SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 2000. Commission File No. 0-6080
DELHAIZE AMERICA, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-0660192
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 1330, 2110 Executive Drive
Salisbury, North Carolina 28145-1330
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code--
(704) 633-8250
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Class A Common Stock, par value $.50 per share New York Stock Exchange
Class B Common Stock, par value $.50 per share New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 such 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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K ( 229.405 of this chapter) 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 this Form 10-K.[ ]
The aggregate market value of the voting and non-voting stock held by non-
affiliates of the Registrant based on the price of such stock at the close of
business on March 24, 2000, was $579,046,755 and $766,122,471, respectively. For
purposes of this report and as used herein, the term "non-affiliate" includes
all shareholders of the Registrant other than directors, executive officers and
other senior management of the Registrant and persons holding more than five
percent of the outstanding voting stock of the Registrant.
Outstanding shares of common stock of the Registrant as of March 24, 2000.
Class A Common Stock - 79,931,607
Class B Common Stock - 75,290,542
Exhibit index is located on sequential page 15 hereof.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in this Form
10-K:
1. Annual Report to Shareholders for the fiscal year ended January 1, 2000,
is incorporated by reference in Part II hereof.
2. Proxy Statement for the 2000 Annual Meeting of Shareholders of the
Company to be held on May 4, 2000, is incorporated by reference in
Part III hereof.
PART I
Item 1. Business.
Delhaize America, Inc. (the "Company") engages in one line of business, the
operation of retail food supermarkets in the Southeastern and Mid-Atlantic
regions of the United States. The Company was incorporated in North Carolina in
1957 and maintains its corporate headquarters in Salisbury, North Carolina.
On August 17, 1999, the Company entered into a definitive merger agreement
to acquire all of the outstanding shares of Hannaford Bros. Co. in a cash and
stock transaction valued at approximately $3.6 billion, including the assumption
of debt. Upon completion of the transaction , Hannford will operate as a
subsidiary of Delhaize America, Inc. The Company expects to finalize the
acquisition of Hannaford Bros. Co. in fiscal 2000.
The Company's stores, which are operated under the names of "Food Lion,"
"Kash n' Karry" and "Save `n Pack," sell a wide variety of groceries, produce,
meats, dairy products, seafood, frozen food, deli/bakery and non-food items such
as health and beauty care, prescriptions, and other household and personal
products. The Company offers nationally and regionally advertised brand name
merchandise as well as products manufactured and packaged for the Company under
the private labels of "Food Lion" and "Kash n' Karry." The Company offers
between 25,000 and 35,000 Stock Keeping Units (SKU's) in its Food Lion locations
and between 35,000 and 40,000 SKU's in its Kash n' Karry locations. The
Company's current Food Lion store prototype is a 38,000 square foot model. The
current Kash n' Karry store prototype is a 46,000 square foot model.
The products sold by the Company are purchased through a centralized buying
department at the Company's headquarters. The centralization of the buying
function allows the management of the Company to establish long-term
relationships with many vendors providing various alternatives for sources of
product supply.
The business in which the Company is engaged is highly competitive and
characterized by low profit margins. The Company competes with national,
regional and local supermarket chains, super-centers, discount food stores,
single unit stores, convenience stores, warehouse clubs and drug stores. The
Company will continue to develop and evaluate new retailing strategies that will
respond to its customers' needs. Seasonal changes have no material effect on
the operation of the Company's supermarkets.
As of January 1, 2000, 1,276 supermarkets were in operation as follows:
Delaware 14 North Carolina 429
Florida 182 Pennsylvania 7
Georgia 58 South Carolina 118
Kentucky 13 Tennessee 88
Maryland 59 Virginia 291
West Virginia 17
As of March 24, 2000, the Company had opened ten supermarkets since January 1,
2000, and relocated one supermarket and signed leases for five supermarkets
which are expected to open in either 2000 or 2001.
Warehousing and distribution facilities, including its transportation
fleet, are owned and operated by the Company and are located in Green Cove
Springs and Plant City, Florida; Salisbury and Dunn, North Carolina;
Greencastle, Pennsylvania; Elloree, South Carolina; Clinton, Tennessee; and
Disputanta, Virginia.
As of January 1, 2000, the Company employed 35,021 full-time and 58,647
part-time employees.
The following table shows the number of stores opened, closed and
relocated, and the number of stores open at the end of each year, for
the past three fiscal years.
# Stores # Stores #Stores # Stores Opened
Opened Closed Relocated Year-end
1999 100 (10) (21) 1,276
1998 79 (12) (17) 1,207
1997 164 (a) (94) (b) (25) 1,157
(a) Includes 100 stores acquired from Kash n' Karry
(b) Includes 61 Southwest store closings
Item 2. Properties.
Supermarkets operated by the Company in the Southeastern and Mid-Atlantic
states average 33,715 square feet in size. The Company's current Food Lion
store prototype retail format is a 38,000 square foot model with a deli/bakery
department. The current Kash n' Karry store prototype is a 46,000 square foot
model. All of the Company's supermarkets are self-service stores which have off-
street parking facilities. With the exception of operating 72 owned
supermarkets, the Company occupies its various supermarket premises under lease
agreements providing for initial terms of up to 30 years, with renewal options
generally ranging from five to twenty years.
At the end of 1999 the Company had $18.6 million (net book value) in
property held for sale.
The following table identifies the location and square footage of
distribution centers and office space operated by the Company as of
January 1, 2000.
Location of
Property Square Footage
Distribution Center #1 Salisbury, NC 1,630,233
Distribution Center #2 Disputanta, VA 1,123,718
Distribution Center #3 Elloree, SC 1,098,612
Distribution Center #4 Dunn, NC 1,224,652
Distribution Center #5 Green Cove Springs, FL 832,109
Distribution Center #6 Clinton, TN 833,042
Distribution Center #7 Greencastle, PA 1,236,124
Distribution Center #8 Plant City, FL 759,546
Corporate Headquarters Salisbury, NC 271,592
9,009,628
Item 3. Legal Proceedings.
The Company has had no significant developments related to legal matters
since the Item 1 disclosure included in the Company's Form 10-Q filed
October 26, 1999 for the quarter ended September 11, 1999.
Item 4. Submission of Matters to a Vote of Security Holders.
This item is not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
The information pertaining to the Class A and Class B Common Stock price
range, dividends and record holders discussed beneath the headings "Market Price
of Common Stock" and "Dividends Declared Per Share of Common Stock" in the
Annual Report to Shareholders for the fiscal year ended January 1, 2000, is
hereby incorporated by reference.
Item 6. Selected Financial Data.
The information set forth beneath the heading "Ten Year Summary of
Operations" in the Annual Report to Shareholders for the fiscal year ended
January 1, 2000, is hereby incorporated by reference.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The information set forth beneath the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report
to Shareholders for the fiscal year ended January 1, 2000, which
information is set forth in Exhibit 13 to this Form 10-K and is hereby
incorporated by reference.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information set forth beneath the heading "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Annual Report
to Shareholders for the fiscal year ended January 1, 2000, which information
is set forth in Exhibit 13 to this Form 10-K and is hereby incorporated
by reference.
Item 8. Financial Statements and Supplementary Data.
The information required by this item is included in the Company's Annual
Report under the captions "Consolidated Balance Sheets," "Consolidated
Statements of Income," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Shareholders' Equity," "Notes to Consolidated Financial
Statements," "Report of Independent Accountants" and "Results by Quarter" which
information is set forth in Exhibit 13 to this Form 10-K and is hereby
incorporated by reference.
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure.
This item is not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The information pertaining to nominees for election as directors set forth
beneath the heading "Election of Directors"and "Section 16(A) Beneficial
Ownership Reporting Compliance" in the Proxy Statement for the 2000
Annual Meeting of Shareholders to be held May 4, 2000 is incorporated by
reference.
Executive Officers of the Registrant
The names and ages of the current executive officers of the Company and
their positions as of March 30, 2000, are set forth below. None of the
executive officers named below is related to any other executive officer or
director by blood, marriage or adoption. Officers serve at the discretion
of the Board of Directors.
Bill McCanless, age 42, was named President and Chief Executive Officer
of the Company on April 7, 1999, and at the same time, was elected to the
Company's Board of Directors. On January 1, 2000, Mr. McCanless was appointed
to the Executive Committee of Delhaize, the Company's parent, based in
Brussels, Belgium. Mr. McCanless joined the Company in 1989 and served
from 1995 to 1999 as its Senior Vice President of Administration, Chief
Administrative Officer, and Secretary responsible for administration of the
Company's finance, strategic planning, real estate, information technology,
human resources, diversity and legal departments.
David G. Biery, age 43, was appointed Vice President of Marketing-Food
Lion Division in 1999. Mr. Biery has served the Company since 1994 as
Director of Marketing, coordinating local marketing initiatives and working
with store operations.
Robert J. Brunory, age 45, is the Senior Vice President of Sales and
Marketing-Food Lion Division, overseeing category management, marketing,
and procurement. He previously served the Company as its Vice President of
Category Management, a position he held since 1994.
Michael D. Byars, age 41, has served as Chief Operating Officer of
Kash n' Karry since September, 1997. Previously, Mr. Byars served as
Director of Merchandising of Food Lion's Central Division for the Company's
meat operations from 1995 to 1997.
Robert E. Crosslin, age 45, was named Vice President of
Distribution-Food Lion Division in 1998 and is responsible for all
operational functions of distribution. His responsibilities include
warehousing, transportation and in-bound logistics. Mr. Crosslin joined
the Company in 1996 as director of distribution and regional transportation
manager. Prior to joining the Company, Mr. Crosslin served as Director
of Fleet Services of Ralphs from 1983 to 1986.
