are subject to various laws and regulations
regarding the discharge of materials into the environment. In conformity with
these provisions, the company has a comprehensive program for testing and
removal, replacement or repair of its underground fuel storage tanks and for
site remediation where necessary. The company has established reserves that
it believes will be sufficient to satisfy anticipated costs of all known
remediation requirements. In addition, the company is addressing several
other environmental cleanup matters involving its properties, all of which
the company believes are immaterial.
The company has been designated by the U. S. Environmental Protection
Agency ("EPA") as a potentially responsible party under the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA") with
others, with respect to EPA-designated Superfund sites. While liability
under CERCLA for remediation at such sites is joint and several with other
responsible parties, the company believes that, to the extent it is
ultimately determined to be liable for clean up at any site, such liability
will not result in a material adverse effect on its consolidated financial
position or results of operations.
The company is committed to maintaining the environment and protecting
natural resources and to achieving full compliance with all applicable laws
and regulations.
The company is a party to various other litigation, possible tax
assessments and other matters, some of which are for substantial amounts,
arising in the ordinary course of business. While the ultimate effect of such
actions cannot be predicted with certainty, the company expects that the
outcome of these matters will not result in a material adverse effect on its
consolidated financial position or results of operations.
The company has aggregate contingent liabilities for future minimum
rental commitments made on behalf of customers of $227 million in 1994 and
$370 million in 1993.
49
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders
Fleming Companies, Inc.
We have audited the accompanying consolidated balance sheets of Fleming
Companies, Inc. and subsidiaries as of December 31, 1994 and December 25,
1993, and the related consolidated statements of earnings, shareholders'
equity, and cash flows for each of the three years in the period ended
December 31, 1994. Our audits also included the financial statement schedule
listed in the index at item 14. These financial statements and financial
statement schedule are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements and
financial statement schedule 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 consolidated financial position of Fleming
Companies, Inc. and subsidiaries as of December 31, 1994 and December 25,
1993, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles. Also, in our opinion such financial
statement schedule, when considered in relation to the basic consolidated
statements taken as a whole, presents fairly in all material respects
the information set forth therein.
/s/ Deloitte & Touche LLP
Oklahoma City, Oklahoma
February 23, 1995
50
<PAGE>
QUARTERLY FINANCIAL INFORMATION
(In thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
======================================================================================================
1994 First Second Third Fourth Year
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $4,031,980 $2,883,648 $4,141,538 $4,696,321 $15,753,487
Costs and expenses:
Cost of sales 3,777,967 2,699,029 3,818,129 4,311,838 14,606,963
Selling and administrative 201,535 144,157 289,449 327,788 962,929
Interest expense 21,828 16,365 37,498 44,717 120,408
Interest income (16,252) (11,811) (18,821) (17,059) (63,943)
Equity investment results 3,257 2,640 5,130 3,766 14,793
- ------------------------------------------------------------------------------------------------------
Total costs and expenses 3,988,335 2,850,380 4,131,385 4,671,050 15,641,150
- ------------------------------------------------------------------------------------------------------
Earnings before taxes 43,645 33,268 10,153 25,271 112,337
Taxes on income 19,248 14,671 7,437 14,812 56,168
- ------------------------------------------------------------------------------------------------------
Net earnings $ 24,397 $ 18,597 $ 2,716 $ 10,459 $ 56,169
- ------------------------------------------------------------------------------------------------------
Net earnings per share $.66 $.50 $.07 $.28 $1.51
Dividends paid per share $.30 $.30 $.30 $.30 $1.20
Weighted average shares outstanding 37,093 37,247 37,332 37,424 37,254
=======================================================================================================
</TABLE>
The first quarter of both years consists of 16 weeks, all other quarters are
12 weeks, except for the fourth quarter of 1994 which was 13 weeks. The year
1994 was a 53-week year, 1993 consists of 52 weeks.
The results of Scrivner are included effective at the beginning of the third
quarter. A customer filed for bankruptcy during the third quarter, resulting
in a credit loss of $6.5 million.
51
<PAGE>
QUARTERLY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
=============================================================================================================
1993 First Second Third Fourth Year
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $4,044,894 $2,964,655 $2,936,010 $3,146,586 $13,092,145
Costs and expenses:
Cost of sales 3,803,545 2,787,087 2,767,074 2,969,072 12,326,778
Selling and administrative 170,893 121,366 125,106 141,105 558,470
Interest expense 23,481 17,804 17,796 18,948 78,029
Interest income (18,548) (14,469) (14,885) (15,000) (62,902)
Equity investment results 2,067 805 2,952 6,041 11,865
Facilities consolidation and restructuring - 6,500 - 101,327 107,827
- -------------------------------------------------------------------------------------------------------------
Total costs and expenses 3,981,438 2,919,093 2,898,043 3,221,493 13,020,067
- -------------------------------------------------------------------------------------------------------------
Earnings (loss) before taxes 63,456 45,562 37,967 (74,907) 72,078
Taxes on income (tax benefit) 26,081 18,726 17,662 (27,871) 34,598
- -------------------------------------------------------------------------------------------------------------
Earnings (loss) before extraordinary loss 37,375 26,836 20,305 (47,036) 37,480
Extraordinary loss from early retirement
of debt - - - 2,308 2,308
- -------------------------------------------------------------------------------------------------------------
Net earnings (loss) $ 37,375 $ 26,836 $ 20,305 $ (49,344) $ 35,172
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share:
Earnings before extraordinary loss $1.02 $.73 $.55 $(1.28) $1.02
Extraordinary loss - - - .06 .06
- -------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share $1.02 $.73 $.55 $(1.34) $ .96
Dividends paid per share $.30 $.30 $.30 $.30 $1.20
Weighted average shares outstanding 36,722 36,780 36,833 36,896 36,801
=============================================================================================================
</TABLE>
The second quarter of 1993 includes $11 million of pretax income resulting
from the favorable resolution of a litigation matter and a $1 million accrual
for charges in other legal proceedings. Also included is a $2 million charge
for an increase to previously established reserves related to the company's
contingent liability for lease obligations. The company also recorded a $5
million gain from a real estate transaction during the second quarter of 1993.
The effective tax rate was increased in the third quarter of 1993 due to the
new tax law enacted in August 1993. See discussion of facilities
consolidation and restructuring charges in the notes to consolidated
financial statements.
52
<PAGE>
SCHEDULE II
FLEMING COMPANIES, INC.
AND CONSOLIDATED SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994,
DECEMBER 25, 1993, AND DECEMBER 26, 1992
(In thousands)
<TABLE>
<CAPTION>
ALLOWANCE
FOR
CREDIT LOSSES CURRENT NONCURRENT
------------- ------- ----------
<S> <C> <C> <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS
BALANCE, December 28, 1991 $ 32,758 $25,330 $ 7,428
======= =======
Charged to costs and expenses 28,258
Uncollectible accounts, written off,
less recoveries (17,485)
--------
BALANCE, December 26, 1992 43,531 $25,298 $18,233
======= =======
Charged to costs and expenses 52,018
Uncollectible accounts written off,
less recoveries (32,954)
--------
BALANCE, December 25, 1993 62,595 $44,320 $18,275
======= =======
Acquired reserves, Scrivner
acquisition, July 19, 1994 25,950
Charged to costs and expenses 61,218
Uncollectible accounts written off,
less recoveries (101,196)
--------
BALANCE, December 31, 1994 $ 48,567 $39,506 $ 9,061
======== ======= =======
</TABLE>
53
<PAGE>
(a), (c) 3. Exhibits:
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
3.1 Certificate of Incorporation Exhibit 3.1 to
Form 10-K
for year ended
December 28, 1991.
3.2 By-Laws Exhibit 28.2 to
Form 8-K dated
August 22, 1989.
4.0 Credit Agreement, dated as of Exhibit 4.0 to
July 19, 1994, among Fleming Form 8-K dated
Companies, Inc., the Banks July 19, 1994
listed therein and Morgan
Guaranty Trust Company of New
York, as Managing Agent
4.1 Pledge Agreement, dated as of Exhibit 4.1 to
July 19, 1994, among Fleming Form 8-K dated
Companies, Inc. and Morgan July 19, 1994
Guaranty Trust Company of
New York, as Collateral Agent
4.2 Security Agreement dated as of Exhibit 4.2 to
July 19, 1994, between Fleming Form 8-K dated
Companies, Inc. in favor of July 19, 1994
Morgan Guaranty Trust Company
of New York, as Collateral Agent
4.3 Amendment No. 1 to Credit Exhibit 4.3 to
Agreement dated as of Form 8-K dated
July 21, 1994 July 19, 1994
4.4 Amendment No. 2 to Credit
Agreement dated as of
November 14, 1994
4.5 Agreement to furnish copies of
other long-term debt
instruments
4.6 Rights Agreement dated as of Exhibit 28 to
July 7, 1986, between the Form 8-K dated
Registrant and Morgan June 24, 1986.
Guaranty Trust Company of New
York
4.7 Amendment to Rights Agreement Exhibit 28.1 to
dated as of August 22, 1989, Form 8-K dated
between the Registrant August 22, 1989.
and First Chicago Trust Company
of New York, as Rights Agent
4.8 Indenture dated as of December Exhibit 4 to
1, 1989, between the Registrant Registration
and Morgan Guaranty Trust Statement No.
Company of New York, as trustee 33-29633.
4.9 Indenture dated as of
December 15, 1994, between the
Registrant, the Subsidiary
Guarantors and Texas Commerce
Bank National Association, as
Trustee, regarding $300 million
of 10 5/8% Senior Notes
4.10 Indenture dated as of December
15, 1994, between the Registrant,
the Subsidiary Guarantors and the
Texas Commerce Bank National
Association, as Trustee,
regarding $200 million of
Floating Rate Senior Notes
54
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
10.0 Stock Purchase Agreement by and Exhibit 2.0 to
Fleming Companies, Inc. and Form 8-K dated
Franz Haniel & Cie. GmbH dated July 19, 1994
as of July 15, 1994
10.1 Investment Advisor Agreement Exhibit 10.17 to
between the Registrant and The Form 10-K for year
First Boston Corporation dated ended December 30,
November 27, 1989 1989.
10.2 Investment Advisor Agreement Exhibit 10.18 to
between the Registrant and Form 10-K for year
Merrill Lynch, Pierce, Fenner ended December 30,
& Smith Incorporated dated 1989.
December 5, 1989
10.3 Dividend Reinvestment and Exhibit 28.1 to
Stock Purchase Plan, as Registration
amended Statement No.
33-26648 and
Exhibit 28.3
to Registration
Statement No.
33-45190.
10.4* 1985 Stock Option Plan Exhibit 28(a) to
Registration
Statement No.
2-98602.
10.5* Form of Award Agreement for Exhibit 10.6 to Form
1985 Stock Option Plan (1994) 10-K for year ended
December 25, 1993.
10.6* 1990 Stock Option Plan Exhibit 28.2 to
Registration
Statement No.
33-36586.
10.7* Form of Award Agreement for Exhibit 10.8 to Form
1990 Stock Option Plan (1994) 10-K for year ended
December 25, 1993.
10.8* Fleming Management Incentive Exhibit 10.4 to
Compensation Plan Registration
Statement No.
33-51312.
55
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
10.9* Directors' Deferred Exhibit 10.5 to
Compensation Plan Registration
Statement No.
33-51312.
10.10* Amended and Restated
Supplemental Retirement Plan
10.11* Form of Amended and Restated
Supplemental Retirement
Income Agreement
10.12* Godfrey Company 1984 Non- Appendix II to
qualified Stock Option Plan Registration
Statement No.
33-18867.
10.13* Form of Amended and Restated
Severance Agreement
between the Registrant and
certain of its officers
10.14* Fleming Companies, Inc. 1990 Exhibit B to
Stock Incentive Plan dated Proxy Statement
February 20, 1990 for year ended
December 30, 1989.
10.15* Phase I of Fleming Companies, Exhibit 10.16 to
Inc. Stock Incentive Plan and Form 10-K for year
Form of Awards Agreement ended December 30,
1989.
10.16* Phase II of Fleming Companies, Exhibit 10.12 to
Inc. Stock Incentive Plan Form 10-K for year
ended December 26,
1992.
10.17* Phase III of Fleming Companies, Exhibit 10.17 to
Inc. Stock Incentive Plan Form 10-K for year
ended December 25,
1993.
10.18* Fleming Companies, Inc. Exhibit 10.14 to
Directors' Stock Form 10-K for year
Equivalent Plan ended December 28,
1991.
10.19* Agreement between the Exhibit 10.19 to
Registrant and Form 10-K for year
E. Dean Werries ended December 25,
1993.
10.20* Supplemental Income Trust
10.21* Form of Employment
Agreement between Registrant
and certain of the employees
10.22* Economic Value Added Exhibit A to Proxy
Incentive Bonus Plan Statement for year
ended December 31, 1994
11 Earnings per share computation
12 Computation of ratio of
earnings to fixed charges
56
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
24 Power of attorney instruments
signed by certain directors
and officers of the Registrant
appointing Harry L. Winn, Jr.,
Executive Vice President and
Chief Financial Officer, as
attorney-in-fact and agent to
sign the Annual Report on
Form 10-K on behalf of said
directors and officers
27 Financial Data Schedule
99 Company Undertaking
* Management contract, compensatory plan or arrangement.
(b) Reports on Form 8-K:
None.
57
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Fleming has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized on the
28th day of March 1995.
FLEMING COMPANIES, INC.
/s/ Robert E. Stauth
---------------------------------
By: Robert E. Stauth
(Chairman, President
and Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities indicated on the 28th day of March 1995.
/s/ Robert E. Stauth /s/ Archie R. Dykes * /s/ Carol B. Hallett *
- ------------------------- ----------------------- -----------------------
Robert E. Stauth Archie R. Dykes Carol B. Hallett
(Chairman of the Board) (Director) (Director)
/s/ James G. Harlow, Jr.* /s/ Lawrence M. Jones * /s/ Edward C.Joullian III*
- ------------------------- ------------------------ --------------------------
James G. Harlow, Jr. Lawrence M. Jones Edward C. Joullian III
(Director) (Director) (Director)
/s/ Howard H. Leach * /s/ John A. McMillan * /s/ Guy O. Osborn *
- ------------------------- ----------------------- -----------------------
Howard H. Leach John A. McMillan Guy O. Osborn
(Director) (Director) (Director)
/s/ E. Dean Werries *
- -------------------------
E. Dean Werries
(Director)
*By /s/ Harry L. Winn, Jr.
-------------------------
Harry L. Winn, Jr.
Attorney-In-Fact
A Power of Attorney authorizing Harry L. Winn,
Jr. to sign the Annual Report on Form 10-K on
behalf of each of the indicated directors of
Fleming Companies, Inc. has been filed herein
as Exhibit 25.
58
<PAGE>
INDEX TO EXHIBITS
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
3.1 Certificate of Incorporation Exhibit 3.1 to
Form 10-K
for year ended
December 28, 1991.
3.2 By-Laws Exhibit 28.2 to
Form 8-K dated
August 22, 1989.
4.0 Credit Agreement, dated as of Exhibit 4.0 to
July 19, 1994, among Fleming Form 8-K dated
Companies, Inc., the Banks July 19, 1994
listed therein and Morgan
Guaranty Trust Company of New
York, as Managing Agent
4.1 Pledge Agreement, dated as of Exhibit 4.1 to
July 19, 1994, among Fleming Form 8-K dated
Companies, Inc. and Morgan July 19, 1994
Guaranty Trust Company of
New York, as Collateral Agent
4.2 Security Agreement dated as of Exhibit 4.2 to
July 19, 1994, between Fleming Form 8-K dated
Companies, Inc. in favor of July 19, 1994
Morgan Guaranty Trust Company
of New York, as Collateral Agent
4.3 Amendment No. 1 to Credit Exhibit 4.3 to
Agreement dated as of Form 8-K dated
July 21, 1994 July 19, 1994
4.4 Amendment No. 2 to Credit
Agreement dated as of
November 14, 1994
4.5 Agreement to furnish copies of
other long-term debt
instruments
4.6 Rights Agreement dated as of Exhibit 28 to
July 7, 1986, between the Form 8-K dated
Registrant and Morgan June 24, 1986.
Guaranty Trust Company of New
York
4.7 Amendment to Rights Agreement Exhibit 28.1 to
dated as of August 22, 1989, Form 8-K dated
between the Registrant August 22, 1989.
and First Chicago Trust Company
of New York, as Rights Agent
4.8 Indenture dated as of December Exhibit 4 to
1, 1989, between the Registrant Registration
and Morgan Guaranty Trust Statement No.
Company of New York, as trustee 33-29633.
4.9 Indenture dated as of
December 15, 1994, between the
Registrant, the Subsidiary
Guarantors and Texas Commerce
Bank National Association, as
Trustee, regarding $300 million
of 10 5/8% Senior Notes
4.10 Indenture dated as of December
15, 1994, between the Registrant,
the Subsidiary Guarantors and the
Texas Commerce Bank National
Association, as Trustee,
regarding $200 million of
Floating Rate Senior Notes
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
10.0 Stock Purchase Agreement by and Exhibit 2.0 to
Fleming Companies, Inc. and Form 8-K dated
Franz Haniel & Cie. GmbH dated July 19, 1994
as of July 15, 1994
10.1 Investment Advisor Agreement Exhibit 10.17 to
between the Registrant and The Form 10-K for year
First Boston Corporation dated ended December 30,
November 27, 1989 1989.
10.2 Investment Advisor Agreement Exhibit 10.18 to
between the Registrant and Form 10-K for year
Merrill Lynch, Pierce, Fenner ended December 30,
& Smith Incorporated dated 1989.
December 5, 1989
10.3 Dividend Reinvestment and Exhibit 28.1 to
Stock Purchase Plan, as Registration
amended Statement No.
33-26648 and
Exhibit 28.3
to Registration
Statement No.
33-45190.
10.4* 1985 Stock Option Plan Exhibit 28(a) to
Registration
Statement No.
2-98602.
10.5* Form of Award Agreement for Exhibit 10.6 to Form
1985 Stock Option Plan (1994) 10-K for year ended
December 25, 1993.
10.6* 1990 Stock Option Plan Exhibit 28.2 to
Registration
Statement No.
33-36586.
10.7* Form of Award Agreement for Exhibit 10.8 to Form
1990 Stock Option Plan (1994) 10-K for year ended
December 25, 1993.
10.8* Fleming Management Incentive Exhibit 10.4 to
Compensation Plan Registration
Statement No.
33-51312.
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
10.9* Directors' Deferred Exhibit 10.5 to
Compensation Plan Registration
Statement No.
33-51312.
10.10* Amended and Restated
Supplemental Retirement Plan
10.11* Form of Amended and Restated
Supplemental Retirement
Income Agreement
10.12* Godfrey Company 1984 Non- Appendix II to
qualified Stock Option Plan Registration
Statement No.
33-18867.
10.13* Form of Amended and Restated
Severance Agreement
between the Registrant and
certain of its officers
10.14* Fleming Companies, Inc. 1990 Exhibit B to
Stock Incentive Plan dated Proxy Statement
February 20, 1990 for year ended
December 30, 1989.
10.15* Phase I of Fleming Companies, Exhibit 10.16 to
Inc. Stock Incentive Plan and Form 10-K for year
Form of Awards Agreement ended December 30,
1989.
10.16* Phase II of Fleming Companies, Exhibit 10.12 to
Inc. Stock Incentive Plan Form 10-K for year
ended December 26,
1992.
10.17* Phase III of Fleming Companies, Exhibit 10.17 to
Inc. Stock Incentive Plan Form 10-K for year
ended December 25,
1993.
10.18* Fleming Companies, Inc. Exhibit 10.14 to
Directors' Stock Form 10-K for year
Equivalent Plan ended December 28,
1991.
10.19* Agreement between the Exhibit 10.19 to
Registrant and Form 10-K for year
E. Dean Werries ended December 25,
1993.
10.20* Supplemental Income Trust
10.21* Form of Employment
Agreement between Registrant
and certain of the employees
10.22* Economic Value Added Exhibit A to Proxy
Incentive Bonus Plan Statement for year
ended December 31, 1994
11 Earnings per share computation
12 Computation of ratio of
earnings to fixed charges
<PAGE>
PAGE NUMBER OR
EXHIBIT INCORPORATION BY
NUMBER REFERENCE TO
------- ----------------
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
24 Power of attorney instruments
signed by certain directors
and officers of the Registrant
appointing Harry L. Winn, Jr.,
Executive Vice President and
Chief Financial Officer, as
attorney-in-fact and agent to
sign the Annual Report on
Form 10-K on behalf of said
directors and officers
27 Financial Data Schedule
99 Company Undertaking
* Management contract, compensatory plan or arrangement.
<PAGE>
AMENDMENT NO. 2 TO CREDIT AGREEMENT
AMENDMENT dated as of November 14, 1994, to the $2,200,000,000 Credit
Agreement dated as of July 19, 1994 (as heretofore amended, the "Credit
Agreement") among FLEMING COMPANIES, INC., the BANKS party thereto, the
AGENTS party thereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Managing Agent.
W I T N E S S E T H:
WHEREAS, the Borrower desires to amend the Credit Agreement to effect
the amendments reflected herein, and the Banks party hereto are willing to
agree to such amendments;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; REFERENCES. Unless otherwise specifically defined
herein, each term used herein that is defined in the Credit Agreement shall
have the meaning assigned to such term in the Credit Agreement. Each
reference to "hereof," "hereunder," "herein" and "hereby" and each other
similar reference and each reference to "this Agreement" and each other
similar reference contained in the Credit Agreement shall from and after the
date hereof refer to the Credit Agreement as amended hereby.
SECTION 2. AMENDMENT OF SECTION 1.01 OF THE CREDIT AGREEMENT. (a)
Section 1.01 of the Credit Agreement is hereby amended by changing the
reference to "Article III" to a reference to "Article IV" where it appears
in the definition of "Borrower's Knowledge".
(b) Section 1.01 of the Credit Agreement is hereby further amended by
restating the definition of "Borrower Special Charges" to read in its
entirety as follows:
"Borrower Special Charges" means the charges to the
Borrower's earnings originally taken in December 1993
relating to (i) the consolidaton of certain of the
Borrower's facilities and operations, as approved by
the board of directors of the Borrower at a meeting
on January 17, 1994 and (ii) the extraordinary loss
from the early retirement of debt, as approved by the
board of directors of the Borrower at a meeting on
December 15, 1993."
<PAGE>
SECTION 3. AMENDMENT OF SECTION 2.09 OF THE CREDIT AGREEMENT. Clause
(b)(i) of Section 2.09 of the Credit Agreement is hereby amended by inserting
the words "or will be" after the words "to the extent it was" where such
words appear in clause (B) of the last sentence of such clause (b)(i).
SECTION 4. NEW SECTION 6.04. A new Section 6.04 shall be added to the
Credit Agreement as follows:
"Section 6.04 RESTATEMENT OF FINANCIAL STATEMENTS. No
representation or warranty as to, or statement contained
in, any financial statement or other information delivered
by the Borrower pursuant to this Agreement shall be
considered to be or to have been incorrect or misleading
when made (or deemed made) if solely as a result of a
restatement of the Borrower's financial statements to
record some or all of the Borrower Special Charges in a
period subsequent to the fourth quarter of 1993 pursuant
to the request or direction of the Securities and Exchange
Commission or with the approval of the Borrower's independent
public accountants.
SECTION 5. AMENDMENT TO SECTION 5.13 OF THE CREDIT AGREEMENT. Clause
(iii) of Section 5.13(a) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(iii) Debt incurred by the Borrower after the date hereof
that has a final maturity of at least six months after the
Tranche C Termination Date and of which no more
than $2,000,000 in the aggregate is subject to mandatory repayment
or repurchase at the option of the holders thereof or otherwise
prior to such time; PROVIDED that such Debt may be so subject to
mandatory repayment or repurchase so long as neither the Borrower
nor any Subsidiary has any obligation to repay, repurchase or
otherwise retire an amount of such Debt exceeding $2,000,000 in the
aggregate when any Loans, Letters of Credit Liabilities or
Commitments are outstanding hereunder;"
For the sake of avoidance of doubt, it is hereby confirmed and agreed that
references in clause (iii) of Section 5.13(a) of the Credit Agreement to
mandatory repayment, repurchase or retirement of Debt do not include any
obligation to do so arising solely
2
<PAGE>
upon the occurrence of a default or event of default with respect to such
Debt.
SECTION 6. AMENDMENTS TO SECURITY DOCUMENTS AND GUARANTEE AGREEMENTS.
Each Bank party hereto hereby unconditionally and irrevocably authorizes and
directs the Collateral Agent to execute and deliver amendments to each
Security Document and Guarantee Agreement substantially in the forms attached
to the Borrower's letter to the Banks dated November 14, 1994.
SECTION 7. COUNTERPARTS; EFFECTIVENESS. This Amendment may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Amendment shall become effective as of the date hereof when the Managing
Agent shall become effective as of the date hereof when the Managing Agent
shall have received duly executed counterparts hereof signed by the Borrower
and the Required Banks or, in the case of the authorization in Section 6 of
amendments to the Security Documents, the Releasing Banks (or, in the case of
any Bank as to which an executed counterpart shall not have been received,
the Managing Agent shall have received telegraphic, telex or other written
confirmation from such party of execution of a counterpart hereof by such
Bank).
SECTION 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective authorized officers as of the day and year
first above written.
FLEMING COMPANIES, INC.
By /s/ John M. Thompson
---------------------------------
Name: John M. Thompson
Title: Vice President and
Treasurer
BANKS
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By /s/ Stephen B. King
--------------------------------
Title: Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By /s/ Jody B. Schneider
--------------------------------
Title: Vice President
THE BANK OF NOVA SCOTIA
By /s/ F.C.H. Ashby
--------------------------------
Title: Sr. Manager Loan Operations
CANADIAN IMPERIAL BANK OF COMMERCE
By /s/ MAG Corkum
--------------------------------
Title: Authorized Signatory
4
<PAGE>
CREDIT SUISSE
By /s/ Geoffrey M. Craig
--------------------------------
Title: Member of Sr. Management
By /s/ Kristinn R. Kristinsson
--------------------------------
Title: Associate
DEUTSCHE BANK AG NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH
By /s/ Dr. Hans-Deter Wettlaufer
--------------------------------
Title: Vice President
By /s/ Jean Hannigan
--------------------------------
Title: Associate
THE FUJI BANK, LIMITED
By /s/ David Kelley
--------------------------------
Title: Vice President and
Senior Manager
NATIONSBANK OF TEXAS, N.A.
By /s/ Bianca Hemmen
--------------------------------
Title: Senior Vice President
SOCIETE GENERALE, SOUTHWEST AGENCY
By /s/ Richard M. Lewis
--------------------------------
Title: Assistant Vice President
By /s/ Louis P. Laville
--------------------------------
Title: Vice President
5
<PAGE>
THE SUMITOMO BANK LTD.
HOUSTON AGENCY
By /s/ Tatsuo Ueda
--------------------------------
Title: General Manager
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By /s/ Matthew H. Hildreth
--------------------------------
Title: Vice President
THE TORONTO-DOMINION BANK
By /s/ F.B. Hawley
--------------------------------
Title: Mgr. Credit Administration
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY
By /s/ Alfred W. Imholz
--------------------------------
Title: First Vice President
By /s/ Jan Buettgen
--------------------------------
Title: First Vice President
FIRST INTERSTATE BANK OF CALIFORNIA
By /s/ William Baird
--------------------------------
Title: Vice President
By /s/ Wendy Purcell
--------------------------------
Title: Assistant Vice President
6
<PAGE>
WACHOVIA BANK OF GEORGIA,
NATIONAL ASSOCIATION
By /s/ Terry L. Akin
--------------------------------
Title: Senior Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By /s/ Robert Ivosevich
--------------------------------
Title: Senior Vice President
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK, B.A.,
"RABOBANK NEDERLAND",
NEW YORK BRANCH
By /s/ J. Scott Taylor
--------------------------------
Title: Vice President
By /s/ W. Jeffrey Vollack
--------------------------------
Title: Vice President
THE SANWA BANK LIMITED,
DALLAS AGENCY
By /s/ Blake Wright
--------------------------------
Title: Assistant Vice President
BANQUE NATIONALE DE PARIS
By /s/ Henry F. Setina
--------------------------------
Title: Vice President
BOATMEN'S FIRST NATIONAL BANK
OF OKLAHOMA
By /s/ K. Randy Roper
--------------------------------
Title: Senior Vice President
7
<PAGE>
CITIBANK N.A.
By /s/ W.P. Stengel
--------------------------------
Title: Vice President
COMMERZBANK AG, NEW YORK AND/OR
GRAND CAYMAN BRANCH
By /s/ Juergen Scmieding
--------------------------------
Title: Vice President
By /s/Juergen Boysen
--------------------------------
Title: Senior Vice President
DAI-ICHI KANGYO BANK, LTD.
NEW YORK BRANCH
By /s/ Frank A. Bertelle
--------------------------------
Title: Corporate Credit Officer
THE INDUSTRIAL BANK OF JAPAN, LTD.
By /s/ Takeshi Kawano
--------------------------------
Title: Senior Vice President
and Senior Manager
LTCB TRUST COMPANY
By /s/ John J. Sullivan
--------------------------------
Title: Executive Vice President
THE MITSUBISHI BANK, LIMITED
HOUSTON AGENCY
By /s/ Shoji Honda
--------------------------------
Title: General Manager
8
<PAGE>
NATIONAL WESTMINSTER BANK Plc
NASSAU BRANCH
By /s/ David L. Smith
--------------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK Plc
NEW YORK BRANCH
By /s/ David L. Smith
--------------------------------
Title: Vice President
UNITED STATES NATIONAL BANK
OF OREGON
By /s/ Blake R. Howells
--------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ Jody B. Schneider
--------------------------------
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION
By /s/ Greg Gaschler
--------------------------------
Title: Vice President
BANCA DI ROMA SpA
By /s/ Oakley W. Cheney, Jr.
--------------------------------
Title: Chief Manager
By /s/ William Fontana
--------------------------------
Title: Vice President
9
<PAGE>
BANK IV OKLAHOMA, N.A.
By /s/ Paul Anderson
--------------------------------
Title: Vice President
BANK OF HAWAII
By /s/ Joseph T. Donaldson
--------------------------------
Title: Vice President
THE BANK OF TOKYO, LTD.,
DALLAS AGENCY
By /s/ J. Mearns
--------------------------------
Title: V.P. and Manager
BANQUE PARIBAS
By /s/ Robert G. Shaw
--------------------------------
Title: Vice President
By /s/ Pierre-Jean de Filippis
--------------------------------
Title: General Manager
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By /s/ Kenneth C. Couiter
--------------------------------
Title: Assistant Vice President
By /s/ Mark A. Harrington
--------------------------------
Title: Vice President and
Regional Manager
10
<PAGE>
BAYERISCHE VEREINSBANK AG,
LOS ANGELES AGENCY
By /s/ Jarunee Hanpachern
--------------------------------
Title: Assistant Vice President
By /s/ Sylvia K. Cheng
--------------------------------
Title: Assistant Vice President
BHF-BANK, NEW YORK BRANCH
By /s/ Paul Travers
--------------------------------
Title: Vice President
By /s/ David Fraenkel
--------------------------------
Title: Vice President
DAIWA BANK AND TRUST COMPANY
By
--------------------------------
Title:
By
--------------------------------
Title:
DG BANK
DEUTSCHE GENOSSENSCHAFTSBANK
By /s/ John L. Dean
--------------------------------
Title: Senior Vice President
By /s/ Karen A. Brinkman
--------------------------------
Title: Vice President
FIRST HAWAIIAN BANK
By /s/ Robert M. Wheeler III
--------------------------------
Title: Vice President
11
<PAGE>
FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By /s/ Edwin T. Gray
--------------------------------
Title: Account Officer
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ Roger C. Boucher
--------------------------------
Title: Vice President
LIBERTY BANK AND TRUST COMPANY
OF OKLAHOMA CITY, N.A.
By /s/ Laura Christofferson
--------------------------------
Title: Vice President
MANUFACTURERS AND TRADERS
TRUST COMPANY
By /s/ Geoffrey R. Fenn
--------------------------------
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By /s/ Masaaki Yamagishi
--------------------------------
Title: Chief Manager
THE MITSUI TRUST AND BANKING
COMPANY, LIMITED
By /s/ Shigeru Tsujimoto
--------------------------------
Title: Vice President and Manager
12
<PAGE>
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Perry G. Pelos
--------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, New York Branch
By /s/ Lucy Gurnsey
--------------------------------
Title: Vice President
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, Cayman Islands
Branch
By /s/ Jeffrey Hilsgen
--------------------------------
Title: Vice President
THE YASUDA TRUST AND BANKING
COMPANY, LTD.
By /s/ Neil T. Chau
--------------------------------
Title: First Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By /s/ Jeanette Ganousis
--------------------------------
Title: Vice President
13
<PAGE>
DRESDNER BANK AG
NEW YORK BRANCH
By /s/ R. Matthew Scherer
--------------------------------
Title: Vice President
By /s/ Robert Conroy
--------------------------------
Title: Vice President
BANK HAPOALIM B.M., Los Angeles Branch
By /s/ David L. Ruggeri
--------------------------------
Title: Vice President
By /s/ Craig M. Ciebiera
--------------------------------
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.
By /s/ William J. Bokos
--------------------------------
Title: Attorney-In-Fact
KREDIETBANK N.V.
By /s/ Diane Grimmig
--------------------------------
Title: Vice President
By /s/ Robert Snauffer
--------------------------------
Title: Vice President
MERCANTILE BANK OF ST. LOUIS
NATIONAL ASSOCIATION
By /s/ John C. Billings
--------------------------------
Title: Vice President
THE SUMITOMO BANK OF CALIFORNIA
By /s/ Seishi Jiromaru
--------------------------------
Title: Vice President and
Division Manager
14
<PAGE>
EXHIBIT 4.5
INSTRUMENTS DEFINING THE RIGHTS OF
SECURITY HOLDERS, INCLUDING INDENTURES
The Registrant has various long-term debt agreements which define
the rights of the holders of the related debt securities of the Registrant.
No agreement with respect to the Registrant's long-term debt exceeds 10%
of total assets, except the $1.7 billion Credit Agreement dated as of
July 19, 1994 (as amended) (incorporated by reference) and the Indentures
dated as of December 15, 1994 (incorporated by reference). Debt agreements
that do not exceed 10% of total assets have not been filed. The Registrant
agrees to furnish copies of any unfiled debt agreements to the Commission
upon request.
FLEMING COMPANIES, INC.
-----------------------------
(Registrant)
Date March 28, 1995 By /s/ KEVIN J. TWOMEY
-------------- -----------------------------
Kevin J. Twomey
Vice President-Controller
(Chief Accounting Officer)
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEMING COMPANIES, INC.
ISSUER
TO
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
TRUSTEE
THE SUBSIDIARY GUARANTORS NAMED HEREIN
GUARANTORS
------------------------
Indenture
Dated as of December 15, 1994
------------------------
$300,000,000
10 5/8% Senior Notes due 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FLEMING COMPANIES, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF , 1994
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- ------------------------- ----------------------------
<S> <C> <C>
Section310(a)(1) .......................................................... 607[(a)]
(a)(2) .......................................................... 607[(a)]
(b) .......................................................... [607(b),] 608
Section312(c) .......................................................... 701
Section314(a) .......................................................... 703
(a)(4) .......................................................... 1008(a)
(c)(1) .......................................................... 102
(c)(2) .......................................................... 102
(e) .......................................................... 102
Section315(b) .......................................................... 601
Section316(a)(last
sentence) .......................................................... 101 ("Outstanding")
(a)(1)(A) .......................................................... 502, 512
(a)(1)(B) .......................................................... 513
(b) .......................................................... 508
(c) .......................................................... 104(d)
Section317(a)(1) .......................................................... 503
(a)(2) .......................................................... 504
(b) .......................................................... 1003
Section318(a) .......................................................... 111
</TABLE>
- ------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
PARTIES.............................................................................. 1
RECITALS OF THE COMPANY.............................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.......................................................................... 1
Acquired Indebtedness................................................................ 2
Act.................................................................................. 2
Affiliate............................................................................ 2
Average Life to Stated Maturity...................................................... 2
Bankruptcy Law....................................................................... 2
Banks................................................................................ 2
Board of Directors................................................................... 2
Board Resolution..................................................................... 3
Business Day......................................................................... 3
Business Development Program......................................................... 3
Business Development Venture......................................................... 3
Capital Lease Obligation............................................................. 3
Capital Stock........................................................................ 3
Change of Control.................................................................... 3
Change of Control Purchase Date...................................................... 4
Change of Control Purchase Offer..................................................... 4
Change of Control Purchase Price..................................................... 4
Change of Control Triggering Event................................................... 4
Commission........................................................................... 4
Common Stock......................................................................... 4
Company.............................................................................. 4
Company Request or Company Order..................................................... 4
Consolidated......................................................................... 4
Consolidated Fixed Charge Coverage Ratio............................................. 4
Consolidated Income Tax Expense...................................................... 5
Consolidated Interest Expense........................................................ 5
Consolidated Net Income.............................................................. 5
Consolidated Net Tangible Assets..................................................... 6
</TABLE>
- ------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
ii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
Consolidated Non-Cash Charges........................................................ 6
Corporate Trust Office............................................................... 6
Corporation.......................................................................... 6
Credit Agreement..................................................................... 6
Currency Agreements.................................................................. 6
Default.............................................................................. 6
Defaulted Interest................................................................... 6
Equity Store......................................................................... 6
Event of Default..................................................................... 6
Exchange Act......................................................................... 6
Floating Rate Note Indenture......................................................... 7
Floating Rate Notes.................................................................. 7
Generally Accepted Accounting Principles............................................. 7
Guaranteed Debt...................................................................... 7
Guaranteed Obligations............................................................... 7
Holder............................................................................... 7
Indebtedness......................................................................... 7
Indenture............................................................................ 8
Interest Payment Date................................................................ 8
Interest Rate Agreements............................................................. 8
Investment........................................................................... 8
Investment Grade..................................................................... 8
Lien................................................................................. 8
Managing Agent....................................................................... 8
Maturity............................................................................. 8
Moody's.............................................................................. 9
Note Guarantee....................................................................... 9
Notes................................................................................ 9
Offering............................................................................. 9
Officers' Certificate................................................................ 9
Opinion of Counsel................................................................... 9
Outstanding.......................................................................... 9
Paying Agent......................................................................... 10
Permitted Indebtedness............................................................... 10
Permitted Investment................................................................. 12
Permitted Liens...................................................................... 12
Permitted Receivables Financing...................................................... 14
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
Person............................................................................... 14
Predecessor Note..................................................................... 14
Preferred Stock...................................................................... 14
Principal Property................................................................... 14
Prior Indentures..................................................................... 14
Public Equity Offering............................................................... 14
Qualified Capital Stock.............................................................. 15
Rating Agency........................................................................ 15
Rating Category...................................................................... 15
Rating Decline....................................................................... 15
Redeemable Capital Stock............................................................. 15
Redemption Date...................................................................... 15
Redemption Price..................................................................... 15
Regular Record Date.................................................................. 15
Responsible Officer.................................................................. 15
Securities Act....................................................................... 16
Security Register and Security Registrar............................................. 16
Senior Indebtedness.................................................................. 16
Significant Subsidiary............................................................... 16
S&P.................................................................................. 16
Special Record Date.................................................................. 16
Stated Maturity...................................................................... 16
Subordinated Indebtedness............................................................ 16
Subsidiary........................................................................... 16
Subsidiary Guarantor................................................................. 16
Temporary Cash Investments........................................................... 17
Transferred Receivables.............................................................. 17
Trust Indenture Act or TIA........................................................... 18
Trustee.............................................................................. 18
U.S. Government Obligations.......................................................... 18
Vice President....................................................................... 18
Voting Stock......................................................................... 18
Wholly Owned Subsidiary.............................................................. 18
SECTION 102. Compliance Certificates and Opinions................................................. 18
103. Form of Documents Delivered to Trustee............................................... 19
104. Acts of Holders...................................................................... 19
105. Notices, Etc., to Trustee, Company and Subsidiary Guarantors......................... 20
</TABLE>
<PAGE>
iv
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
106. Notice to Holders; Waiver............................................................ 21
107. Effect of Headings and Table of Contents............................................. 21
108. Successors and Assigns............................................................... 21
109. Separability Clause.................................................................. 21
110. Benefits of Indenture................................................................ 22
111. Governing Law........................................................................ 22
112. Legal Holidays....................................................................... 22
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally...................................................................... 22
202. Form of Face of Note................................................................. 23
203. Form of Reverse of Note.............................................................. 24
204. Form of Trustee's Certificate of Authentication...................................... 27
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms...................................................................... 27
302. Denominations........................................................................ 28
303. Execution, Authentication, Delivery and Dating....................................... 28
304. Temporary Notes...................................................................... 29
305. Registration, Registration of Transfer and Exchange.................................. 29
306. Mutilated, Destroyed, Lost and Stolen Notes.......................................... 30
307. Payment of Interest; Interest Rights Preserved....................................... 31
308. Persons Deemed Owners................................................................ 32
309. Cancellation......................................................................... 32
310. Computation of Interest.............................................................. 32
311. CUSIP Numbers........................................................................ 33
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.............................................. 33
402. Application of Trust Money........................................................... 34
</TABLE>
<PAGE>
v
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.................................................................... 34
502. Acceleration of Maturity; Rescission and Annulment................................... 36
503. Collection of Indebtedness and Suits for Enforcement by Trustee...................... 37
504. Trustee May File Proofs of Claim..................................................... 37
505. Trustee May Enforce Claims Without Possession of Notes............................... 38
506. Application of Money Collected....................................................... 38
507. Limitation on Suits.................................................................. 38
508. Unconditional Right of Holders to Receive Principal, Premium and Interest............ 39
509. Restoration of Rights and Remedies................................................... 39
510. Rights and Remedies Cumulative....................................................... 39
511. Delay or Omission Not Waiver......................................................... 40
512. Control by Holders................................................................... 40
513. Waiver of Past Defaults.............................................................. 40
514. Waiver of Stay or Extension Laws..................................................... 40
515. Notice of Defaults................................................................... 41
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults................................................................... 41
602. Certain Rights of Trustee............................................................ 41
603. Trustee Not Responsible for Recitals or Issuance of Notes............................ 42
604. May Hold Notes....................................................................... 42
605. Money Held in Trust.................................................................. 43
606. Compensation and Reimbursement....................................................... 43
607. Corporate Trustee Required; Eligibility.............................................. 43
608. Resignation and Removal; Appointment of Successor.................................... 44
609. Acceptance of Appointment by Successor............................................... 45
610. Merger, Conversion, Consolidation or Succession to Business.......................... 45
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS
SECTION 701. Disclosure of Names and Addresses of Holders......................................... 46
702. Reports by Trustee................................................................... 46
703. Reports by Company and Subsidiary Guarantors......................................... 46
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms................................. 47
802. Successor Substituted................................................................ 48
803. Notes to Be Secured in Certain Events................................................ 48
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders................................... 49
902. Supplemental Indentures With Consent of Holders...................................... 49
903. Execution of Supplemental Indentures................................................. 50
904. Effect of Supplemental Indentures.................................................... 50
905. Conformity with Trust Indenture Act.................................................. 50
906. Reference in Notes to Supplemental Indentures........................................ 50
907. Notice of Supplemental Indentures.................................................... 51
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.................................. 51
1002. Maintenance of Office or Agency...................................................... 51
1003. Money for Note Payments to Be Held in Trust.......................................... 52
1004. Corporate Existence.................................................................. 53
1005. Payment of Taxes and Other Claims.................................................... 53
1006. Maintenance of Properties............................................................ 53
1007. Insurance............................................................................ 53
1008. Statement by Officers As to Default.................................................. 54
1009. Purchase of Notes Upon a Change of Control Triggering Event.......................... 54
1010. Limitation on Indebtedness........................................................... 55
1011. Limitation on Restricted Payments.................................................... 55
1012. Limitation on Liens.................................................................. 57
1013. Additional Guarantees................................................................ 57
1014. Provision of Financial Statements.................................................... 58
1015. Waiver of Certain Covenants.......................................................... 58
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Right of Redemption.................................................................. 58
1102. Applicability of Article............................................................. 59
1103. Election to Redeem; Notice to Trustee................................................ 59
1104. Selection by Trustee of Notes to Be Redeemed......................................... 59
1105. Notice of Redemption................................................................. 59
</TABLE>
<PAGE>
vii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
1106. Deposit of Redemption Price.......................................................... 60
1107. Notes Payable on Redemption Date..................................................... 60
1108. Notes Redeemed in Part............................................................... 60
ARTICLE TWELVE
NOTE GUARANTEES
SECTION 1201. Note Guarantees...................................................................... 61
1202. Obligations of the Subsidiary Guarantors Unconditional............................... 62
1203. Ranking of Note Guarantee............................................................ 63
1204. Limitation of Note Guarantees........................................................ 63
1205. Release of Subsidiary Guarantors..................................................... 63
1206. Subsidiary Guarantors May Consolidate, Etc. on Certain Terms......................... 64
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance......................... 64
1302. Defeasance and Discharge............................................................. 64
1303. Covenant Defeasance.................................................................. 65
1304. Conditions to Defeasance or Covenant Defeasance...................................... 65
1305. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions............................................................ 66
1306. Reinstatement........................................................................ 67
</TABLE>
<PAGE>
INDENTURE, dated as of December 15, 1994 among FLEMING COMPANIES, INC., a
corporation duly organized and existing under the laws of the State of Oklahoma
(herein called, the "Company"), having its principal office at 6301 Waterford
Boulevard, P.O. Box 26647, Oklahoma City, Oklahoma 73126, each of the Subsidiary
Guarantors (as hereinafter defined), and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association duly organized and existing under
the laws of the United States, Trustee (herein called, the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of 10 5/8% Senior
Notes due 2001 (herein called, the "Notes"), of substantially the tenor and
amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended and shall, to the extent applicable, be governed by such
provisions.
The Company, directly or indirectly, owns beneficially and of record 100% of
the Capital Stock of the Subsidiary Guarantors; the Company and the Subsidiary
Guarantors are members of the same consolidated group of companies; the
Subsidiary Guarantors will derive direct and indirect economic benefit from the
issuance of the Notes; accordingly, the Subsidiary Guarantors have each duly
authorized the execution and delivery of this Indenture to provide for the
Guarantee by each of them with respect to the Notes as set forth in this
Indenture.
All things necessary have been done to make the Notes, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, to make the Note Guarantees of
each of the Subsidiary Guarantors, when executed by the respective Subsidiary
Guarantors and delivered hereunder, the valid obligations of the respective
Subsidiary Guarantors, and to make this Indenture a valid agreement of the
Company and each of the Subsidiary Guarantors, in accordance with their and its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
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2
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the
Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; PROVIDED, HOWEVER, that
with respect to any computation required pursuant to Sections 1009, 1010,
1011 and 1012, such term shall mean such accounting principles as are
generally accepted as of the date of the Indenture; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (A) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (B) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Banks" means the banks or other financial institutions from time to time
that are lenders under the Credit Agreement.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board, and, with respect to any Subsidiary
Guarantor, either the board of directors of such Subsidiary Guarantor or any
duly authorized committee of that board.
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3
"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, and delivered to the Trustee, and, with respect to a Subsidiary
Guarantor, a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Subsidiary Guarantor to have been duly adopted by its Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Business Development Program" means the business practice of the Company
and its Subsidiaries of making or guaranteeing loans to, or making equity
investments in, third parties engaged in the retail grocery business in exchange
for long-term supply agreements with the Company or any Subsidiary.
"Business Development Venture" means any Person participating in the
Business Development Program and BFL of Tulsa, Inc., Butch's Finer Foods, Inc.,
South Ogden Super Duper, Inc., Stores located at 301 South Main, Smith Center,
KS 66967, 109 West Main Street, Inc., Route 417, Inc., Route 16, Inc. and Route
219, Inc.
"Capital Lease Obligation" means, with respect to any Person, any
obligations of such Person and its Subsidiaries on a Consolidated basis under
any capital lease of real or personal property which, in accordance with GAAP,
has been recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
partnership interests, participations or other equivalents (however designated)
of such Person's capital stock whether now outstanding or issued after the date
hereof, including, without limitation, all Common Stock and Preferred Stock of
such Person.
"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have beneficial ownership of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total outstanding
Voting Stock of the Company; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election to such
Board of Directors, or whose nomination for election by the shareholders of the
Company, was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of such Board of Directors then in office; (iii) the
Company consolidates with or merges with or into any Person or conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with or merges into or with the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction where the outstanding Voting
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4
Stock of the Company is not changed or exchanged at all (except to the extent
necessary to reflect a change in the jurisdiction of incorporation of the
Company) or where (A) the outstanding Voting Stock of the Company is changed
into or exchanged for (x) Voting Stock of the surviving corporation which is not
Redeemable Capital Stock or (y) cash, securities or other property (other than
Capital Stock of the surviving corporation) in an amount which could be paid by
the Company as a Restricted Payment under Section 1011 (and such amount shall be
treated as a Restricted Payment subject to Section 1011) and (B) immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total outstanding Voting Stock of the surviving corporation; or (iv) the Company
is liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with Section 801.
"Change of Control Purchase Date" has the meaning specified in Section 1009.
"Change of Control Purchase Offer" has the meaning specified in Section
1009.
"Change of Control Purchase Price" has the meaning specified in Section
1009.
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act then the body performing
such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Indenture, including, without limitation, all
series and classes of such common stock.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company by its Chairman, any Vice Chairman, its President,
any Vice President, its Treasurer or an Assistant Treasurer, and delivered to
the Trustee.
"Consolidated" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges deducted in computing
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5
Consolidated Net Income, in each case, for such period, of the Company and its
Subsidiaries on a Consolidated basis, all determined in accordance with GAAP to
(b) Consolidated Interest Expense for such period; PROVIDED that (i) in making
such computation, the Consolidated Interest Expense attributable to interest on
any Indebtedness computed on a PRO FORMA basis and (A) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (B) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of the Company, a fixed or floating rate of interest,
shall be computed by applying, at the option of the Company, either the fixed or
floating rate; (ii) in making such computation, Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
computed on a PRO FORMA basis shall be computed based upon the average daily
balance of such Indebtedness during the applicable period; and (iii) in making
such computation, Consolidated Interest Expense attributable to interest on
Indebtedness constituting obligations in connection with any letters of credit
and acceptances issued under letter of credit facilities, acceptance facilities
or other similar facilities computed on a PRO FORMA basis shall be computed
excluding any contingent obligations and without assuming that any undrawn
letter of credit has been drawn.
"Consolidated Income Tax Expense" means for any period the provision for
federal, state, local and foreign income taxes of the Company and its
Subsidiaries for such period as determined on a Consolidated basis in accordance
with GAAP.
"Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Subsidiaries for such
period, as determined on a Consolidated basis in accordance with GAAP including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
Interest Rate Agreements (including amortization of discount), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the aggregate amount for such period of dividends on any Redeemable
Capital Stock or Preferred Stock of the Company and its Subsidiaries, (c) the
interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid, or accrued by such Person during such period and (d) all
capitalized interest of the Company and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the Consolidated net income
(or loss) of the Company and its Subsidiaries for such period as determined on a
Consolidated basis in accordance with GAAP, adjusted, to the extent included in
calculating such net income (loss), by excluding, without duplication, (i) any
net after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (ii) the $101.3 million facilities consolidation and restructuring
charge originally reflected in the Company's audited Consolidated statement of
earnings for the year ended December 25, 1993, (iii) the portion of net income
(or loss) of the Company and its Subsidiaries determined on a Consolidated basis
allocable to minority interests in unconsolidated Persons to the extent that
cash dividends or distributions have not actually been received by the Company
or any Subsidiary, (iv) net income (or loss) of any Person combined with the
Company or any Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination, (v) net gains or losses (less all fees
and expenses relating thereto) in respect of dispositions of assets other than
in the ordinary course of business and (vi) the net income of any Subsidiary to
the extent that the declaration
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6
of dividends or similar distributions by that Subsidiary of that income is not
at the time permitted, 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 Subsidiary or its shareholders.
"Consolidated Net Tangible Assets" means the total of all the assets
appearing on the Consolidated balance sheet of the Company and its Consolidated
Subsidiaries, less the following: (1) current liabilities; (2) reserves for
depreciation and other asset valuation reserves; (3) intangible assets
including, without limitation, items such as goodwill, trademarks, trade names,
patents and unamortized debt discount and expense; and (4) appropriate
adjustments on account of minority interests of other Persons holding stock in
any majority-owned Subsidiary of the Company.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash charges of the Company and its
Consolidated Subsidiaries for such period, as determined on a Consolidated basis
in accordance with GAAP (excluding any non-cash charges which require an accrual
or reserve for any future period).
"Corporate Trust Office" means a corporate trust office of the Trustee, at
which at any particular time its corporate trust business shall be administered,
which office at the date of execution of this Indenture is located at 2200 Ross
Avenue, 5th Floor, Dallas, Texas 75201.
"Corporation" includes corporations, associations, companies and business
trusts.
"Credit Agreement" means the Credit Agreement, dated as of July 19, 1994,
among the Company, the Banks, the Agents listed therein and the Managing Agent,
as such agreement may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing).
"Currency Agreements" means any spot or forward foreign exchange agreements
and currency swap, currency option or other similar financial agreements or
arrangements entered into by the Company or any of its Subsidiaries.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Equity Store" means a Person in which the Company or any of its
Subsidiaries has invested capital or to which it has made loans in accordance
with the business practice of the Company and its Subsidiaries of making equity
investments in Persons, and making or guaranteeing loans to such Persons, for
the purpose of assisting such Person in acquiring, remodeling, refurbishing,
expanding or operating one or more retail grocery stores and pursuant to which
such Person is permitted or required to reduce the Company's or the Subsidiary's
equity interest to a minority position over time (usually five to ten years).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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7
"Floating Rate Note Indenture" means the indenture dated as of December 15,
1994 among the Company, each of the Subsidiary Guarantors and Texas Commerce
Bank National Association, Trustee covering the Company's Floating Rate Notes.
"Floating Rate Notes" means the Floating Rate Senior Notes due 2001 and,
more particularly, means any notes authenticated and delivered under the
Floating Rate Note Indenture.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as applied from time to
time by the Company in the preparation of its Consolidated financial statements.
"Guaranteed Debt" means, with respect to any Person, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness contained herein guaranteed directly or indirectly in any manner by
such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness other than to the Company, a Wholly Owned Subsidiary of the Company
or a Subsidiary Guarantor or to assure the holder of such Indebtedness other
than the Company, a Wholly Owned Subsidiary of the Company or a Subsidiary
Guarantor against loss, (iii) to supply funds to, or in any other manner invest
in, the debtor (including any agreement to pay for property or services without
requiring that such property be received or such services be rendered), (iv) to
maintain working capital or equity capital of the debtor, or otherwise to
maintain the net worth, solvency or other financial condition of the debtor or
(v) otherwise to assure a creditor against loss, PROVIDED that the term
"guarantee" shall not include endorsements for collection or deposit, in either
case in the ordinary course of business.
"Guaranteed Obligations" has the meaning specified in Section 1201.
"Holder" means a Person in whose name a Note is registered in the Security
Register.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all liabilities of such Person for borrowed money (including overdrafts) or for
the deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (ii) all obligations of such Person evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade payables arising in the ordinary course of business, (iv) all
Capital Lease Obligations of such Person, (v) all obligations under Interest
Rate Agreements or Currency Agreements of such Person, (vi) all Indebtedness
referred to in clauses (i) through (v) above of other Persons and all dividends
of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien,
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8
upon or with respect to property (including, without limitation, accounts and
contract rights) owned by such Person, even though such Person has not assumed
or become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt
of such Person, (viii) all Redeemable Capital Stock valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends, and (ix) any amendment, supplement, modification, deferral, renewal,
extension, refunding or refinancing of any liability of the types referred to in
clauses (i) through (viii) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the fair market
value of such Redeemable Capital Stock, such fair market value is to be
determined in good faith by the Board of Directors of the issuer of such
Redeemable Capital Stock.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Interest Rate Agreements" means any interest rate protection agreements and
other types of interest rate hedging agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements).
"Investment" means, with respect to any Person, directly or indirectly, any
advance (other than advances to customers in the ordinary course of business,
which are recorded as accounts receivable on the balance sheet of the Company
and its Subsidiaries), loan or other extension of credit or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition by such Person of any Capital Stock, bonds, notes, debentures or
other securities issued by any other Person.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's or in the event Moody's or
S&P shall cease rating the Notes and the Company shall select any other Rating
Agency, the equivalent of such ratings by such other Rating Agency.
"Lien" means any mortgage or deed of trust, charge, pledge, lien (statutory
or otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property or assets of any kind, real or personal,
movable or immovable.
"Managing Agent" means Morgan Guaranty Trust Company of New York as managing
agent under the Credit Agreement and any future managing agent under the Credit
Agreement.
"Maturity", when used with respect to the Notes, means the date on which the
principal of the Notes becomes due and payable as therein provided or as
provided in this Indenture,
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9
whether at Stated Maturity, purchase upon a Change of Control Triggering Event
or redemption date, and whether by declaration of acceleration, Change of
Control, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor rating
agency.
"Note Guarantee" means any guarantee by a Subsidiary Guarantor of the
Company's obligations under this Indenture as set forth in Article Twelve of
this Indenture and any additional guarantee of the Notes pursuant to Section
1013 hereof.
"Notes" has the meaning stated in the first recital of this Indenture and,
more particularly, means any Notes authenticated and delivered under this
Indenture.
"Offering" means the sale of the Notes by the Company to Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan
Securities Inc., as underwriters.
"Officers' Certificate" means a certificate signed by the Chairman, any Vice
Chairman, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, including an officer or employee of the Company, and who shall
be reasonably acceptable to the Trustee.
"Outstanding", when used with respect to the Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; PROVIDED that, if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Notes, except to the extent provided in Sections 1302 and 1303,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Thirteen; and
(iv) Notes which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Notes have been authenticated and delivered
pursuant to this Indenture, other than any such Notes in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Notes are held by a bona fide purchaser in whose hands the Notes are
valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any
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10
Affiliate of the Company or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Trustee shall be
protected in making such calculation or in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Notes which
the Trustee actually knows to be so owned shall be so disregarded. Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Notes and that the pledgee is not the Company or
any other obligor upon the Notes or any Affiliate of the Company or such other
obligor.
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any,
on) or interest on any Notes on behalf of the Company.
"Permitted Indebtedness" means any of the following Indebtedness of the
Company or any Subsidiary, as the case may be:
(i) Indebtedness of the Company and guarantees of the Subsidiary
Guarantors under the Credit Agreement (including Indebtedness of the Company
under Tranche A of the Credit Agreement to the extent that the aggregate
commitment thereunder does not exceed $900 million, the maximum aggregate
commitment for such facility on the date of this Indenture, and any
guarantees with respect thereto outstanding on the date of this Indenture
and any additional guarantees executed in connection therewith) in an
aggregate principal amount, together with Indebtedness, if any, incurred
pursuant to clauses (ii) and (xi) of this definition of "Permitted
Indebtedness", at any one time outstanding not to exceed $1.7 billion (after
giving PRO FORMA effect to the use of proceeds of the Offering) less
mandatory repayments actually made in respect of any term Indebtedness
thereunder;
(ii) Indebtedness of the Company under uncommitted bank lines of credit;
PROVIDED, HOWEVER, that the aggregate principal amount of Indebtedness
incurred pursuant to clauses (i), (ii) and (xi) of this definition of
"Permitted Indebtedness" does not exceed $1.7 billion (after giving PRO
FORMA effect to the use of proceeds of the Offering) less mandatory
repayments actually made in respect of any term Indebtedness thereunder;
(iii) Indebtedness of the Company evidenced by the Notes and the Note
Guarantees with respect thereto under this Indenture;
(iv) Indebtedness of the Company evidenced by the Floating Rate Notes
and the Note Guarantees (as defined in the Floating Rate Note Indenture)
with respect thereto under the Floating Rate Note Indenture;
(v) Indebtedness of the Company or any Subsidiary outstanding on the
date of this Indenture and listed on Schedule A hereto;
(vi) obligations of the Company or any Subsidiary entered into in the
ordinary course of business (a) pursuant to Interest Rate Agreements
designed to protect against or manage exposure to fluctuations in interest
rates in respect of Indebtedness or retailer notes receivables, which, if
related to Indebtedness or retailer notes receivables, do not exceed the
aggregate notional principal amount of such Indebtedness or such retailer
notes receivables, as the case may be, to which such Interest Rate
Agreements
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11
relate, or (b) under any Currency Agreements in the ordinary course of
business and designed to protect against or manage exposure to fluctuations
in foreign currency exchange rates which, if related to Indebtedness, do not
increase the amount of such Indebtedness other than as a result of foreign
exchange fluctuations;
(vii) Indebtedness of the Company owing to a Wholly Owned Subsidiary or
of any Subsidiary owing to the Company or any Wholly Owned Subsidiary;
PROVIDED that any disposition, pledge (except any pledge under the Credit
Agreement or the Prior Indentures) or transfer of any such Indebtedness to a
Person (other than the Company or another Wholly Owned Subsidiary) shall be
deemed to be an incurrence of such Indebtedness by the Company or
Subsidiary, as the case may be, not permitted by this clause (vii);
(viii) Indebtedness in respect of letters of credit, surety bonds and
performance bonds provided in the ordinary course of business;
(ix) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business; PROVIDED that
such Indebtedness is extinguished within five Business Days of its
incurrence;
(x) Indebtedness of the Company or any Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets;
(xi) Indebtedness of the Company evidenced by commercial paper issued by
the Company; PROVIDED, HOWEVER, that the aggregate principal amount of
Indebtedness incurred pursuant to clauses (i), (ii) and (xi) of this
definition of "Permitted Indebtedness" does not exceed $1.7 billion (after
giving PRO FORMA effect to the use of proceeds of the Offering) less
mandatory repayments actually made in respect of any term Indebtedness
thereunder;
(xii) Indebtedness of the Company pursuant to guarantees by the Company
or any Subsidiary Guarantor in connection with any Permitted Receivables
Financing; PROVIDED, HOWEVER, that such Indebtedness shall not exceed 15% of
the book value of the Transferred Receivables or, in the case of receivables
arising from direct financing leases for retail electronics systems, 30% of
the book value thereof;
(xiii) Indebtedness of the Company and its Subsidiaries in addition to
that described in clauses (i) through (xii) of this definition of "Permitted
Indebtedness," together with any other outstanding Indebtedness incurred
pursuant to this clause (xiii), not to exceed $100 million at any time
outstanding in the aggregate; and
(xiv) any renewals, extensions, substitutions, refundings, refinancings
or replacements (each, a "refinancing") of any Indebtedness described in
clauses (iii), (iv) and (v) of this definition of "Permitted Indebtedness",
including any successive refinancings, so long as (A) the aggregate
principal amount of Indebtedness represented thereby is not increased by
such refinancing to an amount greater than such principal amount plus the
lesser of (x) the stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to the terms of the
Indebtedness
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12
being refinanced or (y) the amount of premium or other payment actually paid
at such time to refinance the Indebtedness, plus, in either case, the amount
of expenses of the Company or Subsidiary, as the case may be, incurred in
connection with such refinancing and (B) such refinancing does not reduce
the Average Life to Stated Maturity or the Stated Maturity of such
Indebtedness.
"Permitted Investment" means (i) Investment in any Wholly Owned Subsidiary
or any Investment in any Person by the Company or any Wholly Owned Subsidiary as
a result of which such Person becomes a Wholly Owned Subsidiary or any
Investment in the Company by a Wholly Owned Subsidiary; (ii) intercompany
Indebtedness to the extent permitted under clause (vii) of the definition of
"Permitted Indebtedness"; (iii) Temporary Cash Investments; (iv) sales of goods
on trade credit terms consistent with the Company's past practices or otherwise
consistent with trade credit terms in common use in the industry; (v)
Investments in direct financing leases for equipment owned by the Company and
leased to its customers in the ordinary course of business consistent with past
practice; (vi) Investments in existence on the date of this Indenture; and (vii)
any substitutions or replacements of any Investment so long as the aggregate
amount of such Investment is not increased by such substitution or replacement.
"Permitted Liens" means, with respect to any Person:
(a) any Lien existing as of the date of this Indenture;
(b) any Lien arising by reason of (1) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (2) taxes, assessments, governmental charges or levies not yet
delinquent or which are being contested in good faith; (3) security for
payment of workers compensation or other insurance; (4) security for the
performance of tenders, leases (including, without limitation, statutory and
common law landlord's liens) and contracts (other than contracts for the
payment of money); (5) zoning restrictions, easements, licenses,
reservations, title defects, rights of others for rights-of-way for
utilities, sewers, electric lines, telephone or telegraph lines and other
similar purposes, provisions, covenants, conditions, waivers and
restrictions on the use of 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 or owner of the leased property, with or
without consent of the lessee), none of which materially impairs the use of
any parcel of property material to the operation of the business of the
Company or any Subsidiary or the value of such property for the purpose of
such business; (6) deposits to secure public or statutory obligations; (7)
operation of law in favor of growers, dealers and suppliers of fresh fruits
and vegetables, carriers, mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are
not yet delinquent or are being contested in good faith by negotiations or
by appropriate proceedings which suspend the collection thereof; (8) the
grant by the Company to licensees, pursuant to security agreements, of
security interests in trademarks and goodwill, patents and trade secrets of
the Company to secure the damages, if any, of such licensees,
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13
resulting from the rejection of the license of such licensees in a
bankruptcy, reorganization or similar proceeding with respect to the
Company; or (9) security for surety or appeal bonds;
(c) any extension, renewal, refinancing or replacement of any Lien on
property of the Company or any Subsidiary existing as of the date of this
Indenture and securing the Indebtedness under the Credit Agreement or the
Prior Indenture in an aggregate principal amount not to exceed the principal
amount of the Indebtedness outstanding as permitted by clause (i) of the
definition of "Permitted Indebtedness" so long as no additional collateral
is granted as security thereby; PROVIDED that this clause (c) shall not
apply to any Lien on such property that has not been subject to a Lien for
30 days;
(d) any Lien on any property or assets of a Subsidiary in favor of the
Company or any Wholly Owned Subsidiary;
(e) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary; PROVIDED that such Lien does
not extend to any assets of the Company or any Subsidiary other than the
assets acquired in the transaction resulting in such Acquired Indebtedness
being incurred by the Company or Subsidiary, as the case may be;
(f) any Lien to secure the performance of bids, trade contracts,
letters of credit and other obligations of a like nature and incurred in the
ordinary course of business of the Company or any Subsidiary;
(g) any Lien securing any Interest Rate Agreements or Currency
Agreements permitted to be incurred pursuant to clause (v) of the definition
of "Permitted Indebtedness" or any collateral for the Indebtedness to which
such Interest Rate Agreements or Currency Agreements relate;
(h) any Lien securing the Notes;
(i) any Lien on an asset securing Indebtedness (including Capital
Lease Obligations) incurred or assumed for the purpose of financing all or
any part of the cost of acquiring or constructing such asset; PROVIDED that
such Lien attaches to such asset concurrently or within 180 days after the
acquisition or completion of construction thereof; and
(j) any Lien on real or personal property securing Capital Lease
Obligations of the Company or any Subsidiary as lessee with respect to such
real or personal property (1) to the extent that the Company or such
Subsidiary has entered into (and not terminated), or has a binding
commitment for, subleases on terms which, to the Company, are at least as
favorable, on a current basis, as the terms of the corresponding capital
lease or (2) under which the aggregate principal component of the annual
rent payable does not exceed $5 million;
(k) any Lien on a Financing Receivable or other receivable that is
transferred in a Permitted Receivables Financing;
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14
(l) any Lien consisting of any pledge to any Person of Indebtedness
owed by any Subsidiary to the Company or any Wholly Owned Subsidiary;
PROVIDED that (i) such Subsidiary is a Subsidiary Guarantor and (ii) the
principal amount pledged does not exceed the Indebtedness secured by such
pledge; and
(m) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clause (a) so long as no
additional collateral is granted as security thereby.
"Permitted Receivables Financing" means any transaction involving the
transfer (by way of sale, pledge or otherwise) by the Company or any of its
Subsidiaries of receivables to any other Person, PROVIDED that after giving
effect to such transaction the sum of (i) the aggregate uncollected balances of
the receivables so transferred ("Transferred Receivables") PLUS (ii) the
aggregate amount of all collections on Transferred Receivables theretofore
received by the seller but not yet remitted to the purchaser, in each case at
the date of determination, would not exceed $750 million.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred stock whether now outstanding or issued after the date of
this Indenture, including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Principal Property" means any manufacturing or processing plant, office
facility, retail store, warehouse or distribution center, including, in each
case, the fixtures appurtenant thereto, located within the continental United
States and owned and operated now or hereafter by the Company or any Subsidiary
(other than an Equity Store or a Business Development Venture) and having a book
value on the date as of which the determination is being made of more than 2% of
Consolidated Net Tangible Assets.
"Prior Indentures" means the Indenture, dated March 15, 1986, between the
Company and Morgan Guaranty Trust Company of New York, as Trustee, covering $100
million aggregate principal amount of the Company's 9 1/2% Debentures due 2016
and the Indenture, dated December 1, 1989, between the Company and Morgan
Guaranty Trust Company of New York, as Trustee, covering $275 million aggregate
principal amount of the Company's Medium-Term Notes.
"Public Equity Offering" means a primary public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act with net cash proceeds of at least $50 million.
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15
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Rating Agency" means any of (i) S&P, (ii) Moody's or (iii) if S&P or
Moody's or both shall not make a rating of the Notes publicly available, a
security rating agency or agencies, as the case may be, nationally recognized in
the United States, selected by the Company, which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: Aaa,
Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody's used by another
Rating Agency. In determining whether the rating of the Notes has decreased by
one or more gradation, gradations within Rating Categories (+ and - for S&P; 1,
2 and 3 for Moody's; or the equivalent gradations for another Rating Agency)
shall be taken into account (E.G., with respect to S&P, a decline in rating from
BB+ to BB, as well as from BB- to B+, will constitute a decrease of one
gradation).
"Rating Decline" means the occurrence on, or within 90 days after, the date
of public notice of the occurrence of a Change of Control or of the intention of
the Company or Persons controlling the Company to effect a Change of Control
(which period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies) of the following: (i) if the Notes are rated by either Rating Agency
as Investment Grade immediately prior to the beginning of such period, the
rating of the Notes by both Rating Agencies shall be below Investment Grade; or
(ii) if the Notes are rated below Investment Grade by both Rating Agencies
immediately prior to the beginning of such period, the rating of the Notes by
either Rating Agency shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating Categories).
"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is, or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity at the option of the
holder thereof.
"Redemption Date", when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Note to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the June 1 or December 1 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the
<PAGE>
16
executive committee of the board of directors, the chairman of the trust
committee, the president, any vice president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, the cashier, any assistant
cashier, any trust officer or assistant trust officer, the controller or any
assistant controller or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above-designated officers,
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.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Indebtedness" means Indebtedness of the Company other than
Subordinated Indebtedness.
"Significant Subsidiary" of the Company means any Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1.02(v) of Regulation S-X
under the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill Inc.,
a New York corporation, or any successor rating agency.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of or premium on such Indebtedness or
such installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company subordinated
in right of payment to the Notes.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
"Subsidiary Guarantor" means any Person that is required pursuant to Section
1013, on or after the date of this Indenture, to execute a Note Guarantee of the
Notes until a successor replaces any such party pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor, and the
following Subsidiaries of the Company: ATI, Inc., Badger Markets, Inc., Baker's
Supermarkets, Inc., Ball Motor Service, Inc., Boogaart Stores of Nebraska, Inc.,
Central Park Super Duper, Inc., Commercial Cold/Dry Storage Company, Consumers
Markets, Inc., D.L. Food Stores, Inc., Del-Arrow Super Duper, Inc., Festival
Foods, Inc., Fleming Direct Sales Corporation, Fleming Foods East, Inc., Fleming
Foods of Alabama, Inc., Fleming Foods of Ohio, Inc., Fleming Foods of Tennessee,
Inc., Fleming Foods of Texas, Inc., Fleming Foods of Virginia, Inc., Fleming
Foods South, Inc., Fleming Foods West, Inc., Fleming Foreign Sales Corporation,
Fleming Franchising, Inc., Fleming Holdings, Inc., Fleming International, Ltd.,
Fleming Site Media, Inc., Fleming
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17
Supermarkets of Florida, Inc., Fleming Technology Leasing Company, Inc., Fleming
Transportation Service, Inc., Food Brands, Inc., Food-4-Less, Inc., Food
Holdings, Inc., Food Saver of Iowa, Inc., Gateway Development Co., Inc., Gateway
Food Distributors, Inc., Gateway Foods, Inc., Gateway Foods of Altoona, Inc.,
Gateway Foods of Pennsylvania, Inc., Gateway Foods of Twin Ports, Inc., Gateway
Foods Service Corporation, Grand Central Leasing Corporation, Great Bend
Supermarkets, Inc., Hub City Transportation, Inc., Kensington and Harlem, Inc.,
LAS, Inc., Ladysmith East IGA, Inc., Ladysmith IGA, Inc., Lake Markets, Inc.,
M&H Desoto, Inc., M&H Financial Corp., M&H Realty Corp., Malone & Hyde, Inc.,
Malone & Hyde of Lafayette, Inc., Manitowoc IGA, Inc., Moberly Foods, Inc., Mt.
Morris Super Duper, Inc., Niagara Falls Super Duper, Inc., Northern Supermarkets
of Oregon, Inc., Northgate Plaza, Inc., 109 West Main Street, Inc., 121 East
Main Street, Inc., Peshtigo IGA, Inc., Piggly Wiggly Corporation, Quality
Incentive Company, Inc., Rainbow Transportation Services, Inc., Route 16, Inc.,
Route 219, Inc., Route 417, Inc., Richland Center IGA, Inc, Scrivner, Inc.,
Scrivner-Food Holdings, Inc., Scrivner of Alabama, Inc., Scrivner of Illinois,
Inc., Scrivner of Iowa, Inc., Scrivner of Kansas, Inc., Scrivner of New York,
Inc., Scrivner of North Carolina, Inc., Scrivner of Pennsylvania, Inc., Scrivner
of Tennessee, Inc., Scrivner of Texas, Inc., Scrivner Super Stores of Illinois,
Inc., Scrivner Super Stores of Iowa, Inc., Scrivner Transportation, Inc., Sehon
Foods, Inc., Selected Products, Inc., Sentry Markets, Inc., Smar Trans, Inc.,
Southern Supermarkets, Inc. (TX), Southern Supermarkets, Inc. (OK), Southern
Supermarkets of Louisiana, Inc., Star Groceries, Inc., Store Equipment, Inc.,
Sundries Service, Inc., Switzer Foods, Inc., 35 Church Street, Inc., Thompson
Food Basket, Inc., 29 Super Market, Inc., 27 Slayton Avenue, Inc. and WPC, Inc.
"Temporary Cash Investments" means (i) any evidence of Indebtedness issued
by the United States, or an instrumentality or agency thereof, and guaranteed
fully as to principal, premium, if any, and interest by the United States, (ii)
any certificate of deposit issued by, or time deposit of, a bank or trust
company in the United States having combined capital and surplus and undivided
profits of not less than $500 million, whose debt has a rating, at the time as
of which any investment therein is made, of "A" (or higher) according to Moody's
or "A" (or higher) according to S&P, (iii) commercial paper issued by an entity
(other than an Affiliate or Subsidiary of the Company) with a rating, at the
time as of which any investment therein is made, of "P-1" (or higher) according
to Moody's or "A-1" (or higher) according to S&P, (iv) any money market deposit
accounts issued or offered by a financial institution in the United States
having capital and surplus in excess of $500 million, (v) short term tax exempt
bonds with a rating, at the time as of which any investment is made therein, of
"Aa2" (or higher) according to Moody's or "AA" (or higher) according to S&P,
(vi) shares in a mutual fund, the investment objectives and policies of which
require it to invest substantially all of its assets in investments of the type
described in clause (v) and (vii) repurchase and reverse repurchase obligations
underlying securities of the types described in clauses (i) and (ii) entered
into with any financial institution meeting the qualifications specified in
clause (ii); PROVIDED that in the case of clauses (i), (ii), (iii), (v) and
(vii), such investment matures within one year from the date of acquisition
thereof.
"Transferred Receivables" has the meaning specified in the definition of
"Permitted Receivables Financing" in this Section.
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18
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed, except
as provided in Section 905.
"Trustee" means the Person named as the Trustee in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the timely payment of which its full faith
and credit is pledged or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States, the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such U.S. Government Obligation
or a specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
depository receipt; PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository receipt.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock (other
than directors' qualifying shares) of which is owned by the Company or another
Wholly Owned Subsidiary.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
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19
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 1008)
shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, he 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 complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. In giving such opinion, such counsel may rely upon opinions of local
counsel reasonably satisfactory to the Trustee. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Company stating that the information with respect to such factual matters is in
the possession of the Company, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are
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20
herein sometimes referred to as the "Act" of the Holders signing such instrument
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any Person,
and the date of holding the same, shall be proved by the Security Register.
(d) If the Company shall solicit from the Holders of Notes any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to Board Resolution, fix in advance a
record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section 316(c),
such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; PROVIDED that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than 330 days after the
record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
SECTION 105. NOTICES, ETC., TO TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
<PAGE>
21
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department, or
(2) the Company or any Subsidiary Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this Indenture, or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides notice of any event to Holders by the Company,
any Subsidiary Guarantor or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder when so
mailed, whether or not such Holder actually receives such notice. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders when such notice is required to be given pursuant
to any provision of this Indenture, then any manner of giving such notice as
shall be satisfactory to the Trustee shall be deemed to be a sufficient giving
of such notice for every purpose hereunder.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes or the Note
Guarantees 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.
<PAGE>
22
SECTION 110. BENEFITS OF INDENTURE.
Nothing in this Indenture, in the Notes or the Note Guarantees, express or
implied, shall give to any Person, other than the parties hereto, any Paying
Agent, any Securities Registrar and their successors hereunder and the Holders,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 111. GOVERNING LAW.
This Indenture, the Notes and the Note Guarantees shall be governed by and
construed in accordance with the law of the State of New York. This Indenture is
subject to the provisions of the Trust Indenture Act of 1939, as amended and
shall, to the extent applicable, be governed by such provisions.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity or Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of interest or principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption Date, or at the
Stated Maturity or Maturity; PROVIDED that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Notes and the Trustee's certificates of authentication shall be in
substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
<PAGE>
23
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner permitted by the
rules of any securities exchange on which the Notes may be listed, all as
determined by the officers of the Company executing such Notes, as evidenced by
their execution of such Notes.
SECTION 202. FORM OF FACE OF NOTE.
FLEMING COMPANIES, INC.
10 5/8% SENIOR NOTE DUE 2001 CUSIP
NO. $
Fleming Companies, Inc., an Oklahoma corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
or registered assigns, the principal sum of Dollars on
December 15, 2001, at the office or agency of the Company referred to below, and
to pay interest thereon from December 15, 1994, or from the most recent Interest
Payment Date to which interest has been paid or duly provided for, semiannually
on June 15 and December 15, of each year, commencing June 15, 1995, at the rate
of 10 5/8% per annum, until the principal hereof is paid or duly provided for,
and (to the extent lawful) to pay on demand interest on any overdue interest at
the rate borne by the Notes from the date on which such overdue interest becomes
payable to the date payment of such interest has been made or duly provided for.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in such Indenture, be paid to the Person
in whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on the Regular Record Date for such interest, which shall be
the [date] or [date] (whether or not a Business Day), as the case may be, next
preceding such Interest Payment Date. Any such interest not so punctually paid
or duly provided for shall forthwith cease to be payable to the Holder on such
Regular Record Date, and such Defaulted Interest, and (to the extent lawful)
interest on such Defaulted Interest at the rate borne by the Notes, may be paid
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes not less than 10 days prior to such Special Record
Date, or may be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in said Indenture. Payment of the principal of (and premium, if
any, on) and interest on this Note will be made at the office or agency of the
Company maintained for that purpose in The City of New York, or at such other
office or agency of the Company as may be maintained for such purpose, 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; PROVIDED, HOWEVER, that
payment of interest may be made at the option of the Company (i) by check mailed
to the address of the Person entitled thereto as such address shall appear on
the Security Register or (ii) if requested in writing at least 10 days prior to
a Regular Record Date or a Special Record Date, as the case may be, by a Person
who is entitled thereto with respect to at least $1 million in principal amount
of the Notes, by transfer to an account maintained by such Person at a bank
located in the United States.
<PAGE>
24
Reference is hereby made to the further provisions of this Note set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: FLEMING COMPANIES, INC.
By ___________________________________
Attest:
___________________________________
Secretary
SECTION 203. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of securities of the Company
designated as its 10 5/8% Senior Notes due 2001 (herein called the "Notes"),
limited (except as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $300,000,000, which may be issued under an
indenture (herein called the "Indenture") dated as of December 15, 1994, among
the Company, the Subsidiary Guarantors named therein and Texas Commerce Bank
National Association, trustee (herein called the "Trustee", which term includes
any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and immunities
thereunder of the Company, the Subsidiary Guarantors, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered.
The Notes are subject to redemption at the option of the Company, upon not
less than 30 nor more than 60 days notice at any time after December 15, 1999,
as a whole or in part, at the election of the Company, at a Redemption Price
equal to the percentage of the principal amount of the Notes set forth below if
redeemed during the 12-month period beginning on December 15 of the years
indicated below (subject to the right of Holders of record on relevant record
dates to receive accrued interest due on an Interest Payment Date):
<TABLE>
<CAPTION>
YEAR REDEMPTION PRICE
- ---------------------------------------------------- -----------------
<S> <C>
1999................................................ 103.0%
2000................................................ 101.5%
</TABLE>
and thereafter at 100% of the principal amount together in the case of any such
redemption with accrued interest, if any, to the Redemption Date, all as
provided in the Indenture.
<PAGE>
25
In addition, up to 20% of the initial aggregate principal amount of the
Notes may be redeemed on or prior to December 15, 1997, at the option of the
Company, within 180 days of a Public Equity Offering at a redemption price equal
to 110% of the principal amount thereof, together with accrued and unpaid
interest, if any, to the date of redemption (subject to the right of Holders of
record on relevant record dates to receive interest due on relevant Interest
Payment Dates); PROVIDED that after giving effect to such redemption at least
$200 million aggregate principal amount of the Notes remain outstanding.
Upon the occurrence of a Change of Control Triggering Event, the Holder of
this Note may require the Company, subject to certain limitations provided in
the Indenture, to purchase this Note at a purchase price in cash in an amount
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase.
In the case of any redemption of Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Notes, or one or more Predecessor Notes, of record at the close of business
on the relevant Record Date referred to on the face hereof. Notes (or portions
thereof) for whose redemption and payment provision is made in accordance with
the Indenture shall cease to bear interest from and after the Redemption Date.
In the event of redemption of this Note in part only, a new Note or Notes
for the unredeemed portion hereof shall be issued in the name of the Holder
hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of all
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company and any Subsidiary Guarantor on this Note and
(b) certain restrictive covenants and the related Defaults and Events of
Default, upon compliance by the Company and the Subsidiary Guarantors with
certain conditions set forth therein, which provisions apply to this Note.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Notes at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to
waive compliance by the Company and the Subsidiary Guarantors with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by or on behalf of the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
<PAGE>
26
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any, on) and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registerable on the Security Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in The City of New York,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Note for registration of
transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of
the Company, the Subsidiary Guarantors or the Trustee may treat the Person in
whose name this Note is registered as the owner hereof for all purposes, whether
or not this Note be overdue, and neither the Company, the Subsidiary Guarantors,
the Trustee nor any such agent shall be affected by notice to the contrary.
Interest on this Note shall be computed on the basis of a 360-day year of
twelve 30-day months.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ___________________ hereby sell(s), assign(s) and
transfer(s) unto ______________ ______________ ______________ (please insert
social security or other identifying number of assignee) the within Note and
hereby irrevocably constitutes and appoints ______________ ______________ as
agent to transfer the said Note on the books of the Company with the full power
of substitution in the premises.
Dated:
______________________________________
Signature(s)
<PAGE>
27
Signature must be guaranteed by
a bank or trust company
or a member firm of a major stock
exchange
______________________________________
Signature Guarantee
NOTICE: The signature on the assignment
must correspond with the name as
written upon the face of the Note in every
particular without alteration or enlargement or any
change whatever.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially the
following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within-mentioned Indenture.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
as Trustee
By ___________________________________
Authorized Signatory
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $300,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 303, 304, 305, 306, 801,
906, 1009 or 1108.
The Notes shall be known and designated as the "10 5/8% Senior Notes due
2001" of the Company. Their Stated Maturity shall be December 15, 2001, and they
shall bear interest at the rate of 10 5/8% per annum from December 15, 1994, or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for, payable semi-annually on June 15 and December 15 of each
year, commencing June 15, 1995 and at said Stated Maturity, until the principal
thereof is paid or duly provided for.
The principal of (and premium, if any, on) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; PROVIDED, HOWEVER, that, at the option of the
Company, interest may be paid by
<PAGE>
28
(i) mailing a check for such interest, payable to or upon the written
order of the Person entitled thereto pursuant to Section 308, to the address
of such Person as it appears in the Security Register or
(ii) if requested in writing at least 10 days prior to a Regular Record
Date or a Special Record Date, as the case may be, by a person who is
entitled thereto with respect to at least $1 million in principal amount of
the Notes by transfer to an account maintained by such Person at a bank
located in the United States.
The Notes shall be redeemable as provided in Article Eleven.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons and only
in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman, any
Vice Chairman, its President or a Vice President, under its corporate seal
reproduced thereon and attested by its Secretary or an Assistant Secretary. The
signature of any of these officers on the Notes may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of a Responsible Officer, and such certificate
upon any Note shall be conclusive evidence, and the only evidence, that such
Note has been duly authenticated and delivered hereunder and is entitled to the
benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Notes executed in the
<PAGE>
29
name of the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Notes surrendered
for such exchange and of like principal amount; and the Trustee, upon Company
Request of the successor Person, shall authenticate and deliver Notes as
specified in such request for the purpose of such exchange. If Notes shall at
any time be authenticated and delivered in any new name of a successor Person
pursuant to this Section in exchange or substitution for or upon registration of
transfer of any Notes, such successor Person, at the option of the Holders but
without expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute and
upon Company Order the Trustee shall authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Notes in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to be
prepared without unreasonable delay. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Company designated for such
purpose pursuant to Section 1002, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes, the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Security Register shall be in written
form or any other form capable of being converted into written form within a
reasonable time. At all reasonable times, the Security Register shall be open to
inspection by the Trustee. The Trustee is hereby initially appointed as security
registrar (the "Security Registrar") for the purpose of registering Notes and
transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office or
agency of the Company designated pursuant to Section 1002, the Company shall
execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Notes to be
<PAGE>
30
exchanged at such office or agency. Whenever any Notes are so surrendered for
exchange, the Company shall execute and the Trustee shall authenticate and
deliver, the Notes which the Holder making the exchange is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company and, pursuant to the Note
Guarantees, the Subsidiary Guarantors, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange
or redemption of Notes, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 303, 304, 801, 906, 1108 or 1009 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the selection of Notes to be redeemed under Section 1104 and ending at
the close of business on the day of such mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of actual notice to the Company or the Trustee that such
Note has been acquired by a bona fide purchaser, the Company shall execute and
the Trustee shall authenticate and deliver, in exchange for any such mutilated
Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company and, pursuant to the Note Guarantees, the Subsidiary
Guarantors, whether or not the destroyed,
<PAGE>
31
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all benefits of this Indenture equally and proportionately with any
and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; PROVIDED,
HOWEVER, that each installment of interest may at the Company's option be paid
by (i) mailing a check for such interest, payable to or upon the written order
of the Person entitled thereto pursuant to Section 308, to the address of such
Person as it appears in the Security Register or (ii) if requested in writing at
least 10 days prior to a Regular Record Date or a Special Record Date, as the
case may be, by a person who is entitled thereto with respect to at least $1
million in principal amount of the Notes by transfer to an account maintained by
such Person at a bank located in the United States.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this clause
provided. Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than 15 days and
not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of such Special
Record Date, and in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor to be given in the manner provided for in Section 106,
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so given, such Defaulted Interest shall be paid to the
Persons in
<PAGE>
32
whose names the Notes (or their respective Predecessor Notes) are registered
at the close of business on such Special Record Date and shall no longer be
payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to the due presentment of a Note for registration of transfer, the
Company, the Subsidiary Guarantors, the Trustee and any agent of the Company,
the Subsidiary Guarantors or the Trustee may treat the Person in whose name such
Note is registered as the owner of such Note for the purpose of receiving
payment of principal of (and premium, if any, on) and (subject to Sections 305
and 307) interest on such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and none of the Company, any Subsidiary Guarantor, the
Trustee or any agent of the Company, any Subsidiary Guarantor or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold, and all Notes so delivered
shall be promptly cancelled by the Trustee. If the Company shall so acquire any
of the Notes, however, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are surrendered to the Trustee for cancellation. No Notes shall be
authenticated in lieu of or in exchange for any Notes cancelled as provided in
this Section, except as expressly permitted by this Indenture. All cancelled
Notes held by the Trustee shall be disposed of by the Trustee in accordance with
its customary procedures and certification of their disposal delivered to the
Company unless by Company Order the Company shall direct that cancelled Notes be
returned to it.
SECTION 310. COMPUTATION OF INTEREST.
Interest on the Notes shall be computed on the basis of a 360-day year of
twelve 30-day months.
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SECTION 311. CUSIP NUMBERS.
The Company may use "CUSIP" numbers in issuing the Notes (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice
may state that no representation is made as to the correctness of such "CUSIP"
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of Notes
issued under this Indenture) and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture when
(1) either
(A) all Notes theretofore authenticated and delivered (except (i)
lost, stolen or destroyed Notes which have been replaced or paid as
provided in Section 306 and (ii) Notes for whose payment funds have
theretofore been deposited in trust by the Company with the Trustee or
any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, and
either the Company or any Subsidiary Guarantor has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal,
premium, if any, and interest to the date of such deposit;
(2) the Company or any Subsidiary Guarantor has paid all other sums
payable hereunder by the Company and any Subsidiary Guarantors; and
(3) 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 the satisfaction and discharge of this Indenture
have been complied with and that such satisfaction and discharge will not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company
or any Subsidiary Guarantor is a party or by which it is bound.
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34
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Note issued under
this Indenture when such interest becomes due and payable, and continuance
of such default for a period of 60 days; or
(2) default in the payment of the principal of (or premium, if any, on)
any Note at its Stated Maturity; or
(3) (A) default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Guarantor under this Indenture
(other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in the immediately preceding
clauses (1) and (2) or clauses (B) and (C) of this clause (3), and such
default or breach shall continue for a period of 60 days after written
notice has been given, by certified mail, (x) to the Company by the Trustee
or (y) to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Notes specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; (B) default in the performance or breach of the
provisions in Section 801; or (C) the Company shall have failed to make or
consummate a Change of Control Purchase Offer in accordance with the
provisions of Section 1009; or
(4) (A) there shall have occurred any default in the payment of
principal of any Indebtedness under any agreements, indentures (including
any such default under the Floating Rate Note Indenture) or instruments
under which the Company or any Subsidiary of the Company then has
outstanding Indebtedness in excess of $50 million, when the same shall
become due and payable in full and such default shall have continued
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35
after any applicable grace period and shall not have been cured or waived or
(B) an event of default as defined in any of the agreements, indentures or
instruments described in clause (A) of this clause (4) shall have occurred
and the Indebtedness thereunder, if not already matured at its final
maturity in accordance with its terms, shall have been accelerated or
otherwise declared due and payable, or required to be prepaid or repurchased
(other than by regularly scheduled required prepayment), prior to the stated
maturity thereof; or
(5) any Person entitled to take the actions described in this clause
(5), after the occurrence of any event of default on Indebtedness in excess
of $50 million in the aggregate of the Company or any Subsidiary, shall
notify the Trustee of the intended sale or disposition of any assets of the
Company or any Subsidiary that have been pledged to or for the benefit of
such Person to secure such Indebtedness or shall commence proceedings, or
take any action (including by way of set-off) to retain in satisfaction of
any Indebtedness, or to collect on, seize, dispose of or apply, any such
assets of the Company or any Subsidiary (including funds on deposit or held
pursuant to lock-box and other similar arrangements), pursuant to the terms
of any agreement or instrument evidencing any such Indebtedness or in
accordance with applicable law; or
(6) any Note Guarantee of any Significant Subsidiary individually or
any other Subsidiaries if such Subsidiaries in the aggregate represent 15%
or more of the assets of the Company and its Subsidiaries on a Consolidated
basis with respect to such Notes shall for any reason cease to be, or be
asserted in writing by the Company, any Subsidiary Guarantor or any other
Subsidiary of the Company, as applicable, not to be, in full force and
effect, enforceable in accordance with its terms, except pursuant to the
release of any such Note Guarantee in accordance with this Indenture; or
(7) one or more judgments, orders or decrees for the payment of money
in excess of $50 million (net of amounts covered by insurance, bond or
similar instrument), either individually or in an aggregate amount, entered
against the Company or any Subsidiary or any of their respective properties
which is not discharged and either (i) any creditor shall have commenced an
enforcement proceeding upon such judgment, order or decree or (ii) there
shall have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(8) the entry by a court of competent jurisdiction of (A) a decree or
order for relief in respect of the Company or any Significant Subsidiary in
an involuntary case or proceeding under any applicable Bankruptcy Law or (B)
a decree or order adjudging the Company or any Significant Subsidiary
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant Subsidiary
under any applicable federal or state law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company or any Significant Subsidiary or of any substantial
part of its property, or ordering the winding up or liquidation of its
affairs, and any such decree or order for relief shall continue to be in
effect, or any such other decree or order shall be unstayed and in effect,
for a period of 60 consecutive days; or
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36
(9) (A) the commencement by the Company or any Significant Subsidiary
of a voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (B) the
Company or any Significant Subsidiary consents to the entry of a decree or
order for relief in respect of the Company or such Significant Subsidiary in
an involuntary case or proceeding under any applicable Bankruptcy Law or to
the commencement of any bankruptcy or insolvency case or proceeding against
it, (C) the Company or any Significant Subsidiary files a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state law, (D) the Company or any Significant Subsidiary (x) consents to the
filing of such petition or the appointment of, or taking possession by, a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or such Significant Subsidiary or of any substantial
part of its property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they
become due or (E) the Company or any Significant Subsidiary takes any
corporate action in furtherance of any such actions in this clause (9).
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in Section
501(8) or 501(9)) shall occur and be continuing, then and in every such case the
Trustee, by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes Outstanding may declare all amounts payable in
respect of such Notes to be due and payable immediately, by a notice in writing
to the Company and to the Trustee, and upon any such declaration such amounts
shall become immediately due and payable. If an Event of Default specified in
Section 501(8) or 501(9) occurs then all amounts payable in respect of such
Notes shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Notes Outstanding, by written notice to the Company and
the Trustee, may rescind or annul such declaration if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel,
(B) all overdue interest on all Outstanding Notes, and
(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the Notes; and
(2) all Events of Default, other than the non-payment of principal of
such Notes which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission or annulment shall affect any subsequent default or
impair any right consequent thereon.
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SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Notes, the whole amount then due and payable on such
Notes for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Notes, and, in addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any, or interest) shall be entitled and
empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes and
to file such 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 of the Holders allowed in such judicial
proceeding, and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official 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 the
Trustee any amount due 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 606.
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 thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money on account of principal (or premium, if any)
or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any, on,) and interest on the Notes in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable
on such Notes for principal (and premium, if any) and interest,
respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
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39
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee, for 60 days after its receipt of such notice, request
and offer of reasonably satisfactory indemnity, has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority or
more in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Thirteen) and in
such Note, of the principal of (and premium, if any, on) and (subject to Section
307) interest on, such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and, subject
to the provisions of Section 507, every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and
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40
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not consenting.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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 Event of Default or impair any right consequent thereon.
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
Each of the Company and the Subsidiary Guarantors covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Subsidiary Guarantors (to
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41
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been enacted.
SECTION 515. NOTICE OF DEFAULTS.
Within ten days after the occurrence of any Default hereunder, the Company
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice to the Trustee of such Default hereunder known to the Company or any
Subsidiary Guarantor, unless such Default shall have been cured or waived.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and
PROVIDED FURTHER that in the case of any Default of the character specified in
Section 501(3) no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) 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 in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
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42
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled at all reasonable times to examine the books, records and
premises of the Company and the Subsidiary Guarantors, personally or by
agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except for the Trustee's
certificates of authentication, shall be taken as the statements of the Company
or the Subsidiary Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility of Form T-1 supplied to the
Company are true and accurate, subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Notes or the proceeds thereof.
SECTION 604. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company or of the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and, subject to TIA Sections 310(b) and
311, may otherwise deal with the Company and any Subsidiary Guarantor with the
same rights it would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
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SECTION 605. MONEY HELD IN TRUST.
Cash in United States dollars or U.S. Government Obligations held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for interest on
any such cash or U.S. Government Obligations received by it hereunder except as
otherwise agreed in writing with the Company or any Subsidiary Guarantor.
SECTION 606. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance, administration or
enforcement of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the Trustee,
to pay or reimburse the Trustee for expenses, disbursements and advances and to
indemnify and hold harmless the Trustee shall constitute indebtedness and shall
survive the satisfaction and discharge of this Indenture. As security for the
performance of such obligations of the Company, the Trustee shall have a claim
prior to the Notes upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (and
premium, if any, on) or interest on particular Notes.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50 million. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section, it
shall resign immediately in the manner and with the effect hereinafter specified
in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
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(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company addressed to the Company and the Subsidiary Guarantors. If the
instrument of acceptance by a successor Trustee required by Section 609 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company addressed to the Company and the Subsidiary
Guarantors.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA Section
310(b) after written request therefor by the Company, any Subsidiary
Guarantor or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and shall
fail to resign after written request therefor by the Company, any Subsidiary
Guarantor or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company,
the Subsidiary Guarantors and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Note for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
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(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of Notes
in the manner provided for in Section 106. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder. Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes; and in case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor 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;
PROVIDED, HOWEVER, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that none of the Company or the Trustee or any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE.
Within 60 days after May 15 of each year commencing with the first May 15
after the first issuance of Notes, the Trustee shall transmit to the Holders, in
the manner and to the extent provided in TIA Section 313(c), a brief report
dated as of such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY AND SUBSIDIARY GUARANTORS.
The Company and each of the Subsidiary Guarantors shall:
(1) file with the Trustee, within 15 days after the Company or such
Subsidiary Guarantor is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company or such Subsidiary Guarantor may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company or any of the Subsidiary Guarantors is not required to file
information, documents or reports pursuant to either of said Sections, then
they shall file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission; PROVIDED, HOWEVER, that any Subsidiary
Guarantor shall be relieved of its obligations under clauses (1) and (2) of
this Section to the extent that it is relieved of its obligations under
Section 13
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or Section 15(d) of the Exchange Act by the Commission pursuant to the terms
of any no-action letter addressed to the Company or such Subsidiary
Guarantor from the staff of the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person or group of affiliated Persons, or
permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, transfer, lease or disposal of all or substantially all
of the properties and assets of the Company and its Subsidiaries on a
Consolidated basis to any other Person or group of affiliated Persons, unless at
the time and after giving effect thereto:
(1) either
(A) the Company shall be the surviving or continuing corporation or
(B) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, conveyance, transfer, lease or disposition,
the properties and assets of the Company substantially as an entirety
(the "Surviving Entity")
(i) shall be a corporation duly organized and validly existing
under the laws of the United States, any state thereof or the
District of Columbia and
(ii) shall, in any case, expressly assume, by a supplement
indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company
under the Notes and this Indenture, and this Indenture shall remain
in full force and effect;
(2) immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis (and treating any Indebtedness which
becomes an obligation of the Company or any of its Subsidiaries in
connection with or as a result of such transaction as having been incurred
at the time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(3) immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis (on the assumption that the transaction
occurred on the first day of the four-quarter period immediately prior to
the consummation of such transaction with the appropriate adjustments with
respect to the transaction being included in such PRO FORMA calculation),
the Company (or the Surviving Entity if the Company is not the continuing
obligor under this Indenture) could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the provisions of Section 1010;
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(4) each Subsidiary Guarantor, unless it is the other party to the
transactions described above, shall have, by supplemental indenture to this
Indenture, confirmed that its respective Note Guarantees with respect to the
Notes shall apply to such Person's obligations under this Indenture and the
Notes;
(5) if any property or assets of the Company or any of its Subsidiaries
would thereupon become subject to any Lien, the provisions of Section 1012
are complied with; and
(6) the Company shall have delivered, or caused to be delivered, to the
Trustee an Officers' Certificate and an Opinion of Counsel, each to the
effect that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other transaction and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation, merger, sale, assignment, conveyance, transfer,
lease or other transaction described in, and complying with the provisions of,
Section 801 in which the Company is not the continuing corporation, the
successor Person formed or remaining shall succeed to, and be substituted for,
and may exercise every right and power of, the Company, as the case may be, and
the Company shall be discharged from all obligations and covenants under this
Indenture and the Notes, PROVIDED that, in the case of a transfer by lease, the
predecessor shall not be released from its obligations with respect to the
payment of principal (premium, if any) and interest on the Notes.