W. Bruce Dawson, age 47, assumed the position of President of Kash n'
Karry in January, 2000. Mr. Dawson joined the Company in 1981 as an area
perishable supervisor and has held numerous positions of increasing
responsibility with the Company. He was named Vice President of Food Lion's
Southern Division in 1995 and later that year to Vice President of
Food Lion's Northern Division.
James E. Egan, Jr., age 35, assumed the position of Vice President
of Operations for Food Lion's Atlantic Division in January 2000. Mr.
Egan previously served as Director of Store Operations in Food
Lion's Northern Division from October 1998 to January 2000.
Mr. Egan joined the Company in 1986.
Keith M. Gehl, age 41, serves the Company as Vice President of Real
Estate and Store Development-Food Lion Division, a position he has
held since 1997. Mr. Gehl joined the Company as Director of Internal
Audit in 1989. He became Director of Store Operations for Food Lion's
Northern Division in 1996, before assuming his current position.
Dwayne R. Gilley, age 51, serves as Vice President of Operations
for Food Lion's Northern Division, a position he assumed in January 2000.
In this position, Mr. Gilley oversees Food Lion stores in Virginia,
West Virginia, Tennessee and North Carolina. Previously, Mr. Gilley
served as Director of Store Operations from December 1996 to January 2000.
Joseph C. Hall, age 50, is President and Chief Operating Officer
of the Food Lion Division, a position he has held since September 1999. He
joined the Company as a buyer in 1976 and held numerous positions before
being promoted to Vice President of Purchasing in 1988. Mr. Hall has
served as Vice President of Marketing and Vice President of Food Lion's
Southern and Central Divisions. He was appointed to the Board of Directors
in 1995. Mr. Hall was named Senior Vice President and Chief Operating
Officer in 1995 and served in such position until his appointment to President
and Chief Operating Officer.
Carol Herncon, age 37, serves as Vice President of Information Technology
- -Food Lion Division. Ms. Herndon joined the Company as financial controller
in 1989 and became the Director of Financial Accounting in 1991.
L. Darrell Johnson, age 47, joined the Company in 1985. In October 1997,
Mr. Johnson assumed the position of Vice President of Human Resources,
overseeing benefits administration, compensation, recruiting and retention
of employees. Previously, Mr. Johnson served as Director of Human Resources
Compensation and Administration from 1996 to 1997.
Laura C. Kendall, age 48, joined the Company in 1997 as Chief Financial
Officer and Vice President of Finance. In such positions, Ms. Kendall is
responsible for the administration of the finance, accounting, audit and
information technology departments. Before coming to the Company, she served
as chief financial officer at F & M Distributors, a discount health and
beauty aids retailer in Michigan. Ms. Kendall is a certified public
accountant.
Randall S. Miller , age 38, serves as Vice President of Operations for
Food Lion's Southern Division, a position he assumed in March 2000. In this
position, Mr. Miller oversees the operation of Food Lion stores in Florida,
Georgia and South Carolina. Previously, Mr. Miller served as Director of
Operations for the Northern Division from 1997 until promoted to Vice
President.
Kyle Mitchell, age 42, serves as Vice President of Construction and
Engineering-Food Lion Division, a position he has held since 1999.
In that position, Mr. Mitchell oversees the construction and renovation of
all Food Lion and Kash n'Karry stores in 11 states. Mr. Mitchell previously
served as Director of Construction and Engineering, responsible for the
development and construction of new stores, remodels and expansions from
1997 to 1999.
C. David Morgan, age 49, became Senior Vice President of Operations-Food
Lion Division in January 2000. He joined the Company in 1990 as an area
supervisor and served most recently as Vice President of Operations for
the Southern Division, a position he held from December 1997 to December
1999.
Elwyn G. Murray, III, age 33, was named Vice President of Procurement of
the Company in 1999. Mr. Murray is responsible for overseeing all the buying
functions for Food Lion and Kash n' Karry stores. Mr. Murray joined the Company
in 1989, and served as Vice President of Marketing and Director of Category
Management from 1995 to 1999.
Lester C. Nail, age 40, joined the Company as Vice President of
Legal Affairs in 1995 and was named General Counsel of the Company in 1999.
Mr. Nail oversees the legal and corporate communications/public affairs
departments, as well as the customer service/community affairs and food
safety/regulatory compliance departments.
Thomas J. Robinson, age 39, serves as Vice President of Operations
for the Central Division of Food Lion, a position he has held since 1997.
Mr. Robinson oversees Food Lion supermarkets in Kentucky, North Carolina,
Tennessee and Virginia. Previously, Mr. Robinson served as Director of
Category Management/Grocery from 1994 to 1997.
Natalie Taylor, age 40, is Vice President of Diversity for the Food Lion
Division, a position she has held since 1997. In her position, she is
responsible for the integration of diversity initiatives within the Company,
outreach efforts to serve the Company's diverse community base, and partnership
opportunities through which the Company may develop state-of-the-art
supermarkets for inner-city communities. Previously, Ms. Taylor served as
Director of Community Affairs and Employee Development from 1993 to 1997.
Item 11. Executive Compensation.
The information pertaining to executive compensation set forth beneath the
headings "Executive Compensation" and "Report of the Senior Management
Compensation Committee, Stock Option Committee and Board of Directors" in the
Proxy Statement for the 2000 Annual Meeting of Shareholders to be held on May 4,
2000, is hereby incorporated by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The information pertaining to security ownership of certain beneficial
owners and management set forth beneath the heading "Security Ownership of
Certain Beneficial Owners and Management" in the Proxy Statement for the 2000
Annual Meeting of Shareholders to be held on May 4, 2000, is hereby incorporated
by reference.
Item 13. Certain Relationships and Related Transactions.
The information relating to certain relationships and related transactions
set forth beneath the headings "Employment Plans and Agreements-Low Interest
Loan Plan," "Compensation Committee Interlocks and Insider Participation" and
"Certain Transactions" in the Proxy Statement for the 2000 Annual Meeting of
Shareholders to be held May 4, 2000, is hereby incorporated by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
1. Financial Statements:
The following financial statements are incorporated by
reference in Item 8 hereof from the Annual Report to
Shareholders for the fiscal year ended January 1, 2000:
ANNUAL REPORT
PAGE NO.
Consolidated Statements of Income for the fiscal
years ended January 1, 2000, January 2, 1999 and
January 3, 1998 22
Consolidated Balance Sheets, as of January 1,
2000 and January 2, 1999 23
Consolidated Statements of Cash Flows for the
fiscal years ended January 1, 2000, January 2, 1999
and January 3, 1998 24
Consolidated Statements of Shareholders' Equity
for the fiscal years ended January 1, 2000,
January 2, 1999 and January 3, 1998 25
Notes to Consolidated Financial Statements 26-31
Report of Independent Accountants 32
Results by Quarter (unaudited) 33
2. Other:
All other schedules are omitted since the required information is not
applicable or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.
With the exception of the financial statements listed in the above index,
the information referred to in Items 5, 6, 7 and the supplementary quarterly
financial information referred to in Item 8, all of which is included in the
portions of the Annual Report to Shareholders for the fiscal year ended January
1, 2000 and incorporated by reference into this Form 10-K Annual Report, the
Annual Report to Shareholders for the fiscal year ended January 1, 2000 is not
to be deemed "filed" as part of this report.
3. Exhibits:
Exhibit No.
2 Agreement and Plan of Merger dated as of August 17,
1999, among the Company, Hannaford Bros. Co. and FL
Acquisition Sub, Inc. (incorporated by reference to
Exhibit 2 of the Company's Report on Form 8-K dated
August 19, 1999)
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)(incorporated
by reference to Exhibit 3(a) of the Company's
Annual Report on Form 10-K dated March 24, 1992)
3(b) Articles of Amendment to Articles of Incorporation
(incorporated by reference to Exhibit 3.1 of the
Company's Current Report on Form 8-K dated September
7, 1999)
3(c) Bylaws of the Company effective September 7, 1999
(incorporated by reference to Exhibit 3.2 of the
Company's Current Report on Form 8-K dated September
7, 1999)
4(a) Indenture dated as of August 15, 1991, between
the Company and the Bank of New York, Trustee,
providing for the issuance of an unlimited amount
of Debt Securities in one or more series (incorpo-
rated by reference to Exhibit 4(a) of the Company's
Annual Report on Form 10-K dated March 24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global
Fixed Rate) (incorporated by reference to Exhibit
4(b) of the Company's Annual Report on Form 10-K
dated March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference
to Exhibit 19(a) of the Company's Report on Form
8-K dated October 27, 1986)
10(b) Form of Deferred Compensation Agreement
(incorporated by reference to Exhibit 19(b) of
the Company's Report on Form 8-K dated October 27,
1986)
10(c) Form of Salary Continuation Agreement (incorporated
by reference to Exhibit 19(c) of the Company's
report on Form 8-K dated October 27, 1986)
10(d) 1994 Shareholders' Agreement dated as of
September 15, 1994 among Etablissements Delhaize
Freres et Cie "Le Lion" S.A., Delhaize The Lion
America, Inc., and the Company (incorporated by
reference to Exhibit 10 of the Company's Report on
Form 8-K dated October 7, 1994)
10(e) Proxy Agreement dated January 4, 1991, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize The Lion, America, Inc.