SECTION 803. NOTES TO BE SECURED IN CERTAIN EVENTS.
If, upon any such consolidation of the Company with or merger of the Company
into any other corporation, or upon any conveyance, lease or transfer of the
property of the Company substantially as an entirety to any other Person, any
property or assets of the Company would thereupon become subject to any Lien,
then unless such Lien could be created pursuant to Section 1012 without equally
and ratably securing the Notes, the Company, prior to or simultaneously with
such consolidation, merger, conveyance, lease or transfer, will as to such
property or assets, secure the Notes Outstanding (together with, if the Company
shall so determine any other Indebtedness of the Company now existing or
hereinafter created which is not subordinate in right of payment to the Notes)
equally and ratably with (or prior to) the Indebtedness which upon such
consolidation, merger, conveyance, lease or transfer is to become secured as to
such property or assets by such Lien, or will cause such Notes to be so secured.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, the Subsidiary Guarantors,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company contained
herein and in the Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee pursuant to the requirements of Section 609; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture; PROVIDED that such action shall not adversely affect the
interests of the Holders in any material respect;
(6) to add new Subsidiary Guarantors pursuant to Section 1013;
(7) to secure the Notes pursuant to the requirements of Section 803 or
otherwise; or
(8) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the
Company, the Subsidiary Guarantors and the Trustee, the Company, when authorized
by a Board Resolution, the Subsidiary Guarantors and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption or purchase
thereof, or change the coin or currency in which any Note or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof (or,
in the case of redemption, on or after the Redemption Date), or
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(2) reduce the percentage in principal amount of the Outstanding Notes,
the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section or Sections 513 and
1015, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
(a) In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
(b) Each Subsidiary Guarantor hereby appoints the Company as its
attorney-in-fact to execute, on its behalf, any indenture supplemental hereto to
be entered into solely for the purpose specified in Section 901(6).
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to the Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company and the Subsidiary Guarantors shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company and the Subsidiary Guarantors, to any such supplemental
indenture may be prepared and executed by the Company and the Subsidiary
Guarantors and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
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SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Sections 901 and 902, the
Company shall give notice thereof to the Holders of each Outstanding Note
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture; PROVIDED, HOWEVER, that the
Company shall not be required to give notice of any indenture supplemental
hereto entered into solely for the purpose specified in Section 901(5), (6) or
(8), notice with respect to which shall be given by the Company when it is next
required to give notice pursuant to this Section.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that it will
duly and punctually pay the principal of (and premium, if any, on) and interest
on the Notes in accordance with the terms of the Notes and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York, an office or agency where
Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company or any Subsidiary Guarantor in respect of the
Notes and this Indenture may be served. The Corporate Trust Office of the
Trustee shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any 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, and the Company and each of the Subsidiary Guarantors hereby appoints
the Trustee as its agent to receive all such presentations, surrenders, notices
and demands. Unless otherwise specified with respect to the Notes as
contemplated by Section 301, the Company hereby designates as a Place of Payment
for the Notes the office or agency of the Trustee in the Borough of Manhattan,
The City of New York, and initially appoints Texas Commerce Trust Company of New
York, 80 Broad Street, Suite 400, New York, New York 10004, as Paying Agent to
receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; 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 City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
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SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the principal of (and premium, if any, on) or interest
on any of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes, it
will, on or before each due date of the principal of (and premium, if any, on),
or interest on, any Notes, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal (and
premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any,
on) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper
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published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
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 such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect the corporate existence,
rights (charter and statutory) and franchises of the Company and each
Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right or franchise 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 Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Notwithstanding anything to the contrary in this Section 1004, the Company shall
be permitted to consolidate or merge any of its Subsidiaries with or into the
Company or any Wholly Owned Subsidiary of the Company.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (b) all lawful claims
for labor, materials and supplies, which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties owned by the Company or any Subsidiary
or used or held for use in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1007. INSURANCE.
The Company will at all times keep all of its and its Subsidiaries
properties which are of an insurable nature insured with insurers, believed by
the Company to be responsible, against loss or damage to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties.
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SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this Section 1008, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 1009. PURCHASE OF NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT.
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder shall have the right to require that the Company purchase such Holder's
Notes in whole or in part in integral multiples of $1,000 (the "Change of
Control Purchase Offer"), at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), in accordance with the procedures set forth
in paragraphs (c) and (d) of this Section.
(b) Upon the occurrence of a Change of Control Triggering Event and prior
to the mailing of the notice to Holders provided for in paragraph (c) below, the
Company covenants to either (x) repay in full all Indebtedness under the Credit
Agreement or offer to repay in full all such Indebtedness and to repay the
Indebtedness of each of the Banks that has accepted such offer or (y) obtain any
requisite consent under the Credit Agreement to permit the purchase of the Notes
as provided for in paragraph (c) below or take any other action as may be
required under the Credit Agreement to permit such purchase.
(c) Within 30 days following any Change of Control Triggering Event, the
Company shall give to each Holder of the Notes in the manner provided in Section
106 a notice stating:
(1) that a Change of Control Triggering Event has occurred and that
such Holder has the right to require the Company to purchase in whole or in
part such Holder's Notes at the Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding such Change of
Control Triggering Event (including but not limited to information with
respect to PRO FORMA historical income, cash flow and capitalization after
giving effect to the Change of Control);
(3) the Change of Control Purchase Date which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with the Exchange Act;
(4) that any Note, or portion thereof, not tendered will continue to
accrue interest;
(5) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment of the Change of
Control Purchase Price pursuant to the Change of Control Purchase Offer
shall cease to accrue interest after the Change of Control Purchase Date;
and
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55
(6) the instructions a Holder must follow in order to have its Notes
purchased in accordance with paragraph (d) of this Section.
(d) Holders electing to have Notes purchased will be required to surrender
such Notes to the Company at the address specified in the notice at least five
Business Days prior to the Change of Control Purchase Date. Holders will be
entitled to withdraw their election if the Company receives, not later than five
Business Days prior to the Change of Control Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes delivered for purchase by the Holder as to which
his election is to be withdrawn and a statement that such Holder is withdrawing
his election to have such Notes purchased. Holders whose Notes are purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
(e) The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and other applicable securities
laws and regulations in connection with a Change of Control Purchase Offer.
SECTION 1010. LIMITATION ON INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries to,
create, assume, or directly or indirectly guarantee or in any other manner
become directly or indirectly liable for the payment of, or otherwise incur
(collectively, "incur"), any Indebtedness (including any Acquired Indebtedness)
other than Permitted Indebtedness, unless, at the time of such event (and after
giving effect on a PRO FORMA basis to (i) the incurrence of such Indebtedness;
(ii) the incurrence, repayment or retirement of any other Indebtedness by the
Company or its Subsidiaries since the first day of such four-quarter period as
if such Indebtedness was incurred, repaid or retired at the beginning of such
four-quarter period; and (iii) the acquisition (whether by purchase, merger or
otherwise) or disposition (whether by sale, merger or otherwise) of any company,
entity or business acquired or disposed of by the Company or its Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition had occurred at the beginning of such four-quarter
period), the Consolidated Fixed Charge Coverage Ratio of the Company for the
four full fiscal quarters immediately preceding such event, taken as one period
and calculated on the assumption that such Indebtedness had been incurred on the
first day of such four-quarter period and, in the case of Acquired Indebtedness,
on the assumption that the related acquisition (whether by means of purchase,
merger or otherwise) also had occurred on such date with the appropriate
adjustments with respect to such acquisition being included in such PRO FORMA
calculation, would have been at least equal to 1.75 to 1.
SECTION 1011. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any Subsidiary of the Company
to, directly or indirectly:
(1) declare or pay any dividend on, or make any distribution to, the
holders of, any Capital Stock of the Company (other than dividends or
distributions payable solely in shares of Qualified Capital Stock of the
Company or in options, warrants or other rights to purchase such Qualified
Capital Stock);
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56
(2) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Capital Stock of the Company or any Subsidiary or any
options, warrants or other rights to acquire such Capital Stock;
(3) make any principal payment on, or redeem, repurchase, defease or
otherwise acquire or retire for value, prior to any scheduled repayment,
sinking fund payment or maturity, any Indebtedness of the Company which is
subordinate in right of payment to the Notes or of any Subsidiary Guarantor
that is subordinate to such Subsidiary Guarantor's Note Guarantee;
(4) declare or pay any dividend or distribution on any Capital Stock of
any Subsidiary of the Company to any Person (other than the Company or any
Wholly Owned Subsidiary of the Company) or purchase, redeem or otherwise
acquire or retire for value any Capital Stock of any Subsidiary of the
Company held by any Person (other than the Company or any Wholly Owned
Subsidiary of the Company);
(5) create, assume or suffer to exist any guarantee of Indebtedness of
any Affiliate of the Company (other than a Wholly Owned Subsidiary of the
Company in accordance with the terms of the Indenture); or
(6) make any Investment (other than any Permitted Investment) in any
Person
(such payments described in clauses (1) through (6) and not excepted therefrom
are collectively referred to herein as "Restricted Payments") unless at the time
of and immediately after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in accordance with the
provisions described under Section 1010.
(b) Notwithstanding paragraph (a) above, the Company and its Subsidiaries
may take the following actions so long as (with respect to clauses (2), (3), and
(4), below) no Default or Event of Default shall have occurred and be
continuing:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such declaration date such declaration complied
with the provisions of paragraph (a) above;
(2) the purchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or out
of the net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Subsidiary) of shares of Capital Stock of the Company
(other than Redeemable Capital Stock, unless the redemption provisions of
such Redeemable Capital Stock prohibit the redemption thereof prior to the
date on which the Capital Stock to be acquired or retired was by its terms
required to be redeemed);
(3) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for or out of the net cash proceeds of a
substantially concurrent issuance and sale (other than to a Subsidiary) of
shares of Capital Stock of the Company (other than
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57
Redeemable Capital Stock, unless the redemption provisions of such
Redeemable Capital Stock prohibit the redemption thereof prior to the Stated
Maturity of the Subordinated Indebtedness to be acquired or retired); and
(4) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for, or out of the net cash proceeds of a
substantially concurrent incurrence or sale (other than to a Subsidiary) of,
new Subordinated Indebtedness of the Company so long as
(A) the principal amount of such new Subordinated Indebtedness does
not exceed the principal amount (or, if such Subordinated Indebtedness
being refinanced provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination) of the Subordinated
Indebtedness being so purchased, redeemed, defeased, acquired or retired,
PLUS the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Subordinated Indebtedness
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing, PLUS the amount of
expenses of the Company incurred in connection with such refinancing,
(B) such new Subordinated Indebtedness is subordinated to the Notes
to the same extent as such Subordinated Indebtedness so purchased,
redeemed, defeased, acquired or retired, and
(C) such new Subordinated Indebtedness has an Average Life longer
than the Average Life of the Notes and a final Stated Maturity of
principal later than the final Stated Maturity of principal of the Notes.
SECTION 1012. LIMITATION ON LIENS.
The Company will not, and will not permit any Subsidiary of the Company to,
directly or indirectly, create, incur, assume or suffer to exist any Lien (other
than Permitted Liens) of any kind upon any Principal Property or upon any shares
of stock or indebtedness of any Subsidiary of the Company now owned or acquired
after the date of this Indenture, or any income or profits therefrom, unless (a)
the Notes are directly secured equally and ratably with (or prior to in the case
of Liens with respect to Subordinated Indebtedness) the obligation or liability
secured by such Lien or (b) any such Lien is in favor of the Company or any
Subsidiary Guarantor.
SECTION 1013. ADDITIONAL GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or form a
Subsidiary, the Company will cause any such Subsidiary (other than an Equity
Store or Business Development Venture, PROVIDED that such Equity Store or
Business Development Venture does not guarantee the Senior Indebtedness of any
other Person) that is or becomes a Significant Subsidiary or that guarantees any
Senior Indebtedness of the Company or of any Subsidiary Guarantor to become a
Subsidiary Guarantor with respect to the Notes. Any such Subsidiary shall become
a Subsidiary Guarantor by (i) executing and delivering to the Trustee a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee pursuant to which such Subsidiary shall guarantee all of the obligations
of the Company with respect to
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the Notes issued under this Indenture on a senior basis and (ii) delivering to
the Trustee an Opinion of Counsel reasonably satisfactory to the Trustee to the
effect that a supplemental indenture has been duly executed and delivered by
such Subsidiary and is in compliance with the terms of this Indenture.
SECTION 1014. PROVISION OF FINANCIAL STATEMENTS.
Whether or not the Company is subject to Section 13(a), 13(c) or 15(d) of
the Exchange Act, the Company will file with the Commission the annual reports,
quarterly reports and other documents that the Company is or would have been
required to file with the Commission pursuant to such Section 13(a), 13(c) or
15(d) of the Exchange Act if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event
within 15 days of each Required Filing Date (within 30 days of such Required
Filing Date for any reports filed on Form 10-K) (i) transmit by mail to each
Holder, as its name and address appears in the security register, without cost
to such holder and (ii) file with the Trustee copies of the annual reports,
quarterly reports and other documents which the Company is or would have been
required to file with the Commission pursuant to Section 13(a), 13(c) or 15(d)
of the Exchange Act if the Company were so subject.
SECTION 1015. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 803 or Sections 1007 through 1014,
inclusive, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Notes, by Act of such
Holders, waive such compliance in such instance with such term, provision or
condition, but no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. RIGHT OF REDEMPTION.
The Notes may be redeemed, at the option of the Company, as a whole or from
time to time in part, at any time on or after December 15, 1999, subject to the
conditions and at the Redemption Prices specified in the form of Note, together
with accrued interest to the Redemption Date.
Up to 20% of the initial aggregate principal amount of the Notes may be
redeemed on or prior to December 15, 1997, at the option of the Company, within
180 days of a Public Equity Offering with the net proceeds of such offering at a
redemption price equal to 110% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date of redemption (subject to the
right of holders of record on relevant record dates to receive
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59
interest due on relevant interest payment dates); PROVIDED that after giving
effect to such redemption at least $200 million aggregate principal amount of
the Notes remain outstanding.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 1101
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Notes not previously called for redemption, by
such method as the Trustee shall deem fair and appropriate and which may provide
for the selection for redemption of portions of the principal of Notes;
PROVIDED, HOWEVER, that no such partial redemption shall reduce the portion of
the principal amount of a Note not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided for in Section
106 not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Notes to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the
identification by CUSIP Numbers, if any, (and, in the case of a partial
redemption, the principal amounts) of the particular Notes to be redeemed,
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(4) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in
Section 1107) will become due and payable upon each such Note, or the
portion thereof, to be redeemed, and that interest thereon will cease to
accrue on and after said date, and
(5) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
Notice of redemption of Notes to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and accrued interest on, any
Notes, or any portions thereof, to be redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Notes, or
portions thereof, shall cease to bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such at the close
of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part (pursuant to the provisions of
this Article shall be surrendered at the office or agency of the Company
maintained for such purpose pursuant to Section 1002 (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holders attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the Note so
surrendered.
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ARTICLE TWELVE
NOTE GUARANTEES
SECTION 1201. NOTE GUARANTEES.
Subject to the provisions of this Article Twelve, each Subsidiary Guarantor
hereby irrevocably and unconditionally guarantees, jointly and severally, on a
senior basis to each Holder and to the Trustee, on behalf of the Holders, (i)
the due and punctual payment of the principal of and interest on each Note, when
and as the same shall become due and payable, whether at Stated Maturity or
purchase upon a Change of Control Triggering Event, and whether by declaration
of acceleration, Change of Control Triggering Event, call for redemption or
otherwise, the due and punctual payment of interest on the overdue principal of
and interest, if any, on the Notes, to the extent lawful, and the due and
punctual performance of all other obligations of the Company to the Holders or
the Trustee all in accordance with the terms of such Note and this Indenture and
(ii) in the case of any extension of time of payment or renewal of any Notes or
any of such other obligations, that the same will be promptly paid in full when
due or performed in accordance with the terms of the extension or renewal, at
Stated Maturity or purchase upon a Change of Control Triggering Event, and
whether by declaration of acceleration, Change of Control Triggering Event, call
for redemption or otherwise (the obligations in clauses (i) and (ii) hereof
being the "Guaranteed Obligations").
Without limiting the generality of the foregoing, each Subsidiary
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Company to the Holders or the
Trustee under the Notes and the Indenture but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company. The Subsidiary
Guarantors hereby agree that their obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any failure
to enforce the provisions of any such Note or this Indenture, any waiver,
modification or indulgence granted to the Company with respect thereto, by any
Holder or any other circumstances which may otherwise constitute a legal or
equitable discharge or defense of the Company or a surety or guarantor.
The Subsidiary Guarantors hereby waive diligence, presentment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, the benefit of
discussion, protest or notice with respect to any such Note or the Indebtedness
evidenced thereby and all demands whatsoever (except as specified above), and
covenant that the Guaranteed Obligations will not be discharged as to any such
Note except by payment in full of such Guaranteed Obligations and as provided in
Sections 401, 1102 and 1205.
Each Subsidiary Guarantor further agrees that, as between such Subsidiary
Guarantor and the Holders, (i) the maturity of the Guaranteed Obligations may be
accelerated as provided in Article Five, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Company or any
other Subsidiary Guarantor in respect of the Guaranteed Obligations, and (ii) in
the event of any declaration of acceleration of such Guaranteed Obligations as
provided in Article Five, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by each Subsidiary
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Guarantor. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article Five, the Trustee shall promptly
make a demand for payment on any Notes in respect of which the Guaranteed
Obligations provided for in this Article Twelve are not discharged.
Each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights that it may now or hereafter acquire against the Company that arise from
the existence, payment, performance or enforcement of such Subsidiary
Guarantor's obligations under this Indenture, or any other document or
instrument including, without limitation, any right of reimbursement,
exoneration, contribution, indemnification, any right to participate in any
claim or remedy of the Holders against the Company, whether or not such claim,
remedy or right arises in equity, or under contract, statute or common law,
including, without limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or in any other manner,
payment or security on account of such claim or other rights. Each Subsidiary
Guarantor shall be subrogated to all rights of the Holders of the Notes pursuant
to any Note Guarantee against the Company in respect of any amounts paid by such
Subsidiary Guarantor on account of such Note pursuant to the provisions of this
Indenture; PROVIDED, HOWEVER, that no Subsidiary Guarantor shall be entitled to
enforce or to receive any payments arising out of, or based upon such right of
subrogation until the principal of (and premium, if any) and interest on all
Notes issued hereunder shall have been paid in full to the Holders entitled
thereto. If any amount shall be paid to any Subsidiary Guarantor in violation of
this paragraph and the Guaranteed Obligations shall not have been paid in full,
such amount shall be deemed to have been paid to such Subsidiary Guarantor for
the benefit of, and held in trust for the benefit of, the Holders, and shall
forthwith be paid to the Trustee. Each Subsidiary Guarantor acknowledges that it
will receive direct and indirect benefits from the issuance of the Notes and
that the waiver set forth in this Section 1201 is knowingly made in
contemplation of such benefits.
Without limiting the generality of the foregoing, the Subsidiary Guarantors
hereby expressly and specifically waive the benefits of Section 26-7 through
26-9 of the General Statutes of North Carolina, as amended from time to time,
and any similar statute or law of any other jurisdiction, as the same may be
amended from time to time.
SECTION 1202. OBLIGATIONS OF THE SUBSIDIARY GUARANTORS UNCONDITIONAL.
Nothing contained in this Article Twelve, elsewhere in this Indenture or in
any Note is intended to or shall impair, as between the Subsidiary Guarantors
and the Holders, the obligation of the Subsidiary Guarantors, which obligations
are independent of the obligations of the Company under the Notes and this
Indenture and are absolute and unconditional, to pay to the Holders the
Guaranteed Obligations as and when the same shall become due and payable in
accordance with the provisions of this Indenture, or is intended to or shall
affect the relative rights of the Holders and creditors of the Subsidiary
Guarantors, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture. Each payment to be made by any Subsidiary
Guarantor hereunder in respect of the Guaranteed Obligations shall be payable in
the currency or currencies in which such Guaranteed Obligations are denominated.
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SECTION 1203. RANKING OF NOTE GUARANTEES.
Each Subsidiary Guarantor covenants and agrees, and each Holder of a Note by
his acceptance thereof likewise covenants and agrees, that each Note Guarantee
will be an unsecured senior obligation of the Subsidiary Guarantor issuing such
Note Guarantee, ranking PARI PASSU in right of payment with all other existing
and future Senior Indebtedness of such Subsidiary Guarantor and senior in right
of payment to any future Indebtedness of such Subsidiary Guarantor that is
expressly subordinated to Senior Indebtedness of such Subsidiary Guarantor.
SECTION 1204. LIMITATION OF NOTE GUARANTEES.
The Company and each Subsidiary Guarantor, and each Holder of a Note by his
acceptance thereof, hereby confirm that it is the intention of all such parties
that each Subsidiary Guarantor shall be liable under this Indenture only for
amounts aggregating up to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state law.
To effectuate the foregoing intention, the Holders hereby irrevocably agree that
in the event that any such Note Guarantee would constitute or result in a
violation of any applicable fraudulent conveyance or similar law of any relevant
jurisdiction, the liability of the Subsidiary Guarantor under such Note
Guarantee shall be reduced to the maximum amount, after giving effect to all
other contingent and fixed liabilities of such Subsidiary Guarantor, permissible
under the applicable fraudulent conveyance or similar law.
SECTION 1205. RELEASE OF SUBSIDIARY GUARANTORS.
(a) Any Subsidiary Guarantor shall be released from and relieved of its
obligations under this Article Twelve (1) upon defeasance in accordance with
Section 1302, (2) upon the payment in full of all the Guaranteed Obligations or
(3) upon the sale by the Company or any Subsidiary of such Subsidiary Guarantor
to any Person other than a Subsidiary of the Company provided that such sale
does not result in a sale, assignment, transfer, lease or disposal of all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis. Upon the delivery by the Company to the
Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of such
obligations was made by the Company in accordance with the provisions of this
Indenture and the Notes, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Subsidiary Guarantors from
their obligations. If any of the Guaranteed Obligations are revived and
reinstated after the termination of such Note Guarantee, then all of the
obligations of the Subsidiary Guarantors under such Note Guarantee shall be
revived and reinstated as if such Note Guarantee had not been terminated until
such time as the Guaranteed Obligations are paid in full, and the Subsidiary
Guarantors shall execute any documents reasonably satisfactory to the Trustee
evidencing such revival and reinstatement.
(b) Upon (i) the sale or disposition of all of the Common Stock of a
Subsidiary Guarantor (by merger or otherwise) to a Person other than the Company
and which sale or disposition is otherwise in compliance with the terms of this
Indenture, or (ii) the unconditional and full release in writing as provided
herein of such Subsidiary Guarantor from all
<PAGE>
64
Indebtedness arising hereunder, such Subsidiary Guarantor shall be deemed
released from all obligations under this Article Twelve; PROVIDED, HOWEVER, that
any such termination upon such sale or disposition shall occur if and only to
the extent that all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, Indebtedness of the Company or any Subsidiary, shall
also terminate upon such sale or disposition. Upon the delivery by the Company
to the Trustee of an Officers' Certificate and, if requested by the Trustee, an
Opinion of Counsel to the effect that the transaction giving rise to the release
of such obligations was made in accordance with the provisions of this Indenture
and the Notes, the Trustee shall execute any documents reasonably required in
order to evidence the release of such Subsidiary Guarantor from its obligations.
Any Subsidiary Guarantor not so released remains liable for the full amount of
principal of (and premium, if any) and interest on the Notes as provided in this
Article Twelve.
SECTION 1206. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
Except as set forth in Section 1205 and in Articles Eight and Ten hereof,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or a
Subsidiary Guarantor or shall prevent any sale or conveyance of the property of
a Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or a Subsidiary Guarantor.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option and at any time, with respect to the Notes,
elect to have either Section 1302 or Section 1303 be applied to all Outstanding
Notes upon compliance with the conditions set forth below in this Article
Thirteen.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1302, the Company shall be deemed to have been discharged from its
obligations with respect to all Outstanding Notes on the date the conditions set
forth in Section 1304 are satisfied (hereinafter, "defeasance"). For this
purpose, such 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
1305 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 insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Notes to receive payments in
respect of the principal of (and premium, if any, on) and interest on such Notes
when such payments are due or on the Redemption Date with respect to such Notes,
as the case may be, (B) the Company's obligations with respect to such Notes
under Sections 304, 305, 306, 1002 and 1003, (C) the rights,
<PAGE>
65
powers, trusts, duties and immunities of the Trustee hereunder and (D) this
Article Thirteen. Subject to compliance with this Article Thirteen, the Company
may exercise its option under this Section 1302 notwithstanding the prior
exercise of its option under Section 1303 with respect to the Notes.
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1303, the Company shall be released from its obligations under any
covenant contained in Section 801(3) and Section 803 and in Sections 1007
through 1015 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 to be "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. For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Notes, the Company 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 501(3), but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section 1302
or Section 1303 to the Outstanding Notes:
(1) the Company shall irrevocably have deposited with the Trustee (or
another trustee satisfying the requirements of Section 607 who shall agree
to comply with the provisions of this Article Thirteen applicable to it) in
trust, for the benefit of the Holders, cash in United States dollars, U.S.
Government Obligations or a combination thereof in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge the principal of, and premium, if any, and
interest on the Outstanding Notes on the Stated Maturity or on an optional
redemption date (such date being referred to as the "Defeasance Redemption
Date"), as the case may be, if in the case of a Defeasance Redemption Date
prior to electing to exercise either defeasance or covenant defeasance, the
Company has delivered to the Trustee an irrevocable notice to redeem all of
the outstanding Notes on such Defeasance Redemption Date;
(2) in the case of an election under Section 1302, the Company shall
have delivered to the Trustee an opinion of independent counsel in the
United States stating that (x) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (y) 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 in the United States shall confirm that, the Holders of
the
<PAGE>
66
Outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such 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 defeasance had not occurred;
(3) in the case of an election under Section 1303, the Company shall
have delivered to the Trustee an opinion of independent counsel in the
United States to the effect that 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;
(4) no Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit or, insofar as
paragraphs (8) and (9) of Section 501 hereof are concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(5) such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a Default under, this Indenture or any other
material agreement or instrument to which the Company or any Subsidiary
Guarantor is a party or by which it is bound;
(6) 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 or any Subsidiary Guarantor over the other
creditors of the Company or any Subsidiary Guarantor or with the intent of
defecting, hindering, delaying or defrauding creditors of the Company, any
Subsidiary Guarantor or others; and
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to
either the defeasance under Section 1302 or the covenant defeasance under
Section 1303 (as the case may be) have been complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee -- collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 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 its
own 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 (and 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 U.S. Governmental Obligations
deposited pursuant to
<PAGE>
67
Section 1304 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.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent defeasance or covenant
defeasance, as applicable, in accordance with this Article.
SECTION 1306. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1305 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 1302 or 1303, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1305, and the Company shall execute all documents reasonably satisfactory to the
Trustee evidencing such revival and reinstatement; PROVIDED, HOWEVER, that if
the Company makes any payment of principal of (or premium, if any, on) 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.
This Indenture may be signed in any number of counterparts each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
<PAGE>
68
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
FLEMING COMPANIES, INC.
SEAL By /s/ David R. Almond
-----------------------------------
Title: Senior Vice President -
General Counsel and
Secretary
Attest: /s/ John M. Thompson
---------------------------
Title: Vice President,
Treasurer and
Assistant Secretary
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By /s/
-----------------------------------
Title: Assistant Vice President and
Trust Officer
Attest: /s/
---------------------------
Title: Vice President and
Trust Officer
ATI, Inc.
Badger Markets, Inc.
Baker's Supermarkets, Inc.
Ball Motor Service, Inc.
Boogaart Stores of Nebraska, Inc.
Central Park Super Duper, Inc.
Commercial Cold/Dry Storage Company
Consumers Markets, Inc.
D.L. Food Stores, Inc.
Del-Arrow Super Duper, Inc.
Festival Foods, Inc.
Fleming Direct Sales Corporation
Fleming Foods East, Inc.
Fleming Foods of Alabama, Inc.
Fleming Foods of Ohio, Inc.
Fleming Foods of Tennessee, Inc.
Fleming Foods of Texas, Inc.
Fleming Foods of Virginia, Inc.
Fleming Foods South, Inc.
Fleming Foods West, Inc.
Fleming Foreign Sales Corporation
Fleming Franchising, Inc.
Fleming Holdings, Inc.
Fleming International, Ltd.
<PAGE>
69
Fleming Site Media, Inc.
Fleming Supermarkets of Florida, Inc.
Fleming Technology Leasing Company,
Inc.
Fleming Transportation Service, Inc.
Food Brands, Inc.
Food-4-Less, Inc.
Food Holdings, Inc.
Food Saver of Iowa, Inc.
Gateway Development Co., Inc.
Gateway Food Distributors, Inc.
Gateway Foods, Inc.
Gateway Foods of Altoona, Inc.
Gateway Foods of Pennsylvania, Inc.
Gateway Foods of Twin Ports, Inc.
Gateway Foods Service Corporation
Grand Central Leasing Corporation
Great Bend Supermarkets, Inc.
Hub City Transportation, Inc.
Kensington and Harlem, Inc.
LAS, Inc.
Ladysmith East IGA, Inc.
Ladysmith IGA, Inc.
Lake Markets, Inc.
M&H Desoto, Inc.
M&H Financial Corp.
M&H Realty Corp.
Malone & Hyde, Inc.
Malone & Hyde of Lafayette, Inc.
Manitowoc IGA, Inc.
Moberly Foods, Inc.
Mt. Morris Super Duper, Inc.
Niagara Falls Super Duper, Inc.
Northern Supermarkets of Oregon, Inc.
Northgate Plaza, Inc.
109 West Main Street, Inc.
121 East Main Street, Inc.
Peshtigo IGA, Inc.
Piggly Wiggly Corporation
Quality Incentive Company, Inc.
Rainbow Transportation Services, Inc.
Route 16, Inc.
Route 219, Inc.
Route 417, Inc.
Richland Center IGA, Inc.
Scrivner, Inc.
Scrivner-Food Holdings, Inc.
<PAGE>
70
Scrivner of Alabama, Inc.
Scrivner of Illinois, Inc.
Scrivner of Iowa, Inc.
Scrivner of Kansas, Inc.
Scrivner of New York, Inc.
Scrivner of North Carolina, Inc.
Scrivner of Pennsylvania, Inc.
Scrivner of Tennessee, Inc.
Scrivner of Texas, Inc.
Scrivner Super Stores of Illinois,
Inc.
Scrivner Super Stores of Iowa, Inc.
Scrivner Transportation, Inc.
Sehon Foods, Inc.
Selected Products, Inc.
Sentry Markets, Inc.
Smar Trans, Inc.
Southern Supermarkets, Inc. (TX)
Southern Supermarkets, Inc. (OK)
Southern Supermarkets of Louisiana,
Inc.
Star Groceries, Inc.
Store Equipment, Inc.
Sundries Service, Inc.
Switzer Foods, Inc.
35 Church Street, Inc.
Thompson Food Basket, Inc.
29 Super Market, Inc.
27 Slayton Avenue, Inc.
WPC, Inc.
Each, a Subsidiary Guarantor
By /s/ John M. Thompson
-----------------------------------
Name: John M. Thompson
Title: Vice President and Treasurer
(Chief Financial Officer)
Attest: /s/ David R. Almond
- ----------------------------------
[Secretary]
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLEMING COMPANIES, INC.
ISSUER
TO
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
TRUSTEE
THE SUBSIDIARY GUARANTORS NAMED HEREIN
GUARANTORS
------------------------
Indenture
Dated as of December 15, 1994
------------------------
$200,000,000
Floating Rate Senior Notes due 2001
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FLEMING COMPANIES, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT
OF 1939 AND INDENTURE, DATED AS OF , 1994
<TABLE>
<CAPTION>
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
- ----------------------- ----------------------
<S> <C> <C>
Section310 (a)(1) .................................................................................... 607[(a)]
(a)(2) .................................................................................... 607[(a)]
(b) .................................................................................... [607(b),] 608
Section312 (c) .................................................................................... 701
Section314 (a) .................................................................................... 703
(a)(4) .................................................................................... 1008(a)
(c)(1) .................................................................................... 102
(c)(2) .................................................................................... 102
(e) .................................................................................... 102
Section315 (b) .................................................................................... 601
Section316 (a)(last
sentence) .................................................................................... 101 ("Outstanding")
(a)(1)(A) .................................................................................... 502, 512
(a)(1)(B) .................................................................................... 513
(b) .................................................................................... 508
(c) .................................................................................... 104(d)
Section317 (a)(1) .................................................................................... 503
(a)(2) .................................................................................... 504
(b) .................................................................................... 1003
Section318 (a) .................................................................................... 111
</TABLE>
- ------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
PARTIES.............................................................................. 1
RECITALS OF THE COMPANY.............................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.......................................................................... 1
Acquired Indebtedness................................................................ 2
Act.................................................................................. 2
Affiliate............................................................................ 2
Applicable LIBOR Rate................................................................ 2
Average Life to Stated Maturity...................................................... 3
Bankruptcy Law....................................................................... 3
Banks................................................................................ 3
Board of Directors................................................................... 3
Board Resolution..................................................................... 3
Business Day......................................................................... 3
Business Development Program......................................................... 3
Business Development Venture......................................................... 3
Capital Lease Obligation............................................................. 4
Capital Stock........................................................................ 4
Change of Control.................................................................... 4
Change of Control Purchase Date...................................................... 4
Change of Control Purchase Offer..................................................... 4
Change of Control Purchase Price..................................................... 4
Change of Control Triggering Event................................................... 5
Commission........................................................................... 5
Common Stock......................................................................... 5
Company.............................................................................. 5
Company Request or Company Order..................................................... 5
Consolidated......................................................................... 5
Consolidated Fixed Charge Coverage Ratio............................................. 5
Consolidated Income Tax Expense...................................................... 5
Consolidated Interest Expense........................................................ 6
Consolidated Net Income.............................................................. 6
</TABLE>
- ------------------------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
<PAGE>
ii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
Consolidated Net Tangible Assets..................................................... 6
Consolidated Non-Cash Charges........................................................ 6
Corporate Trust Office............................................................... 6
Corporation.......................................................................... 6
Credit Agreement..................................................................... 7
Currency Agreements.................................................................. 7
Default.............................................................................. 7
Defaulted Interest................................................................... 7
Equity Store......................................................................... 7
Event of Default..................................................................... 7
Exchange Act......................................................................... 7
Floating Rate Note Indenture......................................................... 7
Floating Rate Interest Payment Date.................................................. 7
Fixed Rate Notes..................................................................... 7
Generally Accepted Accounting Principles............................................. 7
Guaranteed Debt...................................................................... 7
Guaranteed Obligations............................................................... 8
Holder............................................................................... 8
Indebtedness......................................................................... 8
Indenture............................................................................ 8
Initial Quarterly Period............................................................. 8
Interest Payment Date................................................................ 9
Interest Rate Agreements............................................................. 9
Interest Rate Determination Date..................................................... 9
Investment........................................................................... 9
Investment Grade..................................................................... 9
LIBOR Fraction....................................................................... 9
LIBOR Rate........................................................................... 9
Lien................................................................................. 9
Managing Agent....................................................................... 9
Maturity............................................................................. 9
Moody's.............................................................................. 9
Note Guarantee....................................................................... 9
Notes................................................................................ 10
Offering............................................................................. 10
Officers' Certificate................................................................ 10
Opinion of Counsel................................................................... 10
</TABLE>
<PAGE>
iii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
Outstanding.......................................................................... 10
Paying Agent......................................................................... 11
Permitted Indebtedness............................................................... 11
Permitted Investment................................................................. 12
Permitted Liens...................................................................... 13
Permitted Receivables Financing...................................................... 15
Person............................................................................... 15
Predecessor Note..................................................................... 15
Preferred Stock...................................................................... 15
Principal Property................................................................... 15
Prior Indentures..................................................................... 15
Public Equity Offering............................................................... 15
Qualified Capital Stock.............................................................. 15
Quarterly Period..................................................................... 15
Rating Agency........................................................................ 16
Rating Category...................................................................... 16
Rating Decline....................................................................... 16
Redeemable Capital Stock............................................................. 16
Redemption Date...................................................................... 16
Redemption Price..................................................................... 16
Reference Banks...................................................................... 16
Regular Record Date.................................................................. 17
Responsible Officer.................................................................. 17
Reuters Screen LIBO Page............................................................. 17
Securities Act....................................................................... 17
Security Register and Security Registrar............................................. 17
Senior Indebtedness.................................................................. 17
Significant Subsidiary............................................................... 17
S&P.................................................................................. 17
Special Record Date.................................................................. 17
Stated Maturity...................................................................... 17
Subordinated Indebtedness............................................................ 17
Subsidiary........................................................................... 18
Subsidiary Guarantor................................................................. 18
Temporary Cash Investments........................................................... 18
Transferred Receivables.............................................................. 19
Trust Indenture Act or TIA........................................................... 19
</TABLE>
<PAGE>
iv
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
Trustee.............................................................................. 19
U.S. Government Obligations.......................................................... 19
Vice President....................................................................... 19
Voting Stock......................................................................... 19
Wholly Owned Subsidiary.............................................................. 20
Working Day.......................................................................... 20
SECTION 102. Compliance Certificates and Opinions................................................. 20
103. Form of Documents Delivered to Trustee............................................... 20
104. Acts of Holders...................................................................... 21
105. Notices, Etc., to Trustee, Company and Subsidiary Guarantors......................... 22
106. Notice to Holders; Waiver............................................................ 22
107. Effect of Headings and Table of Contents............................................. 23
108. Successors and Assigns............................................................... 23
109. Separability Clause.................................................................. 23
110. Benefits of Indenture................................................................ 23
111. Governing Law........................................................................ 23
112. Legal Holidays....................................................................... 23
ARTICLE TWO
NOTE FORMS
SECTION 201. Forms Generally...................................................................... 24
202. Form of Face of Note................................................................. 24
203. Form of Reverse of Note.............................................................. 25
204. Form of Trustee's Certificate of Authentication...................................... 28
ARTICLE THREE
THE NOTES
SECTION 301. Title and Terms...................................................................... 28
302. Denominations........................................................................ 29
303. Execution, Authentication, Delivery and Dating....................................... 29
304. Temporary Notes...................................................................... 30
305. Registration, Registration of Transfer and Exchange.................................. 30
306. Mutilated, Destroyed, Lost and Stolen Notes.......................................... 31
307. Payment of Interest; Interest Rights Preserved....................................... 32
308. Persons Deemed Owners................................................................ 33
309. Cancellation......................................................................... 33
310. CUSIP Numbers........................................................................ 34
</TABLE>
<PAGE>
v
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.............................................. 34
402. Application of Trust Money........................................................... 35
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.................................................................... 35
502. Acceleration of Maturity; Rescission and Annulment................................... 37
503. Collection of Indebtedness and Suits for Enforcement by Trustee...................... 38
504. Trustee May File Proofs of Claim..................................................... 38
505. Trustee May Enforce Claims Without Possession of Notes............................... 39
506. Application of Money Collected....................................................... 39
507. Limitation on Suits.................................................................. 40
508. Unconditional Right of Holders to Receive Principal, Premium and Interest............ 40
509. Restoration of Rights and Remedies................................................... 40
510. Rights and Remedies Cumulative....................................................... 41
511. Delay or Omission Not Waiver......................................................... 41
512. Control by Holders................................................................... 41
513. Waiver of Past Defaults.............................................................. 41
514. Waiver of Stay or Extension Laws..................................................... 42
515. Notice of Defaults................................................................... 42
ARTICLE SIX
THE TRUSTEE
SECTION 601. Notice of Defaults................................................................... 42
602. Certain Rights of Trustee............................................................ 42
603. Trustee Not Responsible for Recitals or Issuance of Notes............................ 43
604. May Hold Notes....................................................................... 44
605. Money Held in Trust.................................................................. 44
606. Compensation and Reimbursement....................................................... 44
607. Corporate Trustee Required; Eligibility.............................................. 44
608. Resignation and Removal; Appointment of Successor.................................... 45
609. Acceptance of Appointment by Successor............................................... 46
610. Merger, Conversion, Consolidation or Succession to Business.......................... 46
</TABLE>
<PAGE>
vi
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS
SECTION 701. Disclosure of Names and Addresses of Holders......................................... 47
702. Reports by Trustee................................................................... 47
703. Reports by Company and Subsidiary Guarantors......................................... 47
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms................................. 48
802. Successor Substituted................................................................ 49
803. Notes to Be Secured in Certain Events................................................ 49
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders................................... 50
902. Supplemental Indentures With Consent of Holders...................................... 50
903. Execution of Supplemental Indentures................................................. 51
904. Effect of Supplemental Indentures.................................................... 51
905. Conformity with Trust Indenture Act.................................................. 51
906. Reference in Notes to Supplemental Indentures........................................ 51
907. Notice of Supplemental Indentures.................................................... 52
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, If Any, and Interest.................................. 52
1002. Maintenance of Office or Agency...................................................... 52
1003. Money for Note Payments to Be Held in Trust.......................................... 53
1004. Corporate Existence.................................................................. 54
1005. Payment of Taxes and Other Claims.................................................... 54
1006. Maintenance of Properties............................................................ 54
1007. Insurance............................................................................ 54
1008. Statement by Officers as to Default.................................................. 55
1009. Purchase of Notes Upon a Change of Control Triggering Event.......................... 55
1010. Limitation on Indebtedness........................................................... 56
1011. Limitation on Restricted Payments.................................................... 56
1012. Limitation on Liens.................................................................. 58
1013. Additional Guarantees................................................................ 58
1014. Provision of Financial Statements.................................................... 59
1015. Waiver of Certain Covenants.......................................................... 59
</TABLE>
<PAGE>
vii
<TABLE>
<CAPTION>
SECTION PAGE
- --------------------- -----
<C> <S> <C>
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. Right of Redemption.................................................................. 59
1102. Applicability of Article............................................................. 59
1103. Election to Redeem; Notice to Trustee................................................ 59
1104. Selection by Trustee of Notes to Be Redeemed......................................... 60
1105. Notice of Redemption................................................................. 60
1106. Deposit of Redemption Price.......................................................... 60
1107. Notes Payable on Redemption Date..................................................... 61
1108. Notes Redeemed in Part............................................................... 61
ARTICLE TWELVE
NOTE GUARANTEES
SECTION 1201. Note Guarantees...................................................................... 61
1202. Obligations of the Subsidiary Guarantors Unconditional............................... 63
1203. Ranking of Note Guarantee............................................................ 63
1204. Limitation of Note Guarantees........................................................ 63
1205. Release of Subsidiary Guarantors..................................................... 64
1206. Subsidiary Guarantors May Consolidate, Etc. on Certain Terms......................... 65
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. Company's Option to Effect Defeasance or Covenant Defeasance......................... 65
1302. Defeasance and Discharge............................................................. 65
1303. Covenant Defeasance.................................................................. 65
1304. Conditions to Defeasance or Covenant Defeasance...................................... 66
1305. Deposited Money and U.S. Government Obligations to Be Held in Trust; Other
Miscellaneous Provisions............................................................ 67
1306. Reinstatement........................................................................ 68
ARTICLE FOURTEEN
SINKING FUND
SECTION 1401. Mandatory Sinking Fund Payments...................................................... 68
1402. Satisfaction of Sinking Fund Payments with Notes..................................... 68
1403. Redemption of Notes for Sinking Fund................................................. 68
</TABLE>
<PAGE>
INDENTURE, dated as of December 15, 1994 among FLEMING COMPANIES, INC., a
corporation duly organized and existing under the laws of the State of Oklahoma
(herein called the "Company"), having its principal office at 6301 Waterford
Boulevard, P.O. Box 26647, Oklahoma City, Oklahoma 73126, each of the Subsidiary
Guarantors (as hereinafter defined), and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association duly organized and existing under
the laws of the United States, Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of Floating Rate
Senior Notes due 2001 (herein called the "Notes"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the Company has duly
authorized the execution and delivery of this Indenture.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended and shall, to the extent applicable, be governed by such
provisions.
The Company, directly or indirectly, owns beneficially and of record 100% of
the Capital Stock of the Subsidiary Guarantors; the Company and the Subsidiary
Guarantors are members of the same consolidated group of companies; the
Subsidiary Guarantors will derive direct and indirect economic benefit from the
issuance of the Notes; accordingly, the Subsidiary Guarantors have each duly
authorized the execution and delivery of this Indenture to provide for the
Guarantee by each of them with respect to the Notes as set forth in this
Indenture.
All things necessary have been done to make the Notes, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, to make the Note Guarantees of
each of the Subsidiary Guarantors, when executed by the respective Subsidiary
Guarantors and delivered hereunder, the valid obligations of the respective
Subsidiary Guarantors, and to make this Indenture a valid agreement of the
Company and each of the Subsidiary Guarantors, in accordance with their and its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes by
the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Notes, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article, and include the plural as well as the singular;
<PAGE>
2
(b) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section 311, shall have the
meanings assigned to them in the rules of the Commission adopted under the
Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting
principles, and, except as otherwise herein expressly provided, the term
"generally accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting principles as are
generally accepted at the date of such computation; PROVIDED, HOWEVER, that
with respect to any computation required pursuant to Sections 1009, 1010,
1011 and 1012, such term shall mean such accounting principles as are
generally accepted as of the date of the Indenture; and
(d) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision.
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition.
"Act", when used with respect to any Holder, has the meaning specified in
Section 104.
"Affiliate" means, with respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through ownership of Voting Stock, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable LIBOR Rate" means for the Initial Quarterly Period and for each
Quarterly Period during which any Floating Rate Note is outstanding, 225 basis
points over the "LIBOR Rate", which shall be the rate determined by the Company
(notice of such rate to be sent to the Trustee by the Company on the date of
determination thereof) equal to the average (rounded upwards, if necessary, to
the nearest 1/16 of 1%) of the offered rates for deposits in U.S. dollars for a
period of three months, as set forth on the Reuters Screen LIBO Page as of 11:00
a.m., London time, on the applicable Interest Rate Determination Date; PROVIDED,
HOWEVER, that if only one such offered rate appears on the Reuters Screen LIBO
Page, the LIBOR Rate will mean such offered rate. If such rate is not available
at 11:00 a.m., London time, on the applicable Interest Rate Determination Date,
then the LIBOR Rate will mean the arithmetic mean (rounded upwards, if
necessary, to the nearest 1/16 of 1%) of the interest rates per annum at which
deposits in amounts equal to $1 million in U.S. dollars are offered by the
Reference Banks to leading banks in the London Interbank Market for a period of
three months as of 11:00 a.m., London time, on the applicable Interest Rate
Determination Date. If on any Interest Rate Determination Date, at least two of
the Reference Banks provide such offered quotations, then the LIBOR Rate will be
determined in
<PAGE>
3
accordance with the preceding sentence on the basis of the offered quotations of
those Reference Banks providing such quotations; PROVIDED, HOWEVER, that if
fewer than two of the Reference Banks are so quoting such interest rates as
mentioned above, the Applicable LIBOR Rate shall be deemed to be the Applicable
LIBOR Rate for the next preceding Quarterly Period and in the case of the
Quarterly Period next succeeding the Initial Quarterly Period, the Applicable
LIBOR Rate shall be the Applicable LIBOR Rate for the Initial Quarterly Period
and in the case of the Initial Quarterly Period, the Applicable LIBOR Rate shall
be 8.625%.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the sum
of the products of (A) the number of years from the date of determination to the
date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (B) the amount of each such principal payment by (ii)
the sum of all such principal payments.
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization or
relief of debtors or any amendment to, succession to or change in any such law.
"Banks" means the banks or other financial institutions from time to time
that are lenders under the Credit Agreement.
"Board of Directors" means either the board of directors of the Company or
any duly authorized committee of that board, and, with respect to any Subsidiary
Guarantor, either the board of directors of such Subsidiary Guarantor or any
duly authorized committee of that board.
"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, and delivered to the Trustee, and, with respect to a Subsidiary
Guarantor, a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Subsidiary Guarantor to have been duly adopted by its Board of
Directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in The City of New York are
authorized or obligated by law or executive order to close.
"Business Development Program" means the business practice of the Company
and its Subsidiaries of making or guaranteeing loans to, or making equity
investments in, third parties engaged in the retail grocery business in exchange
for long-term supply agreements with the Company or any Subsidiary.
"Business Development Venture" means any Person participating in the
Business Development Program and BFL of Tulsa, Inc., Butch's Finer Foods, Inc.,
South Ogden Super Duper, Inc., Stores located at 301 South Main, Smith Center,
KS 66967, 109 West Main Street, Inc., Route 417, Inc., Route 16, Inc. and Route
219, Inc.
<PAGE>
4
"Capital Lease Obligation" means, with respect to any Person, any
obligations of such Person and its Subsidiaries on a Consolidated basis under
any capital lease of real or personal property which, in accordance with GAAP,
has been recorded as a capitalized lease obligation.
"Capital Stock" of any Person means any and all shares, interests,
partnership interests, participations or other equivalents (however designated)
of such Person's capital stock whether now outstanding or issued after the date
hereof, including, without limitation, all Common Stock and Preferred Stock of
such Person.
"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act) is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to
have beneficial ownership of all shares that such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total outstanding
Voting Stock of the Company; (ii) during any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election to such
Board of Directors, or whose nomination for election by the shareholders of the
Company, was approved by a vote of 66 2/3% of the directors then still in office
who were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of such Board of Directors then in office; (iii) the
Company consolidates with or merges with or into any Person or conveys,
transfers, leases or otherwise disposes of all or substantially all of its
assets to any Person, or any Person consolidates with or merges into or with the
Company, in any such event pursuant to a transaction in which the outstanding
Voting Stock of the Company is changed into or exchanged for cash, securities or
other property, other than any such transaction where the outstanding Voting
Stock of the Company is not changed or exchanged at all (except to the extent
necessary to reflect a change in the jurisdiction of incorporation of the
Company) or where (A) the outstanding Voting Stock of the Company is changed
into or exchanged for (x) Voting Stock of the surviving corporation which is not
Redeemable Capital Stock or (y) cash, securities or other property (other than
Capital Stock of the surviving corporation) in an amount which could be paid by
the Company as a Restricted Payment under Section 1011 (and such amount shall be
treated as a Restricted Payment subject to Section 1011) and (B) immediately
after such transaction no "person" or "group" (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person
shall be deemed to have beneficial ownership of all shares that such Person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 50% of the
total outstanding Voting Stock of the surviving corporation; or (iv) the Company
is liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with Section 801.