(incorporated by reference to Exhibit 10(e) of
the Company's Annual Report on Form 10-K dated
March 25, 1991)
10(f) Retirement Agreement dated as of April 7, 1999,
between the Company and Tom E. Smith (incorporated
by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q dated May 5, 1999)
10(g) Stock Purchase Agreement dated June 30, 1981,
between the Company and Ralph W. Ketner
(incorporated by reference to Exhibit 10(j) of
the Company's Annual Report on Form 10-K dated
April 1, 1987)
10(h) Letter Agreement dated May 10, 1990, between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's Annual
Report on Form 10-K dated March 25, 1991)
10(i) U.S. Distribution Agreement dated August 20, 1991,
between the Company and Goldman, Sachs & Co. and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount of the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(j) License Agreement between the Company and
Etablissements Delhaize Freres Et Cie "Le Lion"
S.A. dated January 1, 1983 (incorporated by
reference to Exhibit 10(t) of the Company's
Annual Report on Form 10-K dated March 31, 1994)
10(k) 1996 Employee Stock Incentive Plan of Food Lion,
Inc. (incorporated by reference to Exhibit 10(a)
of the Company's Quarterly Report on Form 10-Q
dated July 30, 1996)
10(l) Key Executive Annual Incentive Bonus Plan
(incorporated by reference to Exhibit 10(b)
of the Company's Quarterly Report on Form
10-Q dated July 30, 1996)
10(m) Profit Sharing Restoration Plan effective as
of May 4, 1995 (incorporated by reference to
Exhibit 10(c) of the Company's 10-Q A dated
August 13, 1996)
10(n) Supplemental Executive Retirement Plan effective
as of May 4, 1995 (incorporated by reference to
Exhibit 10(d) of the Company's 10-Q A dated
August 13, 1996)
10(o) Employee Severance Agreement dated September 5,
1996, between the Company and Dan A. Boone
(incorporated by reference to Exhibit 10 of the
Company's Quarterly Report on Form 10-Q dated
October 16, 1996)
10(p) Employment Agreement dated as of April 7, 1999,
between R. William McCanless and the Company
(incorporated by reference to Exhibit 10(b)of the
Company's Quarterly Report on Form 10-Q dated
July 29, 1999)
10(q) Agreement and Plan of Merger dated as of October
31, 1996, among the Company, KK Acquisition Corp.
and Kash n' Karry Food Stores, Inc. (incorporated
by reference to Exhibit 2 of the Company's Report
on Form 8-K dated October 31, 1996)
10(r) Stockholders' Agreement, dated as of October 31,
1996, among the Company, KK Acquisition Corp.,
Kash n' Karry Food Stores, Inc. and the stockholders
of Kash n' Karry Food Stores, Inc. signatory thereto
(incorporated by reference to Exhibit 10 of the
Company's Report on Form 8-K dated October 31, 1996)
10(s) License Agreement, dated as of June 19, 1997,
among the Company, Kash n' Karry Food Stores, Inc.,
and Etablissements Delhaize Freres Et Cie "Le Lion" S.A.
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
July 25, 1997)
10(t) Food Lion Inc. and The Bank of New York, Trustee,
First Supplement Indenture dated as of April 21, 1997
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
May 2, 1997)
10(u) Underwriting Agreement dated as of April 16, 1997,
between Food Lion, Inc. and Salomon Brothers, Inc.
for itself and as representative for NationsBanc
Capital Markets Inc. (incorporated by reference to
Exhibit 10(b) of the Company's Quarterly Report
on Form 10-Q dated May 2, 1997)
10(v) Employment Severance Agreement and Mutual Release,
dated as of April 14, 1999, between Pamela K. Kohn
and the Company (incorporated by reference to
Exhibit 10(a) of the Company's Quarterly Report
on Form 10-Q dated July 30 1999)
10(w) Agreement, dated as of January 4, 1998, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and the Company (incorporated by reference to
10(af) of the Company's Annual Report on Form 10-K
dated April 8, 1998)
10(x) Credit Agreement dated as of November 19, 1999,
among the Company, the lenders party thereto, and
Morgan Guaranty Trust Company of New York, as
Administrative Agent
10(y) Credit Agreement dated as of January 26, 2000,
among the Company, the lenders party thereto,
and Morgan Guaranty Trust Company of New York,
as Administrative Agent, relating to
$2,500,000,000 364-Day Term Loan Facility
10(z) Credit Agreement dated as of January 26, 2000,
among the Company, the lenders party thereto,
and Morgan Guaranty Trust Company of New York,
as Administrative Agent, relating to $500,000,000
5-Year Revolving Credit Facility
10(aa) Stock Exchange Agreement dated as of August 17, 1999,
among the Company, Empire Company Limited and E.C.L.
Investments Limited (incorporated by reference to
Exhibit 99.2 of the Company's Current Report on
Form 8-K dated August 19, 1999)
10(ab) Voting Agreement dated as of August 17, 1999, among
the Company, Empire Company Limited and E.C.L.
Investments Limited (incorporated by reference to
Exhibit 99.3 of the Company's Current Report on Form
8-K dated August 19, 1999)
10(ac) Registration Rights Agreement dated as of August 17,
1999, among the Company, Empire Company Limited,
E.C.L. Investments Limited, Pension Plan for Employees
of Sobeys, Inc. and Sobeys Inc. Master Trust Investment
Fund (incorporated by reference to Exhibit 99.4 of the
Company's Current Report on Form 8-K dated August 19, 1999)
10(ad) Employment Severance Agreement and Mutual Release dated
as of January 1, 2000, between A. Edward Benner, Jr. and
Food Lion, a division of Delhaize America, Inc.
10(ae) Employment Agreement dated as of January 20, 2000,
between W. Bruce Dawson and Kash n' Karry Food Stores, Inc.
10(af) Employment Agreement dated as of March 13, 2000, between
Joseph C. Hall, Jr. and Food Lion, a division of Delhaize
America, Inc.
10(ag) Employment Agreement dated as of March 14, 2000, between
Laura C. Kendall and Delhaize America, Inc.
13 Portions of the Annual Report to Shareholders for the
fiscal year ended January 1, 2000
21 Subsidiaries of Registrant
23 Consent of Independent Accountants
27 Financial Data Schedules
99 Undertaking of the Company to file exhibits
pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K
(b) Reports on Form 8-K:
Current Report on Form 8-K filed August 19, 1999
Current Report on Form 8-K filed September 17, 1999
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Delhaize America, Inc.
Date:3/30/00 By /s/Laura C. Kendall
Laura C. Kendall
Chief Financial Officer
Principal Accounting 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 in the capacities and on the dates indicated.
Date:3/30/00 By/s/Laura Kendall
Laura Kendall
Chief Financial Officer
Principal Accounting Officer
Date:3/30/00 By/s/Pierre-Olivier Beckers
Pierre-Olivier Beckers
Director
Date:3/22/00 By/s/Jacqueline K. Collamore
Dr. Jacqueline K. Collamore
Director
Date:3/30/00 By/s/Jean-Claude Coppieters 't Wallant
Jean-Claude Coppieters 't Wallant
Director
Date:3/30/00 By/s/Pierre DuMont
Pierre DuMont
Director
Date:3/30/00 By/s/William G. Ferguson
William G. Ferguson
Director
Date:3/22/00 By/s/Bernard W. Franklin
Dr. Bernard W. Franklin
Director
Date:3/30/00 By/s/Joseph C. Hall
Joseph C. Hall
President and Chief Operating Officer,
Food Lion Division
Director
Date:3/23/00 By/s/Margaret H. Kluttz
Margaret H. Kluttz
Director
Date:3/30/00 By/s/Bill McCanless
Bill McCanless
Chief Executive Officer, Delhaize
America, Inc.
Chief Executive Officer, Food Lion
Division
Director
Date:3/30/00 By/s/Dominique Raquez
Dominique Raquez
Director
EXHIBIT INDEX
to
ANNUAL REPORT ON FORM 10-K of
Delhaize America, Inc.
For the Fiscal Year Ended January 1, 2000
Sequential
Exhibit No. Description Page No.
2 Agreement and Plan of Merger dated as of August 17,
1999, among the Company, Hannaford Bros. Co. and FL
Acquisition Sub, Inc. (incorporated by reference to
Exhibit 2 of the Company's Report on Form 8-K dated
August 19, 1999)
3(a) Articles of Incorporation, together with all
amendments thereto (through May 5, 1988)(incorporated
by reference to Exhibit 3(a) of the Company's Annual
Report on Form 10-K dated March 24, 1992)
3(b) Articles of Amendment to Articles of Incorporation
(incorporated by reference to Exhibit 3.1 of the
Company's Current Report on Form 8-K dated September
7, 1999)
3(c) Bylaws of the Company effective September 7, 1999
(incorporated by reference to Exhibit 3.2 of the
Company's Current Report on Form 8-K dated September
7, 1999)
4(a) Indenture dated as of August 15, 1991, between
the Company and the Bank of New York, Trustee,
providing for the issuance of an unlimited amount
of Debt Securities in one or more series (incorpo-
rated by reference to Exhibit 4(a) of the Company's
Annual Report on Form 10-K dated March 24, 1992)
4(b) Form of Food Lion, Inc. Medium Term Note (Global
Fixed Rate) (incorporated by reference to Exhibit
4(b) of the Company's Annual Report on Form 10-K
dated March 24, 1992)
10(a) Low Interest Loan Plan (incorporated by reference
to Exhibit 19(a) of the Company's Report on Form
8-K dated October 27, 1986)
10(b) Form of Deferred Compensation Agreement
(incorporated by reference to Exhibit 19(b) of
the Company's Report on Form 8-K dated October 27,
1986)
10(c) Form of Salary Continuation Agreement (incorporated
by reference to Exhibit 19(c) of the Company's
report on Form 8-K dated October 27, 1986)
10(d) 1994 Shareholders' Agreement dated as of
September 15, 1994 among Etablissements Delhaize
Freres et Cie "Le Lion" S.A., Delhaize The Lion
America, Inc., and the Company (incorporated by
reference to Exhibit 10 of the Company's Report on
Form 8-K dated October 7, 1994)
10(e) Proxy Agreement dated January 4, 1991, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and Delhaize The Lion, America, Inc.