"Change of Control Purchase Date" has the meaning specified in Section 1009.
"Change of Control Purchase Offer" has the meaning specified in Section
1009.
"Change of Control Purchase Price" has the meaning specified in Section
1009.
<PAGE>
5
"Change of Control Triggering Event" means the occurrence of both a Change
of Control and a Rating Decline.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of this Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act then the body performing
such duties at such time.
"Common Stock" means, with respect to any Person, any and all shares,
interests, participations and other equivalents (however designated, whether
voting or non-voting) of such Person's common stock, whether now outstanding or
issued after the date of this Indenture, including, without limitation, all
series and classes of such common stock.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" shall mean
such successor Person.
"Company Request" or "Company Order" means a written request or order signed
in the name of the Company by its Chairman, any Vice Chairman, its President,
any Vice President, its Treasurer or an Assistant Treasurer, and delivered to
the Trustee.
"Consolidated" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries if and to the extent the
accounts of such Person and each of its subsidiaries would normally be
consolidated with those of such Person, all in accordance with GAAP consistently
applied.
"Consolidated Fixed Charge Coverage Ratio" of the Company means, for any
period, the ratio of (a) the sum of Consolidated Net Income, Consolidated
Interest Expense, Consolidated Income Tax Expense and Consolidated Non-Cash
Charges deducted in computing Consolidated Net Income, in each case, for such
period, of the Company and its Subsidiaries on a Consolidated basis, all
determined in accordance with GAAP to (b) Consolidated Interest Expense for such
period; PROVIDED that (i) in making such computation, the Consolidated Interest
Expense attributable to interest on any Indebtedness computed on a PRO FORMA
basis and (A) bearing a floating interest rate shall be computed as if the rate
in effect on the date of computation had been the applicable rate for the entire
period and (B) which was not outstanding during the period for which the
computation is being made but which bears, at the option of the Company, a fixed
or floating rate of interest, shall be computed by applying, at the option of
the Company, either the fixed or floating rate; (ii) in making such computation,
Consolidated Interest Expense attributable to interest on any Indebtedness under
a revolving credit facility computed on a PRO FORMA basis shall be computed
based upon the average daily balance of such Indebtedness during the applicable
period; and (iii) in making such computation, Consolidated Interest Expense
attributable to interest on Indebtedness constituting obligations in connection
with any letters of credit and acceptances issued under letter of credit
facilities, acceptance facilities or other similar facilities computed on a PRO
FORMA basis shall be computed excluding any contingent obligations and without
assuming that any undrawn letter of credit has been drawn.
"Consolidated Income Tax Expense" means for any period the provision for
federal, state, local and foreign income taxes of the Company and its
Subsidiaries for such period as determined on a Consolidated basis in accordance
with GAAP.
<PAGE>
6
"Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Subsidiaries for such
period, as determined on a Consolidated basis in accordance with GAAP including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
Interest Rate Agreements (including amortization of discount), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the aggregate amount for such period of dividends on any Redeemable
Capital Stock or Preferred Stock of the Company and its Subsidiaries, (c) the
interest component of the Capital Lease Obligations paid, accrued and/or
scheduled to be paid, or accrued by such Person during such period and (d) all
capitalized interest of the Company and its Subsidiaries determined on a
Consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the Consolidated net income
(or loss) of the Company and its Subsidiaries for such period as determined on a
Consolidated basis in accordance with GAAP, adjusted, to the extent included in
calculating such net income (loss), by excluding, without duplication, (i) any
net after-tax extraordinary gains or losses (less all fees and expenses relating
thereto), (ii) the $101.3 million facilities consolidation and restructuring
charge originally reflected in the Company's audited Consolidated statement of
earnings for the year ended December 25, 1993, (iii) the portion of net income
(or loss) of the Company and its Subsidiaries determined on a Consolidated basis
allocable to minority interests in unconsolidated Persons to the extent that
cash dividends or distributions have not actually been received by the Company
or any Subsidiary, (iv) net income (or loss) of any Person combined with the
Company or any Subsidiary on a "pooling of interests" basis attributable to any
period prior to the date of combination, (v) net gains or losses (less all fees
and expenses relating thereto) in respect of dispositions of assets other than
in the ordinary course of business and (vi) the net income of any Subsidiary to
the extent that the declaration of dividends or similar distributions by that
Subsidiary of that income is not at the time permitted, 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
Subsidiary or its shareholders.
"Consolidated Net Tangible Assets" means the total of all the assets
appearing on the Consolidated balance sheet of the Company and its Consolidated
Subsidiaries, less the following: (1) current liabilities; (2) reserves for
depreciation and other asset valuation reserves; (3) intangible assets
including, without limitation, items such as goodwill, trademarks, trade names,
patents and unamortized debt discount and expense; and (4) appropriate
adjustments on account of minority interests of other Persons holding stock in
any majority-owned Subsidiary of the Company.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, amortization and other non-cash charges of the Company and its
Subsidiaries for such period, as determined on a Consolidated basis in
accordance with GAAP (excluding any non-cash charges which require an accrual or
reserve for any future period).
"Corporate Trust Office" means a corporate trust office of the Trustee, at
which at any particular time its corporate trust business shall be administered,
which office at the date of execution of this Indenture is located at 2200 Ross
Avenue, 5th Floor, Dallas, Texas 75201.
"Corporation" includes corporations, associations, companies and business
trusts.
<PAGE>
7
"Credit Agreement" means the Credit Agreement, dated as of July 19, 1994,
among the Company, the Banks, the Agents listed therein and the Managing Agent,
as such agreement may be amended, renewed, extended, substituted, refinanced,
restructured, replaced, supplemented or otherwise modified from time to time
(including, without limitation, any successive renewals, extensions,
substitutions, refinancings, restructurings, replacements, supplementations or
other modifications of the foregoing).
"Currency Agreements" means any spot or forward foreign exchange agreements
and currency swap, currency option or other similar financial agreements or
arrangements entered into by the Company or any of its Subsidiaries.
"Default" means any event which is, or after notice or passage of time or
both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Equity Store" means a Person in which the Company or any of its
Subsidiaries has invested capital or to which it has made loans in accordance
with the business practice of the Company and its Subsidiaries of making equity
investments in Persons, and making or guaranteeing loans to such Persons, for
the purpose of assisting such Person in acquiring, remodeling, refurbishing,
expanding or operating one or more retail grocery stores and pursuant to which
such Person is permitted or required to reduce the Company's or the Subsidiary's
equity interest to a minority position over time (usually five to ten years).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fixed Rate Note Indenture" means the indenture dated as of December 15,
1994 among the Company, each of the Subsidiary Guarantors and Texas Commerce
Bank National Association, Trustee covering the Company's Fixed Rate Notes.
"Fixed Rate Notes" means the 10 5/8% Rate Senior Notes due 2001 and, more
particularly, means any notes authenticated and delivered under the Fixed Rate
Note Indenture.
"Floating Rate Interest Payment Date" has the meaning specified in Section
301.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, as applied from time to
time by the Company in the preparation of its Consolidated financial statements.
"Guaranteed Debt" means, with respect to any Person, without duplication,
all Indebtedness of any other Person referred to in the definition of
"Indebtedness" contained herein guaranteed directly or indirectly in any manner
by such Person, or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or to advance or
supply funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell services,
primarily for the purpose of enabling the debtor to make payment of such
Indebtedness other than to the Company, a Wholly Owned Subsidiary of the Company
or a Subsidiary Guarantor or to assure the holder of such Indebtedness other
than the Company, a Wholly Owned Subsidiary of the Company or a Subsidiary
Guarantor against loss, (iii) to supply funds to, or in any other manner invest
in, the debtor (including any agreement to pay for property or
<PAGE>
8
services without requiring that such property be received or such services be
rendered), (iv) to maintain working capital or equity capital of the debtor, or
otherwise to maintain the net worth, solvency or other financial condition of
the debtor or (v) otherwise to assure a creditor against loss, PROVIDED that the
term "guarantee" shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"Guaranteed Obligations" has the meaning specified in Section 1201.
"Holder" means a Person in whose name a Note is registered in the Security
Register.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all liabilities of such Person for borrowed money (including overdrafts) or for
the deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities arising in the ordinary course of
business, but including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of credit and
acceptances issued under letter of credit facilities, acceptance facilities or
other similar facilities, (ii) all obligations of such Person evidenced by
bonds, notes, debentures or other similar instruments, (iii) all indebtedness of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of such property), but
excluding trade payables arising in the ordinary course of business, (iv) all
Capital Lease Obligations of such Person, (v) all obligations under Interest
Rate Agreements or Currency Agreements of such Person, (vi) all Indebtedness
referred to in clauses (i) through (v) above of other Persons and all dividends
of other Persons, the payment of which is secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien, upon or with respect to property (including, without limitation,
accounts and contract rights) owned by such Person, even though such Person has
not assumed or become liable for the payment of such Indebtedness, (vii) all
Guaranteed Debt of such Person, (viii) all Redeemable Capital Stock valued at
the greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends, and (ix) any amendment, supplement, modification,
deferral, renewal, extension, refunding or refinancing of any liability of the
types referred to in clauses (i) through (viii) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock which does not
have a fixed repurchase price shall be calculated in accordance with the terms
of such Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to be determined
pursuant to this Indenture, and if such price is based upon, or measured by, the
fair market value of such Redeemable Capital Stock, such fair market value is to
be determined in good faith by the Board of Directors of the issuer of such
Redeemable Capital Stock.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Initial Quarterly Period" means the period from and including December 15,
1994 through and including March 14, 1995.
<PAGE>
9
"Interest Payment Date" means the Stated Maturity of an installment of
interest on the Notes.
"Interest Rate Agreements" means any interest rate protection agreements and
other types of interest rate hedging agreements (including, without limitation,
interest rate swaps, caps, floors, collars and similar agreements).
"Interest Rate Determination Date" means, with respect to the Initial
Quarterly Period, December 13, 1994, and with respect to each Quarterly Period,
the second Working Day prior to the first day of such Quarterly Period.
"Investment" means, with respect to any Person, directly or indirectly, any
advance (other than advances to customers in the ordinary course of business,
which are recorded as accounts receivable on the balance sheet of the Company
and its Subsidiaries), loan or other extension of credit or capital contribution
to (by means of any transfer of cash or other property to others or any payment
for property or services for the account or use of others), or any purchase or
acquisition by such Person of any Capital Stock, bonds, notes, debentures or
other securities issued by any other Person.
"Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's
or the equivalent of such ratings by S&P or Moody's or in the event Moody's or
S&P shall cease rating the Notes and the Company shall select any other Rating
Agency, the equivalent of such ratings by such other Rating Agency.
"LIBOR Fraction" means the actual number of days in the Initial Quarterly
Period or Quarterly Period, as applicable, divided by 360; PROVIDED, HOWEVER,
that the number of days in the Initial Quarterly Period and each Quarterly
Period shall be calculated by including the first day of such Initial Quarterly
Period or Quarterly Period and excluding the last.
"LIBOR Rate" has the meaning specified in the definition of "Applicable
LIBOR Rate" contained herein.
"Lien" means any mortgage or deed of trust, charge, pledge, lien (statutory
or otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property or assets of any kind, real or personal,
movable or immovable.
"Managing Agent" means Morgan Guaranty Trust Company of New York as managing
agent under the Credit Agreement and any future managing agent under the Credit
Agreement.
"Maturity", when used with respect to the Notes, means the date on which the
principal of the Notes becomes due and payable as therein provided or as
provided in this Indenture, whether at Stated Maturity, purchase upon a Change
of Control Triggering Event or redemption date, and whether by declaration of
acceleration, Change of Control, call for redemption or purchase or otherwise.
"Moody's" means Moody's Investors Service, Inc. or any successor rating
agency.
"Note Guarantee" means any guarantee by a Subsidiary Guarantor of the
Company's obligations under this Indenture as set forth in Article Twelve of
this Indenture and any additional guarantee of the Notes pursuant to Section
1013 hereof.
<PAGE>
10
"Notes" has the meaning stated in the first recital of this Indenture and,
more particularly, means any Notes authenticated and delivered under this
Indenture.
"Offering" means the sale of the Notes by the Company to Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan
Securities Inc., as underwriters.
"Officers' Certificate" means a certificate signed by the Chairman, any Vice
Chairman, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company, and delivered
to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company, including an officer or employee of the Company, and who shall
be acceptable to the Trustee.
"Outstanding", when used with respect to the Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
(i) Notes theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption money
in the necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Notes; PROVIDED that, if such Notes
are to be redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee has been
made;
(iii) Notes, except to the extent provided in Sections 1302 and 1303,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Thirteen; and
(iv) Notes which have been paid pursuant to Section 306 or in exchange
for or in lieu of which other Notes have been authenticated and delivered
pursuant to this Indenture, other than any such Notes in respect of which
there shall have been presented to the Trustee proof satisfactory to it that
such Notes are held by a bona fide purchaser in whose hands the Notes are
valid obligations of the Company;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section 313, Notes owned by
the Company or any other obligor upon the Notes or any Affiliate of the Company
or such other obligor shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in making
such calculation or in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes which the Trustee actually
knows to be so owned shall be so disregarded. Notes so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor upon the
Notes or any Affiliate of the Company or such other obligor.
<PAGE>
11
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of (and premium, if any,
on) or interest on any Notes on behalf of the Company.
"Permitted Indebtedness" means any of the following Indebtedness of the
Company or any Subsidiary, as the case may be:
(i) Indebtedness of the Company and guarantees of the Subsidiary
Guarantors under the Credit Agreement (including Indebtedness of the Company
under Tranche A of the Credit Agreement to the extent that the aggregate
commitment thereunder does not exceed $900 million, the maximum aggregate
commitment for such facility on the date of this Indenture, and any
guarantees with respect thereto outstanding on the date of this Indenture
and any additional guarantees executed in connection therewith) in an
aggregate principal amount, together with Indebtedness, if any, incurred
pursuant to clauses (ii) and (xi) of this definition of "Permitted
Indebtedness", at any one time outstanding not to exceed $1.7 billion (after
giving PRO FORMA effect to the use of proceeds of the Offering) less
mandatory repayments actually made in respect of any term Indebtedness
thereunder;
(ii) Indebtedness of the Company under uncommitted bank lines of credit;
PROVIDED, HOWEVER, that the aggregate principal amount of Indebtedness
incurred pursuant to clauses (i), (ii) and (xi) of this definition of
"Permitted Indebtedness" does not exceed $1.7 billion (after giving PRO
FORMA effect to the use of proceeds of the Offering) less mandatory
repayments actually made in respect of any term Indebtedness thereunder;
(iii) Indebtedness of the Company evidenced by the Notes and the Note
Guarantees with respect thereto under this Indenture;
(iv) Indebtedness of the Company evidenced by the Fixed Rate Notes and
the Note Guarantees (as defined in the Fixed Rate Note Indenture) with
respect thereto under the Fixed Rate Note Indenture;
(v) Indebtedness of the Company or any Subsidiary outstanding on the
date of this Indenture and listed on Schedule A hereto;
(vi) obligations of the Company or any Subsidiary entered into in the
ordinary course of business (a) pursuant to Interest Rate Agreements
designed to protect against or manage exposure to fluctuations in interest
rates in respect of Indebtedness or retailer notes receivables, which, if
related to Indebtedness or retailer notes receivables, as the case may be,
do not exceed the aggregate notional principal amount of such Indebtedness
to which such Interest Rate Agreements relate, or (b) under any Currency
Agreements in the ordinary course of business and designed to protect
against or manage exposure to fluctuations in foreign currency exchange
rates which, if related to Indebtedness, do not increase the amount of such
Indebtedness other than as a result of foreign exchange fluctuations;
(vii) Indebtedness of the Company owing to a Wholly Owned Subsidiary or
of any Subsidiary owing to the Company or any Wholly Owned Subsidiary;
PROVIDED that any disposition, pledge (except any pledge under the Credit
Agreement or the Prior Indentures) or transfer of any such Indebtedness to a
Person (other than the Company or
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12
another Wholly Owned Subsidiary) shall be deemed to be an incurrence of such
Indebtedness by the Company or Subsidiary, as the case may be, not permitted
by this clause (vii);
(viii) Indebtedness in respect of letters of credit, surety bonds and
performance bonds provided in the ordinary course of business;
(ix) Indebtedness arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently drawn
against insufficient funds in the ordinary course of business; PROVIDED that
such Indebtedness is extinguished within five Business Days of its
incurrence;
(x) Indebtedness of the Company or any Subsidiary consisting of
guarantees, indemnities or obligations in respect of purchase price
adjustments in connection with the acquisition or disposition of assets;
(xi) Indebtedness of the Company evidenced by commercial paper issued by
the Company; PROVIDED, HOWEVER, that the aggregate principal amount of
Indebtedness incurred pursuant to clauses (i), (ii) and (xi) of this
definition of "Permitted Indebtedness" does not exceed $1.7 billion (after
giving PRO FORMA effect to the use of proceeds of the Offering) less
mandatory repayments actually made in respect of any term Indebtedness
thereunder;
(xii) Indebtedness of the Company pursuant to guarantees by the Company
or any Subsidiary Guarantor in connection with any Permitted Receivables
Financing; PROVIDED, HOWEVER, that such Indebtedness shall not exceed 15% of
the book value of the Transferred Receivables or, in the case of receivables
arising from direct financing leases for retail electronics systems, 30% of
the book value thereof;
(xiii) Indebtedness of the Company and its Subsidiaries in addition to
that described in clauses (i) through (xii) of this definition of "Permitted
Indebtedness," together with any other outstanding Indebtedness incurred
pursuant to this clause (xiii), not to exceed $100 million at any time
outstanding in the aggregate; and
(xiv) any renewals, extensions, substitutions, refundings, refinancings
or replacements (each, a "refinancing") of any Indebtedness described in
clauses (iii), (iv) and (v) of this definition of "Permitted Indebtedness",
including any successive refinancings, so long as (A) the aggregate
principal amount of Indebtedness represented thereby is not increased by
such refinancing to an amount greater than such principal amount plus the
lesser of (x) the stated amount of any premium or other payment required to
be paid in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (y) the amount of premium or other payment
actually paid at such time to refinance the Indebtedness, plus, in either
case, the amount of expenses of the Company or Subsidiary, as the case may
be, incurred in connection with such refinancing and (B) such refinancing
does not reduce the Average Life to Stated Maturity or the Stated Maturity
of such Indebtedness.
"Permitted Investment" means (i) Investment in any Wholly Owned Subsidiary
or any Investment in any Person by the Company or any Wholly Owned Subsidiary as
a result of which such Person becomes a Wholly Owned Subsidiary or any
Investment in the Company
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13
by a Wholly Owned Subsidiary; (ii) intercompany Indebtedness to the extent
permitted under clause (vii) of the definition of "Permitted Indebtedness";
(iii) Temporary Cash Investments; (iv) sales of goods on trade credit terms
consistent with the Company's past practices or otherwise consistent with trade
credit terms in common use in the industry; (v) Investments in direct financing
leases for equipment owned by the Company and leased to its customers in the
ordinary course of business consistent with past practice; (vi) Investments in
existence on the date of this Indenture; and (vii) any substitutions or
replacements of any Investment so long as the aggregate amount of such
Investment is not increased by such substitution or replacement.
"Permitted Liens" means, with respect to any Person:
(a) any Lien existing as of the date of this Indenture;
(b) any Lien arising by reason of (1) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (2) taxes, assessments, governmental charges or levies not yet
delinquent or which are being contested in good faith; (3) security for
payment of workers compensation or other insurance; (4) security for the
performance of tenders, leases (including, without limitation, statutory and
common law landlord's liens) and contracts (other than contracts for the
payment of money); (5) zoning restrictions, easements, licenses,
reservations, title defects, rights of others for rights-of-way for
utilities, sewers, electric lines, telephone or telegraph lines and other
similar purposes, provisions, covenants, conditions, waivers and
restrictions on the use of 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 or owner of the leased property, with or
without consent of the lessee), none of which materially impairs the use of
any parcel of property material to the operation of the business of the
Company or any Subsidiary or the value of such property for the purpose of
such business; (6) deposits to secure public or statutory obligations; (7)
operation of law in favor of growers, dealers and suppliers of fresh fruits
and vegetables, carriers, mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are
not yet delinquent or are being contested in good faith by negotiations or
by appropriate proceedings which suspend the collection thereof; (8) the
grant by the Company to licensees, pursuant to security agreements, of
security interests in trademarks and goodwill, patents and trade secrets of
the Company to secure the damages, if any, of such licensees, resulting from
the rejection of the license of such licensees in a bankruptcy,
reorganization or similar proceeding with respect to the Company; or (9)
security for surety or appeal bonds;
(c) any extension, renewal, refinancing or replacement of any Lien on
property of the Company or any Subsidiary existing as of the date of this
Indenture and securing the Indebtedness under the Credit Agreement or the
Prior Indenture in an aggregate principal amount not to exceed the principal
amount of the Indebtedness outstanding as
<PAGE>
14
permitted by clause (i) of the definition of "Permitted Indebtedness" so
long as no additional collateral is granted as security thereby; PROVIDED
that this clause (c) shall not apply to any Lien on such property that has
not been subject to a Lien for 30 days;
(d) any Lien on any property or assets of a Subsidiary in favor of the
Company or any Wholly Owned Subsidiary;
(e) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary; PROVIDED that such Lien does
not extend to any assets of the Company or any Subsidiary other than the
assets acquired in the transaction resulting in such Acquired Indebtedness
being incurred by the Company or Subsidiary, as the case may be;
(f) any Lien to secure the performance of bids, trade contracts,
letters of credit and other obligations of a like nature and incurred in the
ordinary course of business of the Company or any Subsidiary;
(g) any Lien securing any Interest Rate Agreements or Currency
Agreements permitted to be incurred pursuant to clause (v) of the definition
of "Permitted Indebtedness" or any collateral for the Indebtedness to which
such Interest Rate Agreements or Currency Agreements relate;
(h) any Lien securing the Notes;
(i) any Lien on an asset securing Indebtedness (including Capital
Lease Obligations) incurred or assumed for the purpose of financing all or
any part of the cost of acquiring or constructing such asset; PROVIDED that
such Lien attaches to such asset concurrently or within 180 days after the
acquisition or completion of construction thereof; and
(j) any Lien on real or personal property securing Capital Lease
Obligations of the Company or any Subsidiary as lessee with respect to such
real or personal property (1) to the extent that the Company or such
Subsidiary has entered into (and not terminated), or has a binding
commitment for, subleases on terms which, to the Company, are at least as
favorable, on a current basis, as the terms of the corresponding capital
lease or (2) under which the aggregate principal component of the annual
rent payable does not exceed $5 million;
(k) any Lien on a Financing Receivable or other receivable that is
transferred in a Permitted Receivables Financing;
(l) any Lien consisting of any pledge to any Person of Indebtedness
owed by any Subsidiary to the Company or any Wholly Owned Subsidiary;
PROVIDED that (i) such Subsidiary is a Subsidiary Guarantor and (ii) the
principal amount pledged does not exceed the Indebtedness secured by such
pledge; and
(m) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clause (a) so long as no
additional collateral is granted as security thereby.
<PAGE>
15
"Permitted Receivables Financing" means any transaction involving the
transfer (by way of sale, pledge or otherwise) by the Company or any of its
Subsidiaries of receivables to any other Person, PROVIDED that after giving
effect to such transaction the sum of (i) the aggregate uncollected balances of
the receivables so transferred ("Transferred Receivables") PLUS (ii) the
aggregate amount of all collections on Transferred Receivables theretofore
received by the seller but not yet remitted to the purchaser, in each case at
the date of determination, would not exceed $750 million.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 306 in exchange for a mutilated
security or in lieu of a lost, destroyed or stolen Note shall be deemed to
evidence the same debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred stock whether now outstanding or issued after the date of
this Indenture, including, without limitation, all classes and series of
preferred or preference stock of such Person.
"Principal Property" means any manufacturing or processing plant, office
facility, retail store, warehouse or distribution center, including, in each
case, the fixtures appurtenant thereto, located within the continental United
States and owned and operated now or hereafter by the Company or any Subsidiary
(other than an Equity Store or a Business Development Venture) and having a book
value on the date as of which the determination is being made of more than 2% of
Consolidated Net Tangible Assets.
"Prior Indentures" means the Indenture, dated March 15, 1986, between the
Company and Morgan Guaranty Trust Company of New York, as Trustee, covering $100
million aggregate principal amount of the Company's 9 1/2% Debentures due 2016
and the Indenture, dated December 1, 1989, between the Company and Morgan
Guaranty Trust Company of New York, as Trustee, covering $275 million aggregate
principal amount of the Company's Medium-Term Notes.
"Public Equity Offering" means a primary public offering of equity
securities of the Company pursuant to an effective registration statement under
the Securities Act with net cash proceeds of at least $50 million.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Quarterly Period" means the period from and including a scheduled Floating
Rate Interest Payment Date through the day next preceding the following
scheduled Floating Rate Interest Payment Date.
<PAGE>
16
"Rating Agency" means any of (i) S&P, (ii) Moody's or (iii) if S&P or
Moody's or both shall not make a rating of the Notes publicly available, a
security rating agency or agencies, as the case may be, nationally recognized in
the United States, selected by the Company, which shall be substituted for S&P
or Moody's or both, as the case may be.
"Rating Category" means (i) with respect to S&P, any of the following
categories: AAA, AA, A, BBB, BB, B, CCC, CC, C and D (or equivalent successor
categories); (ii) with respect to Moody's, any of the following categories: Aaa,
Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent successor categories); and
(iii) the equivalent of any such category of S&P or Moody's used by another
Rating Agency. In determining whether the rating of the Notes has decreased by
one or more gradation, gradations within Rating Categories (+ and - for S&P; 1,
2 and 3 for Moody's; or the equivalent gradations for another Rating Agency)
shall be taken into account (E.G., with respect to S&P, a decline in rating from
BB+ to BB, as well as from BB- to B+, will constitute a decrease of one
gradation).
"Rating Decline" means the occurrence on, or within 90 days after, the date
of public notice of the occurrence of a Change of Control or of the intention of
the Company or Persons controlling the Company to effect a Change of Control
(which period shall be extended so long as the rating of the Notes is under
publicly announced consideration for possible downgrade by any of the Rating
Agencies) of the following: (i) if the Notes are rated by either Rating Agency
as Investment Grade immediately prior to the beginning of such period, the
rating of the Notes by both Rating Agencies shall be below Investment Grade; or
(ii) if the Notes are rated below Investment Grade by both Rating Agencies
immediately prior to the beginning of such period, the rating of the Notes by
either Rating Agency shall be decreased by one or more gradations (including
gradations within Rating Categories as well as between Rating Categories).
"Redeemable Capital Stock" means any Capital Stock that, either by its terms
or by the terms of any security into which it is convertible or exchangeable or
otherwise, is, or upon the happening of an event or passage of time would be,
required to be redeemed prior to any Stated Maturity of the principal of the
Notes or is redeemable at the option of the holder thereof at any time prior to
any such Stated Maturity, or is convertible into or exchangeable for debt
securities at any time prior to any such Stated Maturity at the option of the
holder thereof.
"Redemption Date", when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price", when used with respect to any Note to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
"Reference Banks" means each of Barclays Bank PLC, London Branch, the Bank
of Tokyo, Ltd., London Branch, Bankers Trust Company, London Branch, and
National Westminster Bank PLC, London Branch, and any such replacement bank
thereof as listed on the Reuters Screen LIBO Page and their respective
successors, and if any of such banks are not at the applicable time providing
interest rates as contemplated within the definition of the "Applicable LIBOR
Rate," Reference Banks shall mean the remaining bank or banks so providing such
rates. In the event that fewer than two of such banks are providing such rates,
the Company shall use reasonable efforts to appoint additional Reference Banks
so
<PAGE>
17
that there are at least two such banks providing such rates; PROVIDED, HOWEVER,
that such banks appointed by the Company shall be London offices of leading
banks engaged in the Eurodollar market (the market in which U.S. currency, which
is deposited by corporations and national governments in banks outside the
United States, is used for settling interna-
tional transactions).
"Regular Record Date" for the interest payable on any Interest Payment Date
means the March 1, June 1, September 1, or December 1, (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
"Responsible Officer", when used with respect to the Trustee, means the
chairman or any vice-chairman of the board of directors, the chairman or any
vice-chairman of the executive committee of the board of directors, the chairman
of the trust committee, the president, any vice president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, the cashier, any
assistant cashier, any trust officer or assistant trust officer, the controller
or any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, 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.
"Reuters Screen LIBO Page" means the display designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other page as may replace the
LIBO page on that service for the purpose of displaying London Interbank Offered
Rates of leading banks).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 305.
"Senior Indebtedness" means Indebtedness of the Company other than
Subordinated Indebtedness.
"Significant Subsidiary" of the Company means any Subsidiary of the Company
that is a "significant subsidiary" as defined in Rule 1.02(v) of Regulation S-X
under the Securities Act.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill Inc.,
a New York corporation, or any successor rating agency.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 307.
"Stated Maturity" when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of or premium on such Indebtedness or
such installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company subordinated
in right of payment to the Notes.
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18
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or more
other Subsidiaries.
"Subsidiary Guarantor" means any Person that is required pursuant to Section
1013, on or after the date of this Indenture, to execute a Note Guarantee of the
Notes until a successor replaces any such party pursuant to the applicable
provisions of this Indenture and, thereafter, shall mean such successor, and the
following Subsidiaries of the Company: ATI, Inc., Badger Markets, Inc., Baker's
Supermarkets, Inc., Ball Motor Service, Inc., Boogaart Stores of Nebraska, Inc.,
Central Park Super Duper, Inc., Commercial Cold/Dry Storage Company, Consumers
Markets, Inc., D.L. Food Stores, Inc., Del-Arrow Super Duper, Inc., Festival
Foods, Inc., Fleming Direct Sales Corporation, Fleming Foods East, Inc., Fleming
Foods of Alabama, Inc., Fleming Foods of Ohio, Inc., Fleming Foods of Tennessee,
Inc., Fleming Foods of Texas, Inc., Fleming Foods of Virginia, Inc., Fleming
Foods South, Inc., Fleming Foods West, Inc., Fleming Foreign Sales Corporation,
Fleming Franchising, Inc., Fleming Holdings, Inc., Fleming International, Ltd.,
Fleming Site Media, Inc., Fleming Supermarkets of Florida, Inc., Fleming
Technology Leasing Company, Inc., Fleming Transportation Service, Inc., Food
Brands, Inc., Food-4-Less, Inc., Food Holdings, Inc., Food Saver of Iowa, Inc.,
Gateway Development Co., Inc., Gateway Food Distributors, Inc., Gateway Foods,
Inc., Gateway Foods of Altoona, Inc., Gateway Foods of Pennsylvania, Inc.,
Gateway Foods of Twin Ports, Inc., Gateway Foods Service Corporation, Grand
Central Leasing Corporation, Great Bend Supermarkets, Inc., Hub City
Transportation, Inc., Kensington and Harlem, Inc., LAS, Inc., Ladysmith East
IGA, Inc., Ladysmith IGA, Inc., Lake Markets, Inc., M&H Desoto, Inc., M&H
Financial Corp., M&H Realty Corp., Malone & Hyde, Inc., Malone & Hyde of
Lafayette, Inc., Manitowoc IGA, Inc., Moberly Foods, Inc., Mt. Morris Super
Duper, Inc., Niagara Falls Super Duper, Inc., Northern Supermarkets of Oregon,
Inc., Northgate Plaza, Inc., 109 West Main Street, Inc., 121 East Main Street,
Inc., Peshtigo IGA, Inc., Piggly Wiggly Corporation, Quality Incentive Company,
Inc., Rainbow Transportation Services, Inc., Route 16, Inc., Route 219, Inc.,
Route 417, Inc., Richland Center IGA, Inc, Scrivner, Inc., Scrivner-Food
Holdings, Inc., Scrivner of Alabama, Inc., Scrivner of Illinois, Inc., Scrivner
of Iowa, Inc., Scrivner of Kansas, Inc., Scrivner of New York, Inc., Scrivner of
North Carolina, Inc., Scrivner of Pennsylvania, Inc., Scrivner of Tennessee,
Inc., Scrivner of Texas, Inc., Scrivner Super Stores of Illinois, Inc., Scrivner
Super Stores of Iowa, Inc., Scrivner Transportation, Inc., Sehon Foods, Inc.,
Selected Products, Inc., Sentry Markets, Inc., Smar Trans, Inc., Southern
Supermarkets, Inc. (TX), Southern Supermarkets, Inc. (OK), Southern Supermarkets
of Louisiana, Inc., Star Groceries, Inc., Store Equipment, Inc., Sundries
Service, Inc., Switzer Foods, Inc., 35 Church Street, Inc., Thompson Food
Basket, Inc., 29 Super Market, Inc., 27 Slayton Avenue, Inc. and WPC, Inc.
"Temporary Cash Investments" means (i) any evidence of Indebtedness issued
by the United States, or an instrumentality or agency thereof, and guaranteed
fully as to principal, premium, if any, and interest by the United States, (ii)
any certificate of deposit issued by, or time deposit of, a bank or trust
company in the United States having combined capital and surplus and undivided
profits of not less than $500 million, whose debt has a rating, at the time as
of which any investment therein is made, of "A" (or higher) according to Moody's
or "A" (or higher) according to S&P, (iii) commercial paper issued by an entity
(other than an
<PAGE>
19
Affiliate or Subsidiary of the Company) with a rating, at the time as of which
any investment therein is made, of "P-1" (or higher) according to Moody's or
"A-1" (or higher) according to S&P, (iv) any money market deposit accounts
issued or offered by a financial institution in the United States having capital
and surplus in excess of $500 million, (v) short term tax exempt bonds with a
rating, at the time as of which any investment is made therein, of "Aa2" (or
higher) according to Moody's or "AA" (or higher) according to S&P, (vi) shares
in a mutual fund, the investment objectives and policies of which require it to
invest substantially all of its assets in investments of the type described in
clause (v) and (vii) repurchase and reverse repurchase obligations underlying
securities of the types described in clauses (i) and (ii) entered into with any
financial institution meeting the qualifications specified in clause (ii);
PROVIDED that in the case of clauses (i), (ii), (iii), (v) and (vii), such
investment matures within one year from the date of acquisition thereof.
"Transferred Receivables" has the meaning specified in the definition of
"Permitted Receivables Financing" in this Section.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force at the date as of which this Indenture was executed, except
as provided in Section 905.
"Trustee" means the Person named as the Trustee in the first paragraph of
this Indenture until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"U.S. Government Obligations" means securities that are (i) direct
obligations of the United States for the timely payment of which its full faith
and credit is pledged or (ii) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United States, the timely
payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank (as defined in Section 3(a)(2) of the
Securities Act) as custodian with respect to any such U.S. Government Obligation
or a specific payment of principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the holder of such
depository receipt; PROVIDED that (except as required by law) such custodian is
not authorized to make any deduction from the amount payable to the holder of
such depository receipt from any amount received by the custodian in respect of
the U.S. Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depository receipt.
"Vice President", when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president".
"Voting Stock" means stock of the class or classes having general voting
power under ordinary circumstances to elect at least a majority of the board of
directors, managers or trustees of a corporation (irrespective of whether or not
at the time stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
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20
"Wholly Owned Subsidiary" means a Subsidiary all the Capital Stock (other
than directors' qualifying shares) of which is owned by the Company or another
Wholly Owned Subsidiary.
"Working Day" means any day which is not a Saturday, Sunday or a day on
which banking institutions in New York, New York or London, England are
authorized or obligated by law or executive order to close.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall furnish to the
Trustee an Officers' Certificate stating that all conditions precedent, if any,
provided for in this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed action have been
complied with and an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than pursuant to Section 1008)
shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) 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;
(3) a statement that, in the opinion of each such individual, he 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 complied with; and
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. In giving such opinion, such counsel may rely upon opinions of local
counsel reasonably satisfactory to the Trustee. Any such certificate or Opinion
of Counsel
<PAGE>
21
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company stating
that the information with respect to such factual matters is in the possession
of the Company, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of authority.
The fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c) The principal amount and serial numbers of Notes held by any Person,
and the date of holding the same, shall be proved by the Security Register.
(d) If the Company shall solicit from the Holders of Notes any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to Board Resolution, fix in advance a
record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
Company shall have no obligation to do so. Notwithstanding TIA Section 316(c),
such record date shall be the record date specified in or pursuant to such Board
Resolution, which shall be a date not earlier than the date 30 days prior to the
first solicitation of Holders generally in connection therewith and not later
than the date such solicitation is completed. If such a record date is fixed,
such request, demand, authorization, direction, notice, consent, waiver or other
Act may be given before or after such record date, but only the Holders of
record at the close of business on such record date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
<PAGE>
22
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes shall be computed as of such record
date; PROVIDED that no such authorization, agreement or consent by the Holders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than 330 days after the
record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
SECTION 105. NOTICES, ETC., TO TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be sufficient for
every purpose hereunder if made, given, furnished or filed in writing to or
with the Trustee at its Corporate Trust Office, Attention: Corporate Trust
Department, or
(2) the Company or any Subsidiary Guarantor by the Trustee or by any
Holder shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if in writing and mailed, first-class postage
prepaid, to the Company addressed to it at the address of its principal
office specified in the first paragraph of this Indenture, or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides notice of any event to Holders by the Company,
any Subsidiary Guarantor or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at his
address as it appears in the Security Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders. Any notice mailed to a Holder in the manner herein prescribed
shall be conclusively deemed to have been received by such Holder when so
mailed, whether or not such Holder actually receives such notice. Where this
Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it shall be impracticable to mail
notice of any event to Holders
<PAGE>
23
when such notice is required to be given pursuant to any provision of this
Indenture, then any manner of giving such notice as shall be satisfactory to the
Trustee shall be deemed to be a sufficient giving of such notice for every
purpose hereunder.
SECTION 107. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 108. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company and the
Subsidiary Guarantors shall bind their respective successors and assigns,
whether so expressed or not.
SECTION 109. SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes or the Note
Guarantees 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 110. BENEFITS OF INDENTURE.
Nothing in this Indenture, in the Notes or the Note Guarantees, express or
implied, shall give to any Person, other than the parties hereto, any Paying
Agent, any Securities Registrar and their successors hereunder and the Holders,
any benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 111. GOVERNING LAW.
This Indenture, the Notes and the Note Guarantees shall be governed by and
construed in accordance with the law of the State of New York. This Indenture is
subject to the provisions of the Trust Indenture Act of 1939, as amended and
shall, to the extent applicable, be governed by such provisions.
SECTION 112. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity or Maturity of any Note shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes) payment
of interest or principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, Redemption Date, or at the
Stated Maturity or Maturity; PROVIDED that no interest shall accrue for the
period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
<PAGE>
24
ARTICLE TWO
NOTE FORMS
SECTION 201. FORMS GENERALLY.
The Notes and the Trustee's certificates of authentication shall be in
substantially the forms set forth in this Article, with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.
The definitive Notes shall be printed, lithographed or engraved on
steel-engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing such Notes, as evidenced by their
execution of such Notes; PROVIDED, HOWEVER, that if the Notes are listed on any
securities exchange such manner is permitted by the rules of such securities
exchange.
SECTION 202. FORM OF FACE OF NOTE.
FLEMING COMPANIES, INC.
FLOATING RATE SENIOR NOTE DUE 2001 CUSIP
NO. $
Fleming Companies, Inc., an Oklahoma corporation (herein called the
"Company", which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
or registered assigns, the principal sum of Dollars on
December 15, 2001, at the office or agency of the Company referred to below, and
to pay interest thereon from December 15, 1994, or from the most recent Floating
Rate Interest Payment Date to which interest has been paid or duly provided for,
quarterly in arrears, on March 15, June 15, September 15 and December 15 of each
year, commencing March 15, 1995, at a rate per annum determined on each Interest
Rate Determination Date by multiplying the principal amount of the Notes
outstanding as of the first day of the respective Quarterly Period or the
Initial Quarterly Period, as the case may be, by the Applicable LIBOR Rate and
multiplying such product by the LIBOR Fraction, until the principal hereof is
paid or duly provided for, and (to the extent lawful) to pay on demand interest
on any overdue interest at the rate borne by the Notes from the date on which
such overdue interest becomes payable to the date payment of such interest has
been made or duly provided for. The interest so payable, and punctually paid or
duly provided for, on any Floating Rate Interest Payment Date will, as provided
in such Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest, which shall be the March 1, June 1, September 1 and
December 1 (whether or not a Business Day), as the case may be, next preceding
such Floating Rate Interest Payment Date. Any such interest not so punctually
paid or duly provided for shall forthwith cease to be payable to the Holder on
such Regular
<PAGE>
25
Record Date, and such Defaulted Interest, and (to the extent lawful) interest on
such Defaulted Interest at the rate borne by the Notes, may be paid to the
Person in whose name this Note (or one or more Predecessor Notes) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Notes not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture. Payment of the principal of (and premium, if any, on) and
interest on this Note will be made at the office or agency of the Company
maintained for that purpose in The City of New York, or at such other office or
agency of the Company as may be maintained for such purpose, 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; PROVIDED, HOWEVER, that payment
of interest may be made at the option of the Company (i) by check mailed to the
address of the Person entitled thereto as such address shall appear on the
Security Register or (ii) if requested in writing at least 10 days prior to a
Regular Record Date or a Special Record Date, as the case may be, by a Person
who is entitled thereto with respect to at least $1 million in principal amount
of the Notes, by transfer to an account maintained by such Person at a bank
located in the United States.
Reference is hereby made to the further provisions of this Note set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: FLEMING COMPANIES, INC.
By ___________________________________
Attest:
___________________________________
Secretary
SECTION 203. FORM OF REVERSE OF NOTE.
This Note is one of a duly authorized issue of securities of the Company
designated as its Floating Rate Senior Notes due 2001 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $200,000,000, which may be issued under
an indenture (herein called the "Indenture") dated as of December 15, 1994,
among the Company, the Subsidiary Guarantors named
<PAGE>
26
therein and Texas Commerce Bank National Association, trustee (herein called the
"Trustee", which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a statement of the respective rights, limitations of rights, duties,
obligations and immunities thereunder of the Company, the Subsidiary Guarantors,
the Trustee and the Holders of the Notes, and of the terms upon which the Notes
are, and are to be, authenticated and delivered.
The Notes are subject to redemption at the option of the Company, on any
Floating Rate Interest Payment Date, upon not less than 30 nor more than 60
days' notice on or after December 15, 1995 and on or prior to December 14, 1999,
as a whole or in part, at the election of the Company, at a Redemption Price
equal to 100.5% of the principal amount of the Notes together with accrued and
unpaid interest, if any, to the Redemption Date, and after December 14, 1999 at
a Redemption Price equal to 100% of the principal amount thereof, together with
accrued and unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive accrued interest
due on an Interest Payment Date), all as provided in the Indenture.
Upon the occurrence of a Change of Control Triggering Event, the Holder of
this Note may require the Company, subject to certain limitations provided in
the Indenture, to purchase this Note at a purchase price in cash in an amount
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase.
In the case of any redemption of Notes, interest installments whose Stated
Maturity is on or prior to the Redemption Date will be payable to the Holders of
such Notes, or one or more Predecessor Notes, of record at the close of business
on the relevant Record Date referred to on the face hereof. Notes (or portions
thereof) for whose redemption and payment provision is made in accordance with
the Indenture shall cease to bear interest from and after the Redemption Date.
In the event of redemption of this Note in part only, a new Note or Notes
for the unredeemed portion hereof shall be issued in the name of the Holder
hereof upon the cancellation hereof.
If an Event of Default shall occur and be continuing, the principal of all
the Notes may be declared due and payable in the manner and with the effect
provided in the Indenture.
The Indenture contains provisions for defeasance at any time of (a) the
entire indebtedness of the Company and any Subsidiary Guarantor on this Note and
(b) certain restrictive covenants and the related Defaults and Events of
Default, upon compliance by the Company and the Subsidiary Guarantors with
certain conditions set forth therein, which provisions apply to this Note.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the Subsidiary Guarantors and the rights of the Holders under the
Indenture at any time by the Company, the Subsidiary Guarantors and the Trustee
with the consent of the Holders of a majority in aggregate principal amount of
the Notes at the time Outstanding. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate principal amount of
the Notes at the time Outstanding, on behalf of the Holders of all the Notes, to
waive compliance by the Company and the Subsidiary Guarantors with certain
provisions of
<PAGE>
27
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by or on behalf of the Holder of this
Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any, on) and
interest on this Note at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Note is registerable on the Security Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose in The City of New York,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to the time of due presentment of this Note for registration of
transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of
the Company, the Subsidiary Guarantors or the Trustee may treat the Person in
whose name this Note is registered as the owner hereof for all purposes, whether
or not this Note be overdue, and neither the Company, the Subsidiary Guarantors,
the Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
FORM OF ASSIGNMENT
FOR VALUE RECEIVED ___________________ hereby sell(s), assign(s) and
transfer(s) unto ______________ ______________ ______________ (please insert
social security or other identifying number of assignee) the within Note and
hereby irrevocably constitutes and appoints ______________ ______________ as
agent to transfer the said Note on the books of the Company with the full power
of substitution in the premises.
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28
Dated:
______________________________________
Signature(s)
Signature must be guaranteed by
a bank or trust company
or a member firm of a major stock
exchange
______________________________________
Signature Guarantee
NOTICE: The signature on the assignment
must correspond with the name as
written upon the face of the Note in every
particular without alteration or enlargement or any
change whatever.
SECTION 204. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in substantially the
following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
This is one of the Notes referred to in the within-mentioned Indenture.
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
as Trustee
By ___________________________________
Authorized Signatory
ARTICLE THREE
THE NOTES
SECTION 301. TITLE AND TERMS.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture is limited to $200,000,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Section 303, 304, 305, 306, 801,
906, 1009 or 1108.
The Notes shall be known and designated as the "Floating Rate Senior Notes
due 2001" of the Company. Their Stated Maturity shall be December 15, 2001, and
they shall bear interest from December 15, 1994, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
payable quarterly on March 15, June 15, September 15 and December 15 of each
year, commencing March 15, 1995 and at said Stated Maturity, until the principal
thereof is paid or duly provided for.
<PAGE>
29
Interest on the Notes will accrue at a rate equal to the Applicable LIBOR
Rate and will be payable quarterly in arrears on March 15, June 15, September 15
and December 15 of each year (each a "Floating Rate Interest Payment Date"), or
if any such day is not a Business Day, on the next succeeding Business Day,
commencing on March 15, 1995 to holders of record on the immediately preceding
March 1, June 1, September 1 and December 1. Interest on the Notes will be
calculated on a formula basis by multiplying the principal amount of the Notes
outstanding as of the first day of a Quarterly Period or the Initial Quarterly
Period, as the case may be, by the Applicable LIBOR Rate and multiplying such
product by the LIBOR Fraction.
The principal of (and premium, if any, on) and interest on the Notes shall
be payable at the office or agency of the Company maintained for such purpose in
The City of New York, or at such other office or agency of the Company as may be
maintained for such purpose; PROVIDED, HOWEVER, that, at the option of the
Company, interest may be paid by (i) mailing a check for such interest, payable
to or upon the written order of the Person entitled thereto pursuant to Section
308, to the address of such Person as it appears in the Security Register or
(ii) if requested in writing at least 10 days prior to a Regular Record Date or
a Special Record Date, as the case may be, by a Person who is entitled thereto
with respect to at least $1 million in principal amount of the Notes, by
transfer to an account maintained by such Person at a bank located in the United
States.
The Notes shall be redeemable as provided in Article Eleven.
SECTION 302. DENOMINATIONS.
The Notes shall be issuable only in registered form without coupons and only
in denominations of $1,000 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
The Notes shall be executed on behalf of the Company by its Chairman, any
Vice Chairman, its President or a Vice President, under its corporate seal
reproduced thereon and attested by its Secretary or an Assistant Secretary. The
signature of any of these officers on the Notes may be manual or facsimile
signatures of the present or any future such authorized officer and may be
imprinted or otherwise reproduced on the Notes.
Notes bearing the manual or facsimile signatures of individuals who were at
any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Notes executed by the Company to the Trustee
for authentication, together with a Company Order for the authentication and
delivery of such Notes, and the Trustee in accordance with such Company Order
shall authenticate and deliver such Notes.
Each Note shall be dated the date of its authentication.
No Note shall be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of a
<PAGE>
30
Responsible Officer, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be consolidated or
merged with or into any other Person or shall convey, transfer, lease or
otherwise dispose of its properties and assets substantially as an entirety to
any Person, and the successor Person resulting from such consolidation, or
surviving such merger, or into which the Company shall have been merged, or the
Person which shall have received a conveyance, transfer, lease or other
disposition as aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Notes authenticated or
delivered prior to such consolidation, merger, conveyance, transfer, lease or
other disposition may, from time to time, at the request of the successor
Person, be exchanged for other Notes executed in the name of the successor
Person with such changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Notes surrendered for such exchange
and of like principal amount; and the Trustee, upon Company Request of the
successor Person, shall authenticate and deliver Notes as specified in such
request for the purpose of such exchange. If Notes shall at any time be
authenticated and delivered in any new name of a successor Person pursuant to
this Section in exchange or substitution for or upon registration of transfer of
any Notes, such successor Person, at the option of the Holders but without
expense to them, shall provide for the exchange of all Notes at the time
Outstanding for Notes authenticated and delivered in such new name.
SECTION 304. TEMPORARY NOTES.
Pending the preparation of definitive Notes, the Company may execute and
upon Company Order the Trustee shall authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Notes in
lieu of which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such Notes may
determine, as conclusively evidenced by their execution of such Notes.
If temporary Notes are issued, the Company will cause definitive Notes to be
prepared without unreasonable delay. After the preparation of definitive Notes,
the temporary Notes shall be exchangeable for definitive Notes upon surrender of
the temporary Notes at the office or agency of the Company designated for such
purpose pursuant to Section 1002, without charge to the Holder. Upon surrender
for cancellation of any one or more temporary Notes, the Company shall execute
and upon Company Order the Trustee shall authenticate and deliver in exchange
therefor a like principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept at the Corporate Trust Office of the
Trustee a register (the register maintained in such office and in any other
office or agency designated pursuant to Section 1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Notes and of transfers of Notes. The Security Register shall be in
<PAGE>
31
written form or any other form capable of being converted into written form
within a reasonable time. At all reasonable times, the Security Register shall
be open to inspection by the Trustee. The Trustee is hereby initially appointed
as security registrar (the "Security Registrar") for the purpose of registering
Notes and transfers of Notes as herein provided.