(incorporated by reference to Exhibit 10(e) of
the Company's Annual Report on Form 10-K dated
March 25, 1991)
10(f) Retirement Agreement dated as of April 7, 1999,
between the Company and Tom E. Smith (incorporated
by reference to Exhibit 10 of the Company's
Quarterly Report on Form 10-Q dated May 5, 1999)
10(g) Stock Purchase Agreement dated June 30, 1981,
between the Company and Ralph W. Ketner
(incorporated by reference to Exhibit 10(j) of
the Company's Annual Report on Form 10-K dated
April 1, 1987)
10(h) Letter Agreement dated May 10, 1990, between the
Company and Ralph W. Ketner (incorporated by
reference to Exhibit 10(q) of the Company's Annual
Report on Form 10-K dated March 25, 1991)
10(i) U.S. Distribution Agreement dated August 20, 1991,
between the Company and Goldman, Sachs & Co. and
Merrill Lynch & Co. relating to the sale of up to
$300,000,000 in principal amount of the Company's
Medium-Term Notes (incorporated by reference to
Exhibit 10(p) of the Company's Annual Report on
Form 10-K dated March 24, 1992)
10(j) License Agreement between the Company and
Etablissements Delhaize Freres Et Cie "Le Lion"
S.A. dated January 1, 1983 (incorporated by
reference to Exhibit 10(t) of the Company's
Annual Report on Form 10-K dated March 31, 1994)
10(k) 1996 Employee Stock Incentive Plan of Food Lion,
Inc. (incorporated by reference to Exhibit 10(a)
of the Company's Quarterly Report on Form 10-Q
dated July 30, 1996)
10(l) Key Executive Annual Incentive Bonus Plan
(incorporated by reference to Exhibit 10(b)
of the Company's Quarterly Report on Form
10-Q dated July 30, 1996)
10(m) Profit Sharing Restoration Plan effective as
of May 4, 1995 (incorporated by reference to
Exhibit 10(c) of the Company's 10-Q A dated
August 13, 1996)
10(n) Supplemental Executive Retirement Plan effective
as of May 4, 1995 (incorporated by reference to
Exhibit 10(d) of the Company's 10-Q A dated
August 13, 1996)
10(o) Employee Severance Agreement dated September 5,
1996, between the Company and Dan A. Boone
(incorporated by reference to Exhibit 10 of the
Company's Quarterly Report on Form 10-Q dated
October 16, 1996)
10(p) Employment Agreement dated as of April 7, 1999,
between R. William McCanless and the Company
(incorporated by reference to Exhibit 10(b)of the
Company's Quarterly Report on Form 10-Q dated
July 29, 1999)
10(q) Agreement and Plan of Merger dated as of October
31, 1996, among the Company, KK Acquisition Corp.
and Kash n' Karry Food Stores, Inc. (incorporated
by reference to Exhibit 2 of the Company's Report
on Form 8-K dated October 31, 1996)
10(r) Stockholders' Agreement, dated as of October 31,
1996, among the Company, KK Acquisition Corp.,
Kash n' Karry Food Stores, Inc. and the stockholders
of Kash n' Karry Food Stores, Inc. signatory thereto
(incorporated by reference to Exhibit 10 of the
Company's Report on Form 8-K dated October 31, 1996)
10(s) License Agreement, dated as of June 19, 1997,
among the Company, Kash n' Karry Food Stores, Inc.,
and Etablissements Delhaize Freres Et Cie "Le Lion" S.A.
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
July 25, 1997)
10(t) Food Lion Inc. and The Bank of New York, Trustee,
First Supplement Indenture dated as of April 21, 1997
(incorporated by reference to Exhibit 10(a) of the
Company's Quarterly Report on Form 10-Q dated
May 2, 1997)
10(u) Underwriting Agreement dated as of April 16, 1997,
between Food Lion, Inc. and Salomon Brothers, Inc.
for itself and as representative for NationsBanc
Capital Markets Inc. (incorporated by reference to
Exhibit 10(b) of the Company's Quarterly Report
on Form 10-Q dated May 2, 1997)
10(v) Employment Severance Agreement and Mutual Release,
dated as of April 14, 1999, between Pamela K. Kohn
and the Company (incorporated by reference to
Exhibit 10(a) of the Company's Quarterly Report
on Form 10-Q dated July 30 1999)
10(w) Agreement, dated as of January 4, 1998, between
Etablissements Delhaize Freres et Cie "Le Lion"
S.A. and the Company (incorporated by reference to
10(af) of the Company's Annual Report on Form 10-K
dated April 8, 1998)
10(x) Credit Agreement dated as of November 19, 1999,
among the Company, the lenders party thereto, and
Morgan Guaranty Trust Company of New York, as
Administrative Agent 20-135
10(y) Credit Agreement dated as of January 26, 2000,
among the Company, the lenders party thereto,
and Morgan Guaranty Trust Company of New York,
as Administrative Agent, relating to
$2,500,000,000 364-Day Term Loan Facility 136-254
10(z) Credit Agreement dated as of January 26, 2000,
among the Company, the lenders party thereto,
and Morgan Guaranty Trust Company of New York,
as Administrative Agent, relating to $500,000,000
5-Year Revolving Credit Facility 255-372
10(aa) Stock Exchange Agreement dated as of August 17, 1999,
among the Company, Empire Company Limited and E.C.L.
Investments Limited (incorporated by reference to
Exhibit 99.2 of the Company's Current Report on
Form 8-K dated August 19, 1999)
10(ab) Voting Agreement dated as of August 17, 1999, among
the Company, Empire Company Limited and E.C.L.
Investments Limited (incorporated by reference to
Exhibit 99.3 of the Company's Current Report on Form
8-K dated August 19, 1999)
10(ac) Registration Rights Agreement dated as of August 17,
1999, among the Company, Empire Company Limited,
E.C.L. Investments Limited, Pension Plan for Employees
of Sobeys, Inc. and Sobeys Inc. Master Trust Investment
Fund (incorporated by reference to Exhibit 99.4 of the
Company's Current Report on Form 8-K dated August 19, 1999)
10(ad) Employment Severance Agreement and Mutual Release dated
as of January 1, 2000, between A. Edward Benner, Jr. and
Food Lion, a division of Delhaize America, Inc. 373-387
10(ae) Employment Agreement dated as of January 20, 2000,
between W. Bruce Dawson and Kash n' Karry Food Stores,
Inc. 388-401
10(af) Employment Agreement dated as of March 13, 2000,
between Joseph C. Hall, Jr. and Food Lion, a division
of Delhaize America, Inc. 402-416
10(ag) Employment Agreement dated as of March 14, 2000,
between Laura C. Kendall and Delhaize America, Inc. 417-431
13 Portions of the Annual Report to Shareholders for the
fiscal year ended January 1, 2000 432-468
21 Subsidiaries of Registrant 469
23 Consent of Independent Accountants 470
27 Financial Data Schedules 471-472
99 Undertaking of the Company to file exhibits
pursuant to Item 601(b)(4)(iii)(A) of Regulation S-K 473
(b) Reports on Form 8-K:
Current Report on Form 8-K filed August 19, 1999
Current Report on Form 8-K filed September 17, 1999
[CONFORMED COPY]
===============================================================================
CREDIT AGREEMENT
dated as of
November 19, 1999
among
DELHAIZE AMERICA, INC.,
The LENDERS Party Hereto,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
$500,000,000 364-DAY REVOLVING CREDIT FACILITY
-----------------------------------------------------------------------
J.P. MORGAN SECURITIES INC.,
as Lead Arranger and Bookrunner
-----------------------------------------------------------------------
BANK OF AMERICA, N.A.,
CITIBANK, N.A.