Upon surrender for registration of transfer of any Note at the office or
agency of the Company designated pursuant to Section 1002, the Company shall
execute and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Notes of any authorized
denomination or denominations of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of any
authorized denomination and of a like aggregate principal amount, upon surrender
of the Notes to be exchanged at such office or agency. Whenever any Notes are so
surrendered for exchange, the Company shall execute and the Trustee shall
authenticate and deliver, the Notes which the Holder making the exchange is
entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Company and, pursuant to the Note
Guarantees, the Subsidiary Guarantors, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Notes surrendered upon such
registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or for
exchange shall be duly endorsed, or be accompanied by a written instrument of
transfer, in form satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or exchange
or redemption of Notes, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Notes, other than exchanges
pursuant to Section 303, 304, 801, 906, 1108 or 1009 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange any Note during a period beginning at the opening of business 15 days
before the selection of Notes to be redeemed under Section 1104 and ending at
the close of business on the day of such mailing of the relevant notice of
redemption, or (ii) to register the transfer of or exchange any Note so selected
for redemption in whole or in part, except the unredeemed portion of any Note
being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
If (i) any mutilated Note is surrendered to the Trustee, or (ii) the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, and there is delivered to the Company and the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then, in the absence of actual notice to the Company or the Trustee that such
Note has been acquired by a bona fide purchaser, the Company shall execute and
the Trustee shall authenticate and deliver, in exchange for any such mutilated
Note or in lieu of any such destroyed, lost or stolen Note, a new Note of like
tenor and principal amount, bearing a number not contemporaneously outstanding.
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In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section in lieu of any destroyed,
lost or stolen Note shall constitute an original additional contractual
obligation of the Company and, pursuant to the Note Guarantees, the Subsidiary
Guarantors, whether or not the destroyed, lost or stolen Note shall be at any
time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Notes duly issued
hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 1002; PROVIDED,
HOWEVER, that each installment of interest may at the Company's option be paid
by (i) mailing a check for such interest, payable to or upon the written order
of the Person entitled thereto pursuant to Section 308, to the address of such
Person as it appears in the Security Register or (ii) if requested in writing at
least 10 days prior to a Regular Record Date or a Special Record Date, as the
case may be, by a Person who is entitled thereto with respect to at least $1
million in principal amount of the Notes, by transfer to an account maintained
by such Person at a bank located in the United States.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date shall forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Notes (or their respective Predecessor Notes)
are registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the following
manner. The Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Note and the date of the
proposed payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed to be paid
in respect of such Defaulted Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the
proposed payment, such money when
<PAGE>
33
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date, and in the name and
at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be given in
the manner provided for in Section 106, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so given, such
Defaulted Interest shall be paid to the Persons in whose names the Notes (or
their respective Predecessor Notes) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the Company to the
Trustee of the proposed payment pursuant to this clause, such manner of
payment shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to the due presentment of a Note for registration of transfer, the
Company, the Subsidiary Guarantors, the Trustee and any agent of the Company,
the Subsidiary Guarantors or the Trustee may treat the Person in whose name such
Note is registered as the owner of such Note for the purpose of receiving
payment of principal of (and premium, if any, on) and (subject to Sections 305
and 307) interest on such Note and for all other purposes whatsoever, whether or
not such Note be overdue, and none of the Company, any Subsidiary Guarantor, the
Trustee or any agent of the Company, any Subsidiary Guarantor or the Trustee
shall be affected by notice to the contrary.
SECTION 309. CANCELLATION.
All Notes surrendered for payment, redemption, registration of transfer or
exchange shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and may deliver to the Trustee (or to any other Person for
delivery to the Trustee) for cancellation any Notes previously authenticated
hereunder which the Company has not issued and sold, and all Notes so delivered
shall be promptly cancelled by the Trustee. If the Company shall so acquire any
of the Notes,
<PAGE>
34
however, such acquisition shall not operate as a redemption or satisfaction of
the indebtedness represented by such Notes unless and until the same are
surrendered to the Trustee for cancellation. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in this Section,
except as expressly permitted by this Indenture. All cancelled Notes held by the
Trustee shall be disposed of by the Trustee in accordance with its customary
procedures and certification of their disposal delivered to the Company unless
by Company Order the Company shall direct that cancelled Notes be returned to
it.
SECTION 310. CUSIP NUMBERS.
The Company may use "CUSIP" numbers in issuing the Notes (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; PROVIDED, HOWEVER, that any such notice
may state that no representation is made as to the correctness of such "CUSIP"
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Notes, and any such redemption shall not be affected by
any defect in or omission of such "CUSIP" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of Notes
issued under this Indenture) and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging satisfaction and discharge of
this Indenture when
(1) either
(A) all Notes theretofore authenticated and delivered (except (i)
lost, stolen or destroyed Notes which have been replaced or paid as
provided in Section 306 and (ii) Notes for whose payment funds have
theretofore been deposited in trust by the Company with the Trustee or
any Paying Agent or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust, as
provided in Section 1003) have been delivered to the Trustee for
cancellation; or
(B) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within
one year, and
either the Company or any Subsidiary Guarantor has irrevocably deposited
or caused to be deposited with the Trustee funds in an amount sufficient
to pay and discharge the entire indebtedness on such Notes not
theretofore delivered to the Trustee for cancellation, for principal,
premium, if any, and interest to the date of such deposit;
(2) the Company or any Subsidiary Guarantor has paid all other sums
payable hereunder by the Company and any Subsidiary Guarantors; and
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35
(3) 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 the satisfaction and discharge of this Indenture
have been complied with and that such satisfaction and discharge will not
result in a breach or violation of, or constitute a default under, this
Indenture or any other material agreement or instrument to which the Company
or any Subsidiary Guarantor is a party or by which it is bound.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 606 and, if money shall
have been deposited with the Trustee pursuant to subclause (B) of clause (1) of
this Section, the obligations of the Trustee under Section 402 and the last
paragraph of Section 1003 shall survive.
SECTION 402. APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 1003, all money
deposited with the Trustee pursuant to Section 401 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee; but such money need not be segregated from other funds except to the
extent required by law.
ARTICLE FIVE
REMEDIES
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(1) default in the payment of any interest on any Note issued under
this Indenture when such interest becomes due and payable, and continuance
of such default for a period of 60 days; or
(2) default in the payment of the principal of (or premium, if any, on)
any Note at its Stated Maturity; or
(3) (A) default in the performance, or breach, of any covenant or
agreement of the Company or any Subsidiary Guarantor under this Indenture
(other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in the immediately preceding
clauses (1) and (2) or clauses (B) and (C) of this clause (3), and such
default or breach shall continue for a period of 60 days after written
notice has been given, by certified mail, (x) to the Company by the Trustee
or (y) to the Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Notes specifying such default or breach
and requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder; (B) default in the performance or breach
<PAGE>
36
of the provisions in Section 801; or (C) the Company shall have failed to
make or consummate a Change of Control Purchase Offer in accordance with the
provisions of Section 1009; or
(4) (A) there shall have occurred any default in the payment of
principal of any Indebtedness under any agreements, indentures (including
any such default under the Fixed Rate Note Indenture) or instruments under
which the Company or any Subsidiary of the Company then has outstanding
Indebtedness in excess of $50 million, when the same shall become due and
payable in full and such default shall have continued after any applicable
grace period and shall not have been cured or waived or (B) an event of
default as defined in any of the agreements, indentures or instruments
described in clause (A) of this clause (4) shall have occurred and the
Indebtedness thereunder, if not already matured at its final maturity in
accordance with its terms, shall have been accelerated or otherwise declared
due and payable, or required to be prepaid or repurchased (other than by
regularly scheduled required prepayment), prior to the stated maturity
thereof; or
(5) any Person entitled to take the actions described in this clause
(5), after the occurrence of any event of default on Indebtedness in excess
of $50 million in the aggregate of the Company or any Subsidiary, shall
notify the Trustee of the intended sale or disposition of any assets of the
Company or any Subsidiary that have been pledged to or for the benefit of
such Person to secure such Indebtedness or shall commence proceedings, or
take any action (including by way of set-off) to retain in satisfaction of
any Indebtedness, or to collect on, seize, dispose of or apply, any such
assets of the Company or any Subsidiary (including funds on deposit or held
pursuant to lock-box and other similar arrangements), pursuant to the terms
of any agreement or instrument evidencing any such Indebtedness or in
accordance with applicable law; or
(6) any Note Guarantee of any Significant Subsidiary individually or
any other Subsidiaries if such Subsidiaries in the aggregate represent 15%
or more of the assets of the Company and its Subsidiaries on a Consolidated
basis with respect to such Notes shall for any reason cease to be, or be
asserted in writing by the Company, any Subsidiary Guarantor or any other
Subsidiary of the Company, as applicable, not to be, in full force and
effect, enforceable in accordance with its terms, except pursuant to the
release of any such Note Guarantee in accordance with this Indenture; or
(7) one or more judgments, orders or decrees for the payment of money
in excess of $50 million (net of amounts covered by insurance, bond or
similar instrument), either individually or in an aggregate amount, entered
against the Company or any Subsidiary or any of their respective properties
which is not discharged and either (i) any creditor shall have commenced an
enforcement proceeding upon such judgment, order or decree or (ii) there
shall have been a period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of pending appeal or
otherwise, shall not be in effect; or
(8) the entry by a court of competent jurisdiction of (A) a decree or
order for relief in respect of the Company or any Significant Subsidiary in
an involuntary case or proceeding under any applicable Bankruptcy Law or (B)
a decree or order adjudging the
<PAGE>
37
Company or any Significant Subsidiary bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or in respect of
the Company or any Significant Subsidiary under any applicable federal or
state law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any
Significant Subsidiary or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, and any such decree
or order for relief shall continue to be in effect, or any such other decree
or order shall be unstayed and in effect, for a period of 60 consecutive
days; or
(9) (A) the commencement by the Company or any Significant Subsidiary
of a voluntary case or proceeding under any applicable Bankruptcy Law or any
other case or proceeding to be adjudicated bankrupt or insolvent, (B) the
Company or any Significant Subsidiary consents to the entry of a decree or
order for relief in respect of the Company or such Significant Subsidiary in
an involuntary case or proceeding under any applicable Bankruptcy Law or to
the commencement of any bankruptcy or insolvency case or proceeding against
it, (C) the Company or any Significant Subsidiary files a petition or answer
or consent seeking reorganization or relief under any applicable federal or
state law, (D) the Company or any Significant Subsidiary (x) consents to the
filing of such petition or the appointment of, or taking possession by, a
custodian, receiver, liquidator, assignee, trustee, sequestrator or similar
official of the Company or such Significant Subsidiary or of any substantial
part of its property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they
become due or (E) the Company or any Significant Subsidiary takes any
corporate action in furtherance of any such actions in this clause (9).
SECTION 502. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default (other than an Event of Default specified in Section
501(8) or 501(9)) shall occur and be continuing, then and in every such case the
Trustee, by notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes Outstanding may declare all amounts payable in
respect of such Notes to be due and payable immediately, by a notice in writing
to the Company and to the Trustee, and upon any such declaration such amounts
shall become immediately due and payable. If an Event of Default specified in
Section 501(8) or 501(9) occurs, then all amounts payable in respect of such
Notes shall IPSO FACTO become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter in this Article provided, the Holders of a majority in aggregate
principal amount of the Notes Outstanding, by written notice to the Company and
the Trustee, may rescind or annul such declaration if
(1) the Company has paid or deposited with the Trustee a sum sufficient
to pay
(A) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel,
(B) all overdue interest on all Outstanding Notes, and
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(C) to the extent that payment of such interest is lawful, interest
upon overdue interest at the rate borne by the Notes; and
(2) all Events of Default, other than the non-payment of principal of
such Notes which have become due solely by such declaration of acceleration,
have been cured or waived as provided in Section 513.
No such rescission or annulment shall affect any subsequent default or impair
any right consequent thereon.
SECTION 503. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
TRUSTEE.
The Company covenants that if
(a) default is made in the payment of any installment of interest on
any Note when such interest becomes due and payable and such default
continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if
any, on) any Note at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee for the benefit
of the Holders of such Notes, the whole amount then due and payable on such
Notes for principal (and premium, if any) and interest, and interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Notes, and, in addition thereto, 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.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the moneys
adjudged or decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effectual to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and
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irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal, premium, if any, or interest) shall be
entitled and empowered, by intervention in such proceeding or otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes and
to file such 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 of the Holders allowed in such judicial
proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
similar official 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 the
Trustee any amount due 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 606.
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 thereof, or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 505. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name and as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Notes in respect of which such judgment has been recovered.
SECTION 506. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall be applied
in the following order, at the date or dates fixed by the Trustee and, in case
of the distribution of such money on account of principal (or premium, if any)
or interest, upon presentation of the Notes and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section 606;
SECOND: To the payment of the amounts then due and unpaid for principal
of (and premium, if any, on) and interest on the Notes in respect of which
or for the benefit of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts due and payable
on such Notes for principal (and premium, if any) and interest,
respectively; and
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THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. LIMITATION ON SUITS.
No Holder of any Notes shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the Trustee of a
continuing Event of Default;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to the Trustee against the costs, expenses and
liabilities to be incurred in compliance with such request;
(4) the Trustee, for 60 days after its receipt of such notice, request
and offer of reasonably satisfactory indemnity, has failed to institute any
such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority or
more in principal amount of the Outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM
AND INTEREST.
Notwithstanding any other provision in this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment, as provided herein (including, if applicable, Article Thirteen) and in
such Note, of the principal of (and premium, if any, on) and (subject to Section
307) interest on, such Note on the respective Stated Maturities expressed in
such Note (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
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41
SECTION 510. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and, subject
to the provisions of Section 507, every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 511. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 512. CONTROL BY HOLDERS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred on the Trustee, PROVIDED that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in
personal liability or be unjustly prejudicial to the Holders not consenting.
SECTION 513. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal amount of the
Outstanding Notes may on behalf of the Holders of all the Notes waive any past
default hereunder and its consequences, except a default
(1) in respect of the payment of the principal of (or premium, if any,
on) or interest on any Note, or
(2) in respect of a covenant or provision hereof which under Article
Nine cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.
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 Event of Default or impair any right consequent thereon.
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42
SECTION 514. WAIVER OF STAY OR EXTENSION LAWS.
Each of the Company and the Subsidiary Guarantors covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, or plead,
or in any manner whatsoever claim or take the benefit or advantage of, any stay
or extension law wherever enacted, now or at any time hereafter in force, which
may affect the covenants or the performance of this Indenture; and each of the
Company and the Subsidiary Guarantors (to the extent that it may lawfully do so)
hereby expressly waives all benefit or advantage of any such law and covenants
that it will not hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 515. NOTICE OF DEFAULTS.
Within ten days after the occurrence of any Default hereunder, the Company
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice to the Trustee of such Default hereunder known to the Company or any
Subsidiary Guarantor, unless such Default shall have been cured or waived.
ARTICLE SIX
THE TRUSTEE
SECTION 601. NOTICE OF DEFAULTS.
Within 90 days after the occurrence of any Default hereunder, the Trustee
shall transmit in the manner and to the extent provided in TIA Section 313(c),
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; PROVIDED, HOWEVER, that, except in the case of a
Default in the payment of the principal of (or premium, if any, on) or interest
on any Note, the Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good faith determines
that the withholding of such notice is in the interest of the Holders; and
PROVIDED FURTHER that in the case of any Default of the character specified in
Section 501(3) no such notice to Holders shall be given until at least 30 days
after the occurrence thereof.
SECTION 602. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of TIA Sections 315(a) through 315(d):
(1) the Trustee may rely and shall be protected in acting or refraining
from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by a Company Request or Company Order and any
resolution of the Board of Directors may be sufficiently evidenced by a
Board Resolution;
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(3) whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith
on its part, rely upon an Officers' Certificate;
(4) 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 in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(5) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction
of any of the Holders pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity reasonably satisfactory to
the Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(6) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further inquiry
or investigation into such facts or matters as it may see fit, and, if the
Trustee shall determine to make such further inquiry or investigation, it
shall be entitled at all reasonable times to examine the books, records and
premises of the Company and the Subsidiary Guarantors, personally or by
agent or attorney;
(7) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder; and
(8) the Trustee shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this Indenture.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
SECTION 603. TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.
The recitals contained herein and in the Notes, except for the Trustee's
certificates of authentication, shall be taken as the statements of the Company
or the Subsidiary Guarantors, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture or of the Notes, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Notes and perform its obligations hereunder and that the
statements made by it in a Statement of Eligibility of Form T-1 supplied to the
Company are true and accurate, subject to the qualifications set forth therein.
The Trustee shall not be accountable for the use or application by the Company
of Notes or the proceeds thereof.
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44
SECTION 604. MAY HOLD NOTES.
The Trustee, any Paying Agent, any Security Registrar or any other agent of
the Company or of the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Notes and, subject to TIA Sections 310(b) and
311, may otherwise deal with the Company and any Subsidiary Guarantor with the
same rights it would have if it were not Trustee, Paying Agent, Security
Registrar or such other agent.
SECTION 605. MONEY HELD IN TRUST.
Cash in United States dollars or U.S. Government Obligations held by the
Trustee in trust hereunder need not be segregated from other funds except to the
extent required by law. The Trustee shall be under no liability for interest on
any such cash or U.S. Government Obligations received by it hereunder except as
otherwise agreed in writing with the Company or any Subsidiary Guarantor.
SECTION 606. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation for
all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision of
this Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify the Trustee for, and to hold it harmless against, any
loss, liability or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance, administration or
enforcement of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligations of the Company under this Section to compensate the Trustee,
to pay or reimburse the Trustee for expenses, disbursements and advances and to
indemnify and hold harmless the Trustee shall constitute indebtedness and shall
survive the satisfaction and discharge of this Indenture. As security for the
performance of such obligations of the Company, the Trustee shall have a claim
prior to the Notes upon all property and funds held or collected by the Trustee
as such, except funds held in trust for the payment of principal of (and
premium, if any, on) or interest on particular Notes.
SECTION 607. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be eligible to
act as Trustee under TIA Section 310(a)(1) and shall have a combined capital and
surplus of at least $50 million. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section, the combined capital and surplus
<PAGE>
45
of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.
SECTION 608. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 609.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company addressed to the Company and the Subsidiary Guarantors. If the
instrument of acceptance by a successor Trustee required by Section 609 shall
not have been delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of not
less than a majority in principal amount of the Outstanding Notes, delivered to
the Trustee and to the Company addressed to the Company and the Subsidiary
Guarantors.
(d) If at any time:
(1) the Trustee shall fail to comply with the provisions of TIA Section
310(b) after written request therefor by the Company, any Subsidiary
Guarantor or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(2) the Trustee shall cease to be eligible under Section 607 and shall
fail to resign after written request therefor by the Company, any Subsidiary
Guarantor or by any Holder who has been a bona fide Holder of a Note for at
least six months, or
(3) the Trustee shall become incapable of acting or shall be adjudged a
bankrupt or insolvent or a receiver of the Trustee or of its property shall
be appointed or any public officer shall take charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (i) the Company, by a Board Resolution, may remove the
Trustee, or (ii) subject to TIA Section 315(e), any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable of acting,
or if a vacancy shall occur in the office of Trustee for any cause, the Company,
by a Board Resolution, shall promptly appoint a successor Trustee. If, within
one year after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the Holders of a
majority in principal amount of the Outstanding Notes delivered to the Company,
the Subsidiary Guarantors and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted
<PAGE>
46
appointment in the manner hereinafter provided, any Holder who has been a bona
fide Holder of a Note for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of Notes
in the manner provided for in Section 106. Each notice shall include the name of
the successor Trustee and the address of its Corporate Trust Office.
SECTION 609. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder. Upon request of any such successor Trustee, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time of such
acceptance such successor Trustee shall be qualified and eligible under this
Article.
SECTION 610. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
PROVIDED such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Notes shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes; and in case at
that time any of the Notes shall not have been authenticated, any successor
Trustee may authenticate such Notes either in the name of any predecessor
hereunder or in the name of the successor 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;
PROVIDED, HOWEVER, that the right to adopt the certificate of authentication of
any predecessor Trustee or to authenticate Notes in the name of any predecessor
Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
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47
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS
SECTION 701. DISCLOSURE OF NAMES AND ADDRESSES OF HOLDERS.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company and the Trustee that none of the Company or the Trustee or any agent of
either of them shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders in accordance with TIA
Section 312, regardless of the source from which such information was derived,
and that the Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under TIA Section 312(b).
SECTION 702. REPORTS BY TRUSTEE.
Within 60 days after May 15 of each year commencing with the first May 15
after the first issuance of Notes, the Trustee shall transmit to the Holders, in
the manner and to the extent provided in TIA Section 313(c), a brief report
dated as of such May 15 if required by TIA Section 313(a).
SECTION 703. REPORTS BY COMPANY AND SUBSIDIARY GUARANTORS.
The Company and each of the Subsidiary Guarantors shall:
(1) file with the Trustee, within 15 days after the Company or such
Subsidiary Guarantor is required to file the same with the Commission,
copies of the annual reports and of the information, documents and other
reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which
the Company or such Subsidiary Guarantor may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company or any of the Subsidiary Guarantors is not required to file
information, documents or reports pursuant to either of said Sections, then
they shall file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
of the supplementary and periodic information, documents and reports which
may be required pursuant to Section 13 of the Exchange Act in respect of a
security listed and registered on a national securities exchange as may be
prescribed from time to time in such rules and regulations;
(2) file with the Trustee and the Commission, in accordance with rules
and regulations prescribed from time to time by the Commission, such
additional information, documents and reports with respect to compliance by
the Company with the conditions and covenants of this Indenture as may be
required from time to time by such rules and regulations; and
(3) transmit by mail to all Holders, in the manner and to the extent
provided in TIA Section 313(c), within 30 days after the filing thereof with
the Trustee, such summaries of any information, documents and reports
required to be filed by the Company pursuant to paragraphs (1) and (2) of
this Section as may be required by rules and regulations prescribed from
time to time by the Commission;
PROVIDED, HOWEVER, that any Subsidiary Guarantor shall be relieved of its
obligations under clauses (1) and (2) of this Section to the extent that it
is relieved of its obligations
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under Section 13 or Section 15(d) of the Exchange Act by the Commission
pursuant to the terms of any no-action letter addressed to the Company or
such Subsidiary Guarantor from the staff of the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of its properties and assets to any Person or group of affiliated Persons, or
permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would result
in a sale, assignment, transfer, lease or disposal of all or substantially all
of the properties and assets of the Company and its Subsidiaries on a
Consolidated basis to any other Person or group of affiliated Persons, unless at
the time and after giving effect thereto:
(1) either
(A) the Company shall be the surviving or continuing corporation or
(B) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by sale, assignment, conveyance, transfer, lease or disposition,
the properties and assets of the Company substantially as an entirety
(the "Surviving Entity")
(i) shall be a corporation duly organized and validly existing
under the laws of the United States, any state thereof or the
District of Columbia and
(ii) shall, in any case, expressly assume, by a supplement
indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all of the obligations of the Company
under the Notes and this Indenture, and this Indenture shall remain
in full force and effect;
(2) immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis (and treating any Indebtedness which
becomes an obligation of the Company or any of its Subsidiaries in
connection with or as a result of such transaction as having been incurred
at the time of such transaction), no Default or Event of Default shall have
occurred and be continuing;
(3) immediately before and immediately after giving effect to such
transaction on a PRO FORMA basis (on the assumption that the transaction
occurred on the first day of the four-quarter period immediately prior to
the consummation of such transaction with the appropriate adjustments with
respect to the transaction being included in such PRO FORMA calculation),
the Company (or the Surviving Entity if the Company is not the continuing
obligor under this Indenture) could incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the provisions of Section 1010;
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(4) each Subsidiary Guarantor, unless it is the other party to the
transactions described above, shall have, by supplemental indenture to this
Indenture, confirmed that its respective Note Guarantees with respect to the
Notes shall apply to such Person's obligations under this Indenture and the
Notes;
(5) if any property or assets of the Company or any of its Subsidiaries
would thereupon become subject to any Lien, the provisions of Section 1012
are complied with; and
(6) the Company shall have delivered, or caused to be delivered, to the
Trustee an Officer's Certificate and an Opinion of Counsel, each to the
effect that such consolidation, merger, sale, assignment, conveyance,
transfer, lease or other transaction and, if a supplemental indenture is
required in connection with such transaction, such supplemental indenture,
comply with this Article and that all conditions precedent herein provided
for relating to such transaction have been complied with.
SECTION 802. SUCCESSOR SUBSTITUTED.
Upon any consolidation, merger, sale, assignment, conveyance, transfer,
lease or other transaction described in, and complying with the provisions of,
Section 801 in which the Company is not the continuing corporation, the
successor Person formed or remaining shall succeed to, and be substituted for,
and may exercise every right and power of, the Company, as the case may be, and
the Company shall be discharged from all obligations and covenants under this
Indenture and the Notes, PROVIDED that, in the case of a transfer by lease, the
predecessor shall not be released from its obligations with respect to the
payment of principal (premium, if any) and interest on the Notes.
SECTION 803. NOTES TO BE SECURED IN CERTAIN EVENTS.
If, upon any such consolidation of the Company with or merger of the Company
into any other corporation, or upon any conveyance, lease or transfer of the
property of the Company substantially as an entirety to any other Person, any
property or assets of the Company would thereupon become subject to any Lien,
then unless such Lien could be created pursuant to Section 1012 without equally
and ratably securing the Notes, the Company, prior to or simultaneously with
such consolidation, merger, conveyance, lease or transfer, will as to such
property or assets, secure the Notes Outstanding (together with, if the Company
shall so determine any other Indebtedness of the Company now existing or
hereinafter created which is not subordinate in right of payment to the Notes)
equally and ratably with (or prior to) the Indebtedness which upon such
consolidation, merger, conveyance, lease or transfer is to become secured as to
such property or assets by such Lien, or will cause such Notes to be so secured.
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ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, the Subsidiary Guarantors,
when authorized by a Board Resolution, and the Trustee, at any time and from
time to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company contained
herein and in the Notes; or
(2) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company; or
(3) to add any additional Events of Default; or
(4) to evidence and provide for the acceptance of appointment hereunder
by a successor Trustee pursuant to the requirements of Section 609; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to make
any other provisions with respect to matters or questions arising under this
Indenture; PROVIDED that such action shall not adversely affect the
interests of the Holders in any material respect;
(6) to add new Subsidiary Guarantors pursuant to Section 1013;
(7) to secure the Notes pursuant to the requirements of Section 803 or
otherwise; or
(8) to comply with any requirements of the Commission in order to
effect and maintain the qualification of this Indenture under the Trust
Indenture Act.
SECTION 902. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority in principal
amount of the Outstanding Notes, by Act of said Holders delivered to the
Company, the Subsidiary Guarantors and the Trustee, the Company, when authorized
by a Board Resolution, the Subsidiary Guarantors and the Trustee may enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; PROVIDED, HOWEVER, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(1) change the Stated Maturity of the principal of, or any installment
of interest on, any Note, or reduce the principal amount thereof or the rate
of interest thereon or any premium payable upon the redemption or purchase
thereof, or change the coin or currency in which any Note or any premium or
the interest thereon is payable, or impair the right to institute suit for
the enforcement of any such payment after the Stated Maturity thereof (or,
in the case of redemption, on or after the Redemption Date), or
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(2) reduce the percentage in principal amount of the Outstanding Notes,
the consent of whose Holders is required for any such supplemental
indenture, or the consent of whose Holders is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture, or
(3) modify any of the provisions of this Section or Sections 513 and
1015, except to increase any such percentage or to provide that certain
other provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Outstanding Note affected thereby.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
SECTION 903. EXECUTION OF SUPPLEMENTAL INDENTURES.
(a) In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel stating that
the execution of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
(b) Each Subsidiary Guarantor hereby appoints the Company as its
attorney-in-fact to execute, on its behalf, any indenture supplemental hereto to
be entered into solely for the purpose specified in Section 901(6).
SECTION 904. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article, this
Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 905. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to the Article shall conform
to the requirements of the Trust Indenture Act as then in effect.
SECTION 906. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company and the Subsidiary Guarantors shall
so determine, new Notes so modified as to conform, in the opinion of the Trustee
and the Company and the Subsidiary Guarantors, to any such supplemental
indenture may be prepared and executed by the Company and the Subsidiary
Guarantors and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
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52
SECTION 907. NOTICE OF SUPPLEMENTAL INDENTURES.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Sections 901 and 902, the
Company shall give notice thereof to the Holders of each Outstanding Note
affected, in the manner provided for in Section 106, setting forth in general
terms the substance of such supplemental indenture; PROVIDED, HOWEVER, that the
Company shall not be required to give notice of any indenture supplemental
hereto entered into solely for the purpose specified in Section 901(5), (6) or
(8), notice with respect to which shall be given by the Company when it is next
required to give notice pursuant to this Section.
ARTICLE TEN
COVENANTS
SECTION 1001. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.
The Company covenants and agrees for the benefit of the Holders that it will
duly and punctually pay the principal of (and premium, if any, on) and interest
on the Notes in accordance with the terms of the Notes and this Indenture.
SECTION 1002. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York, an office or agency where
Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company or any Subsidiary Guarantor in respect of the
Notes and this Indenture may be served. The Corporate Trust Office of the
Trustee shall be such office or agency of the Company, unless the Company shall
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any 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, and the Company and each of the Subsidiary Guarantors hereby appoints
the Trustee as its agent to receive all such presentations, surrenders, notices
and demands. Unless otherwise specified with respect to the Notes as
contemplated by Section 301, the Company hereby designates as a Place of Payment
for the Notes the office or agency of the Trustee in the Borough of Manhattan,
The City of New York, and initially appoints Texas Commerce Trust Company of New
York, 80 Broad Street, Suite 400, New York, New York 10004, as Paying Agent to
receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies (in or outside of The City of New York) where the Notes may be
presented or surrendered for any or all such purposes and may from time to time
rescind any such designation; 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 City of New York for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and any change in the location of any such other office or agency.
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SECTION 1003. MONEY FOR NOTE PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent, it will, on or
before each due date of the principal of (and premium, if any, on) or interest
on any of the Notes, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and premium, if any) or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and will promptly notify the Trustee of
its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for the Notes, it
will, on or before each due date of the principal of (and premium, if any, on),
or interest on, any Notes, deposit with a Paying Agent a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due, such sum to be
held in trust for the benefit of the Persons entitled to such principal, premium
or interest, and (unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to execute
and deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for the payment of the principal of (and
premium, if any, on) or interest on Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal (and
premium, if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
sums.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of (and premium, if any,
on) or interest on any Note and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and payable shall be
paid to the Company on Company Request, or (if then held by the Company) shall
be discharged from such trust; and the Holder of such Note shall thereafter, as
an unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper
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published in the English language, customarily published on each Business Day
and of general circulation in the Borough of Manhattan, The City of New York,
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 such publication,
any unclaimed balance of such money then remaining will be repaid to the
Company.
SECTION 1004. CORPORATE EXISTENCE.
Subject to Article Eight, the Company will do or cause to be done all things
necessary to preserve and keep in full force and effect the corporate existence,
rights (charter and statutory) and franchises of the Company and each
Subsidiary; PROVIDED, HOWEVER, that the Company shall not be required to
preserve any such right or franchise 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 Subsidiaries as a whole and that the loss
thereof is not disadvantageous in any material respect to the Holders.
Notwithstanding anything to the contrary in this Section 1004, the Company shall
be permitted to consolidate or merge any of its Subsidiaries with or into the
Company or any Wholly Owned Subsidiary of the Company.
SECTION 1005. PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same shall become delinquent, (a) all taxes, assessments and governmental
charges levied or imposed upon the Company or any Subsidiary or upon the income,
profits or property of the Company or any Subsidiary and (b) all lawful claims
for labor, materials and supplies, which, if unpaid, might by law become a lien
upon the property of the Company or any Subsidiary; PROVIDED, HOWEVER, that the
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate proceedings.
SECTION 1006. MAINTENANCE OF PROPERTIES.
The Company will cause all properties owned by the Company or any Subsidiary
or used or held for use in the conduct of its business or the business of any
Subsidiary to be maintained and kept in good condition, repair and working order
and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the judgment of the Company may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the maintenance of any of such properties if such
discontinuance is, in the judgment of the Company, desirable in the conduct of
its business or the business of any Subsidiary and not disadvantageous in any
material respect to the Holders.
SECTION 1007. INSURANCE.
The Company will at all times keep all of its and its Subsidiaries'
properties which are of an insurable nature insured with insurers, believed by
the Company to be responsible, against loss or damage to the extent that
property of similar character is usually so insured by corporations similarly
situated and owning like properties.
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SECTION 1008. STATEMENT BY OFFICERS AS TO DEFAULT.
The Company will deliver to the Trustee, within 120 days after the end of
each fiscal year, a brief certificate from the principal executive officer,
principal financial officer or principal accounting officer as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Indenture. For purposes of this Section 1008, such compliance shall be
determined without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 1009. PURCHASE OF NOTES UPON A CHANGE OF CONTROL TRIGGERING EVENT.
(a) Upon the occurrence of a Change of Control Triggering Event, each
Holder shall have the right to require that the Company purchase such Holder's
Notes in whole or in part in integral multiples of $1,000 (the "Change of
Control Purchase Offer"), at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount thereof,
together with accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), in accordance with the procedures set forth
in paragraphs (c) and (d) of this Section.
(b) Upon the occurrence of a Change of Control Triggering Event and prior
to the mailing of the notice to Holders provided for in paragraph (c) below, the
Company covenants to either (x) repay in full all Indebtedness under the Credit
Agreement or offer to repay in full all such Indebtedness and to repay the
Indebtedness of each of the Banks that has accepted such offer or (y) obtain any
requisite consent under the Credit Agreement to permit the purchase of the Notes
as provided for in paragraph (c) below or take any other action as may be
required under the Credit Agreement to permit such purchase.
(c) Within 30 days following any Change of Control Triggering Event, the
Company shall give to each Holder of the Notes in the manner provided in Section
106 a notice stating:
(1) that a Change of Control Triggering Event has occurred and that
such Holder has the right to require the Company to purchase in whole or in
part such Holder's Notes at the Change of Control Purchase Price;
(2) the circumstances and relevant facts regarding such Change of
Control Triggering Event (including but not limited to information with
respect to PRO FORMA historical income, cash flow and capitalization after
giving effect to the Change of Control);
(3) the Change of Control Purchase Date which shall be no earlier than
30 days nor later than 60 days from the date such notice is mailed or such
later date as is necessary to comply with the Exchange Act;
(4) that any Note, or portion thereof, not tendered will continue to
accrue interest;
(5) that, unless the Company defaults in the payment of the Change of
Control Purchase Price, any Notes accepted for payment of the Change of
Control Purchase Price pursuant to the Change of Control Purchase Offer
shall cease to accrue interest after the Change of Control Purchase Date;
and
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(6) the instructions a Holder must follow in order to have its Notes
purchased in accordance with paragraph (d) of this Section.
(d) Holders electing to have Notes purchased will be required to surrender
such Notes to the Company at the address specified in the notice at least five
Business Days prior to the Change of Control Purchase Date. Holders will be
entitled to withdraw their election if the Company receives, not later than five
Business Days prior to the Change of Control Purchase Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Notes delivered for purchase by the Holder as to which
his election is to be withdrawn and a statement that such Holder is withdrawing
his election to have such Notes purchased. Holders whose Notes are purchased
only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered.
(e) The Company will comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and other applicable securities
laws and regulations in connection with a Change of Control Purchase Offer.
SECTION 1010. LIMITATION ON INDEBTEDNESS.
The Company will not, and will not permit any of its Subsidiaries to,
create, assume, or directly or indirectly guarantee or in any other manner
become directly or indirectly liable for the payment of, or otherwise incur
(collectively, "incur"), any Indebtedness (including any Acquired Indebtedness)
other than Permitted Indebtedness, unless, at the time of such event (and after
giving effect on a PRO FORMA basis to (i) the incurrence of such Indebtedness;
(ii) the incurrence, repayment or retirement of any other Indebtedness by the
Company or its Subsidiaries since the first day of such four-quarter period as
if such Indebtedness was incurred, repaid or retired at the beginning of such
four-quarter period; and (iii) the acquisition (whether by purchase, merger or
otherwise) or disposition (whether by sale, merger or otherwise) of any company,
entity or business acquired or disposed of by the Company or its Subsidiaries,
as the case may be, since the first day of such four-quarter period, as if such
acquisition or disposition had occurred at the beginning of such four-quarter
period), the Consolidated Fixed Charge Coverage Ratio of the Company for the
four full fiscal quarters immediately preceding such event, taken as one period
and calculated on the assumption that such Indebtedness had been incurred on the
first day of such four-quarter period and, in the case of Acquired Indebtedness,
on the assumption that the related acquisition (whether by means of purchase,
merger or otherwise) also had occurred on such date with the appropriate
adjustments with respect to such acquisition being included in such PRO FORMA
calculation, would have been at least equal to 1.75 to 1.
SECTION 1011. LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any Subsidiary of the Company
to, directly or indirectly:
(1) declare or pay any dividend on, or make any distribution to, the
holders of, any Capital Stock of the Company (other than dividends or
distributions payable solely in shares of Qualified Capital Stock of the
Company or in options, warrants or other rights to purchase such Qualified
Capital Stock);
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57
(2) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Capital Stock of the Company or any Subsidiary or any
options, warrants or other rights to acquire such Capital Stock;
(3) make any principal payment on, or redeem, repurchase, defease or
otherwise acquire or retire for value, prior to any scheduled repayment,
sinking fund payment or maturity, any Indebtedness of the Company which is
subordinate in right of payment to the Notes or of any Subsidiary Guarantor
that is subordinate to such Subsidiary Guarantor's Note Guarantee;
(4) declare or pay any dividend or distribution on any Capital Stock of
any Subsidiary of the Company to any Person (other than the Company or any
Wholly Owned Subsidiary of the Company) or purchase, redeem or otherwise
acquire or retire for value any Capital Stock of any Subsidiary of the
Company held by any Person (other than the Company or any Wholly Owned
Subsidiary of the Company);
(5) create, assume or suffer to exist any guarantee of Indebtedness of
any Affiliate of the Company (other than a Wholly Owned Subsidiary of the
Company in accordance with the terms of the Indenture); or
(6) make any Investment (other than any Permitted Investment) in any
Person
(such payments described in clauses (1) through (6) and not excepted therefrom
are collectively referred to herein as "Restricted Payments") unless at the time
of and immediately after giving effect to the proposed Restricted Payment (the
amount of any such Restricted Payment, if other than cash, as determined by the
Board of Directors of the Company, whose determination shall be conclusive and
evidenced by a Board Resolution), (i) no Default or Event of Default shall have
occurred and be continuing and (ii) the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in accordance with the
provisions described under Section 1010.
(b) Notwithstanding paragraph (a) above, the Company and its Subsidiaries
may take the following actions so long as (with respect to clauses (2), (3), and
(4), below) no Default or Event of Default shall have occurred and be
continuing:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at such declaration date such declaration complied
with the provisions of paragraph (a) above;
(2) the purchase, redemption or other acquisition or retirement for
value of any shares of Capital Stock of the Company, in exchange for, or out
of the net cash proceeds of, a substantially concurrent issuance and sale
(other than to a Subsidiary) of shares of Capital Stock of the Company
(other than Redeemable Capital Stock, unless the redemption provisions of
such Redeemable Capital Stock prohibit the redemption thereof prior to the
date on which the Capital Stock to be acquired or retired was by its terms
required to be redeemed);
(3) the purchase, redemption, defeasance or other acquisition or
retirement for value of any Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for or out of the net cash proceeds of a
substantially concurrent issuance and sale (other than to a Subsidiary) of
shares of Capital Stock of the Company (other than
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Redeemable Capital Stock, unless the redemption provisions of such
Redeemable Capital Stock prohibit the redemption thereof prior to the Stated
Maturity of the Subordinated Indebtedness to be acquired or retired); and
(4) the purchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Indebtedness (other than Redeemable
Capital Stock) in exchange for, or out of the net cash proceeds of a
substantially concurrent incurrence or sale (other than to a Subsidiary) of,
new Subordinated Indebtedness of the Company so long as
(A) the principal amount of such new Subordinated Indebtedness does
not exceed the principal amount (or, if such Subordinated Indebtedness
being refinanced provides for an amount less than the principal amount
thereof to be due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination) of the Subordinated
Indebtedness being so purchased, redeemed, defeased, acquired or retired,
PLUS the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Subordinated Indebtedness
refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing, PLUS the amount of
expenses of the Company incurred in connection with such refinancing,
(B) such new Subordinated Indebtedness is subordinated to the Notes
to the same extent as such Subordinated Indebtedness so purchased,
redeemed, defeased, acquired or retired, and
(C) such new Subordinated Indebtedness has an Average Life longer
than the Average Life of the Notes and a final Stated Maturity of
principal later than the final Stated Maturity of principal of the Notes.
SECTION 1012. LIMITATION ON LIENS.
The Company will not, and will not permit any Subsidiary of the Company to,
directly or indirectly, create, incur, assume or suffer to exist any Lien (other
than Permitted Liens) of any kind upon any Principal Property or upon any shares
of stock or indebtedness of any Subsidiary of the Company now owned or acquired
after the date of this Indenture, or any income or profits therefrom, unless (a)
the Notes are directly secured equally and ratably with (or prior to in the case
of Liens with respect to Subordinated Indebtedness) the obligation or liability
secured by such Lien or (b) any such Lien is in favor of the Company or any
Subsidiary Guarantor.
SECTION 1013. ADDITIONAL GUARANTEES.
If the Company or any of its Subsidiaries shall acquire or form a
Subsidiary, the Company will cause any such Subsidiary (other than an Equity
Store or Business Development Venture, PROVIDED that such Equity Store or
Business Development Venture does not guarantee the Senior Indebtedness of any
other Person) that is or becomes a Significant Subsidiary or that guarantees any
Senior Indebtedness of the Company or of any Subsidiary Guarantor to become a
Subsidiary Guarantor with respect to the Notes. Any such Subsidiary shall become
a Subsidiary Guarantor by (i) executing and delivering to the Trustee a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee pursuant to which such Subsidiary shall guarantee all of the obligations
of the Company with respect to
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the Notes issued under this Indenture on a senior basis and (ii) delivering to
the Trustee an Opinion of Counsel reasonably satisfactory to the Trustee to the
effect that a supplemental indenture has been duly executed and delivered by
such Subsidiary and is in compliance with the terms of this Indenture.
SECTION 1014. PROVISION OF FINANCIAL STATEMENTS.
Whether or not the Company is subject to Section 13(a), 13(c) or 15(d) of
the Exchange Act, the Company will file with the Commission the annual reports,
quarterly reports and other documents that the Company is or would have been
required to file with the Commission pursuant to such Section 13(a), 13(c) or
15(d) of the Exchange Act if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event
within 15 days of each Required Filing Date (within 30 days of such Required
Filing Date for any reports filed on Form 10-K) (i) transmit by mail to each
Holder, as its name and address appears in the security register, without cost
to such holder and (ii) file with the Trustee copies of the annual reports,
quarterly reports and other documents which the Company is or would have been
required to file with the Commission pursuant to Section 13(a), 13(c) or 15(d)
of the Exchange Act if the Company were so subject.
SECTION 1015. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 803 or Sections 1007 through 1014,
inclusive, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Notes, by Act of such
Holders, waive such compliance in such instance with such term, provision or
condition, but no such waiver shall extend to or affect such term, provision or
condition except to the extent so expressly waived, and, until such waiver shall
become effective, the obligations of the Company and the duties of the Trustee
in respect of any such term, provision or condition shall remain in full force
and effect.
ARTICLE ELEVEN
REDEMPTION OF NOTES
SECTION 1101. RIGHT OF REDEMPTION.
The Notes may be redeemed, at the option of the Company, as a whole or from
time to time in part, at any time on or after December 15, 1995, subject to the
conditions and at the Redemption Prices specified in the form of Note, together
with accrued interest to the Redemption Date.
SECTION 1102. APPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
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SECTION 1103. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 1101
shall be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and shall deliver to the Trustee
such documentation and records as shall enable the Trustee to select the Notes
to be redeemed pursuant to Section 1104.
SECTION 1104. SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed shall be selected not more than 60 days prior to the Redemption Date by
the Trustee, from the Outstanding Notes not previously called for redemption,
pro rata unless prohibited by applicable law, in which case by such method as
the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions of the principal of Notes; PROVIDED,
HOWEVER, that no such partial redemption shall reduce the portion of the
principal amount of a Note not redeemed to less than $1,000.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes shall relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
SECTION 1105. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided for in Section
106 not less than 30 nor more than 60 days prior to the Redemption Date, to each
Holder of Notes to be redeemed.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Notes are to be redeemed, the
identification by CUSIP Numbers, if any (and, in the case of a partial
redemption, the principal amounts), of the particular Notes to be redeemed,
(4) that on the Redemption Date the Redemption Price (together with
accrued interest, if any, to the Redemption Date payable as provided in
Section 1107) will become due and payable upon each such Note, or the
portion thereof, to be redeemed, and that interest thereon will cease to
accrue on and after said date, and
(5) the place or places where such Notes are to be surrendered for
payment of the Redemption Price.
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Notice of redemption of Notes to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.
SECTION 1106. DEPOSIT OF REDEMPTION PRICE.
On or prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and accrued interest on, any
Notes, or any portions thereof, to be redeemed on that date.
SECTION 1107. NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified (together with accrued interest, if any, to the
Redemption Date), and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued interest) such Notes, or
portions thereof, shall cease to bear interest. Upon surrender of any such Note
for redemption in accordance with said notice, such Note shall be paid by the
Company at the Redemption Price, together with accrued interest, if any, to the
Redemption Date; PROVIDED, HOWEVER, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes, or one or more Predecessor Notes, registered as such at the close
of business on the relevant Record Dates according to their terms and the
provisions of Section 307.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
SECTION 1108. NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part (pursuant to the provisions of
this Article shall be surrendered at the office or agency of the Company
maintained for such purpose pursuant to Section 1002 (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of transfer
in form satisfactory to the Company and the Trustee duly executed by, the Holder
thereof or such Holder's attorney duly authorized in writing), and the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Note without service charge, a new Note or Notes, of any authorized
denomination as requested by such Holder, in an aggregate principal amount equal
to and in exchange for the unredeemed portion of the principal of the Note so
surrendered.
ARTICLE TWELVE
NOTE GUARANTEES
SECTION 1201. NOTE GUARANTEES.
Subject to the provisions of this Article Twelve, each Subsidiary Guarantor
hereby irrevocably and unconditionally guarantees, jointly and severally, on a
senior basis to each Holder and to the Trustee, on behalf of the Holders, (i)
the due and punctual payment of the
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principal of and interest on each Note, when and as the same shall become due
and payable, whether at Stated Maturity or purchase upon a Change of Control
Triggering Event, and whether by declaration of acceleration, Change of Control
Triggering Event, call for redemption or otherwise, the due and punctual payment
of interest on the overdue principal of and interest, if any, on the Notes, to
the extent lawful, and the due and punctual performance of all other obligations
of the Company to the Holders or the Trustee all in accordance with the terms of
such Note and this Indenture and (ii) in the case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, at Stated Maturity or purchase upon a Change of
Control Triggering Event, and whether by declaration of acceleration, Change of
Control Triggering Event, call for redemption or otherwise (the obligations in
clauses (i) and (ii) hereof being the "Guaranteed Obligations").
Without limiting the generality of the foregoing, each Subsidiary
Guarantor's liability shall extend to all amounts that constitute part of the
Guaranteed Obligations and would be owed by the Company to the Holders or the
Trustee under the Notes and the Indenture but for the fact that they are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Company. The Subsidiary
Guarantors hereby agree that their obligations hereunder shall be absolute and
unconditional, irrespective of, and shall be unaffected by, any invalidity,
irregularity or unenforceability of any such Note or this Indenture, any failure
to enforce the provisions of any such Note or this Indenture, any waiver,
modification or indulgence granted to the Company with respect thereto, by any
Holder or any other circumstances which may otherwise constitute a legal or
equitable discharge or defense of the Company or a surety or guarantor.
The Subsidiary Guarantors hereby waive diligence, presentment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, the benefit of
discussion, protest or notice with respect to any such Note or the Indebtedness
evidenced thereby and all demands whatsoever (except as specified above), and
covenant that the Guaranteed Obligations will not be discharged as to any such
Note except by payment in full of such Guaranteed Obligations and as provided in
Sections 401, 1102 and 1205.
Each Subsidiary Guarantor further agrees that, as between such Subsidiary
Guarantor and the Holders, (i) the maturity of the Guaranteed Obligations may be
accelerated as provided in Article Five, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the Company or any
other Subsidiary Guarantor in respect of the Guaranteed Obligations, and (ii) in
the event of any declaration of acceleration of such Guaranteed Obligations as
provided in Article Five, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by each Subsidiary Guarantor. In
addition, without limiting the foregoing provisions, upon the effectiveness of
an acceleration under Article Five, the Trustee shall promptly make a demand for
payment on any Notes in respect of which the Guaranteed Obligations provided for
in this Article Twelve are not discharged.
Each Subsidiary Guarantor hereby irrevocably waives any claim or other
rights that it may now or hereafter acquire against the Company that arise from
the existence, payment,
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performance or enforcement of such Subsidiary Guarantor's obligations under this
Indenture, or any other document or instrument including, without limitation,
any right of reimbursement, exoneration, contribution, indemnification, any
right to participate in any claim or remedy of the Holders against the Company,
whether or not such claim, remedy or right arises in equity, or under contract,
statute or common law, including, without limitation, the right to take or
receive from the Company, directly or indirectly, in cash or other property or
in any other manner, payment or security on account of such claim or other
rights. Each Subsidiary Guarantor shall be subrogated to all rights of the
Holders of the Notes pursuant to any Note Guarantee against the Company in
respect of any amounts paid by such Subsidiary Guarantor on account of such Note
pursuant to the provisions of this Indenture; PROVIDED, HOWEVER, that no
Subsidiary Guarantor shall be entitled to enforce or to receive any payments
arising out of, or based upon such right of subrogation until the principal of
(and premium, if any) and interest on all Notes issued hereunder shall have been
paid in full to the Holders entitled thereto. If any amount shall be paid to any
Subsidiary Guarantor in violation of this paragraph and the Guaranteed
Obligations shall not have been paid in full, such amount shall be deemed to
have been paid to such Subsidiary Guarantor for the benefit of, and held in
trust for the benefit of, the Holders, and shall forthwith be paid to the
Trustee. Each Subsidiary Guarantor acknowledges that it will receive direct and
indirect benefits from the issuance of the Notes and that the waiver set forth
in this Section 1201 is knowingly made in contemplation of such benefits.
Without limiting the generality of the foregoing, the Subsidiary Guarantors
hereby expressly and specifically waive the benefits of Section 26-7 through
26-9 of the General Statutes of North Carolina, as amended from time to time,
and any similar statute or law of any other jurisdiction, as the same may be
amended from time to time.
SECTION 1202. OBLIGATIONS OF THE SUBSIDIARY GUARANTORS UNCONDITIONAL.
Nothing contained in this Article Twelve, elsewhere in this Indenture or in
any Note is intended to or shall impair, as between the Subsidiary Guarantors
and the Holders, the obligation of the Subsidiary Guarantors, which obligations
are independent of the obligations of the Company under the Notes and this
Indenture and are absolute and unconditional, to pay to the Holders the
Guaranteed Obligations as and when the same shall become due and payable in
accordance with the provisions of this Indenture, or is intended to or shall
affect the relative rights of the Holders and creditors of the Subsidiary
Guarantors, nor shall anything herein or therein prevent the Trustee or any
Holder from exercising all remedies otherwise permitted by applicable law upon
Default under this Indenture. Each payment to be made by any Subsidiary
Guarantor hereunder in respect of the Guaranteed Obligations shall be payable in
the currency or currencies in which such Guaranteed Obligations are denominated.
SECTION 1203. RANKING OF NOTE GUARANTEES.
Each Subsidiary Guarantor covenants and agrees, and each Holder of a Note by
his acceptance thereof likewise covenants and agrees, that each Note Guarantee
will be an unsecured senior obligation of the Subsidiary Guarantor issuing such
Note Guarantee,
<PAGE>
64
ranking PARI PASSU in right of payment with all other existing and future Senior
Indebtedness of such Subsidiary Guarantor and senior in right of payment to any
future Indebtedness of such Subsidiary Guarantor that is expressly subordinated
to Senior Indebtedness of such Subsidiary Guarantor.
SECTION 1204. LIMITATION OF NOTE GUARANTEES.
The Company and each Subsidiary Guarantor, and each Holder of a Note by his
acceptance thereof, hereby confirm that it is the intention of all such parties
that each Subsidiary Guarantor shall be liable under this Indenture only for
amounts aggregating up to the largest amount that would not render its
obligations hereunder subject to avoidance under Section 548 of the United
States Bankruptcy Code or any comparable provisions of any applicable state law.
To effectuate the foregoing intention, the Holders hereby irrevocably agree that
in the event that any such Note Guarantee would constitute or result in a
violation of any applicable fraudulent conveyance or similar law of any relevant
jurisdiction, the liability of the Subsidiary Guarantor under such Note
Guarantee shall be reduced to the maximum amount, after giving effect to all
other contingent and fixed liabilities of such Subsidiary Guarantor, permissible
under the applicable fraudulent conveyance or similar law.
SECTION 1205. RELEASE OF SUBSIDIARY GUARANTORS.
(a) Any Subsidiary Guarantor shall be released from and relieved of its
obligations under this Article Twelve (1) upon defeasance in accordance with
Section 1302, (2) upon the payment in full of all the Guaranteed Obligations or
(3) upon the sale by the Company or any Subsidiary of such Subsidiary Guarantor
to any Person other than a Subsidiary of the Company provided that such sale
does not result in a sale, assignment, transfer, lease or disposal of all or
substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis. Upon the delivery by the Company to the
Trustee of an Officers' Certificate and, if requested by the Trustee, an Opinion
of Counsel to the effect that the transaction giving rise to the release of such
obligations was made by the Company in accordance with the provisions of this
Indenture and the Notes, the Trustee shall execute any documents reasonably
required in order to evidence the release of the Subsidiary Guarantors from
their obligations. If any of the Guaranteed Obligations are revived and
reinstated after the termination of such Note Guarantee, then all of the
obligations of the Subsidiary Guarantors under such Note Guarantee shall be
revived and reinstated as if such Note Guarantee had not been terminated until
such time as the Guaranteed Obligations are paid in full, and the Subsidiary
Guarantors shall execute any documents reasonably satisfactory to the Trustee
evidencing such revival and reinstatement.
(b) Upon (i) the sale or disposition of all of the Common Stock of a
Subsidiary Guarantor (by merger or otherwise) to a Person other than the Company
and which sale or disposition is otherwise in compliance with the terms of this
Indenture, or (ii) the unconditional and full release in writing as provided
herein of such Subsidiary Guarantor from all Indebtedness arising hereunder,
such Subsidiary Guarantor shall be deemed released from all obligations under
this Article Twelve; PROVIDED, HOWEVER, that any such termination upon such sale
or disposition shall occur if and only to the extent that all obligations of
such Subsidiary Guarantor under all of its guarantees of, and under all of its
pledges of assets or
<PAGE>
65
other security interests which secure, Indebtedness of the Company or any
Subsidiary, shall also terminate upon such sale or disposition. Upon the
delivery by the Company to the Trustee of an Officers' Certificate and, if
requested by the Trustee, an Opinion of Counsel to the effect that the
transaction giving rise to the release of such obligations was made in
accordance with the provisions of this Indenture and the Notes, the Trustee
shall execute any documents reasonably required in order to evidence the release
of such Subsidiary Guarantor from its obligations. Any Subsidiary Guarantor not
so released remains liable for the full amount of principal of (and premium, if
any) and interest on the Notes as provided in this Article Twelve.
SECTION 1206. SUBSIDIARY GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.
Except as set forth in Section 1205 and in Articles Eight and Ten hereof,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Company or a
Subsidiary Guarantor or shall prevent any sale or conveyance of the property of
a Subsidiary Guarantor as an entirety or substantially as an entirety to the
Company or a Subsidiary Guarantor.
ARTICLE THIRTEEN
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1301. COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at its option and at any time, with respect to the Notes,
elect to have either Section 1302 or Section 1303 be applied to all Outstanding
Notes upon compliance with the conditions set forth below in this Article
Thirteen.
SECTION 1302. DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1302, the Company shall be deemed to have been discharged from its
obligations with respect to all Outstanding Notes on the date the conditions set
forth in Section 1304 are satisfied (hereinafter, "defeasance"). For this
purpose, such 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
1305 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 insofar as such Notes are concerned (and the Trustee, at the expense
of the Company, shall execute proper instruments acknowledging the same), except
for the following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Notes to receive payments in
respect of the principal of (and premium, if any, on) and interest on such Notes
when such payments are due or on the Redemption Date with respect to such Notes,
as the case may be, (B) the Company's obligations with respect to such Notes
under Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article Thirteen.
Subject to compliance with this Article Thirteen, the Company may exercise its
option under this Section 1302 notwithstanding the prior exercise of its option
under Section 1303 with respect to the Notes.
<PAGE>
66
SECTION 1303. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 1301 of the option applicable to
this Section 1303, the Company shall be released from its obligations under any
covenant contained in Section 801(3) and Section 803 and in Sections 1007
through 1015 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 to be "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. For this
purpose, such covenant defeasance means that, with respect to the Outstanding
Notes, the Company 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 501(3), but,
except as specified above, the remainder of this Indenture and such Notes shall
be unaffected thereby.
SECTION 1304. CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following shall be the conditions to application of either Section 1302
or Section 1303 to the Outstanding Notes:
(1) the Company shall irrevocably have deposited with the Trustee (or
another trustee satisfying the requirements of Section 607 who shall agree
to comply with the provisions of this Article Thirteen applicable to it) in
trust, for the benefit of the Holders, cash in United States dollars, U.S.
Government Obligations or a combination thereof in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge the principal of, and premium, if any, and
interest on the Outstanding Notes on the Stated Maturity or on an optional
redemption date (such date being referred to as the "Defeasance Redemption
Date"), as the case may be, if in the case of a Defeasance Redemption Date
prior to electing to exercise either defeasance or covenant defeasance, the
Company has delivered to the Trustee an irrevocable notice to redeem all of
the outstanding Notes on such Defeasance Redemption Date;
(2) in the case of an election under Section 1302, the Company shall
have delivered to the Trustee an opinion of independent counsel in the
United States stating that (x) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling, or (y) 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 in the United States shall confirm that, the Holders of
the Outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such 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 defeasance had not occurred;
(3) in the case of an election under Section 1303, the Company shall
have delivered to the Trustee an opinion of independent counsel in the
United States to the effect that
<PAGE>
67
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;
(4) no Default or Event of Default with respect to the Notes shall have
occurred and be continuing on the date of such deposit or, insofar as
paragraphs (8) and (9) of Section 501 hereof are concerned, at any time
during the period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed satisfied until the
expiration of such period);
(5) such defeasance or covenant defeasance shall not result in a breach
or violation of, or constitute a Default under, this Indenture or any other
material agreement or instrument to which the Company or any Subsidiary
Guarantor is a party or by which it is bound;
(6) 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 or any Subsidiary Guarantor over the other
creditors of the Company or any Subsidiary Guarantor or with the intent of
defecting, hindering, delaying or defrauding creditors of the Company, any
Subsidiary Guarantor or others; and
(7) the Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for relating to
either the defeasance under Section 1302 or the covenant defeasance under
Section 1303 (as the case may be) have been complied with.
SECTION 1305. DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE
HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 1003, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee -- collectively for purposes of this
Section 1305, the "Trustee") pursuant to Section 1304 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 its
own 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 (and 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 U.S. Governmental Obligations
deposited pursuant to Section 1304 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.
Anything in this Article Thirteen to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1304 which, in the opinion of a
<PAGE>
68
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are in excess of the
amount thereof which would then be required to be deposited to effect an
equivalent defeasance or covenant defeasance, as applicable, in accordance with
this Article.
SECTION 1306. REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 1305 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 1302 or 1303, as the case may be, until such time as the Trustee or
Paying Agent is permitted to apply all such money in accordance with Section
1305, and the Company shall execute all documents reasonably satisfactory to the
Trustee evidencing such revival and reinstatement; PROVIDED, HOWEVER, that if
the Company makes any payment of principal of (or premium, if any, on) 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 FOURTEEN
SINKING FUND
SECTION 1401. MANDATORY SINKING FUND PAYMENTS.
As a mandatory sinking fund for the retirement of certain of the Notes, the
Company will, until all such Notes shall have been paid, or payment thereof duly
provided for, pay to the Trustee, on each of December 15, 1999 and December 15,
2000 (each such date a "sinking fund payment date"), an amount sufficient to
redeem $1 million principal amount of Notes, at a Redemption Price equal to 100%
of their principal amount. The cash amount of any sinking fund payment is
subject to reduction as provided in Section 1402. Each sinking fund payment
shall be applied to the redemption of Notes on such sinking fund payment date as
herein provided.
SECTION 1402. SATISFACTION OF SINKING FUND PAYMENTS WITH NOTES.
Subject to Section 1403, in lieu of making all or any part of any sinking
fund payment in cash, the Company may at its option (1) deliver to the Trustee
Outstanding Notes (other than any previously called for redemption) theretofore
purchased or otherwise acquired by the Company and/or (2) receive credit for the
principal amount of Notes which have been redeemed at the election of the
Company pursuant to Section 1101, in each case in satisfaction of all or any
part of any sinking fund payment required to be made pursuant to Section 1401;
PROVIDED, HOWEVER, that such Notes have not been previously so credited. Such
Notes shall be received and credited for such purpose by the Trustee at the
Redemption Price specified in the form of Note for redemption through operation
of the sinking fund and the amount of such sinking fund payment shall be reduced
accordingly.
<PAGE>
69
SECTION 1403. REDEMPTION OF NOTES FOR SINKING FUND.
Not less than 60 days prior to each sinking fund payment date, the Company
will deliver to the Trustee an Officer's Certificate specifying the amount of
the next ensuing sinking fund payment, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
satisfied by delivering or crediting Notes pursuant to Section 1402 (which Notes
will, if not previously delivered, accompany such certificate). Such certificate
shall be irrevocable and, upon its delivery, the Company shall be obligated to
make the cash payment or payments therein referred to, if any, on or before the
next succeeding sinking fund payment date. In the case of the failure of the
Company to deliver such certificate, the sinking fund payment due on the next
succeeding sinking fund payment date shall be paid entirely in cash and shall be
sufficient to redeem the principal amount of such Notes subject to such sinking
fund payment without the option to deliver or credit Notes as provided in
Section 1402.
Not more than 60 days before each such sinking fund payment date, the
Trustee shall select the Notes to be redeemed upon such sinking fund payment
date in the manner specified in Section 1104 and cause notice of the redemption
thereof to be given in the name of and at the expense of the Company in the
manner provided in Section 1105. Such notice having been duly given, the
redemption of such Notes shall be made upon the terms and in the manner stated
in Sections 1107 and 1108.
Prior to any sinking fund payment date, the Company shall pay to the Trustee
or a Paying Agent a sum in cash equal to any interest that will accrue to the
date fixed for redemption of Notes or portions thereof to be redeemed on such
sinking fund payment date pursuant to this Section 1403.
Notwithstanding the foregoing, if at any time the amount of cash to be paid
into such sinking fund on the next succeeding sinking fund payment date,
together with any unused balance of any preceding sinking fund payment or
payments, does not exceed in the aggregate $100,000, the Trustee, unless
requested by the Company, shall not give the next succeeding notice of the
redemption of Notes through the operation of the sinking fund. Any such unused
balance of moneys deposited in such sinking fund shall be added to the sinking
fund payment to be made in cash on the next succeeding sinking fund payment date
or, at the request of the Company, shall be applied at any time or from time to
time to the purchase of Notes, by public or private purchase, in the open market
or otherwise, at a purchase price for such Notes (excluding accrued interest and
brokerage commissions, for which the Trustee or any Paying Agent will be
reimbursed by the Company) not in excess of the principal amount thereof. In the
absence of such written request, the Trustee shall be under no duty to make such
purchases or otherwise invest such unused balance.
<PAGE>
70
This Indenture may be signed in any number of counterparts each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
FLEMING COMPANIES, INC.
SEAL By /s/ David R. Almond
-----------------------------------
Title: Senior Vice President -
General Counsel and
Secretary
Attest: /s/ John M. Thompson
---------------------------
Title: Vice President,
Treasurer and
Assistant Secretary
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By /s/
-----------------------------------
Title: Assistant Vice President
and Trust Officer
Attest: /s/
---------------------------
Title: Vice President
and Trust Officer
ATI, Inc.
Badger Markets, Inc.
Baker's Supermarkets, Inc.
Ball Motor Service, Inc.
Boogaart Stores of Nebraska, Inc.
Central Park Super Duper, Inc.
Commercial Cold/Dry Storage Company
Consumers Markets, Inc.
D.L. Food Stores, Inc.
Del-Arrow Super Duper, Inc.
Festival Foods, Inc.
Fleming Direct Sales Corporation
Fleming Foods East, Inc.
Fleming Foods of Alabama, Inc.
Fleming Foods of Ohio, Inc.
Fleming Foods of Tennessee, Inc.
Fleming Foods of Texas, Inc.
Fleming Foods of Virginia, Inc.
Fleming Foods South, Inc.
Fleming Foods West, Inc.
<PAGE>
71
Fleming Foreign Sales Corporation
Fleming Franchising, Inc.
Fleming Holdings, Inc.
Fleming International, Ltd.
Fleming Site Media, Inc.
Fleming Supermarkets of Florida, Inc.
Fleming Technology Leasing Company,
Inc.
Fleming Transportation Service, Inc.
Food Brands, Inc.
Food-4-Less, Inc.
Food Holdings, Inc.
Food Saver of Iowa, Inc.
Gateway Development Co., Inc.
Gateway Food Distributors, Inc.
Gateway Foods, Inc.
Gateway Foods of Altoona, Inc.
Gateway Foods of Pennsylvania, Inc.
Gateway Foods of Twin Ports, Inc.
Gateway Foods Service Corporation
Grand Central Leasing Corporation
Great Bend Supermarkets, Inc.
Hub City Transportation, Inc.
Kensington and Harlem, Inc.
LAS, Inc.
Ladysmith East IGA, Inc.
Ladysmith IGA, Inc.
Lake Markets, Inc.
M&H Desoto, Inc.
M&H Financial Corp.
M&H Realty Corp.
Malone & Hyde, Inc.
Malone & Hyde of Lafayette, Inc.
Manitowoc IGA, Inc.
Moberly Foods, Inc.
Mt. Morris Super Duper, Inc.
Niagara Falls Super Duper, Inc.
Northern Supermarkets of Oregon, Inc.
Northgate Plaza, Inc.
109 West Main Street, Inc.
121 East Main Street, Inc.
Peshtigo IGA, Inc.
Piggly Wiggly Corporation
Quality Incentive Company, Inc.
Rainbow Transportation Services, Inc.
Route 16, Inc.
Route 219, Inc.
<PAGE>
72
Route 417, Inc.
Richland Center IGA, Inc.
Scrivner, Inc.
Scrivner-Food Holdings, Inc.
Scrivner of Alabama, Inc.
Scrivner of Illinois, Inc.
Scrivner of Iowa, Inc.
Scrivner of Kansas, Inc.
Scrivner of New York, Inc.
Scrivner of North Carolina, Inc.
Scrivner of Pennsylvania, Inc.
Scrivner of Tennessee, Inc.
Scrivner of Texas, Inc.
Scrivner Super Stores of Illinois,
Inc.
Scrivner Super Stores of Iowa, Inc.
Scrivner Transportation, Inc.
Sehon Foods, Inc.
Selected Products, Inc.
Sentry Markets, Inc.
Smar Trans, Inc.
Southern Supermarkets, Inc. (TX)
Southern Supermarkets, Inc. (OK)
Southern Supermarkets of Louisiana,
Inc.
Star Groceries, Inc.
Store Equipment, Inc.
Sundries Service, Inc.
Switzer Foods, Inc.
35 Church Street, Inc.
Thompson Food Basket, Inc.
29 Super Market, Inc.
27 Slayton Avenue, Inc.
WPC, Inc.
Each, a Subsidiary Guarantor
By /s/ John M. Thompson
------------------------------------
Name: John M. Thompson
Title: Vice President and Treasurer
(Chief Financial Officer)
Attest: /s/ David R. Almond
- ----------------------------------
[Secretary]
<PAGE>
AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT INCOME PLAN OF
FLEMING COMPANIES, INC.
AND ITS SUBSIDIARIES
(Amended and Restated Effective January 1, 1995)
(Execution Date: March 2, 1995)
<PAGE>
AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT INCOME PLAN OF
FLEMING COMPANIES, INC.
AND ITS SUBSIDIARIES
TABLE OF CONTENTS
PAGE
ARTICLE I Name and Purpose of Plan. . . . . . . . . . . 1
1.1 Name of Plan . . . . . . . . . . . . . . . . 1
1.2 Purpose of Plan . . . . . . . . . . . . . . . 1
ARTICLE II Definitions and Construction . . . . . . . . 1
2.1 Definitions . . . . . . . . . . . . . . . . . 1
2.2 Construction . . . . . . . . . . . . . . . . 8
ARTICLE III Participation . . . . . . . . . . . . . . . . 8
3.1 Selection for Participation . . . . . . . . . 8
3.2 Participation in Consideration
for Future Services Only . . . . . . . . . . 8
3.3 Other Agreements . . . . . . . . . . . . . . 9
3.4 Continuation of Participation
While on Authorized Leave of
Absence or After Disability . . . . . . . . . 9
ARTICLE IV Contributions . . . . . . . . . . . . . . . . 9
4.1 Payments by the Company and/or
Subsidiary . . . . . . . . . . . . . . . . . 9
ARTICLE V Supplemental Normal Retirement Benefit . . . 9
5.1 Calculation of Supplemental Normal
Retirement Income . . . . . . . . . . . . . . 9
5.2 Postponed Retirement Date . . . . . . . . . . 10
5.3 Payment of Supplemental Normal
Retirement Income . . . . . . . . . . . . . . 10
-i-
<PAGE>
ARTICLE VI Death of a Participant. . . . . . . . . . . . 11
6.1 Payment of Death Benefit . . . . . . . . . . 11
6.2 Beneficiary Designation . . . . . . . . . . . 12
ARTICLE VII Early Retirement . . . . . . . . . . . . . . 12
7.1 Supplemental Early Retirement Income . . . . 12
ARTICLE VIII Disability . . . . . . . . . . . . . . . . . 13
8.1 Supplemental Disability Retirement
Income . . . . . . . . . . . . . . . . . . . 13
8.2 Proof of Disability . . . . . . . . . . . . . 13
ARTICLE IX Termination of Employment . . . . . . . . . . 14
9.1 Termination of Employment Prior
to Retirement Date . . . . . . . . . . . . . 14
9.2 Acceleration of Accrual of
Target Benefit Upon Change
in Control . . . . . . . . . . . . . . . . . 14
ARTICLE X Manner of Payment of Benefits . . . . . . . . 18
10.1 Payment at Actual Retirement . . . . . . . . 18
10.2 Participant to Elect Method
of Distribution . . . . . . . . . . . . . . . 18
ARTICLE XI General Benefit Provisions . . . . . . . . . 18
11.1 Reemployed Participants Who Had
Been Receiving Pension Benefits . . . . . . . 18
11.2 Restrictions on Alienation
of Benefits . . . . . . . . . . . . . . . . . 19
11.3 No Trust . . . . . . . . . . . . . . . . . . 19
11.4 Withholding and Other
Employment Taxes . . . . . . . . . . . . . . 19
-ii-
<PAGE>
ARTICLE XII Provisions Relating to Participants . . . . . 19
12.1 Information Required of Participants . . . . 19
12.2 Abandonment of Benefits . . . . . . . . . . . 20
12.3 Benefits Payable to Incompetents . . . . . . 20
12.4 Conditions of Employment Not
Affected by Plan . . . . . . . . . . . . . . 20
ARTICLE XIII Administration and Associate Benefits
Committee . . . . . . . . . . . . . . . . . . 21
13.1 Allocation of Responsibility
for Plan Administration . . . . . . . . . . . 21
13.2 Appointment of Committee . . . . . . . . . . 21
13.3 Claims Procedure . . . . . . . . . . . . . . 21
13.4 Review Procedure . . . . . . . . . . . . . . 21
13.5 Records and Reports . . . . . . . . . . . . . 22
13.6 Other Committee Powers and Duties . . . . . . 22
13.7 Rules and Decisions . . . . . . . . . . . . . 23
13.8 Committee Procedures . . . . . . . . . . . . 23
ARTICLE XIV Amendment and Termination . . . . . . . . . . 23
14.1 Right to Amend or Alter Plan . . . . . . . . 23
14.2 Right to Terminate Plan . . . . . . . . . . . 23
14.3 Merger or Termination of Qualified
Retirement Plan . . . . . . . . . . . . . . . 24
14.4 Forfeiture of All Benefits . . . . . . . . . 24
ARTICLE XV Miscellaneous Provisions . . . . . . . . . . 25
15.1 Articles and Section Titles
and Headings . . . . . . . . . . . . . . . . 25
15.2 Laws of Oklahoma to Govern . . . . . . . . . 25
-iii-
<PAGE>
AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT INCOME PLAN OF
FLEMING COMPANIES, INC.
AND ITS SUBSIDIARIES
FLEMING COMPANIES, INC., an Oklahoma corporation, hereby
adopts the Amended and Restated Supplemental Retirement Income Plan
of Fleming Companies, Inc. and Its Subsidiaries upon the following
terms and conditions. This Plan shall serve as an amendment,
restatement and continuation of that certain nonqualified
retirement plan entitled "Supplemental Retirement Income Plan of
Fleming Companies, Inc. and Its Subsidiaries" originally adopted
effective March 1, 1985.
ARTICLE I
NAME AND PURPOSE OF PLAN
1.1 NAME OF PLAN. This Plan shall be hereafter known as
the AMENDED AND RESTATED SUPPLEMENTAL RETIREMENT INCOME PLAN OF
FLEMING COMPANIES, INC. AND ITS SUBSIDIARIES.
1.2 PURPOSE OF PLAN. This Plan shall be considered as
a "nonqualified deferred compensation plan" which is to be
sponsored by the Company solely for the purpose of providing a
supplemental retirement income for a select group of management and
highly compensated Associates who contribute materially to the
continued growth, development and future business success of the
Company and its Subsidiaries. It is the intention of the Company
that this Plan and any Agreements entered into pursuant hereto be
administered as unfunded benefit plans established and maintained
for a select group of management and highly compensated Associates.
ARTICLE II
DEFINITIONS AND CONSTRUCTION
2.1 DEFINITIONS. Where the following capitalized words
and phrases appear in this instrument, they shall have the
respective meanings set forth below unless a different context is
clearly expressed herein.
(a) ACTUARIAL EQUIVALENT: The words "Actuarial
Equivalent" shall mean the equivalent of Supplemental
Normal Retirement Income as of the applicable Retirement
Date otherwise payable to a Participant in the mode of a
single life annuity commencing on his Normal Retirement
Date, determined using only mortality and interest
assumptions. The rates of mortality are contained in the
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Qualified Retirement Plan. The rate of interest shall be
the rate determined by the Pension Benefit Guaranty
Corporation for valuing immediate annuities effective for
defined benefit plans that terminate on the December 31
of the calendar year immediately preceding the date of
calculation of actuarial equivalence.
(b) ACT: The word "Act" shall mean Public Law.
No. 93-406, the Employee Retirement Income Security Act
of 1974, as amended from time to time.
(c) ACTUARY: The word "Actuary" shall mean an
enrolled actuary selected by the Committee to provide
actuarial services for the Plan.
(d) AGREEMENT: The word "Agreement" shall mean
that certain "Agreement for Supplemental Retirement
Income" which will be entered into by and between the
Company and the Participant.
(e) ASSOCIATE: The word "Associate" shall mean any
person, employed by the Employer on the basis of an
employer-employee relationship, who receives remuneration
for personal services rendered to the Employer.
(f) AUTHORIZED LEAVE OF ABSENCE: The words
"Authorized Leave of Absence" shall mean any
extraordinary absence authorized by the Committee within
its sole discretion.
(g) ANNUAL FINAL COMPENSATION: The words "Annual
Final Compensation" shall mean the highest annual total
compensation earned by a Participant during any of the
three consecutive calendar years of his employment
immediately preceding his Normal Retirement Date or his
earlier termination of employment, as the case may be,
which shall include the following:
(i) the total of all amounts paid to a
Participant by the Employer as regular salary
or wages including overtime, commissions,
bonuses, jury pay, vacation pay, sick pay and
holiday pay, but excluding other forms of
extraordinary compensation reported on the
Participant's Form W-2 to the Internal Revenue
Service such as final payments of the balance
of the bonus bank under the Economic Value
Added Incentive Bonus Plan for Fleming
Companies, Inc. and Its Subsidiaries,
allowances or reimbursement for moving
expenses, automobiles, income recognized on
the exercise of stock options or upon receipt
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of an award of stock; provided, Annual Final
Compensation shall further be adjusted to
include or be limited by the amounts provided
in the following Subsection (ii); and
(ii) any amount deferred by a Participant
pursuant to (x) Section 401(k) of the Code
with respect to an employee benefit plan
sponsored by the Employer or (y) Section 125
of the Code with respect to a "cafeteria plan"
sponsored by the Employer.
(h) BASIC RETIREMENT INCOME: The words "Basic
Retirement Income" shall mean the retirement benefits
which have been paid, or are otherwise payable on his
Normal Retirement Date to a Participant, or his
dependents, spouse, former spouse pursuant to a
"qualified domestic relations order", or such other
beneficiary as designated under the Qualified Retirement
Plan of the Company.
(i) BENEFICIARY: The words "Beneficiary" shall
mean that person designated by the Participant pursuant
to Section 6.2 hereof who would be entitled to receive
his Supplemental Retirement Income upon the death of the
Participant.
(j) CATEGORY I ASSOCIATES: The words "Category I
Associates" shall mean the Chief Executive Officer,
President, Executive Vice Presidents and Senior Vice
Presidents of the Company.
(k) CATEGORY II ASSOCIATES: The words "Category II
Associates" shall mean Vice Presidents and any other key
management Associates of the Company and its
Subsidiaries.
(l) CAUSE: The word "Cause" when used in
connection with a termination from employment after a
Change of Control shall mean termination for one of the
following reasons:
(i) the conviction of the Participant of a
felony by a federal or state court of competent
jurisdiction; (ii) an act or acts of dishonesty
taken by the Participant and intended to result in
substantial personal enrichment of the Participant
at the expense of the Company; (iii) the
Participant's "willful" failure to follow a direct,
reasonable and lawful written order from his
supervisor, within the reasonable scope of the
Participant's duties, which failure is not cured
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within 30 days; or (iv) the Participant's failure
to perform his specified duties and
responsibilities for a period of 45 days as
determined by his supervisor after a warning in
writing. Further, for purposes of this Section
(b):
(1) No act or failure to act, on the
Participant's part shall be deemed
"willful" unless done, or omitted to be
done, by the Participant not in good
faith and without reasonable belief that
the Participant's action or omission was
in the best interest of the Company.
(2) The Participant shall not be deemed
to have been terminated for Cause unless
and until there shall have been delivered
to the Participant a copy of a resolution
duly adopted by the affirmative vote of
not less than three-fourths (3/4ths) of
the entire membership of the Board at a
meeting of the Board called and held for
such purpose (after reasonable notice to
the Participant and an opportunity for
the Participant, together with the
Participant's counsel, to be heard before
the Board), finding that in the good
faith opinion of the Board the
Participant was guilty of conduct set
forth in clauses (i), (ii), (iii) or (iv)
above and specifying the particulars
thereof in detail.
(m) CHANGE OF CONTROL: The words "Change of
Control" shall have the meaning set forth in Section 9.2
of this Plan.
(n) CODE: The word "Code" shall mean the Internal
Revenue Code of 1986, as amended from time to time.
(o) COMMITTEE: The word "Committee" shall mean the
Compensation and Organization Committee appointed by the
Board of Directors of the Company under Article XIII
herein to administer the Plan.
(p) COMPANY: The word "Company" shall mean Fleming
Companies, Inc., or its successor.
(q) DISABILITY: The word "Disability" shall mean
a condition whereby a Participant has become totally and
permanently disabled within the meaning of the Long-Term
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Disability Plan as in effect as of the Effective Date of
this Plan.
(r) DISABILITY RETIREMENT DATE: The words
"Disability Retirement Date" shall mean the first day of
the month after which a Participant terminating
employment has satisfied all conditions specified in the
foregoing Subsection for Disability.
(s) EARLY RETIREMENT DATE: The words "Early
Retirement Date" shall mean the first day of the month
coinciding with or following the date a Participant
terminates employment with the Employer after (i) earning
at least 10 Years of Credited Service and (ii) attaining
at least age 55.
(t) EFFECTIVE DATE: The words "Effective Date"
shall mean the 1st day of January, 1995.
(u) ELIGIBLE SPOUSE: The words "Eligible Spouse"
shall mean the spouse to whom the Participant is married
for the one-year period preceding his date of death or
the date on which payment of his Supplemental Retirement
Income will commence.
(v) EMPLOYER: The word "Employer" shall mean
either the Company or any Subsidiary of the Company.
(w) GOOD REASON: The words "Good Reason" when used
in connection with a termination of employment after a
Change of Control shall mean:
(i) the assignment to the Participant of any
duties inconsistent in any respect with the
Participant's position (including status, offices,
titles and reporting requirements), authority,
duties or responsibilities as in effect during the
90-day period immediately prior to the Change of
Control, or any other action by the Company which
results in a diminution in such position,
compensation, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof
given by the Participant;
(ii) the Employer's requiring the Participant
to be based at any office or location more than 25
miles from where the Participant was employed
immediately prior to the Change of Control, except
for periodic travel reasonably required in the
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performance of the Participant's responsibilities;
or
(iii) the failure by the Company to comply
with Section 14.3(a) of this Plan.
(x) LONG-TERM DISABILITY PLAN: The words "Long-
Term Disability Plan" shall mean the "Long-Term
Disability Benefit Plan of Fleming Companies, Inc. and
Its Subsidiaries."
(y) NORMAL RETIREMENT AGE: The words "Normal
Retirement Age" shall mean the 65th birthday of a
Participant.
(z) NORMAL RETIREMENT DATE: The words "Normal
Retirement Date" shall mean the first day of the month
coinciding with or following a Participant's Normal
Retirement Age.
(aa) OFFSET AMOUNTS: The words "Offset Amounts"
shall mean that amount of other benefits which will be
applied by the Committee in determining the amount of
Supplemental Normal Retirement Income for any
Participant. The Offset Amounts shall consist of the (i)
Basic Retirement Income, (ii) any and all amounts which
have been paid, or are due and payable to the Participant
(and his dependents) as applied by and provided under
Social Security to be calculated assuming the Participant
has attained 65 years of age, and (iii) the present value
of the "B" Account under the Consolidated Savings Plus
Plan of Fleming Companies, Inc. and Its Subsidiaries, if
any, attributable or paid to the Participant. The Offset
Amounts shall include any amounts which have been paid or
which are payable to a spouse, former spouse or his
dependents pursuant to a "qualified domestic relations
order" as defined in Section 414(p) of the Code. The
present value of the "B" Account under the Consolidated
Savings Plus Plan of Fleming Companies, Inc. and Its
Subsidiaries will be calculated by the Actuary for the
Plan to determine the Actuarial Equivalent amount of a
single life annuity commencing on the Participant's
Normal Retirement Date. If the Participant has accrued
a benefit in any retirement plan of the Company or any
Subsidiary qualified under Section 401(a) and Section
501(a) of the Code other than the Qualified Retirement
Plan, the Committee may consider and apply such accrued
benefit as an "offset amount" which will be applied
against any Target Benefit which may be provided herein.
Provided, however, no accrued benefits attributable to
contributions made pursuant to Section 401(k) or Section
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<PAGE>
401(m) of the Code shall be considered as "Offset
Amounts."
(bb) PARTICIPANT: The word "Participant" shall mean
an Associate who during a Year shall meet the eligibility
requirements of Article III herein for participation or
reparticipation, as the case may be.
(cc) PLAN: The word "Plan" shall mean the Amended
and Restated Supplemental Retirement Income Plan of
Fleming Companies, Inc. and Its Subsidiaries, as set
forth in this instrument, and as hereafter amended from
time to time.
(dd) POSTPONED RETIREMENT DATE: The words
"Postponed Retirement Date" shall mean the first day of
the month coinciding with or next following the date that
a Participant retires under Section 5.3 herein subsequent
to his Normal Retirement Date.
(ee) QUALIFIED RETIREMENT PLAN: The words
"Qualified Retirement Plan" shall mean the employee
pension plan sponsored by the Company which is qualified
under Section 401(a) and Section 501(a) of the Code which
is known as the "Consolidated Retirement Plan of Fleming
Companies, Inc. and Its Subsidiaries."
(ff) RETIREMENT DATE: The words "Retirement Date"
shall mean a Participant's Early Retirement Date,
Disability Retirement Date, Normal Retirement Date, or
Postponed Retirement Date, whichever applies.
(gg) SUBSIDIARY: The word "Subsidiary" shall mean
any corporation with 80% or more of its voting common
stock being owned by the Company.
(hh) SUPPLEMENTAL DEATH BENEFIT: The words
"Supplemental Death Benefit" shall mean that additional
benefit which could be paid to the Eligible Spouse or
Beneficiary of a deceased Participant all as provided by
Article VI hereof.
(ii) SUPPLEMENTAL DISABILITY RETIREMENT INCOME: The
words "Supplemental Disability Retirement Income" shall
mean a monthly pension benefit computed in accordance
with Section 8.1 herein.
(jj) SUPPLEMENTAL EARLY RETIREMENT INCOME: The
words "Supplemental Early Retirement Income" shall mean
a monthly pension benefit computed in accordance with
Section 7.1 herein.
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<PAGE>
(kk) SUPPLEMENTAL NORMAL RETIREMENT INCOME: The
words "Supplemental Normal Retirement Income" shall mean
a monthly pension benefit computed in accordance with
Section 5.1 herein.
(ll) TARGET BENEFIT: The words "Target Benefit"
shall mean that aggregate benefit which is "targeted" for
a Participant selected by the Committee. The amount of
Target Benefit of a Participant will (i) consist of that
designated percentage of Annual Final Compensation earned
by the Participant pursuant to the terms and provisions
of this Plan, and (ii) depend on whether the Participant
is a Category I Associate or Category II Associate as of
his applicable Retirement Date or other termination of
employment.
(mm) YEAR: The word "Year" shall mean the annual
period beginning on the first day following the last
Saturday of December, and ending on the last Saturday of
December of the calendar year immediately following.
(nn) YEAR OF CREDITED SERVICE: The words "Year of
Credited Service" shall have the same meaning and be
calculated in the same manner as "Years of Credited
Service" are computed under the Qualified Retirement
Plan.
2.2 CONSTRUCTION. The masculine gender, where appearing
in the Plan, shall be deemed to include the feminine gender, unless
the context clearly indicates to the contrary. Any word appearing
herein in the plural shall include the singular, where appropriate,
and likewise the singular shall include the plural, unless the
context clearly indicates to the contrary.
ARTICLE III
PARTICIPATION
3.1 SELECTION FOR PARTICIPATION. In order to be
eligible for participation in the Plan, an Associate must be
selected by the Committee, which in its sole and absolute
discretion shall determine eligibility for participation in
accordance with the purposes of and to the extent permitted under
the Plan. To this end, the only Associates who will be eligible to
participate in this Plan will be Associates who are members of a
select group of management Associates.
3.2 PARTICIPATION IN CONSIDERATION FOR FUTURE SERVICES
ONLY. Selection of an Associate by the Committee for participation
in the Plan will be limited to those Associates who meet the
qualification requirements heretofore described and will be deemed
to be for all purposes in consideration of future services which
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will be rendered by such Associate to the Company or its
Subsidiaries in order to retain such Associates and to ensure the
continued growth, development and business of the Company and its
Subsidiaries.
3.3 OTHER AGREEMENTS. Any Associate having been
selected by the Committee as a Participant, shall, as a condition
of participation, complete and return to the Committee any and all
other agreements which will relate to the election by the
Participant to participate in the Plan and to agree to the terms
and conditions thereof.
3.4 CONTINUATION OF PARTICIPATION WHILE ON AUTHORIZED
LEAVE OF ABSENCE OR AFTER DISABILITY. In the event that a
Participant is on an Authorized Leave of Absence, such Participant
shall continue to be eligible to be a Participant hereunder during
such period of Authorized Leave of Absence. In the event that a
Participant has incurred a Disability, Article VIII hereof shall
govern such Participant.
ARTICLE IV
CONTRIBUTIONS
4.1 PAYMENTS BY THE COMPANY AND/OR SUBSIDIARY. The
payments required to fund the cost of the benefits provided by the
Plan shall be made solely by the Company and/or any Subsidiary
whose Associates are participating in the Plan.
ARTICLE V
SUPPLEMENTAL NORMAL RETIREMENT INCOME
5.1 CALCULATION OF SUPPLEMENTAL NORMAL RETIREMENT
INCOME.
(a) GENERAL. Each Associate (either as a Category
I Associate or Category II Associate) who has been
selected by the Committee to be a Participant in the
Plan, is also a participant in the Qualified Retirement
Plan sponsored by the Company. Further, each Participant
has also earned a benefit in the form of a Basic
Retirement Income pursuant to the terms and provisions of
the Qualified Retirement Plan as of the Effective Date or
a date subsequent thereto. The Supplemental Normal
Retirement Income will equal the difference, if any,
between (i) the applicable Target Benefit selected for a
Participant by the Committee and (ii) the Offset Amounts
otherwise payable to the Participant as of his applicable
Retirement Date or other termination of employment, as
the case may be.
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(b) GUIDELINES FOR ACCRUAL OF TARGET BENEFIT. Each
Participant will be awarded his Target Benefit by the
Committee. Entitlement to the Target Benefit will be
based upon whether the Participant is a Category I
Associate or a Category II Associate, his Annual Final
Compensation, and the amount of his Offset Amounts.
Further, the applicable amount of Target Benefit to which
a Participant may be entitled at any point in time
between the date he has been selected for participation
in the Plan and his Retirement Date or other termination
of employment, as the case may be, shall be subject to
the following general guidelines for determining the rate
of accrual of such Target Benefit unless otherwise
determined by the Committee:
Guidelines for Rate of
Accrual of Target Benefit
YEARS OF CREDITED SERVICE AT NORMAL RETIREMENT DATE
CATEGORY I CATEGORY II
FIRST, if the Participant has less 0% 0%
than 10 Years of Credited Service
SECOND, after a Participant has earned at least 10 Years of
Credited Service and he has attained the age of at least 55 years,
he shall have accrued a Target Benefit which is not less than 50%
of his Annual Final Compensation (if a Category I Associate) or 40%
of his Annual Final Compensation (if a Category II Associate). For
each Year of Credited Service earned after the initial 10 Years of
Credited Service has been earned by a Participant, such Participant
shall accrue an additional amount of his Target Benefit at the rate
of 1% for each additional Year of Credited Service earned by the
Participant but in no event shall such amount ever exceed the
lesser of (i) the total Target Benefit otherwise payable to the
Participant at his Normal Retirement Date or (ii) 80% of his Annual
Final Compensation. Provided, the foregoing notwithstanding, the
Committee, in its sole discretion, may, subject to the limitation
that no Target Benefit may exceed 80% of a Participant's Annual
Final Compensation, provide for a Participant's Target Benefit in
a manner otherwise than as heretofore provided.
5.2 POSTPONED RETIREMENT DATE. If a Participant
continues his employment with the Employer to a date after his
Normal Retirement Date ("Postponed Retirement Date"), his
Supplemental Normal Retirement Income shall be deferred until his
Postponed Retirement Date. Benefits to which he shall be entitled
as of his benefit commencement date shall be his Supplemental
Normal Retirement Income earned at his Normal Retirement Date
without adjustment after such date.
5.3 PAYMENT OF SUPPLEMENTAL NORMAL RETIREMENT INCOME.
Notwithstanding any provision contained in this Plan to the
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contrary and except in the case of a Change of Control as specified
in Section 9.2 of this Plan, no portion of Participant's
Supplemental Normal Retirement Income to which he may be entitled
shall be payable (i) prior to the date that he first satisfies the
requirements for retiring on his applicable Retirement Date and
(ii) unless he actually terminates employment with the Employer on
the applicable Retirement Date. Except as provided in Section 9.2
of this Plan, in the event commencement of benefits commence prior
to a Participant's Normal Retirement Date, then, such benefits
shall be adjusted as provided in Article VI in the event of a
payment of a Supplemental Death Benefit, and as provided in Article
VII in the event of a Supplemental Early Retirement Income, and as
provided in Article VIII in the event of a Supplemental Disability
Retirement Income.
ARTICLE VI
DEATH OF A PARTICIPANT
6.1 PAYMENT OF DEATH BENEFIT.
(a) At any point in time to the extent that a
Participant is entitled to receive any portion of his
Basic Retirement Income as determined pursuant to the
terms and provisions of the Qualified Retirement Plan due
to the death of the Participant while employed by the
Company or a Subsidiary, the Eligible Spouse or
Beneficiary of such Participant, as the case may be,
shall be entitled to receive a Supplemental Death Benefit
to be calculated as provided in Article V hereof and will
be based upon the percentage of the Target Benefit earned
by the Participant as of his date of death. Provided,
however, in making such calculation under Article V
hereof, the Participant shall be credited with Years of
Credited Service equal to the greater of his actual Years
of Credited Service or ten (10) Years of Credited
Service. The Supplemental Death Benefit will be paid in
the same manner as he has previously elected in his
Agreement.
(b) The foregoing Subsection (a) notwithstanding,
in the event of the death of Participant who is in the
employ of the Company or a Subsidiary prior to his first
eligible Early Retirement Date, no benefit will be paid
to either the Eligible Spouse or the Beneficiary of
Participant in the form of a Supplemental Death Benefit
until the date such Participant would have otherwise
attained his first eligible Early Retirement Date
assuming he had continued in the employ of the Company.
In the event of the death of the Eligible Spouse or the
Beneficiary, as the case may be, prior to such date, then
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no Supplemental Death Benefit will be paid pursuant to
the terms of this Agreement or the Plan. In the event of
the death of the Participant on or after his first
eligible Early Retirement Date, then his Supplemental
Death Benefit will be paid as hereinabove provided.
Provided further, unless the Participant is in the employ
of the Company as of the date of his death or unless he
has previously terminated employment and commenced
receipt of benefits, then, no Supplemental Death Benefit
shall be paid to the Participant pursuant to the terms of
this Agreement or the Supplemental Plan due to his death.
6.2 BENEFICIARY DESIGNATION. In the event that the
Eligible Spouse is not otherwise designated to receive the
Supplemental Death Benefit otherwise payable to a Participant
hereunder, then, such Supplemental Death Benefit shall be paid to
the Beneficiary designated by the Participant who is then surviving
and if there is no Beneficiary then surviving, such benefits will
automatically be paid to the surviving Eligible Spouse of such
Participant, or otherwise to the estate of such Participant.
ARTICLE VII
EARLY RETIREMENT
7.1 SUPPLEMENTAL EARLY RETIREMENT INCOME. A Participant
who has attained his Early Retirement Date may, with the consent of
the Company, retire early and apply for a Supplemental Early
Retirement Income. A Participant's Supplemental Early Retirement
Income shall commence as of such Participant's Early Retirement
Date. The monthly amount of a Supplemental Early Retirement Income
to which a Participant shall be entitled for life shall be based on
his Supplemental Normal Retirement Income earned by the Participant
as of his Early Retirement Date; provided, that if the payments of
such Supplemental Early Retirement Income commence prior to the
Participant's Normal Retirement Date, such Supplemental Normal
Retirement Income shall be actuarially adjusted as of the date of
actual commencement of payments by multiplying the Participant's
Supplemental Normal Retirement Income by the appropriate "early
retirement adjustment factors" shown below based upon the
Participant's age in years and completed months (calculated
proportionately) at the date of actual commencement of payments;
provided, however, that the Committee may in its sole discretion
waive the application of the Early Retirement Adjustment Factors.
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<TABLE>
<CAPTION>
Early Retirement
Adjustment Factors
-------------------
Percentage of Adjusted
Target Benefit
Age for Participant
--- ----------------------
<S> <C>
62-65 100%
61 94%
60 88%
59 82%
58 76%
57 70%
56 64%
55 58%
</TABLE>
ARTICLE VIII
DISABILITY
8.1 SUPPLEMENTAL DISABILITY RETIREMENT INCOME. If a
Participant has satisfied all conditions of Disability, he shall be
entitled to his Supplemental Disability Retirement Income. The
monthly amount of a Supplemental Disability Retirement Income to
which a Participant shall be entitled for life shall be based on
his Supplemental Normal Retirement Income earned by the Participant
as of his Disability Retirement Date. Payment of a Supplemental
Disability Retirement Income payments shall not commence (i) prior
to his first eligible Early Retirement Date assuming such
Participant continued in the employ of the Employer, and (ii) until
such Participant is no longer receiving benefits pursuant to the
Long-Term Disability Plan. A Participant's Supplemental Disability
Retirement Income will be adjusted like a Supplemental Early
Retirement Income as provided in Section 7.1 hereof if benefits
commence prior to attainment of the age of 62 years.
8.2 PROOF OF DISABILITY. After a Participant's
Disability Retirement Date the Committee may require that the
Participant's continuing Disability be verified by medical
examination at a location convenient to the Participant; provided,
such Participant shall not be required to submit to more than one
examination in a 12 month period. If, at any time prior to the
Participant's Normal Retirement Age, the Committee determines that
he no longer has a Disability, or if the Participant shall refuse
to submit to a physical examination, the Committee shall direct
that in computing such Participant's Supplemental Disability
Retirement Income, only "Years of Credited Service" earned prior to
such determination by the Committee be considered.
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ARTICLE IX
TERMINATION OF EMPLOYMENT
9.1 TERMINATION OF EMPLOYMENT PRIOR TO RETIREMENT DATE.
In the event that a Participant for any reason other than death or
approved retirement by the Employer on or after his applicable
Early Retirement Date terminates his employment with the Employer
prior to his Normal Retirement Date, then, except as provided in
Section 9.2 below, such Participant shall have no rights of any
kind whatsoever in any Supplemental Normal Retirement Income (or
any other benefit) otherwise to be paid pursuant to the terms of
this Plan.