and
WACHOVIA SECURITIES, INC.,
as Co-Arrangers
===============================================================================
<PAGE>
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms..................................................1
SECTION 1.02. Classification of Loans and Borrowing.........................21
SECTION 1.03. Terms Generally...............................................21
SECTION 1.04. Accounting Terms; GAAP........................................22
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments...................................................23
SECTION 2.02. Loans and Borrowings..........................................23
SECTION 2.03. Requests for Revolving Borrowings.............................24
SECTION 2.04. Reserved.....................................................24
SECTION 2.05. Funding of Borrowings.........................................24
SECTION 2.06. Interest Elections............................................25
SECTION 2.07. Termination and Reduction of Commitments......................26
SECTION 2.08. Repayment of Loans; Evidence of Debt..........................27
SECTION 2.09. Prepayment of Loans...........................................28
SECTION 2.10. Fees..........................................................28
SECTION 2.11. Interest......................................................29
SECTION 2.12. Alternate Rate of Interest....................................30
SECTION 2.13. Increased Costs...............................................30
SECTION 2.14. Break Funding Payments........................................31
SECTION 2.15. Taxes.........................................................32
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs........................................................34
SECTION 2.17. Mitigation Obligations; Replacement of Lenders................36
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers...........................................37
SECTION 3.02. Authorization; Enforceability..................................37
SECTION 3.03. Governmental Approvals; No Conflicts...........................37
SECTION 3.04. Financial Condition; No Material Adverse Change................38
SECTION 3.05. Properties.....................................................38
SECTION 3.06. Litigation and Environmental Matters...........................38
SECTION 3.07. Compliance with Laws and Agreements............................39
SECTION 3.08. Investment and Holding Company Status..........................39
SECTION 3.09. Taxes..........................................................39
SECTION 3.10. ERISA..........................................................40
SECTION 3.11. Disclosure.....................................................40
i
<PAGE>
PAGE
----
SECTION 3.12. Margin Stock...................................................40
SECTION 3.13. No Burdensome Restrictions.....................................40
SECTION 3.14. Subsidiaries...................................................40
SECTION 3.15. Solvency.......................................................41
SECTION 3.16. Year 2000 Matters..............................................41
SECTION 3.17. Acquisition Documents..........................................41
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date.................................................41
SECTION 4.02. Each Credit Event..............................................43
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information.....................43
SECTION 5.02. Notices of Material Events.....................................45
SECTION 5.03. Existence; Conduct of Business.................................45
SECTION 5.04. Payment of Obligations.........................................45
SECTION 5.05. Maintenance of Properties; Insurance...........................46
SECTION 5.06. Books and Records; Inspection Rights...........................46
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations..................................................46
SECTION 5.08. Use of Proceeds................................................46
SECTION 5.09. Change in Ratings..............................................46
SECTION 5.10. Copies of Other Bank Agreements................................47
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. Liens..........................................................47
SECTION 6.02. Indebtedness of Subsidiaries...................................48
SECTION 6.03. Fundamental Changes............................................49
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements.............................49
SECTION 6.05. Transactions with Affiliates...................................51
SECTION 6.06. Reserved.......................................................51
SECTION 6.07. Fixed Charges Coverage.........................................51
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR......................................................52
SECTION 6.09. Limitation on Sales of Assets..................................52
SECTION 6.10. Modifications to Acquisition Documents.........................53
SECTION 6.11. Restrictions Affecting Subsidiaries............................53
ii
<PAGE>
PAGE
----
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default..............................................54
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent.......................................57
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices........................................................59
SECTION 9.02. Waivers; Amendments............................................59
SECTION 9.03. Expenses; Indemnity; Damage Waiver.............................60
SECTION 9.04. Successors and Assigns.........................................62
SECTION 9.05. Survival.......................................................64
SECTION 9.06. Counterparts; Integration; Effectiveness.......................65
SECTION 9.07. Severability...................................................65
SECTION 9.08. Right of Setoff................................................65
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process..............................................................65
SECTION 9.10. WAIVER OF JURY TRIAL...........................................66
SECTION 9.11. Headings.......................................................66
SECTION 9.12. Confidentiality................................................67
SECTION 9.13. Interest Rate Limitation.......................................67
ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization.....................................68
SCHEDULES:
Schedule 2.01 Commitments
Schedule 3.06 Disclosed Matters
Schedule 3.14 Subsidiaries of Borrower
Schedule 6.01 Existing Liens
EXHIBITS:
Exhibit A Form of Assignment and Acceptance
Exhibit B-1 Form of Opinion of Counsel of Borrower
iii
<PAGE>
CREDIT AGREEMENT dated as of November 19, 1999, among DELHAIZE
AMERICA, INC., the LENDERS party hereto and MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition" means the Merger and all other transactions contemplated
by the Acquisition Documents.
"Acquisition Date" means the date of consummation of the Acquisition.
"Acquisition Documents" means the Merger Agreement, including the
exhibits and schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith.
"Acquisition Sub" means FL Acquisition Sub, Inc., a Maine corporation.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Morgan, in its capacity as administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire
in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
<PAGE>
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
Eurodollar Revolving Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate",
as the case may be, based upon the ratings by Moody's and S&P, respectively,
applicable on such date to the Index Debt:
S&P/Moody's ABR Eurodollar Commitment
Index Debt Ratings Eurodollar Spread Fee Rate
- -------------------------------------------------------------
Category 1
A-/A3 or higher........ .0% .50% .09%
Category 2
BBB+/Baa1.............. .0% .625% .10%
Category 3
BBB/Baa2............... .0% .75% .125%
Category 4
BBB-/Baa3.............. .25% 1.25% .175%
Category 5
BB+/Ba1................ .75% 1.75% .30%
- -------------------------------------------------------------
Category 6
Below.................. 1.25% 2.25% .50%
=============================================================
In addition,
2
<PAGE>
(x) if (i) the sum of (1) the aggregate principal amount of loans
outstanding under the 5-Year Agreement (if the 5-Year Agreement is in effect on
such date) plus (2) the aggregate principal amount of loans outstanding under
the Bridge Agreement (if the Bridge Agreement is in effect on such date) plus
(3) the aggregate principal amount of Revolving Loans outstanding hereunder, in
each case on such date, exceeds 33% of the sum of (1) the aggregate amount of
the commitments under the 5-Year Agreement (or, if the commitments under the 5-
Year Agreement (if the 5-Year Agreement is in effect on such date) shall have
terminated, the aggregate principal amount of loans outstanding thereunder)
plus (2) the aggregate amount of the commitments under the Bridge Agreement (if
the Bridge Agreement is in effect on such date) (or, if the commitments under
the Bridge Agreement shall have terminated, the aggregate principal amount of
loans outstanding thereunder) plus (3) the aggregate Commitments hereunder (or,
if the Commitments hereunder shall have terminated, the aggregate principal
amount of Revolving Loans outstanding hereunder), in each case on such date and
(ii) Category 1 ratings, Category 2 ratings or Category 3 ratings are
applicable on such date
or
(y) if any Loans are outstanding under the Bridge Agreement (if the
Bridge Agreement is in effect on such date) (regardless of which Category
ratings are applicable on such date),
the "ABR Spread" and the "Eurodollar Spread" will each be increased
by .125%; provided that on any date on which the events in clause (x) and
clause (y) are both in effect, the "ABR Spread" and the "Eurodollar Spread"
will each be increased by .125%.
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this definition), then such
rating agency shall be deemed to have established a rating in Category 6; (ii)
if the ratings established or deemed to have been established by Moody's and
S&P for the Index Debt shall fall within different Categories, the Applicable
Rate shall be based on the lower of the two ratings unless one of the two
ratings is two or more Categories lower than the other, in which case the
Applicable Rate shall be determined by reference to the Category next below
that of the higher of the two ratings; and (iii) if the ratings established or
deemed to have been established by Moody's and S&P for the Index Debt shall be
changed (other than as a result of a change in the rating system of Moody's or
S&P), such change shall be effective as of the date on which it is first
announced by the applicable rating agency. Each change in the Applicable Rate
shall apply during the period commencing on the effective date of
3
<PAGE>
such change and ending on the date immediately preceding the effective date of
the next such change. If the rating system of Moody's or S&P shall change, or
if either such rating agency shall cease to be in the business of rating
corporate debt obligations, the Borrower and the Lenders shall negotiate in
good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate. As used
in this definition, "Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Delhaize America, Inc., a North Carolina corporation.
"Borrowing" means Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
4
<PAGE>
"Bridge Agreement" means the $2,500,000,000 364-Day Term Loan
Agreement to be entered into by the Borrower, the lenders party thereto, and
Morgan, as administrative agent, substantially on the terms described by the
Borrower to the Lenders prior to the Effective Date, as amended from time to
time.
"Bridge Payout Date" means the first date on which the commitments
under the Bridge Agreement have terminated and all loans outstanding
thereunder, together with accrued and unpaid interest thereon, and all fees and
expenses payable with respect thereto, have been repaid in full.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to remain closed; provided that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in Dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means any capital stock of the Borrower or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"Capitalized Lease" means any lease which is required to be
capitalized on a consolidated balance sheet of the lessee and its subsidiaries
in accordance with GAAP.
"Cash Equivalents" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in
each case maturing within one year from the date of acquisition thereof;
5
<PAGE>
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
rating of at least P-1 by Moody's or A-1 by S & P;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of
not less than $250,000,000;
(d) investments consisting of cash deposits in operating accounts
maintained by the Borrower or any Subsidiary; and
(e) repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above.
"Change in Control" means (a) the failure of Delhaize Belgium or any
wholly-owned subsidiary of Delhaize Belgium to own, directly or indirectly,
beneficially or of record, shares representing more than a majority of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Borrower; (b) occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who
were neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group other than Delhaize
Belgium or any wholly-owned subsidiary of Delhaize Belgium.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Charges" has the meaning set forth in Section 9.13.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
6
<PAGE>
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.07 and (b) reduced or increased
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Commitment, as applicable.
"Consolidated" means, when used in connection with any defined term,
and not otherwise defined, such term as it applies to the Borrower and its
Subsidiaries on a consolidated basis, after eliminating all intercompany items.
"Consolidated Adjusted Debt" means at any date (i) the Debt of the
Borrower and its Consolidated Subsidiaries plus (ii) 8 times Rentals (but
excluding any payments with respect to a Capital Lease to the extent such
Capital Lease is included in clause (i)) payable by the Borrower and its
Consolidated Subsidiaries for the period of four consecutive Fiscal Quarters
ended on or most recently prior to such date, determined on a consolidated
basis as of such date.