9.2 ACCELERATION OF ACCRUAL OF TARGET BENEFIT UPON
CHANGE OF CONTROL. In the event that there is a "change of
control" as defined below of the Company, and within three years
following such change of control, a Participant is terminated other
than for Cause or death or Disability or terminates his employment
for Good Reason, then, such Participant shall be fully vested and
entitled to his full Supplemental Normal Retirement Income earned
by such Participant as of his date of termination of employment
with such Supplemental Retirement Income to be paid beginning
immediately. Such Supplemental Normal Retirement Income shall not
be reduced by any Early Retirement Adjustment Factors as provided
in Article VII hereof and shall be calculated based upon such
Participant's actual Annual Final Compensation earned by such
Participant as of his termination of employment and the greater of
such Participant's actual Years of Credited Service or ten (10)
Years of Credited Service. In each case, the Participant shall
have been deemed to have reached 65 years of age. Anything in this
Plan to the contrary notwithstanding, if a Participant's employment
with the Employer is terminated prior to the date on which a Change
of Control occurs, and it is reasonably demonstrated that such
termination (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change of Control or (ii)
otherwise arose in connection with or anticipation of a Change of
Control, then for all purposes of this Plan as to such terminated
Participant, a Change of Control shall mean the date immediately
prior to the date of such termination. For the purposes of this
Plan, the term "change of control" shall mean:
(a) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more (the "Triggering
Percentage") of either (i) the then
outstanding shares of Common Stock of the
Company (the "Outstanding Company Common
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Stock") or (ii) the combined voting power of
the then outstanding voting securities of the
Company entitled to vote generally in the
election of directors (the "Outstanding
Company Voting Securities"); provided,
however, in the event the "Incumbent Board"
(as such term is hereinafter defined) pursuant
to Section 7 of the Rights Agreement between
the Company and The Liberty National Bank and
Trust Company of Oklahoma City dated as of
July 7, 1986 together with any additional
amendments thereto (the "Rights Agreement")
lowers the threshold amounts set forth in
Section 1(a) or 3(a) of the Rights Agreement,
the Triggering Percentage shall be
automatically reduced to equal the threshold
set pursuant to Section 7 of the Rights
Agreement; and provided, further, however,
that the following acquisitions shall not
constitute a change of control: (i) any
acquisition directly from the Company, (ii)
any acquisition by the Company; (iii) any
acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the
Company or any corporation controlled by the
Company, (iv) any acquisition previously
approved by at least a majority of the members
of the Incumbent Board, (v) any acquisition
approved by at least a majority of the members
of the Incumbent Board within five (5)
business days after the Company has notice of
such acquisition, or (vi) any acquisition by
any corporation pursuant to a transaction
which complies with clauses (i), (ii), and
(iii) of subsection (c) of this Section 9.2;
or
(b) Individuals who, as of the date hereof,
constitute the Board of Directors of the
Company (the "Incumbent Board") cease for any
reason to constitute at least a majority of
the Board; provided, however, that any
individual becoming a director subsequent to
the date hereof whose election, appointment or
nomination for election by the Company's
shareholders, was approved by a vote of at
least a majority of the directors then
comprising the Incumbent Board shall be
considered as though such individual were a
member of the Incumbent Board, but excluding,
for purposes of this definition, any such
individual whose initial assumption of office
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occurs as a result of an actual or threatened
election contest with respect to the election
or removal of directors or other actual or
threatened solicitation of proxies or consents
by or on behalf of a Person other than the
Board; or
(c) Approval by the shareholders of the Company of
a reorganization, share exchange, merger or
consolidation (a "Business Combination"), in
each case, unless, following such Business
Combination, (i) all or substantially all of
the individuals and entities who were the
beneficial owners, respectively, of the
Outstanding Company Common Stock and
Outstanding Company Voting Securities
immediately prior to such Business Combination
beneficially own, directly or indirectly, more
than 70% of, respectively, the then
outstanding shares of common stock and the
combined voting power of the then outstanding
voting securities entitled to vote generally
in the election of directors, as the case may
be, of the corporation resulting from such
Business Combination (including, without
limitation, a corporation which as a result of
such transaction owns the Company through one
or more subsidiaries) in substantially the
same proportions as their ownership,
immediately prior to such Business
Combination, of the Outstanding Company Common
Stock and Outstanding Company Voting
Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or
related trust) of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the
corporation resulting from such Business
Combination or the combined voting power of
the then outstanding voting securities of such
corporation except to the extent that such
ownership existed prior to the Business
Combination, and (iii) at least a majority of
the members of the board of directors of the
corporation resulting from such Business
Combination were members of the Incumbent
Board at the time of the execution of the
initial agreement, or of the action of the
Board, providing for such Business Combination
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or were elected, appointed or nominated by the
Board; or
(d) Approval by the shareholders of the Company of
(i) a complete liquidation or dissolution of
the Company or, (ii) the sale or other
disposition of all or substantially all of the
assets of the Company, other than to a
corporation, with respect to which following
such sale or other disposition, (A) more than
70% of, respectively, the then outstanding
shares of common stock of such corporation and
the combined voting power of the then
outstanding voting securities of such
corporation entitled to vote generally in the
election of directors is then beneficially
owned, directly or indirectly, by all or
substantially all of the individuals and
entities who were the beneficial owners,
respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or
other disposition in substantially the same
proportions as their ownership, immediately
prior to such sale or other disposition, of
the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the
case may be, (B) less than 20% of,
respectively, the then outstanding shares of
common stock of such corporation and the
combined voting power of the then outstanding
voting securities of such corporation entitled
to vote generally in the election of directors
is then beneficially owned, directly or
indirectly, by any Person (excluding any
employee benefit plan (or related trust) of
the Company or such corporation), except to
the extent that such Person owned 20% or more
of the Outstanding Company Common Stock or
Outstanding Company Voting Securities prior to
the sale or disposition, and (C) at least a
majority of the members of the board of
directors of such corporation were members of
the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such sale
or other disposition of assets of the Company
or were elected, appointed or nominated by the
Board.
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ARTICLE X
MANNER OF PAYMENT OF BENEFITS
10.1 PAYMENT AT ACTUAL RETIREMENT. Upon the Participant
terminating his employment with the Company on his applicable
Retirement Date, then, such Participant shall be paid a benefit
calculated as provided herein; and, such benefit shall be paid as
Supplemental Early Retirement Income, Supplemental Disability
Retirement Income or Supplemental Normal Retirement Income, as the
case may be. Such Supplemental Normal Retirement income will be
paid monthly on a single life basis for the life of the Participant
unless an optional form of payment is selected by Participant.
Provided, such selections are irrevocable and will be made by the
Participant on the date the Participant becomes a participant in
the Plan. The optional forms of payment permitted under the Plan
are as follows:
OPTIONAL FORM OF PAYMENT
50% spouse survivor benefit
75% spouse survivor benefit
100% spouse survivor benefit
5 year certain
10 year certain
15 year certain
In the event that a Participant elects an optional form of payment
as herein provided, the Actuary for the Plan shall actuarially
adjust the amount of Supplemental Normal Retirement Income
otherwise payable to the Participant if such payment was to be made
on a single life basis to reflect the age of the Participant, his
Beneficiary or his Eligible Spouse, as the case may be.
10.2 PARTICIPANT TO ELECT METHOD OF DISTRIBUTION. On or
about the time a Participant has been selected by the Committee to
participate in the Plan, the Participant shall elect the method of
distribution as described in Subsection 10.1 with respect to the
time and the manner in which his Supplemental Retirement Income
will be distributed. After the death of a Participant, a
Beneficiary may not elect an alternate form of distribution.
ARTICLE XI
GENERAL BENEFIT PROVISIONS
11.1 REEMPLOYED PARTICIPANTS WHO HAD BEEN RECEIVING
PENSION BENEFITS. In the event that a Participant who was
previously receiving any benefits under any provision of this Plan,
and such Participant is reemployed with the Employer and if the
Participant is again selected for participation in the Plan, the
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amount of previous benefits paid shall be taken into account and
shall serve to actuarially reduce the Participant's Supplemental
Normal Retirement Income payable at his subsequent Retirement Date.
11.2 RESTRICTIONS ON ALIENATION OF BENEFITS. No right or
benefit under this Plan shall be subject to anticipation,
alienation, sale, assignment, pledge, encumbrance, or charge, and
any attempt to anticipate, alienate, sell, assign, pledge,
encumber, or charge the same shall be void. No right or benefit
hereunder shall in any manner be liable for or subject to the
debts, contracts, liabilities, or torts of the person entitled to
such benefit. If any Participant or Beneficiary under this Plan
should become bankrupt or attempt to anticipate, alienate, sell,
assign, pledge, encumber, or charge any right to a benefit under
this Plan, then such right or benefit shall, in the discretion of
the Committee, be held or applied for the benefit of such
Participant or Beneficiary, his or her spouse, children, or other
dependents, or any of them, in such manner and in such portion as
the Committee, in its sole and absolute discretion, may deem
proper.
11.3 NO TRUST. No action under this Plan by the Company,
its Board of Directors or the Committee shall be construed as
creating a trust, escrow or other secured or segregated fund in
favor of the Participant, his Beneficiary, or any other persons
otherwise entitled to his Supplemental Normal Retirement Income.
The status of the Participant and his Beneficiary with respect to
any liabilities assumed by the Company hereunder shall be solely
those of unsecured creditors of the Employer. Any asset acquired
or held by the Company or any Subsidiary in connection with
liabilities assumed by it hereunder, shall not be deemed to be held
under any trust, escrow or other secured or segregated fund for the
benefit of the Participant or his Beneficiaries or to be security
for the performance of the obligations of the Company or any
Subsidiary, but shall be, and remain a general, unpledged,
unrestricted asset of the Company or any Subsidiary at all times
subject to the claims of general creditors of the Company or any
Subsidiary.
11.4 WITHHOLDING AND OTHER EMPLOYMENT TAXES. The Company
shall comply with all federal and state laws and regulations
respecting the withholding, deposit and payment of any income or
other taxes relating to any payments made under this Plan.
ARTICLE XII
PROVISIONS RELATING TO PARTICIPANTS
12.1 INFORMATION REQUIRED OF PARTICIPANTS. Payment of
Benefits shall begin as of the payments date(s) provided in this
Plan and no formal claim shall be required therefor; provided, in
the interests of orderly administration of the Plan, the Committee
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may make reasonable requests of Participants and beneficiaries to
furnish information which is reasonably necessary and appropriate
to the orderly administration of the Plan, and, to that limited
extent, payments under the Plan are conditioned upon the
Participants and beneficiaries promptly furnishing true, full and
complete information as the Committee may reasonably request.
12.2 ABANDONMENT OF BENEFITS. Each Participant and
Beneficiary shall file with the Committee, from time to time in
writing, his post office address and each change of post office
address, and any communication addressed to a Participant or
beneficiary at his last post office address filed with the
Committee, or if no such address was filed, then at his last post
office address as shown on the Employer's records, shall be binding
on the Participant or his Beneficiary for all purposes of the Plan,
and the Committee shall not be obliged to search for or ascertain
the whereabouts of any Participant or Beneficiary; provided, that
the Committee shall mail an annual notice of unpaid pension
benefits to such person at such last post office address. If the
Committee furnishes such annual notice to any Participant, or
Beneficiary of a deceased Participant, that he is entitled to a
distribution, and the Participant or Beneficiary fails to claim
such distribution or make his whereabouts known to the Committee
within three years thereafter, such benefits shall be disposed of
as follows:
(a) if the whereabouts of such Beneficiary then is
known to the Committee, payment shall be made to such
beneficiary; or
(b) if the whereabouts of such Participant and his
Beneficiary is unknown to the Committee, the Committee
may direct the distribution of a Participant's pension
benefits on the same basis as though the Participant had
died without designating a Beneficiary as provided in
Subsection 6.2 herein.
12.3 BENEFITS PAYABLE TO INCOMPETENTS. Any benefits
payable hereunder to a minor or other person under legal disability
may be made, at the discretion of the Committee, (i) directly to
the said person, or (ii) to a parent, spouse, relative by blood or
marriage, or the legal representative of the said person. The
Committee shall not be required to see to the application of any
such payment, and the payee's receipt shall be a full and final
discharge of the Committee's responsibility hereunder.
12.4 CONDITIONS OF EMPLOYMENT NOT AFFECTED BY PLAN. The
establishment and maintenance of the Plan shall not be construed as
conferring any legal rights upon any Participant to the
continuation of employment with the Employer, nor shall the Plan
interfere with the rights of the Employer to discharge any
Participant with or without cause.
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ARTICLE XIII
Administration and
ASSOCIATE BENEFITS COMMITTEE
13.1 ALLOCATION OF RESPONSIBILITY FOR PLAN
ADMINISTRATION. The Committee shall have only those specific
powers, duties, responsibilities and obligations as are
specifically given them under the Plan. In general, the Company
shall have the sole responsibility for appointing and removing
Committee members, as provided in Section 13.2 herein. The Company
shall have the sole responsibility for amending or terminating, in
whole or in part, this Plan. The Committee shall have the sole
responsibility for the administration of the Plan which
responsibility is specifically described in this Plan.
13.2 APPOINTMENT OF COMMITTEE. The Plan shall be
administered by the Committee which shall be appointed by and serve
at the pleasure of the Board of Directors of the Company. All
usual and reasonable expenses of the Committee may be paid in whole
or in part by the Company.
13.3 CLAIMS PROCEDURE. The Committee shall make all
determinations as to the right of any person to benefits. If any
request for a benefit is wholly or partially denied, the Committee
shall notify the person requesting the pension benefits, in
writing, of such denial, including in such notification the
following information:
(a) the specific reason or reasons for such denial;
(b) the specific references to the pertinent Plan
provisions upon which the denial is based;
(c) a description of any additional material and
information which may be needed to clarify the request,
including an explanation of why such information is
required; and
(d) an examination of this Plan's review procedure
with respect to denial of benefits.
Provided, that any such notice to be delivered to any Participant
or beneficiary shall be mailed by certified or registered mail and
shall be written to the best of the Committee's ability in a manner
that may be understood without legal counsel.
13.4 REVIEW PROCEDURE. Any Participant or Beneficiary
whose claim has been denied in accordance with Section 13.3 herein
may appeal to the Committee for review of such denial by making a
written request therefor within 60 days of receipt of the
notification of such denial. Such Participant or Beneficiary may
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<PAGE>
examine documents pertinent to the review and may submit to the
Committee written issues and comments. Within 60 days after
receipt of the request for review, the Committee shall communicate
to the claimant, in writing, its decision, and the communication
shall set forth the reason or reasons for the decision and specific
reference to those Plan provisions upon which the decision is
based.
13.5 RECORDS AND REPORTS. The Committee shall exercise
such authority and responsibility as it deems appropriate in order
to comply with the Act and governmental regulations issued
thereunder relating to records of the Participant's accounts and
benefits which may be paid under the Plan; and to notify
Participants and Beneficiaries as required.
13.6 OTHER COMMITTEE POWERS AND DUTIES. The Committee
shall have such duties and powers as may be necessary to discharge
its duties hereunder, including, but not by way of limitation, the
following:
(a) to construe and interpret the Plan in its sole
and absolute discretion, decide all questions of
eligibility and determine the amount, manner and time of
payment of any benefits hereunder;
(b) to prescribe procedures to be followed by
Participants or Beneficiaries filing applications for
benefits;
(c) to prepare and distribute, in such manner as
the Committee determines to be appropriate, information
explaining the Plan;
(d) to receive from the Employer and from
Participants and Beneficiaries such information as shall
be necessary for the proper administration of the Plan;
(e) to furnish the Employer, upon request, such
reports with respect to the administration of the Plan as
are reasonable and appropriate;
(f) to appoint and employ individuals and any other
agents it deems advisable, including legal counsel, to
assist in the administration of the Plan and to render
advice with respect to any responsibility of the
Committee, or any of its individual members, under the
Plan;
(g) to allocate among themselves who shall be
responsible for specific duties and to designate
fiduciaries (other than Committee members) to carry out
responsibilities under the Plan; provided that any such
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<PAGE>
allocations shall be reduced to writing, signed by all
Committee members, and filed in a permanent Committee
minute book; and
(h) to maintain continuing review of the Act and
the Code, implementing regulations thereto and suggest
changes and modifications to the Employer in connection
with delegations of responsibility, as appropriate, and
amendments to the Plan.
13.7 RULES AND DECISIONS. The Committee may adopt such
rules as it deems necessary, desirable, or appropriate. All rules
and decisions of the Committee shall be uniformly and consistently
applied to all Participants and beneficiaries in similar
circumstances. When making a determination or calculation, the
Committee shall be entitled to rely upon information furnished by
a Participant or Beneficiary, the Employer, the legal counsel of
the Company.
13.8 COMMITTEE PROCEDURES. The Committee may act at a
meeting or in writing without a meeting. The Committee shall have
a chairman, and appoint a secretary, who may or may not be a
Committee member. The secretary shall keep a record of all
meetings in a permanent Committee minute book and forward all
necessary communications to the Employer. The Committee may adopt
such bylaws and regulations as it deems desirable for the conduct
of its affairs. All decisions of the Committee shall be made by
the vote of the majority including actions in writing taken without
a meeting. A dissenting Committee member who, within a reasonable
time after he has knowledge of any action or failure to act by the
majority, registers his dissent in writing delivered to the other
Committee members, to the extent permitted by law, shall not be
responsible for any such action or failure to act.
ARTICLE XIV
AMENDMENT AND TERMINATION
14.1 RIGHT TO AMEND OR ALTER PLAN. The Plan may be
amended by the Company from time to time in any respect whatever by
resolution of the Company specifying such amendment; provided,
however, this Plan may not be amended after a Change of Control in
any manner which adversely affects any Participant without the
consent of the affected Participant.
14.2 RIGHT TO TERMINATE PLAN. The Company expressly
reserves the right to terminate this Plan in whole or in part at
any time; provided, however, this Plan may not be terminated in the
event of a Change of Control without the consent of all of the
Participants.
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14.3 MERGER OR TERMINATION OF QUALIFIED RETIREMENT PLAN.
(a) MERGER OF COMPANY; SUCCESSOR MUST ASSUME PLAN.
The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and
agree to perform the Company's and any Subsidiary's
obligations under this Plan in the same manner and to the
same extent that the Company or such Subsidiary would be
required to perform if no such succession had taken
place. Failure of the Company to obtain such assumption
and agreement prior to the effectiveness of any
succession shall be a breach by the Company of its
obligations under this Plan and shall entitle the
Participant to compensation from the Company in the same
amount and on the same terms as the Participant would be
entitled to hereunder if the Participant terminated
employment for Good Reason following a Change of Control,
except that for purposes of implementing the foregoing,
the date on which any such succession becomes effective
shall be deemed the date of termination of employment.
(b) TERMINATION OF QUALIFIED RETIREMENT PLAN. In
the event of the termination of the Company's Qualified
Retirement Plan, then, in calculating any Supplemental
Normal Retirement Income which would otherwise be paid to
Participant under this Plan, the Basic Retirement Income
earned by Participant under the Qualified Retirement Plan
will be calculated as of such termination date and will
be applied at such time to determine the amount of Target
Benefit to which Participant would be entitled under this
Plan; and the Target Benefit will be paid as otherwise
provided under the Agreement and the Plan.
14.4 FORFEITURE OF ALL BENEFITS. In the event that (i)
the Participant is discharged from employment service with the
Company for acts of dishonesty, fraud, theft, embezzlement, (ii)
upon the conviction by a court of competent jurisdiction of a crime
that is deemed to be a felony under the laws of the State of
Oklahoma (or any other state) or laws of the United States, or
(iii) in the event the Participant commits any other act or acts
which are injurious and adversely impacts the Company in any manner
whatsoever, then, in such events, the Committee, in its sole
discretion, may determine that any benefit which would otherwise be
provided to the Participant, his Beneficiary or his Eligible Spouse
under the Agreement or the Plan shall be forfeited in its entirety,
and it shall thereafter be deemed as if the Participant never was
selected for participation in the Plan. Provided, however, that
the provisions of this Section 14.4 shall not be applicable in the
event a Change of Control has occurred.
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ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1 ARTICLES AND SECTION TITLES AND HEADINGS. The
titles and headings at the beginning of each Article and Section
shall not be considered in construing the meaning of any provisions
in this Plan.
15.2 LAWS OF OKLAHOMA TO GOVERN. The provisions of this
Plan shall be construed, administered and enforced according to the
laws of the State of Oklahoma. All Contributions to the Trust
shall be deemed to take place in the State of Oklahoma.
EXECUTED as of the 2nd day of March, 1995.
FLEMING COMPANIES, INC., a
corporation
By: /s/ ROBERT E. STAUTH
-----------------------------------
Robert E. Stauth, Chairman,
President and Chief Executive
Officer
"COMPANY"
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AMENDED AND RESTATED
SUPPLEMENTAL RETIREMENT INCOME AGREEMENT
FOR
---------------------
<PAGE>
AMENDED AND RESTATED
AGREEMENT FOR SUPPLEMENTAL RETIREMENT INCOME
THIS AMENDED AND RESTATED AGREEMENT FOR SUPPLEMENTAL
RETIREMENT INCOME (the "Agreement") is made as of this 2nd day of
March, 1995 by and between 1 , an individual
------------------------
(the "Participant") and FLEMING COMPANIES, INC. (the "Company")
with respect to the following:
WHEREAS, the Company and the Participant are parties to
that certain Agreement for Supplemental Retirement Income (the "Old
Agreement") which Agreement was adopted pursuant to the
Supplemental Retirement Income Plan of Fleming Companies, Inc. and
Its Subsidiaries; and
WHEREAS, the Board of Directors of the Company has
adopted the Amended and Restated Supplemental Plan effective
January 1, 1995 (the "Supplemental Plan"); and
WHEREAS, the Company and the Participant desire to
terminate the Old Agreement and replace it with this Agreement.
NOW, THEREFORE, in consideration of mutual covenants
hereinafter contained, the parties hereto agree as follows. All
capitalized words used in this Agreement shall have the same
meaning as such terms are used in the Supplemental Plan unless
specifically denoted otherwise.
1. PURPOSE OF SUPPLEMENTAL PLAN. The purpose of the
Supplemental Plan and this Agreement is to provide to you, the
Participant, the opportunity to earn a Supplemental Income as
provided in this Agreement in order to retain you, as a key
management associate, with the Company. Payment of the
Supplemental Normal Retirement Income shall be made to you in
consideration of future services rendered by you and shall be paid
to you or your Beneficiary as hereinafter provided.
2. MAXIMUM AMOUNT OF TARGET BENEFIT. The maximum
amount of Target Benefit to which you will be entitled at your
Normal Retirement Date will be 2 percent ( 3 %) of your
--------- -----
Annual Final Compensation. This is your Target Benefit. This
assumes that you will earn 4 years ( 5 ) Years of Credited
------- -----
Service as of your Normal Retirement Date.
3. CALCULATION AND MANNER OF PAYMENT OF SUPPLEMENTAL
NORMAL RETIREMENT INCOME.
(a) GENERAL. You, as a Participant, are also a
participant in the Qualified Retirement Plan sponsored by the
Company. Further, you have also earned a benefit in the form of a
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Basic Retirement Income pursuant to the terms of the Qualified
Retirement Plan as of the Effective Date or a date subsequent
thereto. Your Supplemental Normal Retirement Income will equal the
difference between the applicable Target Benefit selected for you
by the Committee and the Offset Amounts otherwise payable to you as
of your applicable Retirement Date, consisting of the following:
(1) the amount payable to you under Fleming's
Qualified Retirement Plan; and
(2) Social Security amount payable to you and
your spouse.
(b) MANNER OF PAYMENT OF SUPPLEMENTAL NORMAL
RETIREMENT INCOME. The Supplemental Normal Retirement Income will
be paid to you and your Beneficiary, if applicable, in the manner
elected by you below: (Check One Box Only)
METHODS OF PAYMENT
1. [ ] Life of Participant Only
2. [ ] 50% Joint Annuitant Survivor Benefit
3. [ ] 75% Joint Annuitant Survivor Benefit
4. [ ] 100% Joint Annuitant Survivor Benefit
5. [ ] 5 Year Period Certain
6. [ ] 10 Year Period Certain
7. [ ] 15 Year Period Certain
The actual amounts payable at retirement or death will depend upon
your age and/or your Beneficiary. Refer to Exhibit "A" for a
complete description of the Methods of Payment.
(c) CALCULATION. Exhibit "B" hereto contains an
example calculation of Supplemental Normal Retirement Income
assuming a retirement at age 65 and Exhibit "C" hereto contains an
example calculation of Supplemental Early Retirement Income
assuming retirement at age 55.
4. COMMENCEMENT OF SUPPLEMENTAL RETIREMENT INCOME.
Subject to the provisions of Section 9.2 of the Supplemental Plan,
based upon the manner of payment elected by you for payment of your
Supplemental Normal Retirement Income, payments shall actually
commence as of your Early Retirement Date (only with the consent of
the Committee), Normal Retirement Date, Disability Retirement Date,
Postponed Retirement Date, or date of death, as the case may be,
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<PAGE>
and shall be payable monthly to you or your Beneficiary, as the
case may be, until payments cease as provided hereafter.
5. AMENDMENT OR TERMINATION. This Agreement may be
amended or terminated only with the consent of the Company and you,
the Participant.
6. EXPENSES. The expenses of administering this
Agreement shall be borne by the Company and shall not be charged
against your Supplemental Normal Retirement Income.
7. APPLICABLE LAW. The provisions of this Agreement
shall be construed, administered and enforced according to the laws
of the State of Oklahoma.
8. NO TRUST. No action under this Agreement by the
Company or its Board of Directors shall be construed as creating a
trust, escrow or other secured or segregated fund, in favor of you
or your Beneficiary, or any other person otherwise entitled to your
Supplemental Normal Retirement Income and accruals thereon. The
status of you and your Beneficiary with respect to any liabilities
assumed by the Company hereunder shall be solely those of unsecured
creditors of the Company. Any asset acquired or held by the
Company in connection with liabilities assumed by it hereunder,
shall not be deemed to be held under any trust, escrow or other
secured or segregated fund for the benefit of the you or your
Beneficiary or to be security for the performance of the
obligations of the Company, but shall be, and remain a general,
unpledged, unrestricted asset of the Company at all times subject
to the claims of general creditors of the Company.
9. NO ASSIGNABILITY. Neither you, your Beneficiary,
nor any other person shall acquire any right to or interest in any
Supplemental Normal Retirement Income and accruals thereon,
otherwise than by actual payment in accordance with the provisions
of this Agreement, or have any power to transfer, assign,
anticipate, pledge, mortgage or otherwise encumber, alienate or
transfer any rights hereunder in advance of any of the payments to
be made pursuant to the Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit. If you or your Beneficiary should
become bankrupt or attempt to anticipate, alienate, sell, assign,
pledge, encumber, or charge any right to a benefit hereunder or
under the Supplemental Plan, then such right or benefit shall, in
the discretion of the Committee, cease and terminate, and, in such
event, the Committee may hold or apply the same or any part thereof
for the benefit of you and your Beneficiary, in such manner and in
such portion as the Committee, in its sole and absolute discretion,
may deem proper.
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<PAGE>
10. AGREEMENT DOES NOT GUARANTEE CONTINUED EMPLOYMENT OF
PARTICIPANT. The execution of this Agreement by the Company and
you, as the Participant, in no way whatsoever guarantees the
continuation of employment of you with the Company. Further,
notwithstanding any provision contained in this Agreement or the
Supplemental Plan which may imply or specify to the contrary,
except as provided in the Supplemental Plan, your right to receive
a Supplemental Normal Retirement Income (or any other benefit)
under this Agreement or the Supplemental Plan shall at all times be
forfeitable prior to the specific date that you first satisfy the
requirements for actually retiring on your applicable Retirement
Date or as of the date of your death, as the case may be.
Accordingly, in the event of termination of employment of
Participant prior to such applicable date (except as specifically
provided in the Supplemental Plan) neither you nor your
Beneficiary, or any other person shall be entitled to any benefit
pursuant to the terms of this Agreement or the Supplemental Plan.
11. WITHHOLDING. The Company and the Participant shall
comply with all federal and state laws and regulations respecting
the withholding, deposit and payment of any income, employment or
other taxes relating to any payments or rights to payments under
this Agreement.
12. DESIGNATION OF BENEFICIARY.
(a) You, as the Participant, hereby designate the
following individual as your Beneficiary to receive any
Supplemental Death Benefit (including any benefit to be paid to
such Beneficiary as the surviving "joint annuitant" pursuant to
Section 3(b) hereof) payable to you under this Agreement or the
Supplemental Plan in the event of your death:
Name Address Relationship
- -------------------- ------------------------- ------------
-------------------------
(b) You understand that during your lifetime, you
may at any time change the Beneficiary designated herein by
delivering to the Committee a new designation of a Beneficiary.
13. RELATIONSHIP BETWEEN AGREEMENT AND SUPPLEMENTAL
PLAN. This Agreement has been entered into by and between Company
and Participant in accordance with and pursuant to authority
granted to the Committee pursuant to the terms and provisions of
the Supplemental Plan. In the event that there develops a conflict
between this Agreement and the terms and provisions of the
Supplemental Plan, the terms and provisions of the Supplemental
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<PAGE>
Plan, as interpreted by the Committee in its sole discretion, shall
control and be final and conclusive.
14. LIMITATION ON PAYMENT OF BENEFITS. The payment of
the Supplemental Normal Retirement Income as provided in this
Agreement shall accrue and be payable to you or your Beneficiary,
as the case may be, only at such times and upon the occurrence of
such conditions as heretofore described. In no event whatsoever
shall you or your Beneficiary have any right, claim, or interest of
any kind whatsoever in any future payments of such Supplemental
Normal Retirement Income and such payments shall accrue and be
payable only on a monthly basis as provided hereinabove. In no
event may you or your Beneficiary be entitled to receive a lump sum
payment or other sum approximating the right to receive any future
payments of Supplemental Normal Retirement Income hereunder.
15. TERMINATION OF OLD AGREEMENT. Effective as of the
date of the execution and delivery of this Agreement, the Old
Agreement shall be terminated and of no further force and effect.
16. EFFECTIVE DATE. This Agreement shall be effective
from and after the day and year first above written.
DATED the day and year first above written.
FLEMING COMPANIES, INC., an Oklahoma
corporation
By
-----------------------------------
Larry A. Wagner, Senior Vice
President-Human Resources
"COMPANY"
-----------------------------------
(6)
"PARTICIPANT"
-6-
<PAGE>
EXHIBIT "A"
DESCRIPTION OF METHODS OF PAYMENT
<TABLE>
<S> <C>
METHOD 1 - Life of
Participant Only: A Supplemental Normal Retirement
Income will be paid for your life
only. Upon your death, all payments
of Supplemental Normal Retirement
Income shall cease.
METHOD 2 - 50%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be paid
to you for your life, then, at your
death 50% of such amount shall be paid
to your surviving Beneficiary. In the
event that your surviving Beneficiary
has predeceased you, or should
otherwise die after your death, then
no further payments will be paid under
Method 2 or this Agreement.
METHOD 3 - 75%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be paid
to you for your life, then, at your
death 75% of such amount shall be paid
to your surviving Beneficiary. In the
event that your surviving Beneficiary
has predeceased you, or should
otherwise die after your death, then
no further payments will be due under
Method 3 or this Agreement.
METHOD 4 - 100%
Joint Annuitant
Survivor Benefit: A reduced amount of Supplemental
Normal Retirement Income will be paid
to you for your life, then, at your
death 100% of such amount shall be
paid to your surviving Beneficiary.
In the event that your surviving
Beneficiary has predeceased you, or
should otherwise die after your death,
then no further payments will be due
under Method 4 or this Agreement.
</TABLE>
-1-
<PAGE>
<TABLE>
<S> <C>
METHOD 5 - 5 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income will be paid
for a period of 5 years certain.
After the expiration of such 5 year
period, payments shall then continue
for your life in the same amount. In
the event of your death during the 5
year period certain, then, the balance
of such payments due only during such
5 year period will be paid to your
surviving Beneficiary. After the
expiration of such 5 year period, then
all payments shall cease. In the
event of the expiration of such 5 year
period, and you die, then, no further
benefits will be paid under METHOD 5
or this Agreement.
METHOD 6 - 10 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income shall be paid
for a period of 10 years certain.
After the expiration of such 10 year
period, payments shall then continue
for your life in the same amount. In
the event of your death during the 10
year period certain, then, the balance
of such payments due only during such
10 year period will be paid to your
surviving Beneficiary. After the
expiration of such 10 year period,
then all payments shall cease. In the
event of the expiration of such 10
year period, and you die, then, no
further benefits will be paid under
METHOD 6 or this Agreement.
</TABLE>
-2-
<PAGE>
<TABLE>
<S> <C>
METHOD 7 - 15 Year
Period Certain: A reduced amount of Supplemental
Normal Retirement Income shall be paid
for a period of 15 years certain.
After the expiration of such 15 year
period, payments shall then continue
for your life in the same amount. In
the event of your death during the 15
year period certain, then, the balance
of such payments due only during such
15 year period will be paid to your
surviving Beneficiary. After the
expiration of such 15 year period,
then all payments shall cease. In the
event of the expiration of such 15
year period, and you die, then, no
further benefits will be paid under
METHOD 7 or this Agreement.
</TABLE>
-3-
<PAGE>
EXHIBIT "B"
EXAMPLE OF CALCULATION OF SUPPLEMENTAL NORMAL
RETIREMENT INCOME ASSUMING RETIREMENT AT AGE 65
<TABLE>
<CAPTION>
ASSUMPTIONS:
<S> <C> <C> <C>
- Final Average Earnings = $200,000
- Category I Participant
- 28 Years Service
- Retire at 65
- Estimated SSA = 13,610
- Spousal SSA = 6,805
- "B" Account = 120,000
- Annual Pension = $ 53,582
CALCULATIONS:
Final Average Earnings $200,000
SERP Target x .68
--------
$136,000
Less "B" Acct. Equivalent - 14,748
Less Pension - 53,582
Less Age 65 Primary SSA - 13,610
Less Spousal SSA - 6,805
--------
Annual Life Only SERP $ 47,255
</TABLE>
-4-
<PAGE>
EXHIBIT "C"
EXAMPLE OF CALCULATION OF SUPPLEMENTAL EARLY
RETIREMENT INCOME ASSUMING RETIREMENT AT AGE 55
<TABLE>
<CAPTION>
ASSUMPTIONS:
<S> <C> <C> <C>
- Final Average Earnings = $200,000
- Category I Participant
- 28 Years Service
- Retire at 55
- Estimated SSA = 13,610
- Spousal SSA = 6,805
- "B" Account = 120,000
- Annual Pension = $ 24,899
CALCULATIONS:
Final Average Earnings $200,000
SERP Target x .68
---------
$136,000
Less 42% Early Retire. Reduct. - 57,120
---------
78,880
Less "B" Acct. Equivalent - 12,024
Less Pension - 24,899
Less Age 65 Primary SSA - 13,610
Less Spousal SSA - 6,805
--------
Annual Life Only SERP $ 21,542
</TABLE>
-5-
<PAGE>
AMENDED AND RESTATED SEVERANCE AGREEMENT
AMENDED AND RESTATED SEVERANCE AGREEMENT (the
"Agreement") entered into between Fleming Companies, Inc., an
Oklahoma corporation (the "Company"), and 1 , an
---------------
individual (the "Executive"), dated as of this 2nd day of March,
1995 (the "Effective Date").
WHEREAS, the Company and the Executive are parties to
that a Severance Agreement (the "Old Agreement"); and
WHEREAS, the Company and the Executive desire to
terminate the Old Agreement and replace it with this Agreement; and
WHEREAS, the Company deems the services of the Executive
to be of great and unique value to the business of the Company and
the Company desires to assure both itself of continuity of
management and the Executive of continued employment; and
WHEREAS, the Executive is a key management associate of
the Company and is presently making and is expected to continue
making substantial contributions to the Company; and
WHEREAS, it is in the best interests of the Company and
its shareholders to induce the Executive to remain in the employ of
the Company; and
WHEREAS, the Executive presently is serving in his/her
capacity as a 2 of the Company; and
---------
WHEREAS, the Company desires to provide an additional
inducement for the Executive to remain in the employ of the Company
as hereinafter provided by providing to him/her additional amounts
of compensation as provided in this Agreement in the event of
his/her termination of employment for the reasons specified herein.
NOW, THEREFORE, in consideration of the mutual covenants
hereinafter set forth and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Executive and the Company hereby agree as provided below.
1. OPERATION OF AGREEMENT. The purpose of this
Agreement is to provide to the Executive additional amounts of
compensation as provided in this Agreement in the event of his/her
termination of employment for the reasons specified herein.
Accordingly, the Company and the Executive have entered into this
Agreement in accordance with the terms and provisions herein to
provide for such protection to the Executive.
(a) CONTROL DATE. The "Control Date" shall be the
date during the "Change of Control Period" (as defined in Section
1(b)) on which a Change of Control (as defined in Section 1(c))
<PAGE>
occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated prior to the date on which a Change of Control occurs,
and it is reasonably demonstrated that such termination (i) was at
the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in
connection with or anticipation of a Change of Control, then for
all purposes of this Agreement the "Control Date" shall mean the
date immediately prior to the date of such termination.
(b) CHANGE OF CONTROL PERIOD. The "Change of
Control Period" is the period commencing on the Effective Date and
ending on the first to occur of (i) the second anniversary of such
date or (ii) the first day of the month coinciding with or next
following the Executive's attainment of age 65 ("Normal Retirement
Date"); provided, however, that commencing on the date one year
after the date hereof, and on each annual anniversary of such date
(the date one year after the date hereof and each annual
anniversary of such date, is hereinafter referred to as the
"Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate on the first to occur of:
(i) two years from such Renewal Date or (ii) the first day of the
month coinciding with or next following the Executive's Normal
Retirement Date, unless at least 60 days prior to the Renewal Date,
the Company shall give notice that the Change of Control Period
shall not be so extended, in which event this Agreement shall
continue for the remainder of the term of the then current Change
of Control Period and terminate as provided herein.
(c) DEFINITION OF CHANGE OF CONTROL. For the
purpose of this Agreement, a "Change of Control" shall mean:
(i) The acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (x) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
Stock") or (y) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, in the event the "Incumbent Board"
(as such term is hereinafter defined) pursuant to Section 7 of the
Rights Agreement between the Company and The Liberty National Bank
and Trust Company of Oklahoma City dated as of July 7, 1986
together with any additional amendments thereto (the "Rights
Agreement") lowers the threshold amounts set forth in Section 1(a)
or 3(a) of the Rights Agreement, the Triggering Percentage shall be
automatically reduced to equal the threshold set pursuant to
Section 7 of the Rights Agreement; and provided, further, however,
that the following acquisitions shall not constitute a change of
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<PAGE>
control: (A) any acquisition directly from the Company, (B) any
acquisition by the Company; (C) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, (D) any
acquisition previously approved by at least a majority of the
members of the Incumbent Board, (E) any acquisition approved by at
least a majority of the members of the Incumbent Board within five
(5) business days after the Company has notice of such acquisition,
or (F) any acquisition by any corporation pursuant to a transaction
which complies with clauses (x), (y), and (z) of subsection (iii)
of this Section 1(c); or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, appointment or nomination for election by
the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for purposes of this definition,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Approval by the shareholders of the
Company of a reorganization, share exchange, merger or
consolidation (a "Business Combination"), in each case, unless,
following such Business Combination, (x) all or substantially all
of the individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 70% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (y) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the
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<PAGE>
Business Combination, and (z) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination or were elected,
appointed or nominated by the Board; or
(iv) Approval by the shareholders of the
Company of (x) a complete liquidation or dissolution of the Company
or, (y) the sale or other disposition of all or substantially all
of the assets of the Company, other than to a corporation, with
respect to which following such sale or other disposition, (A) more
than 70% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
sale or other disposition in substantially the same proportions as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) less
than 20% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company or such
corporation), except to the extent that such Person owned 20% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities prior to the sale or disposition, and (C) at
least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the
Company or were elected, appointed or nominated by the Board.
2. AGREEMENT NOT EMPLOYMENT CONTRACT. This Agreement
shall be considered solely as a "severance agreement" obligating
the Company to pay to the Executive certain amounts of compensation
in the event and only in the event of his termination of employment
after the Control Date for the reasons and at the times specified
herein.
3. TERMINATION. Except as provided in Section 5
hereof, this Agreement shall terminate upon the first to occur of
the following events.
(a) DEATH. The date of death of the Executive.
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<PAGE>
(b) CAUSE. The termination of the Executive's
employment by the Company for "Cause." For purposes of this
Agreement, termination of the Executive's employment by the Company
for Cause shall mean termination for one of the following reasons:
(i) the conviction of the Executive of a felony by a federal or
state court of competent jurisdiction; (ii) an act or acts of
dishonesty taken by the Executive and intended to result in
substantial personal enrichment of the Executive at the expense of
the Company; or (iii) the Executive's "willful" failure to follow
a direct, reasonable and lawful written order from his supervisor,
within the reasonable scope of the Executive's duties, which
failure is not cured within 30 days. Further, for purposes of this
Section (b):
(1) No act or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in
the best interest of the Company.
(2) The Executive shall not be deemed to
have been terminated for Cause unless and until there shall have
been delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than three-fourths (3/4ths) of
the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice to the Executive
and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Executive was guilty of conduct set
forth in clauses (i), (ii) or (iii) above and specifying the
particulars thereof in detail.
(c) GOOD REASON. The termination of the
Executive's employment by the Executive for Good Reason. For
purposes of this Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's
position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities or
any other action by the Company which results in a
diminishment in such position, compensation, authority,
duties or responsibilities, other than an insubstantial
and inadvertent action which is remedied by the Company
promptly after receipt of written notice thereof given by
the Executive
(ii) the Company's requiring the Executive to
be based at any office or location more than 25 miles
from where the Executive was employed immediately prior
to the Change of Control, except for periodic travel
-5-
<PAGE>
reasonably required in the performance of the Executive's
responsibilities; or
(iii) any failure by the Company to comply
with and satisfy Section 11(a) of this agreement.
(d) FAILURE TO EXTEND AGREEMENT. The Company gives
notice of its intent not to extend the Change of Control Period as
provided in Section 1(b) hereof.
4. NOTICE OF TERMINATION. Any termination of
employment by the Company for Cause or by the Executive for Good
Reason as provided in Section 3, above, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 13 of this Agreement. For purposes of this Agreement,
a "Notice of Termination" means a written notice which (i)
indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive's employment under the provision so indicated and (iii)
if the termination date is other than the date of receipt of such
notice, specifies the termination date (which date shall be not
more than 15 days after the giving of such notice).
5. OBLIGATIONS OF THE COMPANY UPON TERMINATION
FOLLOWING CHANGE OF CONTROL. If (i) within 24 months of the
Control Date the Company shall terminate the Executive's employment
for any reason other than for Cause or death, or (ii) within 24
months of the Control Date the employment of the Executive shall be
terminated by the Executive for Good Reason, then, upon the
occurrence of either event as described in clauses (i) and (ii),
the Company shall pay to the Executive in a lump sum, in cash,
within 30 days after the date of termination of employment an
amount equal to 24 times the Base Compensation Rate (defined below)
on the Control Date. "Base Compensation Rate" shall mean the
monthly rate of compensation of the Executive (before any salary
reductions on account of contributions made pursuant to either
Sections 401(k) or 125 of the Code, if applicable) in effect as of
the Effective Date or such rate as increased but not reduced) from
the Effective Date until the Control Date. The Executive's Base
Compensation Rate as of the Effective Date is the monthly rate of
salary, payable bi-weekly. Provided, in the event the Executive
has not attained his Normal Retirement Date as of the Control Date,
and if his Normal Retirement Date would occur within 24 months of
his Control Date assuming the Executive continued in the employ of
the Company until his Normal Retirement Date and then retired,
then, in such event, the aforesaid factor "24" shall be reduced to
equal the number of months (partial months shall be considered as
a whole month) remaining between the Control Date and the
Executive's Normal Retirement Date. Provided further, if the
Executive has attained his Normal Retirement Date on the Control
Date, then, the factor "24" as used in this Section 5 shall be
-6-
<PAGE>
reduced to zero, and such Executive shall be entitled to no payment
under this Agreement.
6. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANy.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
payment or distribution by the Company to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including, by
example and not by way of limitation, acceleration by the Company
of the date of vesting or payment or rate of payment under any
plan, program or arrangement of the Company (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 6(c), all
determinations required to be made under this Section 6, including
whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by Deloitte & Touche LLP (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that
there has been a Payment which would be subject to the Excise Tax,
or such earlier time as is requested by the Company. The initial
Gross-Up Payment, if any, as determined pursuant to this Section
6(b), shall be paid to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that
the Company exhausts its remedies pursuant to Section 6(c) and the
Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
-7-
<PAGE>
promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-
Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive
knows of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it
gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 6(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
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<PAGE>
Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 6(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 6(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company
pursuant to Section 6(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of
its intent to contest such denial of refund prior to the expiration
of thirty days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other plan
or program provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall
anything herein limit or otherwise affect such rights as the
Executive may have under any stock option or other agreements with
the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to
receive under any plan or program of the Company or any of its
affiliated companies at or subsequent to the date of termination of
employment shall be payable in accordance with such plan or
program.
8. FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any
circumstances, including, without limitation, any set-off,
counterclaim, recoupment, defense or other right which the Company
may have against the Executive or others. In no event shall the
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Executive be obligated to seek other employment by way of
mitigation of the amounts payable to the Executive under any of the
provisions of this Agreement.
9. CONFIDENTIAL INFORMATION.
(a) REQUIREMENT OF EXECUTIVE. The Executive shall
hold in a fiduciary capacity for the benefit of the Company all
secret or confidential information, knowledge or data relating to
the Company or any of its affiliated companies, and their
respective businesses, which shall have been obtained by the
Executive during the Executive's employment by the Company or any
of its affiliated companies and which shall not be public knowledge
(other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company, communicate or divulge any
such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 9 constitute a basis
for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
(b) ADDITIONAL REMEDIES. The Executive agrees that
the remedy at law for any breach or threatened breach of any
covenant contained in this Section 9 will be inadequate, and that
the Company, in addition to such other remedies as may be available
to it, in law or in equity, shall be entitled to injunctive relief
without bond or other security.
10. TERMINATION OF OLD AGREEMENT. Effective as of March
2, 1995, the date of the execution and delivery of this Agreement,
the Old Agreement shall be terminated and of no further force and
effect.
11. SUCCESSORS AND BINDING EFFECT.
(a) SUCCESSOR MUST ASSUME AGREEMENT. The Company
will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Failure of the
Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the
Company in the same amount and on the same terms as the Executive
would be entitled to hereunder if the Executive terminated
employment for Good Reason following a Change of Control, except
that for purposes of implementing the foregoing, the date on which
any such succession becomes effective shall be deemed the date of
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<PAGE>
termination of employment. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to
its business and/or assets which assumes and agrees to perform this
Agreement by operation of law or otherwise.
(b) BINDING EFFECT. This Agreement shall inure to
the benefit of and be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. If the Executive
should die while any amount would still be payable to the Executive
hereunder if the Executive had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee or
other designee or, if there is no such designee, to the Executive's
estate.
12. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Oklahoma, without reference to principles of conflict of laws.
13. NOTICES. All notices and other communications
hereunder shall be in writing and shall be given by hand delivery
to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:
IF TO THE EXECUTIVE:
At his last known address evidenced on the Company's
payroll records
IF TO THE COMPANY:
Fleming Companies, Inc.
6301 Waterford Boulevard
P. O. Box 26647
Oklahoma City, Oklahoma 73126
Attn: Larry A. Wagner
Senior Vice President - Human Resources
with a copy to:
David R. Almond, Esq.
Senior Vice President and General Counsel
Fleming Companies, Inc.
6301 Waterford Boulevard
P.O. Box 26647
Oklahoma City, Oklahoma 73126
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<PAGE>
with a copy to:
McAfee & Taft
A Professional Corporation
Tenth Floor Two Leadership Square
Oklahoma City, Oklahoma 73102
Attn: John M. Mee, Esq.
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
14. TAXES TO BE WITHHELD. The Company may withhold from
any amounts payable under this Agreement such Federal, state or
local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.
15. ENTIRE AGREEMENT. This Agreement constitutes the
entire agreement among the parties with respect to the subject
matter hereof and supersedes any and all prior or contemporaneous
oral and prior written agreements and understandings. There are no
oral promises, conditions, representations, understandings,
interpretations or terms of any kind as conditions or inducements
to the execution hereof or in effect among the parties.
16. AMENDMENT. This Agreement may not be amended, and
no provision hereof shall be waived, except by a writing signed by
all parties to this Agreement, or, in the case of a waiver, by the
party waiving compliance therewith, which states that it is
intended to amend or waive a provision of this Agreement. Any
waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an
agreement to waive any rights or failure to act in any other
instance, whether or not similar.
17. ENFORCEABILITY. Should any provision of this
Agreement be unenforceable or prohibited by an applicable law, this
Agreement shall be considered divisible as to such provision which
shall be inoperative, and the remainder of this Agreement shall be
valid and binding as though such provision were not included
herein. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
18. COUNTERPARTS. This Agreement may be executed in two
or more counterparts with the same effect as if the signatures to
all such counterparts were upon the same instrument, and all such
counterparts shall constitute but one instrument.
19. HEADINGS. All headings in this Agreement are for
convenience only and are not intended to affect the meaning of any
provision hereof.
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<PAGE>
20. NO TRUST. No action under this Agreement by the
Company or its Board of Directors shall be construed as creating a
trust, escrow or other secured or segregated fund, in favor of the
Executive or his beneficiary. The status of the Executive and his
beneficiary with respect to any liabilities assumed by the Company
hereunder shall be solely those of unsecured creditors of the
Company. Any asset acquired or held by the Company in connection
with liabilities assumed by it hereunder, shall not be deemed to be
held under any trust, escrow or other secured or segregated fund
for the benefit of the Executive or his beneficiary or to be
security for the performance of the obligations of the Company, but
shall be, and remain a general, unpledged, unrestricted asset of
the Company at all times subject to the claims of general creditors
of the Company.
21. NO ASSIGNABILITY. Neither the Executive nor his
beneficiary, nor any other person shall acquire any right to or
interest in any payments payable under this Agreement, otherwise
than by actual payment in accordance with the provisions of this
Agreement, or have any power to transfer, assign, anticipate,
pledge, mortgage or otherwise encumber, alienate or transfer any
rights hereunder in advance of any of the payments to be made
pursuant to this Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.
IN WITNESS WHEREOF, the Executive has hereunto set
his/her hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in
its name on its behalf all as of the day and year first above
written.
------------------------------------------
3
"EXECUTIVE"
FLEMING COMPANIES, INC., an Oklahoma
corporation
By
--------------------------------------
Robert E. Stauth
Chairman, President & Chief
Executive Officer
"COMPANY"
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FLEMING COMPANIES, INC.
SUPPLEMENTAL INCOME TRUST
THIS AGREEMENT FOR THE FLEMING COMPANIES, INC.
SUPPLEMENTAL INCOME TRUST (the "Trust Agreement") made as of this
16th day of March, 1995, by and between Fleming Companies, Inc., an
Oklahoma corporation (the "Company"), and BANCOKLAHOMA TRUST
COMPANY, an Oklahoma corporation (the "Trustee"). This Trust
Agreement provides for the establishment of a trust to be known as
the "Fleming Companies, Inc. Supplemental Income Trust"
(hereinafter called the "Trust") to provide a source for payments
required to be made under the contracts, agreements and plans
listed on Exhibit "A" as amended from time to time (the "Plans")
entered into between the Company and certain of its key management
associates (the "Participants").
WHEREAS, Company has adopted the Plans listed on Exhibit
A;
WHEREAS, Company has incurred or expects to incur
liability under the terms of the Plans; and
WHEREAS, Company wishes to establish a trust (hereinafter
called "Trust") and to contribute to the Trust assets that shall be
held therein, subject to the claims of creditors in the event of
Company's Insolvency, as herein defined, until paid to Participants
and their beneficiaries in such manner and at such times as
specified in the Plans; and
WHEREAS, it is the intention of the parties that this
Trust shall constitute an unfunded arrangement and shall not affect
the status of the Plans as unfunded plans maintained for the
purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I
of the Employee Retirement Income Security Act of 1974; and
WHEREAS, it is the intention of Company to make
contributions to the Trust to provide itself with a source of funds
to assist it in the meeting of its liabilities under the Plans;
NOW, THEREFORE, the parties do hereby establish the Trust
and agree that the Trust shall be comprised, held and disposed of
as follows:
<PAGE>
Section 1. ESTABLISHMENT OF TRUST
(a) Company hereby deposits with Trustee, in trust, One
Hundred Dollars ($100.00), which constitutes the principal of the
Trust to be held, administered and disposed of by Trustee as
provided in this Trust Agreement.
(b) The Trust hereby established is revocable by
Company; it shall become irrevocable upon a change of control, as
such term is defined in the Plans ("Change of Control").
(c) The Trust is intended to be a grantor trust, of
which Company is the grantor, within the meaning of subpart E, part
I, subchapter J, chapter 1, subtitle A of the Internal Revenue Code
of 1986, as amended, and shall be construed accordingly.