"Consolidated EBITDAR" for any period means the sum of (i)
Consolidated Net Income for such period plus, in each case to the extent
deducted in determining such Consolidated Net Income and without duplication,
(ii) Consolidated Depreciation expenses of the Borrower and its Consolidated
Subsidiaries, (iii) Consolidated Amortization expenses of the Borrower and its
Consolidated Subsidiaries, (iv) all federal, state, local and foreign income
taxes of the Borrower and its Consolidated Subsidiaries, and (v) Consolidated
Fixed Charges.
"Consolidated Fixed Charges" for any period means, without
duplication, on a consolidated basis the sum of (i) all Rentals payable during
such period by the Borrower and its Consolidated Subsidiaries, and (ii)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" for any period means the gross revenues of
the Borrower and its Consolidated Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
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(a) any unusual or extraordinary gains or losses on the sale or other
disposition of investments (excluding Cash Equivalents) or fixed or
capital assets, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Consolidated Subsidiary accrued
prior to the date it became a Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04) substantially all the
assets of which have been acquired in any manner by the Borrower or any
Consolidated Subsidiary, realized by such corporation prior to the date of
such acquisition;
(e) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04(b)) with which the
Borrower or a Consolidated Subsidiary shall have consolidated or which
shall have merged into or with the Borrower or a Consolidated Subsidiary
prior to the date of such consolidation or merger;
(f) net earnings and losses of any business entity (other than a
Consolidated Subsidiary) in which the Borrower or any Consolidated
Subsidiary has an ownership interest unless such net earnings shall have
actually been received by the Borrower or such Consolidated Subsidiary in
the form of cash distributions;
(g) any portion of the net earnings and losses of any Consolidated
Subsidiary which for any reason is unavailable for payment of dividends to
the Borrower or any other Consolidated Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or write-up
of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Capital Stock;
(k) any reversal of any contingency reserve except to the extent that
provision for such contingency reserve shall have been made from
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income arising during such period; provided, however, that any reversal of
a contingency reserve from a prior period shall only be excluded from
Consolidated Net Income to the extent that the aggregate amount of such
reversals exceeds $10,000,000 during the immediately preceding four Fiscal
Quarters; and
(l) any other unusual or extraordinary gain or loss.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means at any time the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis,
as set forth or reflected on the most recent consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable and accrued expenses
arising in the ordinary course of business, (iv) all Capital Lease Obligations,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (viii)
all Debt of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed
by such Person.
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"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Delhaize Belgium" means Etablissements Delhaize Freres et Cie "Le
Lion" S.A., a Belgian corporation.
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed on Schedule 3.06.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of
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ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 7.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement or is attributable to such Foreign Lender's failure or inability to
comply with Section 2.15(e), except to the extent that such Foreign Lender's
assignor (if any) was entitled, at the time of
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<PAGE>
assignment, to receive additional amounts from the Borrower with respect to
such withholding tax pursuant to Section 2.15(a).
"Existing Public Debt" means the Borrower's $150,000,000 aggregate
principal amount of 7.55% Notes due 2007 and its $150,000,000 aggregate
principal amount of 8.05% Notes due 2027.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"5-YearAgreement" means the $500,000,000 5-Year Revolving Credit
Agreement to be entered into by the Borrower, the lenders party thereto and
Morgan, as administrative agent, substantially on the terms described by the
Borrower to the Lenders prior to the Effective Date, as amended from time to
time.
"Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
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"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
(excluding current accounts payable incurred in the ordinary course of
business), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e)
all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such Person
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<PAGE>
in respect of bankers' acceptances. The Indebtedness of any Person shall
include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person is liable
therefor as a result of such Person's ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Borrower that is not guaranteed by any other Person
(other than Subsidiaries) or subject to any other credit enhancement.
"Information" has the meaning set forth in Section 9.12.
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of a
Eurodollar Borrowing only, such next succeeding Business Day would fall in the
next calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period and
(iii) any Interest Period that would otherwise end after the Maturity Date
shall end on the Maturity Date. For purposes hereof, the date of a Borrowing
initially shall be the date on which
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such Borrowing is made and thereafter shall be the effective date of the most
recent conversion or continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for Dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Borrowing for such Interest Period shall be the rate at which
Dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loans" means the loans made by the Lenders to the Borrower pursuant
to this Agreement.
"Majority Lenders" means, at any time, Lenders having Commitments
representing more than 50% of the aggregate amount of the Commitments at such
time (or, if the Commitments shall have terminated, Lenders holding Revolving
Credit Exposures representing more than 50% of the total Revolving Credit
Exposures at such time).
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"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise,
of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Agreement or (c) the
rights of or benefits available to the Lenders under this Agreement.
"Material Indebtedness" means Indebtedness, or obligations in respect
of one or more Hedging Agreements, of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $20,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required
to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means November 17, 2000.
"Maximum Rate" has the meaning set forth in Section 9.13.
"Medium Term Notes" means the medium term notes of the Borrower having
interest rates ranging from 8.32% to 8.73% with due dates ranging from 1999 to
2006 and having an aggregate principal balance of $153,300,000.
"Merger" means the merger of Acquisition Sub with and into the Target
(with the Target as the surviving Person) pursuant to the Merger Agreement.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 17, 1999 among the Borrower, Acquisition Sub and the Target.
"Minority Interests" means any shares of stock of any class of a
Consolidated Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and/or one or more of its Consolidated
Subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York.
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"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Operating Lease" means any lease other than a Capitalized Lease.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 9.04(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments and other
governmental charges that are not yet due or are being contested in
compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlords' and other like Liens imposed by law, arising in
the ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in compliance with
Section 5.04;
(c) Liens granted to a landlord pursuant to a lease to secure the
obligations of the lessee under such lease which apply only to property or
assets of the lessee located at the leased premises;
(d) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(e) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds (so long as, with
respect to any such appeal bonds posted with respect to any judgment, no
Event of Default then exists under Section 7(k)), performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
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(f) judgment liens provided no Event of Default then exists under
Section 7(k); and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do not
materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Morgan as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Maturity Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise)
or (ii) redeemable at the option of the holder thereof.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Rentals" means and includes as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Borrower or a Consolidated Subsidiary, as lessee or
sublessee under an Operating Lease or Capitalized Lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Borrower or a Consolidated Subsidiary (whether or not designated as rents or
additional rents)
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<PAGE>
on account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee
regardless of sales volume or gross revenues.
"Reorganization" means the collective reference to the following
series of related transactions: The Borrower will create a new direct,
wholly-owned subsidiary, to be named Food Lion, Inc. ("New Food Lion"). The
Borrower will contribute to New Food Lion substantially all of the assets of
the Borrower other than the capital stock of (i) the Target, (ii) FLI Holding
Corp., a Delaware corporation ("FLI Holding"), (iii) Risk Management Services,
Inc., a North Carolina corporation ("RMS"), (iv) FL Food Lion, Inc., a Florida
corporation ("FL Food Lion") and (v) Barnwell, Inc., a Delaware corporation
("Barnwell"). After giving effect to such contribution, New Food Lion, FLI
Holding, RMS, FL Food Lion and Barnwell will each be direct wholly-owned
subsidiaries of the Borrower. FLI Holding will be merged into the Borrower and
Kash n' Karry Food Stores, Inc. will become a direct wholly-owned Subsidiary of
the Borrower.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans at
such time.
"Revolving Loan" means a Loan made pursuant to Section 2.03.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.
"Solvent", when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person and its subsidiaries, taken as a whole, will, as of
such date, exceed the amount that will be required to pay all "liabilities of
such Person and its subsidiaries, taken as a whole, contingent or otherwise",
as of such date (as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the insolvency of
debtors) as such debts become absolute and matured, (b) such Person and its
subsidiaries, taken as a whole, will not have, as of such date, an unreasonably
small amount of capital with which to
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conduct their businesses, taking into account the particular capital
requirements of such Person and its projected capital requirements and
availability and (c) such Person and its subsidiaries, taken as a whole, will
be able to pay their debts as they mature, taking into account the timing of
and amounts of cash to be received by such Person and its subsidiaries, taken
as a whole, and the timing of and amounts of cash to be payable on or in
respect of indebtedness of such Person and its subsidiaries, taken as a whole.
For purposes of this definition, (i) "debt" means liability on a "claim", and
(ii) "claim" means any (x) right to payment, whether or not such a right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal or equitable, secured or unsecured or
(y) right to an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an equitable remedy is
reduced to judgment, fixed, contingent, matured or unmatured, disputed,
undisputed, secured or unsecured.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board to which the Administrative Agent is subject
(a) with respect to the Base CD Rate, for new negotiable nonpersonal time
deposits in Dollars of over $100,000 with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership, association or
other entity of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held by such Person or one or more
subsidiaries of such Person or by such Person and one or more subsidiaries of
such Person.
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"Subsidiary" means any subsidiary of the Borrower.
"Stub End Date" has the meaning set forth in Section 1.04(b).
"Target" means Hannaford Bros. Co., a Maine corporation.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or
such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans and the use of the proceeds
thereof.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowing. For purposes of
this Agreement, Loans may be classified and referred to by Type (e.g., a
"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the
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context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
(b) For purposes of calculating compliance with Section 6.07 on the
last day of any Fiscal Quarter ended on or after the Acquisition Date and prior
to the first date (the "Stub End Date") on which four full Fiscal Quarters have
begun and ended on or after the Acquisition Date and Section 6.08 on any date
on or after the Acquisition Date and prior to the Stub End Date, Consolidated
EBITDAR (and each component thereof), Consolidated Fixed Charges (and each
component thereof) and Rentals for purposes of determining Consolidated
Adjusted Debt for any relevant period shall be adjusted on a pro forma basis as
if (i) the Acquisition had been consummated on the first day of such period,
(ii) the borrowings to finance the Acquisition (including without limitation
the Loans and any loans
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under the 5-Year Agreement and the Bridge Agreement) had been made on the first
day of such period and (iii) any Indebtedness of the Target and its
subsidiaries repaid in connection with the consummation of the Acquisition had
been repaid on the first day of such period.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender with a Commitment agrees to make Revolving Loans to
the Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) At the commencement of each Interest Period for any Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$5,000,000 and not less than $25,000,000 (or, if less, the unused portion of
the Commitments). Borrowings of more than one Type may be outstanding at the
same time; provided that there shall not at any time be more than a total of 10
Eurodollar Revolving Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
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SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
If no election as to the Type of Revolving Borrowing is specified,
then the requested Revolving Borrowing shall be an ABR Borrowing. If no
Interest Period is specified with respect to any requested Eurodollar Revolving
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender's Loan to
be made as part of the requested Borrowing.
SECTION 2.04. Reserved.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by
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notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds,
to an account of the Borrower maintained with the Administrative Agent in New
York City and designated by the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the
case of the Borrower, the interest rate applicable to ABR Loans. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that
a Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
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(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Revolving Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Revolving Borrowing,
the Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Borrowing is repaid
as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Majority Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurodollar Revolving Borrowing
and (ii) unless repaid, each Eurodollar Revolving Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
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(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of any Commitments
shall be in an amount that is an integral multiple of $5,000,000 and not less
than $25,000,000 and (ii) the Borrower shall not terminate or reduce any
Commitments if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.09, the sum of the total Revolving Credit
Exposures would exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender with a Commitment the then unpaid principal amount of
such Lender's Revolving Loans on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence
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and amounts of the obligations recorded therein; provided that the failure of
any Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment or (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. Promptly following receipt of any such
notice relating to a Revolving Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily amount by which such Lender's
Commitment exceeds the aggregate amount of such Lender's outstanding Loans
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during the period from and including the date hereof to but excluding the date
on which such Commitment terminates. Accrued commitment fees shall be payable
in arrears on the last day of March, June, September and December of each year
and on the date on which the Commitments terminate, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number
of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed
upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided above or (ii) in the
case of any other amount, 2% plus the rate applicable to ABR Loans as provided
above.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Revolving Loan prior to the end of the Availability Period), accrued
interest on the principal amount repaid or prepaid shall be payable on the date
of such repayment or prepayment, (iii) in the event of any conversion of any
Eurodollar Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion
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and (iv) all accrued interest shall be payable upon termination of the
Commitments.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account
of, or credit extended by, any Lender (except any such reserve requirement
reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender
or any participation therein;
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and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender, to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or such Lender's holding company, as the case may be, such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 15 days
after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right
to demand such compensation; provided that the Borrower shall not be required
to compensate a Lender (or such Lender's holding company) pursuant to this
Section for any increased costs or reductions incurred more than ninety days
prior to the date that such Lender notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the ninety-day period referred to above shall be extended to include the period
of retroactive effect thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period
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applicable thereto, (c) the failure to borrow any Eurodollar Loan, convert any
ABR Loan into a Eurodollar Loan, continue any Eurodollar Loan or prepay any
Eurodollar Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice is permitted to be revocable under Section
2.09(b) and is revoked in accordance herewith), or (d) the assignment of any
Eurodollar Loan other than on the last day of the Interest Period applicable
thereto as a result of a request by the Borrower pursuant to Section 2.17,
then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a Eurodollar
Loan, the loss to any Lender attributable to any such event shall be deemed to
include an amount determined by such Lender to be equal to the excess, if any,
of (i) the amount of interest that such Lender would pay for a deposit equal to
the principal amount of such Loan for the period from the date of such payment,
conversion, failure or assignment to the last day of the then current Interest
Period for such Loan (or, in the case of a failure to borrow, convert or
continue, the duration of the Interest Period that would have resulted from
such borrowing, conversion or continuation) if the interest rate payable on
such deposit were equal to the Adjusted LIBO Rate for such Interest Period,
over (ii) the amount of interest that such Lender would earn on such principal
amount for such period if such Lender were to invest such principal amount for
such period at the interest rate that would be bid by such Lender (or an
affiliate of such Lender) for Dollar deposits from other banks in the
eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall
be conclusive absent manifest error. The Borrower shall pay such Lender the
amount shown as due on any such certificate within 15 days after receipt
thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
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(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Administrative Agent or such Lender, as the case may be,
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender, or by the Administrative Agent on its
own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate. The Borrower
shall not be obligated to make any payments to a Foreign Lender pursuant to
Section 2.15(a) to the extent that such Indemnified Taxes or Other Taxes became
payable as a consequence of such Foreign Lender having failed to comply with
this Section 2.15(e).
(f) If any Lender shall become aware that it is entitled to receive a
refund or credit (such credit to include any increase in any foreign tax
credit) as a result of Indemnified Taxes (including any penalties or interest
with respect thereto) as to which it has been indemnified by the Borrower
pursuant to this Section 2.15, it shall promptly notify the Borrower of the
availability of such refund or credit and shall, within 30 days after receipt
of a request by the Borrower, apply for such refund or credit at the Borrower's
expense, and in the case of any application for such refund or credit by the
Borrower, shall, if legally able to do so, deliver to the Borrower such
certificates, forms or other documentation as may be reasonably necessary to
assist the Borrower in such application. If any Lender receives a refund or
credit (such credit to include any
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increase in any foreign tax credit) in respect to any Indemnified Taxes as to
which it has been indemnified by the Borrower pursuant to this Section 2.15, it
shall promptly notify the Borrower of such refund or credit and shall, within
30 days after receipt of such refund or the benefit of such credit (such
benefit to include any reduction of the taxes for which any Lender would
otherwise be liable due to any increase in any foreign tax credit available to
such Lender), repay the amount of such refund or benefit of such credit (with
respect to the credit, as determined by the Lender in its sole judgment) to the
Borrower (to the extent of amounts that have been paid by the Borrower under
this Section 2.15 with respect to Indemnified Taxes giving rise to such refund
or credit), plus any interest received with respect thereto, net of all
reasonable out-of-pocket expenses of such Lender and without interest (other
than interest actually received from the relevant taxing authority or other
Governmental Authority with respect to such refund or credit); provided,
however, that the Borrower, upon the request of such Lender, agrees to return
the amount of such refund or benefit of such credit (plus interest) to such
Lender in the event such Lender is required to repay the amount of such refund
or benefit of such credit to the relevant taxing authority or other
Governmental Authority.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 60 Wall Street, New
York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof.
If any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be made in
Dollars.
(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay
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principal then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the Federal Funds
Effective Rate.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(b) or 2.16(d), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to
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satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, or to file any
certificate or document reasonably requested by the Borrower, if, in the
judgment of such Lender, such designation or assignment or filing (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim
for compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply. A Lender shall not be required to pay any fee to
the Administrative Agent in connection with such assignment and delegation (any
such fee to be paid by the Borrower or the assignee).
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Representations and Warranties
The Borrower represents and warrants to the Lenders (including, in the
case of any representation and warranty made or deemed made before the
consummation of the Acquisition, at the time such representation and warranty
is made or deemed made and immediately after giving effect to the consummation
of the Acquisition) that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of this
Agreement and the other documents executed and delivered in connection with the
Transactions, has been duly executed and delivered by the Borrower and
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such consents,
approvals, registrations or filings as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any
of its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under (i) any indenture, agreement or instrument
relating to the Existing Public Debt or the Medium Term Notes or (ii) any other
indenture, agreement or other instrument binding upon the Borrower or any of
its Subsidiaries or its assets, other than defaults or violations for which
consents or waivers have been obtained or,
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solely with respect to any indenture, agreement or instrument described in
clause (ii), which defaults or violations, individually or in the aggregate
could not reasonably be expected to result in a Material Adverse Effect, (d)
will not give rise to a right under any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or its assets
to require any payment to be made by the Borrower or any of its Subsidiaries
other than any payments contemplated to be made in connection with the
Transactions, and (e) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the Fiscal Year ended January 2, 1999, reported on by PricewaterhouseCoopers
LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the Fiscal Year ended September 11, 1999, certified by its
Financial Officer. Such financial statements present fairly, in all material
respects, the financial condition and results of operations and cash flows of
Borrower and its Consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the
absence of footnotes in the case of the statements referred to in clause (ii)
above.
(b) Since June 19, 1999, there has been no Material Adverse Change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes and except
as may be permitted pursuant to Section 6.01.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
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against or affecting the Borrower or any of its Subsidiaries or that involve
this Agreement or the Transactions as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters).
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any
of its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books reserves as and to the extent required
by GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
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SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $8,000,000 the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$15,000,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to its
knowledge to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. None of the reports,
financial statements, certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time. Any
forward looking statements contained therein are inherently subject to risk and
uncertainties, many of which cannot be predicted with accuracy, and some of
which might not be anticipated. Future events and actual results, financial and
otherwise, could differ materially from those set forth therein or contemplated
by the forward looking statements contained therein.