(d) The principal of the Trust, and any earnings thereon
shall be held separate and apart from other funds of Company and
shall be used exclusively for the uses and purposes of Participants
and their beneficiaries and the general creditors of Company and
its subsidiaries as herein set forth. The Participants and their
beneficiaries shall have no preferred claim on, or any beneficial
ownership interest in, any assets of the Trust. Any rights created
under the Plans and this Trust Agreement shall be mere unsecured
contractual rights of the Participants and their beneficiaries
against Company or its subsidiaries whichever is the actual
employer of the Participants. Any assets held by the Trust will be
subject to the claims of general creditors of the Company or its
subsidiaries under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.
(e) Company, in its sole discretion, may at any time, or
from time to time, make additional deposits of cash or other
property in trust with Trustee to augment the principal to be held,
administered and disposed of by Trustee (which may not include
securities issued by Company or its subsidiaries) as provided in
this Trust Agreement. In addition, Company may designate such
Plans and Participants to be entitled to receive any payments from
the amounts so deposited, provided, such payments shall only be
made in accordance with the terms and provisions of the designated
Plans. Neither Trustee nor any Participant or beneficiary shall
have any right to compel such additional deposits.
(f) Upon a Change of Control, Company shall, as soon as
possible, but in no event longer than sixty (60) days following the
Change of Control, make an irrevocable contribution to the Trust in
an amount that is sufficient to pay the Participants or their
beneficiaries the benefits to which the Participants or their
beneficiaries would be entitled pursuant to the terms of the
Amended and Restated Supplemental Retirement Income Plan of Fleming
Companies, Inc. and Its subsidiaries (the "Supplemental Plan") as
of the date on which the Change of Control occurred assuming the
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Participants have each been terminated other than for "cause" (as
such term is defined in the Supplemental Plan ), death or
disability or the Participants terminate their employment for "good
reason" as such term is defined in the Supplemental Plan.
Section 2. PAYMENTS TO PARTICIPANTS AND THEIR BENEFICIARIES.
(a) Company shall deliver to Trustee a schedule (the
"Payment Schedule") that indicates the amounts payable in respect
of each Participant (and his or her beneficiaries) and provides a
formula or other instructions acceptable to Trustee for determining
the amounts so payable, the form in which such amount is to be paid
(as provided for or available under the Plans), and the time of
commencement for payment of such amounts. Except as otherwise
provided herein, Trustee shall make payments to the Participants
and their beneficiaries in accordance with such Payment Schedule.
The Trustee shall make provision for the reporting and withholding
of any federal, state or local taxes that may be required to be
withheld with respect to the payment of benefits pursuant to the
terms of the Plans and shall pay amounts withheld to the
appropriate taxing authorities or determine that such amounts have
been reported, withheld and paid by Company.
(b) The entitlement of a Participant or his or her
beneficiaries to benefits under the Plans shall be determined in
accordance with the terms of the Plans by Company or such party as
it shall designate under the Plans, and any claim for such benefits
shall be considered and reviewed under the procedures set out in
the Plans.
(c) Company may make payment of benefits directly to the
Participants or their beneficiaries as they become due under the
terms of the Plans. Company shall notify Trustee of its decision
to make payment of benefits directly prior to the time amounts are
payable to Participants or their beneficiaries. In addition, if
the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the
terms of the Plans, Company shall make the balance of each such
payment as it falls due. Trustee shall notify Company where
principal and earnings are not sufficient. Trustee shall not be
responsible for the reporting and withholding of any federal, state
or local taxes that may be required to be withheld with respect to
the payment of benefits directly to Participants or their
beneficiaries by Company.
Section 3. TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST
BENEFICIARY WHEN COMPANY IS INSOLVENT.
(a) Trustee shall cease payment of benefits to
Participants and their beneficiaries if Company is Insolvent.
Company shall be considered "Insolvent" for purposes of this Trust
Agreement if (i) Company is unable to pay its debts as they become
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<PAGE>
due, or (ii) Company is subject to a pending proceeding as a debtor
under the United States Bankruptcy Code.
(b) At all times during the continuance of this Trust,
as provided in Section 1(d) hereof, the principal and income of the
Trust shall be subject to claims of general creditors of Company
under federal and state law as set forth below.
(1) The Board of Directors and the Chief Executive
Officer of Company shall have the duty to inform trustee in writing
of Company's Insolvency. If a person claiming to be a creditor of
Company alleges in writing to Trustee that Company has become
Insolvent, Trustee shall determine whether Company is Insolvent
and, pending such determination, Trustee shall discontinue payment
of benefits to the Participants or their beneficiaries.
(2) Unless Trustee has actual knowledge of
Company's Insolvency, or has received notice from Company or a
person claiming to be a creditor alleging that Company is
Insolvent, Trustee shall have no duty to inquire whether Company is
Insolvent. Trustee may in all events rely on such evidence
concerning Company's solvency as may be furnished to Trustee and
that provides Trustee with a reasonable basis for making a
determination concerning Company's solvency.
(3) If at any time Trustee has determined that
Company is Insolvent, Trustee shall discontinue payments to the
Participants or their beneficiaries and shall hold the assets of
the Trust for the benefit of Company's general creditors, including
the Participants. Nothing in this Trust Agreement shall in any way
diminish any rights of Participants or their beneficiaries to
pursue their rights as general creditors of Company with respect to
benefits due under the Plans or otherwise.
(4) Trustee shall resume the payment of benefits to
Participants or their beneficiaries in accordance with Section 2 of
this Trust Agreement only after Trustee has determined that Company
is not Insolvent (or is no longer Insolvent).
(c) Provided that there are sufficient assets, if
Trustee discontinues the payment of benefits from the Trust
pursuant to Section 3(b) hereof and subsequently resumes such
payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to Participants or
their beneficiaries under the terms of the Plans for the period of
such discontinuance, less the aggregate amount of any payments made
to Participants or their beneficiaries by Company in lieu of the
payments provided for hereunder during any such period of
discontinuance.
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<PAGE>
Section 4. PAYMENTS TO COMPANY.
Except as provided in Section 3 hereof, after the Trust
has become irrevocable, Company shall have no right or power to
direct Trustee to return to Company or to divert to others any of
the Trust assets before all payments of benefits have been made to
Participants and their beneficiaries pursuant to the terms of the
Plans.
Section 5. INVESTMENT AUTHORITY.
(a) Trustee may not invest in or hold securities issued
by Company or its subsidiaries. All rights associated with assets
of the Trust shall be exercised by Trustee or the person designated
by Trustee, and shall in no event be exercisable by or rest with
Participants. Dividend rights with respect to Trust assets will
rest with the Trust. All investment decisions with regard to the
investment and reinvestment of the Trust assets will be made by
Trustee.
(b) Company shall have the right at anytime, and from
time to time in its sole discretion, to substitute assets of equal
fair market value for any asset held by the Trust, provided the
asset or assets substituted is acceptable to Trustee. This right
is exercisable by Company in a nonfiduciary capacity without the
approval or consent of any person in a fiduciary capacity.
(c) Trustee, at its own discretion where Trustee has
discretion with respect to investments under this Trust Agreement
or applicable law or upon the direction of any person authorized to
direct investments under this Trust Agreement, including but not
limited to, an investment manager or Company, may invest in the
securities of any open-end or closed-end investment management
trust or company registered under the Investment Company Act of
1940, as amended from time to time, to the maximum extent permitted
by the laws of the State of Oklahoma. Such securities include but
are not limited to securities for which Trustee or any of its
subsidiaries or affiliated companies serves as an investment
advisor, sponsor, distributor, custodian, transfer agent,
administrator, registrar, or otherwise.
Section 6. - DISPOSITION OF INCOME.
During the term of this Trust, all income received by the
Trust, net of expenses, payments to Participants and taxes, shall
be accumulated and reinvested by Trustee.
Section 7. ACCOUNTING BY TRUSTEE.
Trustee shall keep accurate and detailed records of all
investments, receipts, disbursements, and all other transactions
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<PAGE>
required to be made, including such specific records as shall be
agreed upon in writing between Company and Trustee. Within sixty
(60) days following the close of each calendar year and within
sixty (60) days after the removal or resignation of Trustee,
Trustee shall deliver to Company a written account of its
administration of the Trust during such year or during the period
from the close of the last preceding year to the date of such
removal or resignation, setting forth all investments, receipts,
disbursements and other transactions effected by it, including a
description of all securities and investments purchased and sold
with the cost or net proceeds of such purchases or sales (accrued
interest paid or receivable being shown separately), and showing
all cash, securities and other property held in the Trust at the
end of such year or as of the date of such removal or resignation,
as the case may be.
Section 8. RESPONSIBILITY OF TRUSTEE.
(a) Trustee shall act with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would
use in the conduct of an enterprise of a like character and with
like aims, provided, however, that Trustee shall incur no liability
to any person for any action taken pursuant to a direction, request
or approval given by Company which is contemplated by, and in
conformity with, the terms of the Plans or this Trust and is given
in writing by Company. In the event of a dispute between Company
and a party, Trustee may apply to a court of competent jurisdiction
to resolve the dispute.
(b) If Trustee undertakes or defends any litigation
arising in connection with this Trust, Company agrees to indemnify
Trustee against Trustee's costs, expenses and liabilities
(including, without limitation, attorneys' fees and expenses)
relating thereto and to be primarily liable for such payments.
(c) Trustee may consult with legal counsel (who may also
be counsel for Company generally) with respect to any of its duties
or obligations hereunder.
(d) Trustee may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals
to assist it in performing any of its duties or obligations
hereunder.
(e) Trustee shall have, without exclusion, all powers
conferred on Trustee by applicable law, unless expressly provided
otherwise herein, provided, however, that if an insurance policy is
held as an asset of the Trust, Trustee shall have no power to name
a beneficiary of the policy other than the Trust, to assign the
policy (as distinct from conversion of the policy to a different
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form) other than to a successor Trustee, or to loan to any person
the proceeds of any borrowing against such policy.
(f) However, notwithstanding the provisions of Section
8(e) above, Trustee may loan to Company the proceeds of any
borrowing against an insurance policy held as an asset of the
Trust.
(g) Notwithstanding any powers granted to Trustee
pursuant to this Trust Agreement or to applicable law, Trustee
shall not have any power that could give this Trust the objective
of carrying on a business and dividing the gains therefrom, within
the meaning of section 301.7701-2 of the Procedure and
Administrative Regulations promulgated pursuant to the Internal
Revenue Code.
(h) Trustee shall not be responsible for tax return
preparation or filing, nor any reporting to any governmental agency
of income earned, but not distributed.
Section 9. COMPENSATION AND EXPENSES OF TRUSTEE.
Company shall pay all of Trustee's fees and expenses as
well as administrative expenses attributable to the Trust. If not
so paid, the fees and expenses shall be paid from the Trust.
Section 10. RESIGNATION AND REMOVAL OF TRUSTEE.
(a) Trustee may resign at any time by written notice to
Company, which shall be effective sixty (60) days after receipt of
such notice unless Company and Trustee agree otherwise.
(b) Trustee may be removed by Company on thirty (30)
days notice or upon shorter notice accepted by Trustee.
(c) Upon a Change of Control, Trustee may not be removed
by Company for five (5) years.
(d) If Trustee resigns or is removed within five (5)
years of a Change of Control, Company shall apply to a court of
competent jurisdiction for the appointment of a successor Trustee
or for instructions.
(e) Upon resignation or removal of Trustee and
appointment of a successor Trustee, all assets shall subsequently
be transferred to the successor Trustee. The transfer shall be
completed within ninety (90) days after receipt of notice of
resignation, removal or transfer, unless Company extends the time
limit.
(f) If Trustee resigns or is removed, a successor shall
be appointed, in accordance with section 11 hereof, as of the
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<PAGE>
effective date of resignation or removal under paragraphs (a) or
(b) of this section. If no such appointment has been made, Trustee
may apply to a court of competent jurisdiction for appointment of
a successor or for instructions.
Section 11. APPOINTMENT OF SUCCESSOR.
If Trustee resigns or is removed in accordance with
Section 10(a) or (b) hereof, Company may appoint any third party,
such as a bank trust department or other party that may be granted
corporate trustee powers under state law, as a successor to replace
Trustee upon resignation or removal. The appointment shall be
effective when accepted in writing by the new Trustee, who shall
have all the rights and powers of the former Trustee, including
ownership rights in Trust assets. The former Trustee shall execute
any instrument necessary or reasonably requested by Company or the
successor Trustee to evidence the transfer.
Section 12. AMENDMENT OR TERMINATION.
(a) This Trust Agreement may be amended by a written
instrument executed by Trustee and Company. Notwithstanding the
foregoing, no such amendment shall conflict with the terms of the
Plans or shall make the Trust revocable after it has become
irrevocable in accordance with Section 1(b) hereof.
(b) The Trust shall not terminate until the date on
which Participants and their beneficiaries are no longer entitled
to benefits pursuant to the terms of the Plans unless sooner
revoked in accordance with Section 1(b) hereof. Upon termination
of the Trust any assets remaining in the Trust shall be returned to
Company.
(c) Upon written approval of all Participants or
beneficiaries entitled to payment of benefits pursuant to the terms
of the Plans, Company may terminate this Trust prior to the time
all benefit payments under the Plans have been made. All assets in
the Trust at termination shall be returned to Company.
(d) This Trust Agreement may not be amended by Company
for five (5) years following a Change of Control without the
consent of all Participants.
Section 13. MISCELLANEOUS.
(a) Any provision of this Trust Agreement prohibited by
law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.
(b) Benefits payable to Participants and their
beneficiaries under this Trust Agreement may not be anticipated,
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<PAGE>
assigned (either at law or in equity), alienated, pledged,
encumbered or subjected to attachment, garnishment, levy, execution
or other legal or equitable process.
(c) This Trust Agreement shall be governed by and
construed in accordance with the laws of Oklahoma.
Section 14. EFFECTIVE DATE.
The effective date of this Trust Agreement shall be as of
the date hereof.
FLEMING COMPANIES, INC., an
Oklahoma corporation
By: /s/ Larry A. Wagner
--------------------------------------
Larry A. Wagner, Senior Vice
President-Associate Support
"COMPANY"
BANCOKLAHOMA TRUST COMPANY
By: /S/ Ellen D. Fleming
------------------------------------
Name: Ellen D. Fleming
Title: Senior Vice President
& Senior Trust Officer
"TRUSTEE"
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EXHIBIT "A"
TO
FLEMING COMPANIES, INC.
AMENDED AND RESTATED SUPPLEMENTAL INCOME TRUST
1. Amended and Restated Supplemental Retirement Income Plan
of Fleming Companies, Inc. and Its subsidiaries.
2. Agreements for Supplemental Retirement Income together
with all amendments thereto entered into by the Company
under the Amended and Restated Supplemental Retirement
Income Plan of Fleming Companies, Inc. and Its
subsidiaries.
3. Severance Agreements containing provisions requiring
payments upon a change of control together with all
amendments thereto entered into by the Company and
certain key associates.
4. Employment Agreements containing provisions requiring
payments upon a change of control together with all
amendments thereto entered into by the Company and
certain key executives.
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EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") entered into
between FLEMING COMPANIES, INC., an Oklahoma corporation (the
"Company"), and 1 , an individual (the
----------------------
"Executive"), dated as of the 2nd day of March, 1995.
The Board of Directors of the Company (the "Board"), has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility,
threat, or occurrence of a "Change of Control" (as defined in
Section 2 of this Agreement) of the Company. The Board believes it
is important to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created
by a pending or threatened Change of Control, and to encourage the
Executive's full attention and dedication to the affairs of the
Company during the term of this Agreement and upon the occurrence
of such event. The Board also believes the Company is best served
by providing the Executive with compensation arrangements upon a
Change of Control which provide the Executive with individual
financial security and which are competitive with those of other
corporations. In order to accomplish these objectives, the Board
has caused the Company to enter into this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall be the first date
during the "Change of Control Period" (as defined in Section 1(b)
of this Agreement) on which a Change of Control (as defined below)
occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is
terminated prior to the date on which a Change of Control occurs,
and it is reasonably demonstrated that such termination (i) was at
the request of a third party who has taken steps reasonably
calculated to effect a Change of Control or (ii) otherwise arose in
connection with or anticipation of a Change of Control, then for
all purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination.
(b) The "Change of Control Period" is the period
commencing on the date hereof and ending on the earlier to occur of
(i) the third anniversary of such date or (ii) the first day of the
month next following the Executive's attainment of age 65 ("Normal
Retirement Date"); PROVIDED, HOWEVER, that commencing on the date
one year after the date hereof, and on each annual anniversary of
such date (such date and each annual anniversary thereof is
hereinafter referred to as the "Renewal Date"), the Change of
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Control Period shall be automatically extended so as to terminate
on the earlier of (i) three years from such Renewal Date or (ii)
the first day of the month coinciding with or next following the
Executive's Normal Retirement Date, unless at least 60 days prior
to the Renewal Date, the Company shall give notice that the Change
of Control Period shall not be so extended in which event this
Agreement shall continue for the remainder of its then current term
and terminate as provided herein.
2. CHANGE OF CONTROL. For the purpose of this
Agreement, a "Change of Control" shall mean:
(i) The acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"))
(a "Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 20% or more (the
"Triggering Percentage") of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, in the event the "Incumbent Board"
(as such term is hereinafter defined) pursuant to Section 7 of the
Rights Agreement between the Company and The Liberty National Bank
and Trust Company of Oklahoma City dated as of July 7, 1986
together with any additional amendments thereto (the "Rights
Agreement") lowers the threshold amounts set forth in Section 1(a)
or 3(a) of the Rights Agreement, the Triggering Percentage shall be
automatically reduced to equal the threshold set pursuant to
Section 7 of the Rights Agreement; and provided, further, however,
that the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any
acquisition by the Company; (iii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company, (iv) any
acquisition previously approved by at least a majority of the
members of the Incumbent Board, (v) any acquisition approved by at
least a majority of the members of the Incumbent Board within five
(5) business days after the Company has notice of such acquisition,
or (vi) any acquisition by any corporation pursuant to a
transaction which complies with clauses (x), (y), and (z) of
subsection (iii) of this Section 2; or
(ii) Individuals who, as of the date hereof,
constitute the Board (the "Incumbent Board") cease for any reason
to constitute at least a majority of the Board; provided, however,
that any individual becoming a director subsequent to the date
hereof whose election, appointment or nomination for election by
the Company's shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
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Incumbent Board, but excluding, for purposes of this definition,
any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(iii) Approval by the shareholders of the Company
of a reorganization, share exchange, merger or consolidation (a
"Business Combination"), in each case, unless, following such
Business Combination, (x) all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 70% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as
a result of such transaction owns the Company through one or more
subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (y) no Person (excluding any
employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the
Business Combination, and (z) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at the
time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination or were elected,
appointed or nominated by the Board; or
(iv) Approval by the shareholders of the Company of
(x) a complete liquidation or dissolution of the Company or, (y)
the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, with respect to
which following such sale or other disposition, (A) more than 70%
of, respectively, the then outstanding shares of common stock of
such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the
individuals and entities who were the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
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sale or other disposition in substantially the same proportion as
their ownership, immediately prior to such sale or other
disposition, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) less
than 20% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned,
directly or indirectly, by any Person (excluding any employee
benefit plan (or related trust) of the Company or such
corporation), except to the extent that such Person owned 20% or
more of the Outstanding Company Common Stock or Outstanding Company
Voting Securities prior to the sale or disposition, and (C) at
least a majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such sale or other disposition of assets of the
Company or were elected, appointed or nominated by the Board.
3. EMPLOYMENT PERIOD. The Company hereby agrees to
continue the Executive in its employ, and the Executive hereby
agrees to remain in the employ of the Company, for the period
commencing on the Effective Date and ending on the earlier to occur
of (a) the third anniversary of such date or (b) the first day of
the month coinciding with or next following the Executive's Normal
Retirement Date (the "Employment Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the
Executive's position (including status, offices, secretarial and
administrative support, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of
those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date and (B) the
Executive's services shall be performed at the location where the
Executive was employed immediately preceding the Effective Date or
any office or location less than 25 miles from such location.
(ii) During the Employment Period, and
excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote reasonable
attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use
the Executive's reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the Employment Period it
shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B)
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deliver lectures, fulfill speaking engagements or teach at
educational institutions and (C) manage personal investments, so
long as such activities do not significantly interfere with the
performance of the Executive's responsibilities as an associate of
the Company in accordance with this Agreement. It is expressly
understood and agreed that to the extent that any such activities
have been conducted by the Executive prior to the Effective Date,
the continued conduct of such activities (or the conduct of
activities similar in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to interfere with the
performance of the Executive's responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment
Period, the Executive shall receive an annual base salary ("Base
Salary") at least equal to the greater of (i) his annual base
salary in effect immediately prior to the Effective Date or (ii)
the highest average annual base salary paid or payable to the
Executive by the Company and its subsidiaries during the five
fiscal years immediately preceding the fiscal year in which the
Effective Date occurs; provided, however, that the three (which
need not be consecutive) highest annual base salaries paid or
payable during the past five fiscal years which yield the highest
annual base salary payable shall be utilized to compute the highest
average annual base salary. Such Base Salary shall be payable
monthly in cash. Base Salary shall be computed prior to any
reductions for (i) any deferrals of compensation made pursuant to
Sections 125 or 401(c) of the Code and (ii) any withholding, income
or employment taxes. During the Employment Period, the Base Salary
shall be reviewed at least annually and shall be increased at any
time and from time to time as shall be substantially consistent
with increases in base salary awarded in the ordinary course of
business to other key management associates of the Company and its
subsidiaries. Any increase in Base Salary shall not serve to limit
or reduce any other obligation to the Executive under this
Agreement. Base Salary shall not be reduced after any such
increase.
(ii) ANNUAL BONUS. In addition to Base Salary,
the Executive shall be paid, for each fiscal year during the
Employment Period, an annual bonus (an "Annual Bonus") (either
pursuant to the incentive compensation plan of the Company or
otherwise, including, without limitation, the Economic Value Added
Incentive Bonus Plan for Fleming Companies, Inc. and Its
Subsidiaries) in cash at least equal to the highest annual bonus
paid or payable to the Executive by the Company and its
subsidiaries during or for any of the five fiscal years immediately
preceding the fiscal year in which the Effective Date occurs.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS.
In addition to Base Salary and Annual Bonus, the Executive shall be
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entitled to participate during the Employment Period in all
incentive, savings and retirement plans, practices, supplemental
retirement plan policies and programs applicable to other key
management associates of the Company and its subsidiaries, in each
case providing benefits which are the economic equivalent to those
in effect immediately preceding the Effective Date or as
subsequently amended. Such plans, practices, policies and
programs, in the aggregate, shall provide the Executive with
compensation, benefits and reward opportunities at least as
favorable as the most favorable of such compensation, benefits and
reward opportunities provided by the Company for the Executive
under such plans, practices, policies and programs as in effect at
any time during the 90-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as provided
at any time thereafter with respect to other key management
associates of the Company and its subsidiaries.
(iv) WELFARE BENEFIT PLANS. During the
Employment Period, the Executive and/or the Executive's family, as
the case may be, shall be eligible for participation in and shall
receive all benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its subsidiaries
(including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs),
at least as favorable as the most favorable of such plans,
practices, policies and programs in effect at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect at any time thereafter with respect to other key management
associates of the Company and its subsidiaries.
(v) EXPENSES. During the Employment Period,
the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance
with the most favorable policies, practices and procedures of the
Company and its subsidiaries in effect at any time during the 90-
day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key management associates of the Company and
its subsidiaries.
(vi) FRINGE BENEFITS. During the Employment
Period, the Executive shall be entitled to fringe benefits,
including use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and
policies of the Company and its subsidiaries in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive, as in effect at any time
thereafter with respect to other key management associates of the
Company and its subsidiaries.
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(vii) OFFICE AND SUPPORT STAFF. During the
Employment Period, the Executive shall be entitled to an office or
offices of a size and with furnishings and other appointments, and
to secretarial and other assistance, at least equal to the most
favorable of the foregoing provided to the Executive by the Company
and its subsidiaries at any time during the 90-day period
immediately preceding the Effective Date or, if more favorable to
the Executive, as provided at any time thereafter with respect to
other key management associates of the Company and its
subsidiaries.
(viii) VACATION. During the Employment Period,
the Executive shall be entitled to paid vacation in accordance with
the most favorable plans, policies, programs and practices of the
Company and its subsidiaries as in effect at any time during the
90-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key management associates of the Company and
its subsidiaries.
(ix) EFFECT OF INCREASES. Any increase in Base
Salary, Annual Bonus or any other benefit or perquisite described
in the foregoing Sections (i)-(viii) shall in no way diminish any
obligation of the Company under the Agreement.
5. TERMINATION.
(a) DEATH OR DISABILITY. This Agreement shall
terminate automatically upon the Executive's death. If the Company
determines in good faith that the Disability of the Executive has
occurred (pursuant to the definition of "Disability" set forth
below), it may give to the Executive written notice of its
intention to terminate the Executive's employment. In such event,
the Executive's employment with the Company shall terminate
effective on the 30th day after the date of such notice (the
"Disability Effective Date"), provided that, within such time
period, the Executive shall not have returned to full-time
performance of the Executive's duties. For purposes of this
Agreement, "Disability" means disability (either physical or
mental) which, at least 26 weeks after its commencement, is
determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to
acceptability not to be withheld unreasonably).
(b) CAUSE. The Company may terminate the
Executive's employment for "Cause." For purposes of this
Agreement, termination of the Executive's employment by the Company
for Cause shall mean termination for one of the following reasons:
(i) the conviction of the Executive of a felony by a federal or
state court of competent jurisdiction; (ii) an act or acts of
dishonesty taken by the Executive and intended to result in
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substantial personal enrichment of the Executive at the expense of
the Company; or (iii) the Executive's "willful" failure to follow
a direct, reasonable and lawful written order from his supervisor,
within the reasonable scope of the Executive's duties, which
failure is not cured within 30 days. Further, for purposes of this
Section (b):
(1) No act or failure to act, on the
Executive's part shall be deemed "willful" unless done, or omitted
to be done, by the Executive not in good faith and without
reasonable belief that the Executive's action or omission was in
the best interest of the Company.
(2) The Executive shall not be deemed to have
been terminated for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted by
the affirmative vote of not less than three-fourths (3/4ths) of the
entire membership of the Board at a meeting of the Board called and
held for such purpose (after reasonable notice to the Executive and
an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good
faith opinion of the Board the Executive was guilty of conduct set
forth in clauses (i), (ii) or (iii) above and specifying the
particulars thereof in detail.
(c) GOOD REASON. The Executive's employment may be
terminated by the Executive for Good Reason. For purposes of this
Agreement, "Good Reason" means:
(i) the assignment to the Executive of any
duties inconsistent in any respect with the Executive's position
(including status, offices, titles and reporting requirements),
authority, duties or responsibilities as contemplated by Section
4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, compensation, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive;
(ii) any failure by the Company to comply with
any of the provisions of Section 4(b) of this Agreement, other than
an isolated, insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
(iii) the Company's requiring the Executive to
be based at any office or location other than that described in
Section 4(a)(i)(B) hereof, except for periodic travel reasonably
required in the performance of the Executive's responsibilities;
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(iv) any purported termination by the Company
of the Executive's employment otherwise than as expressly permitted
by this Agreement; or
(v) any failure by the Company to comply with
and satisfy Section 12(c) of this Agreement.
For purposes of this Section 5(c), any good faith
determination of "Good Reason" made by the Executive shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Executive for any reason
during the 30-day period immediately following the first
anniversary of the Effective Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) NOTICE OF TERMINATION. Any termination by the
Company for Cause or by the Executive for Good Reason shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 14(b) of this Agreement. For
purposes of this Agreement, a "Notice of Termination" means a
written notice which (i) indicates the specific termination
provisions in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the
provision so indicated and (iii) if the Date of Termination (as
defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than
15 days after the giving of such notice). The failure by the
Executive to set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason shall
not waive any right of the Executive hereunder or preclude the
Executive from asserting such fact or circumstance in enforcing his
rights hereunder.
(e) DATE OF TERMINATION. "Date of Termination"
means the date of receipt of the Notice of Termination by either
the Company or the Executive as the case may be or any later date
specified therein; PROVIDED, HOWEVER, that if the Executive's
employment is terminated by reason of death or Disability, the Date
of Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) DEATH. If the Executive's employment is
terminated by reason of the Executive's death, this Agreement shall
terminate without further obligations to the Executive's legal
representatives under this Agreement, other than those obligations
accrued or earned and vested (if applicable) by the Executive as of
the Date of Termination, including, for this purpose (i) the
Executive's annual full Base Salary through the Date of Termination
at the rate in effect on the Date of Termination or, if higher, at
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the highest annual rate in effect at any time from the thirty-six
month period preceding the Effective Date through the Date of
Termination (the "Highest Base Salary"), (ii) the product of the
Annual Bonus (defined in Section 4(b)(ii)) paid to the Executive
for the last full fiscal year and a fraction, the numerator of
which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365 and (iii)
any compensation previously deferred by the Executive (together
with any accrued interest thereon) and not yet paid by the Company
and any accrued vacation pay not yet paid by the Company (such
amounts specified in clauses (i), (ii) and (iii) are hereinafter
referred to as "Accrued Obligations"). All such Accrued
Obligations shall be paid to the Executive's estate or beneficiary,
as applicable, in a lump sum in cash within 30 days of the Date of
Termination. Anything in this Agreement to the contrary
notwithstanding, the Executive's family shall be entitled to
receive benefits at least equal to the most favorable benefits
provided by the Company and any of its subsidiaries to surviving
families of other key management associates of the Company and such
subsidiaries under such plans, programs, practices and policies
relating to family death benefits, if any, in accordance with the
most favorable plans, programs, practices and policies of the
Company and its subsidiaries in effect at any time during the 90-
day period immediately preceding the Effective Date or, if more
favorable to the Executive and/or the Executive's family, as in
effect on the date of the Executive's death with respect to other
key management associates of the Company and its subsidiaries and
their families.
(b) DISABILITY. If the Executive's employment is
terminated by reason of the Executive's Disability, this Agreement
shall terminate without further obligations to the Executive, other
than those obligations accrued or earned and vested (if applicable)
by the Executive as of the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. Anything in this Agreement to the
contrary notwithstanding, the Executive shall be entitled after the
Disability Effective Date to receive disability and other benefits
at least equal to the most favorable of those provided by the
Company and its subsidiaries to disabled key management associates
and/or their families in accordance with such plans, programs,
practices and policies relating to disability, if any, in
accordance with the most favorable plans, programs, practices and
policies of the Company and its subsidiaries in effect at any time
during the 90-day period immediately preceding the Effective Date
or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter with respect to other
key management associates of the Company and its subsidiaries and
their families.
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(c) CAUSE; OTHER THAN FOR GOOD REASON. If the
Executive's employment shall be terminated for Cause, this
Agreement shall terminate without further obligations to the
Executive other than the obligation to pay to the Executive the
Highest Base Salary through the Date of Termination plus the amount
of any compensation previously deferred by the Executive (together
with accrued interest thereon). If the Executive terminates
employment other than for Good Reason, this Agreement shall
terminate without further obligations to the Executive, other than
those obligations accrued or earned and vested (if applicable) by
the Executive through the Date of Termination, including for this
purpose, all Accrued Obligations. All such Accrued Obligations
shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination.
(d) GOOD REASON; TERMINATION OTHER THAN FOR CAUSE
OR DISABILITY. If, during the Employment Period, the Company shall
terminate the Executive's employment other than for Cause,
Disability, or death or if the Executive shall terminate his
employment for Good Reason:
(i) the Company shall pay to the Executive in
a lump sum in cash within 30 days after the Date of Termination the
aggregate of the following amounts:
A. to the extent not theretofore paid,
the Executive's Highest Base Salary through the Date of
Termination; and
B. the product of (i) the Annual Bonus
paid to the Executive for the last full fiscal year (if any) ending
during the Employment Period or, if higher, the Annual Bonus paid
to the Executive for the last full fiscal year prior to the
Effective Date (as applicable, the "Recent Bonus") and (ii) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Date of Termination and the
denominator of which is 365; and
C. the product obtained by multiplying
2.99 times the sum of (i) the Highest Base Salary and (ii) the
Recent Bonus; and
D. in the case of compensation
previously deferred by the Executive, all amounts previously
deferred (together with any accrued interest thereon) and not yet
paid by the Company, and any accrued vacation pay not yet paid by
the Company; and
(ii) for the remainder of the Employment
Period, or such longer period as any plan, program, practice or
policy may provide, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those
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which would have been provided to them in accordance with the
plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement if the Executive's employment had not
been terminated, including health insurance and life insurance, in
accordance with the most favorable plans, practices, programs or
policies of the Company and its subsidiaries during the 90-day
period immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect at any time thereafter
with respect to other key management associates and their families
and for purposes of eligibility for retiree benefits pursuant to
such plans, practices, programs and policies, the Executive shall
be considered to have remained employed until the end of the
Employment Period and to have retired on the last day of such
period.
7. NON-EXCLUSIVITY OF RIGHTS. Nothing in this
Agreement shall prevent or limit the Executive's continuing or
future participation in any benefit, bonus, incentive or other
plans, programs, policies or practices, provided by the Company or
any of its subsidiaries and for which the Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any stock option or other agreements
with the Company or any of its subsidiaries. Amounts which are
vested benefits or which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of the Company
or any of its subsidiaries at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program.
8. FULL SETTLEMENT. The Company's obligation to make
the payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by any set-
off, counterclaim, recoupment, defense or other claim, right or
action which the Company may have against the Executive or others.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the
amounts payable to the Executive under any of the provisions of
this Agreement. The Company agrees to pay, to the full extent
permitted by law, all legal fees and expenses which the Executive
may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the month of any
payment pursuant to Section 9 of this Agreement), plus in each case
interest at the applicable Federal rate provided for in Section
7872(f)(2) of the Code.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any
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payment or distribution by the Company to or for the benefit of the
Executive, whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, including, by
example and not by way of limitation, acceleration by the Company
of the date of vesting or payment or rate of payment under any
plan, program or arrangement of the Company (a "Payment"), would be
subject to the excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended (the "Code") or any interest or
penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Executive of
all taxes (including any interest or penalties imposed with respect
to such taxes), including any Excise Tax, imposed upon the Gross-Up
Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all
determinations required to be made under this Section 9, including
whether a Gross-Up Payment is required and the amount of such
Gross-Up Payment, shall be made by Deloitte & Touche LLP (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that
there has been a Payment which would be subject to the Excise Tax,
or such earlier time as is requested by the Company. The initial
Gross-Up Payment, if any, as determined pursuant to this Section
9(b), shall be paid to the Executive within five days of the
receipt of the Accounting Firm's determination. If the Accounting
Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with an opinion that he has substantial
authority not to report any Excise Tax on his federal income tax
return. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of the
initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments which will not have been made by
the Company should have been made ("Underpayment"), consistent with
the calculations required to be made hereunder. In the event that
the Company exhausts its remedies pursuant to Section 9(c) and the
Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of the
Executive.
(c) The Executive shall notify the Company in
writing of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the Gross-
Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive
-13-
<PAGE>
knows of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be
paid. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which he
gives such notice to the Company (or such shorter period ending on
the date that any payment of taxes with respect to such claim is
due). If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such
claim, the Executive shall:
(i) give the Company any information
reasonably requested by the Company relating to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably request in
writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney
reasonably selected by the Company,
(iii) cooperate with the Company in good faith
in order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceedings relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties)
incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax, including interest and penalties with respect
thereto, imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings,
hearings and conferences with the taxing authority in respect of
such claim and may, at its sole option, either direct the Executive
to pay the tax claimed and sue for a refund or contest the claim in
any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in
a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if
the Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment to the
Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax
or income tax, including interest or penalties with respect
thereto, imposed with respect to such advance or with respect to
any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due is
-14-
<PAGE>
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by the Executive of an
amount advanced by the Company pursuant to Section 9(c), the
Executive becomes entitled to receive any refund with respect to
such claim, the Executive shall (subject to the Company's complying
with the requirements of Section 9(c)) promptly pay to the Company
the amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after the
receipt by the Executive of an amount advanced by the Company
pursuant to Section 9(c), a determination is made that the
Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of
its intent to contest such denial of refund prior to the expiration
of thirty days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of
such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
10. CONFIDENTIAL INFORMATION. The Executive shall hold
in a fiduciary capacity for the benefit of the Company all secret
or confidential information, knowledge or data relating to the
Company or any of its subsidiaries, and their respective
businesses, which shall have been obtained by the Executive during
the Executive's employment by the Company or any of its
subsidiaries and which shall not be or become public knowledge
(other than by acts by the Executive or his representatives in
violation of this Agreement). After termination of the Executive's
employment with the Company, the Executive shall not, without the
prior written consent of the Company, communicate or divulge any
such information, knowledge or data to anyone other than the
Company and those designated by it. In no event shall an asserted
violation of the provisions of this Section 10 constitute a basis
for deferring or withholding any amounts otherwise payable to the
Executive under this Agreement.
11. TERMINATION OF SEVERANCE AGREEMENT. The Executive
and the Company are Parties to a Severance Agreement (the
"Severance Agreement"). Effective as of the date of execution and
delivery of this Agreement, the Severance Agreement shall be
terminated and of no further force and effect.
12. SUCCESSORS.
(a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be
assignable by the Executive otherwise than by will or the laws of
-15-
<PAGE>
descent and distribution. This Agreement shall inure to the
benefit of and be enforceable by the Executive's legal
representatives.
(b) This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.
(c) The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or
assets of the Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place. As used in this Agreement, "Company" shall mean the
Company as hereinbefore defined and any successor to its business
and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
13. INDEMNIFICATION AND INSURANCE. The Executive shall
be indemnified and held harmless by the Company during the term of
this Agreement and following any termination of this Agreement for
any reason whatsoever in the same manner as would any other key
management associate of the Company with respect to acts or
omissions occurring prior to (a) the termination of this Agreement
or (b) the termination of employment of the Executive. In
addition, during the term of this Agreement and for a period of
five years following the termination of this Agreement for any
reason whatsoever, the Executive shall be covered by a Company held
Directors and Officers liability insurance policy covering acts or
omissions occurring prior to (a) the termination of this Agreement
or (b) the termination of employment of the Executive. Provided,
in no event will the obligation of the Company to indemnify the
Executive or provide Directors and Officers insurance to the
Executive under this Section 13 be less than the obligation and
insurance coverage which the Company had to the Executive
immediately prior to the occurrence of a Change of Control.
14. MISCELLANEOUS.
(a) This Agreement shall be governed by and
construed in accordance with the laws of the State of Oklahoma,
without reference to principles of conflict of laws. The captions
of this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
(b) All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the
other party or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:
-16-
<PAGE>
IF TO THE EXECUTIVE:
At his last known address evidenced on the
Company's payroll records
IF TO THE COMPANY: Fleming Companies, Inc.
6301 Waterford Boulevard
P. O. Box 26647
Oklahoma City, Oklahoma 73126-0647
Attention: Mr. Robert E. Stauth, Chairman,
President and Chief Executive Officer
WITH A COPY TO: David R. Almond, Esq., Senior Vice President
and General Counsel
Fleming Companies, Inc.
6301 Waterford Boulevard
P. O. Box 26647
Oklahoma City, Oklahoma 73126-0647
WITH A COPY TO: McAfee & Taft A Professional Corporation
10th Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attention: John M. Mee, Esq.
or to such other address as either party shall have furnished to
the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the
addressee.
(c) The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement.
(d) The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's failure to insist upon strict
compliance with any provision hereof shall not be deemed to be a
waiver of such provision or any other provision thereof.
(f) This Agreement contains the entire
understanding of the Company and the Executive with respect to the
subject matter hereof.
(g) The Executive and the Company acknowledge that
the employment of the Executive by the Company is "at will," and,
prior to the Effective Date, may be terminated by either the
Executive or the Company at any time. Upon a termination of the
Executive's employment or upon the Executive's ceasing to be an
-17-
<PAGE>
officer of the Company, in each case, prior to the Effective Date,
there shall be no further rights under this Agreement.
15. NO TRUST. No action under this Agreement by the
Company or its Board of Directors shall be construed as creating a
trust, escrow or other secured or segregated fund, in favor of the
Executive or his beneficiary. The status of the Executive and his
beneficiary with respect to any liabilities assumed by the Company
hereunder shall be solely those of unsecured creditors of the
Company. Any asset acquired or held by the Company in connection
with liabilities assumed by it hereunder, shall not be deemed to be
held under any trust, escrow or other secured or segregated fund
for the benefit of the Executive or his beneficiary or to be
security for the performance of the obligations of the Company, but
shall be, and remain a general, unpledged, unrestricted asset of
the Company at all times subject to the claims of general creditors
of the Company.
16. NO ASSIGNABILITY. Neither the Executive nor his
beneficiary, nor any other person shall acquire any right to or
interest in any payments payable under this Agreement, otherwise
than by actual payment in accordance with the provisions of this
Agreement, or have any power to transfer, assign, anticipate,
pledge, mortgage or otherwise encumber, alienate or transfer any
rights hereunder in advance of any of the payments to be made
pursuant to this Agreement or any portion thereof which is
expressly declared to be nonassignable and nontransferable. No
right or benefit hereunder shall in any manner be liable for or
subject to the debts, contracts, liabilities, or torts of the
person entitled to such benefit.
IN WITNESS WHEREOF, the Executive has hereunto set his
hand and, pursuant to the authorization from its Board of
Directors, the Company has caused these presents to be executed in
its name on its behalf, all as of the day and year first above
written.
----------------------------------------
2
"EXECUTIVE"
-18-
<PAGE>
FLEMING COMPANIES, INC., an
Oklahoma corporation
By
---------------------------------------
Robert E. Stauth, Chairman,
President and Chief Executive
Officer
"COMPANY"
-19-
<PAGE>
EXHIBIT 11
FLEMING COMPANIES, INC.
EARNINGS PER SHARE COMPUTATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------
DECEMBER 31, DECEMBER 25,
1994 1993
------------ ------------
<S> <C> <C>
PRIMARY EARNINGS
PER SHARE
Reconciliation of net
earnings from consolidated
statements of earnings to
amount used in primary earnings
per share computation:
Earnings before extraordinary
loss applicable to common shares $56,169 $37,480
======= =======
Weighted average shares
outstanding used to compute
primary earnings per share 37,254 36,801
Add share equivalents-
shares issuable
under stock option and
stock purchase plans 160 26
------- -------
Weighted average shares
outstanding, as adjusted 37,414 36,827
======= =======
Primary earnings per
share before
extraordinary loss $1.51(a) $1.02(a)
===== =====
<FN>
(a) Agrees to the related amounts shown in the consolidated statements
of earnings.
</TABLE>
<PAGE>
EXHIBIT 11
(Continued)
FLEMING COMPANIES, INC.
EARNINGS PER SHARE COMPUTATION
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------
DECEMBER 31, DECEMBER 25,
1994 1993
------------ ------------
<S> <C> <C>
(PRIMARY EARNINGS PER SHARE, cont'd)
Extraordinary loss $ 2,308
=======
Weighted average shares
outstanding, as adjusted 36,827
=======
Loss per share related to
extraordinary item $.06(a)
====
Earnings applicable to common shares $56,169 $35,172
======= =======
Weighted average shares
outstanding, as adjusted 37,414 36,827
======= =======
Primary earnings per share $1.51(a) $.96(a)
===== ====
<FN>
(a) Agrees to the related amounts shown in the consolidated statements
of earnings.
</TABLE>
<PAGE>
EXHIBIT 12
FLEMING COMPANIES, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
FISCAL YEAR ENDED THE LAST SATURDAY IN DECEMBER
------------------------------------------------
1990 1991 1992 1993 1994
-------- -------- -------- -------- --------
(IN THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C>
Earnings:
Pretax income $164,501 $104,329 $194,941 $ 72,078 $112,337
Fixed charges, net 117,877 117,865 105,726 102,303 148,454
-------- -------- -------- -------- --------
Total earnings $282,378 $222,194 $300,667 $174,381 $260,791
======== ======== ======== ======== ========
Fixed charges:
Interest expense $ 93,643 $ 93,353 $ 81,102 $ 78,029 $120,408
Portion of rental charges
deemed to be interest 22,836 22,907 23,027 22,969 27,746
Capitalized interest and
debt issuance cost
amortization 1,250 1,464 1,287 1,005 364
-------- -------- -------- -------- --------
Total fixed charges $117,729 $117,724 $105,416 $102,003 $148,518
======== ======== ======== ======== ========
Ratio of earnings
to fixed charges 2.40 1.89 2.85 1.71 1.76
==== ==== ==== ==== ====
</TABLE>
"Earnings" consist of income from continuing operations before income taxes
and fixed charges excluding capitalized interest. Capitalized interest
amortized during the respective periods is added back to earnings.
"Fixed charges, net" consist of interest expense, an estimated amount of
rental expense which is deemed to be representative of the interest factor
and amortization of capitalized interest and debt issuance cost.
The pro forma ratio of earnings to fixed charges is omitted as it is not
applicable.
<PAGE>
EXHIBIT 21
FLEMING COMPANIES, INC. AND CONSOLIDATED SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
The following table sets forth Fleming's active wholly owned subsidiaries:
<TABLE>
<CAPTION>
JURISDICTION OF
NAME ORGANIZATION
---- ---------------
<S> <C>
Baker's Supermarkets, Inc. Nebraska
Fleming Holdings, Inc. (1) Delaware
Fleming Supermarkets, Inc. Wisconsin
Fleming International, Ltd. Oklahoma
Fleming Transportation Service, Inc. Oklahoma
<FN>
(1) Includes: (a) Scrivner, Inc., which has 12 wholly owned subsidiaries;
(b) Scrivner-Food Holdings, Inc. which is 50% owned by Fleming
Holdings, Inc. and 50% owned by Scrivner, Inc.; and Gateway Foods,
Inc., which has 15 subsidiaries and is wholly owned by Scrivner-Food
Holdings, Inc.
</TABLE>
Not included above are 7 retail equity store corporations in which Fleming
owns more than 50% of the voting securities as described under "Capital
Invested in Retailers" in Item 1 hereto. In addition, the company has
other subsidiaries that are not reflected herein. In the aggregate, these
are not significant.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in:
(i) Registration Statement No. 2-98602 (1985 Stock Option Plan) on
Form S-8;
(ii) Registration Statement No. 33-18867 (Godfrey Company 1981 Stock
Option Plan and 1984 Nonqualified Stock Option Plan) on Form S-8;
(iii) Registration Statement No. 33-36586 (1990 Fleming Stock Option
Plan) on Form S-8;
(iv) Registration Statement No. 33-56241 (Dividend Reinvestment and
Stock Purchase Plan) on Form S-3;
(v) Registration Statement No. 33-61860 ($350,550,000 Debt
Securities, Series C) on Form S-3;
(vi) Registration Statement No. 33-55369 ($500,000,000 Senior Notes)
on Form S-3
of our report dated February 23, 1995, appearing in this Annual Report on
Form 10-K of Fleming Companies, Inc. for the year ended December 31, 1994.
Deloitte & Touche LLP
Oklahoma City, Oklahoma
March 27, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
We, the undersigned officers and directors of Fleming
Companies, Inc. (hereinafter the "Company"), hereby severally constitute
Robert E. Stauth, Harry L. Winn, Jr. and David R. Almond, and each of
them severally, our true and lawful attorneys with full power to them
and each of them to sign for us, and in our names as officers or
directors, or both, of the Company, the Annual Report on Form 10-K for
the fiscal year ended December 31, 1994, and any and all amendments
thereto, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and to perform each and every act
and thing requisite and necessary to be done in and about the premises,
as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or any of them, may lawfully do or cause to be done by
virtue hereof.
Dated this 2nd day of March, 1995.
SIGNATURE TITLE
--------- -----
\s\ ROBERT E. STAUTH Chairman, President and Chief
- ----------------------------- Executive Officer (principal
Robert E. Stauth executive officer)
\s\ HARRY L. WINN, JR. Executive Vice President and Chief
- ----------------------------- Financial Officer (principal
Harry L. Winn, Jr. financial officer)
\s\ KEVIN J. TWOMEY Vice President - Controller
- ----------------------------- (principal accounting officer)
Kevin J. Twomey
\s\ ARCHIE R. DYKES Director
- -----------------------------
Archie R. Dykes
\s\ CAROL B. HALLETT Director
- -----------------------------
Carol B. Hallett
\s\ JAMES G. HARLOW, JR. Director
- -----------------------------
James G. Harlow, Jr.
\s\ LAWRENCE M. JONES Director
- -----------------------------
Lawrence M. Jones
<PAGE>
\s\ EDWARD C. JOULLIAN III Director
- -----------------------------
Edward C. Joullian III
\s\ HOWARD H. LEACH Director
- -----------------------------
Howard H. Leach
\s\ JOHN A. MCMILLAN Director
- -----------------------------
John A. McMillan
\s\ GUY A. OSBORN Director
- -----------------------------
Guy A. Osborn
\s\ E. DEAN WERRIES Director
- -----------------------------
E. Dean Werries
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-K
for the year ended December 31, 1994 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> DEC-26-1993
<PERIOD-END> DEC-31-1994
<CASH> 28,352
<SECURITIES> 0
<RECEIVABLES> 404,390
<ALLOWANCES> 39,506
<INVENTORY> 1,301,980
<CURRENT-ASSETS> 1,820,081
<PP&E> 1,455,954
<DEPRECIATION> 467,830
<TOTAL-ASSETS> 4,608,329
<CURRENT-LIABILITIES> 1,323,631
<BONDS> 1,994,793
<COMMON> 93,705
0
0
<OTHER-SE> 984,850
<TOTAL-LIABILITY-AND-EQUITY> 4,608,329
<SALES> 15,753,487
<TOTAL-REVENUES> 15,753,487
<CGS> 14,606,963
<TOTAL-COSTS> 15,459,524
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 61,218
<INTEREST-EXPENSE> 120,408
<INCOME-PRETAX> 112,337
<INCOME-TAX> 56,168
<INCOME-CONTINUING> 56,169
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 56,169
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
<PAGE>
EXHIBIT 99
FORM S-8 UNDERTAKING
The following is incorporated by reference in Item 21 of Part II of
the registrant's registration statements on Form S-8:
Insofar as indemnification for liabilities
arising under the Securities Act of 1933 may
be permitted to directors, officers and
controlling persons of the registrant pursuant
to the foregoing provisions, or otherwise, the
registrant has been advised that in the
opinion of the 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
registrant of expenses incurred or paid by a
director, officer or controlling person of the
registrant in the successful defense of any
action, suit or proceeding) is asserted by
such director, officer or controlling person
in connection with the securities being
registered, the registrant will, unless in the
opinion of its counsel the matter has been
settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Act and will
be governed by the final adjudication of such
issue.