SECTION 3.12. Margin Stock. Not more than 25% of the consolidated
assets of the Borrower consists of "margin stock" within the meaning of such
term under Regulation U of the Board of Governors of the Federal Reserve
System.
SECTION 3.13. No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.14. Subsidiaries. Schedule 3.14 sets forth all of the
Subsidiaries of the Borrower at the date hereof.
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SECTION 3.15. Solvency. As of the date hereof and on the occasion of
any Borrowing, the Borrower is Solvent.
SECTION 3.16. Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries has been substantially completed. The costs to the Borrower and
its Subsidiaries that have not been incurred as of the date hereof for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. The computer systems of the Borrower and its
Subsidiaries are and, with ordinary course of upgrading and maintenance, will
continue for the term of this Agreement to be sufficient for the conduct of
their business as currently conducted.
SECTION 3.17. Acquisition Documents. As of the Acquisition Date, each
of the representations and warranties made in the Acquisition Documents by each
of the parties thereto is true and correct in all material respects, and such
representations and warranties are hereby incorporated herein by reference with
the same effect as though set forth in their entirety herein, as qualified
therein.
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for the
Borrower, substantially in the form of Exhibit B-1, and covering such other
matters relating to the Borrower, this Agreement or the Transactions as the
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Majority Lenders shall reasonably request. The Borrower hereby requests such
counsel to deliver such opinion.
(c) The Administrative Agent shall have received evidence
satisfactory to it that the commitments under the Credit Agreement dated as of
December 14, 1998 among Food Lion, Inc., the lenders party thereto, The Chase
Manhattan Bank and Wachovia Bank, N.A shall have terminated and all loans
outstanding thereunder, together with accrued and unpaid interest thereon, and
all fees and expenses payable thereunder, shall have been, or shall
contemporaneously with the occurrence of the Effective Date be, paid in full.
(d) The Administrative Agent shall have received such other legal
opinions, documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of the Transactions and any other
legal matters relating to the Borrower, this Agreement or the Transactions, all
in form and substance satisfactory to the Administrative Agent and its counsel.
(e) All governmental and third party approvals necessary in
connection with the Transactions and the continuing operations of the Borrower
and its Subsidiaries shall have been obtained and be in full force and effect.
(f) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
(g) The Lenders and the Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the Effective Date,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
(h) There shall be no actions, suits or proceedings by or before any
arbitrator or Governmental Authority, or any other legal or regulatory
developments pending against or, to the knowledge of the Borrower, threatened
against the Borrower or any of its Subsidiaries or which involve this Agreement
or the Transactions, which, in the reasonable judgment of the Administrative
Agent, may prohibit or impose burdensome conditions on the Transactions
contemplated hereby.
The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not
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become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time,
on August 17, 2000 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including without limitation on the
date of the first Borrowing hereunder) is subject to the satisfaction of the
following conditions (or waiver thereof in accordance with Section 9.02):
(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing, including, without limitation, the representations and warranties
set forth in Sections 3.04 and 3.06, except to the extent such representations
and warranties expressly relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default or Event of Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full, the Borrower covenants and agrees with the Lenders
that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each Fiscal Year, its audited
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures as of the end of and for the previous
Fiscal Year, all reported on by PricewaterhouseCoopers LLP or other independent
public accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of
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operations of the Borrower and its Consolidated Subsidiaries on a consolidated
basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of each Fiscal Year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous Fiscal Year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
of the financial covenants set forth in Sections 6.02, 6.07 and 6.08 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section
3.04(a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
(excluding exhibits) by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;
and
(f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the
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Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
SECTION 5.02. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $20,000,000 subsequent to the date hereof; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole except to that extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect.
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SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in adequate working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations. The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property and all material Contractual
Obligations, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; provided that the foregoing shall not be construed to prevent the
Borrower or any such Subsidiary from contesting any of the same by appropriate
proceedings.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used
only (i) to refinance existing Indebtedness of the Borrower and its
Subsidiaries and (ii) for general corporate purposes of the Borrower and its
Subsidiaries, including as credit support for the Borrower's commercial paper
programs. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X.
SECTION 5.09. Change in Ratings. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of any change in
ratings established or deemed to have been established by Moody's and S&P for
any of its indebtedness for borrowed money, including, without limitation, the
Index Debt or its senior, unsecured, short-term indebtedness for borrowed money
(including, without limitation, commercial paper).
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SECTION 5.10. Copies of Other Bank Agreements. Promptly upon entering
into the Bridge Agreement or the 5-Year Agreement, the Borrower will deliver to
each Lender (other than a Lender who is a party to such Bridge Agreement or
5-Year Agreement) a true, correct and complete copy thereof.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth on Schedule 6.01 or
resulting from operating leases existing on the date hereof being reclassified
as capital leases in accordance with GAAP; provided that (i) such Lien shall
not apply to any other property or asset (other than accessions, modifications
and proceeds thereof) of the Borrower or any Subsidiary and (ii) such Lien
shall secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary on or after the date
hereof prior to the time such Person becomes a Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such
Lien shall not apply to any other property or assets (other than accessions,
modifications and proceeds thereof) of the Borrower or any Subsidiary and (iii)
such Lien shall secure only those obligations which it secures on the date of
such acquisition or the date such Person becomes a Subsidiary, as the case may
be and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
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(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such Liens and
the Indebtedness secured thereby are incurred prior to or within 180 days after
such acquisition or the completion of such construction or improvement, (ii)
the Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such Liens
shall not apply to any other property or assets (other than accessions,
modifications and proceeds thereof) of the Borrower or any Subsidiary; and
(e) Liens not otherwise permitted pursuant to this Section 6.01
securing Indebtedness of the Borrower or any Subsidiary (not otherwise
prohibited hereunder) in an aggregate principal amount at no time exceeding (i)
$30,000,000 minus (ii) the aggregate principal amount of Indebtedness of
Subsidiaries permitted solely by clause (e) of Section 6.02 outstanding at such
time.
SECTION 6.02. Indebtedness of Subsidiaries. The Borrower will not
permit any Subsidiary to create, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except to the extent otherwise permitted
hereunder:
(a) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(b);
(b) (i) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(c) in an aggregate
principal amount not to exceed $140,000,000, (ii) Indebtedness (other than
Indebtedness permitted by clause (i)) consisting of Capital Lease Obligations
and (iii) on and after the date on which Bel-Thai Supermarket Company Ltd.
("Bel- Thai") becomes a Subsidiary, Indebtedness of Bel-Thai in an aggregate
principal amount not exceeding $60,000,000;
(c) Indebtedness of any Subsidiary owed to the Borrower or any other
Subsidiary;
(d) Indebtedness of the Target and its subsidiaries outstanding on the
Acquisition Date and not incurred in contemplation of the Acquisition; and
(e) additional Indebtedness of the Subsidiaries in an aggregate
principal amount (for all Subsidiaries) at no time exceeding (i) $30,000,000
minus (ii) the aggregate principal amount of Indebtedness secured by Liens
permitted solely by clause (e) of Section 6.01 outstanding at such time;
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provided that at any date the aggregate amount of Capital Lease Obligations of
all Subsidiaries (other than any such Capital Lease Obligations incurred in
reliance on clause (i) of subsection (b)) and the aggregate amount of Capital
Lease Obligations of the Borrower will not exceed $1,000,000,000.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole (whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) the Borrower may merge into any other Person in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary may merge into the
Borrower in a transaction in which the Borrower is the surviving corporation,
(iii) any Subsidiary may merge into any Subsidiary in a transaction in which
the surviving entity is a Subsidiary, (iv) any Subsidiary may merge into any
other Person in a transaction in which the surviving entity is a Subsidiary or
in a transaction permitted by Section 6.09 and in which the surviving Person is
not a Subsidiary, (v) any Subsidiary may sell, transfer, lease or otherwise
dispose of its assets to the Borrower or to another Subsidiary or in a
transaction not constituting all or substantially all of the assets of the
Borrower and its Subsidiaries taken as a whole and which is permitted by
Section 6.08, (vi) Acquisition Sub may consummate the Merger, (vii) subject to
Section 10.01, the Borrower and its Subsidiaries may consummate the
Reorganization and (viii) any Subsidiary may liquidate or dissolve if the
Borrower determines in good faith that such liquidation or dissolution is in
the best interests of the Borrower and is not materially disadvantageous to the
Lenders; provided that any such merger involving a Person that is not a wholly
owned Subsidiary immediately prior to such merger shall not be permitted unless
also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries and
Hannaford and its subsidiaries on the date of execution of this Agreement and
businesses reasonably related or incidental thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
prior to such merger) any capital stock, evidences of Indebtedness or other
securities (including
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any option, warrant or other right to acquire any of the foregoing) of, make or
permit to exist any loans or advances to, guarantee any obligations of, or make
or permit to exist any investment or any other interest in, any other Person,
or purchase or otherwise acquire (in one transaction or a series of
transactions) any assets of any other Person constituting a business unit,
except:
(i) Cash Equivalents;
(ii) extensions of trade credit in the ordinary course of business;
(iii) investments arising from the settlement of debts or as a result
of bankruptcy or insolvency proceedings or as a result of enforcement
proceedings;
(iv) investments of the Borrower and the Subsidiaries existing on the
date hereof;
(v) investments by the Borrower existing on the date hereof in the
capital stock of its Subsidiaries;
(vi) loans, advances and other investments made by the Borrower to or
in any Subsidiary and made by any Subsidiary to or in the Borrower or any
other Subsidiary;
(vii) Guarantees to the extent that the resulting Debt would be
permitted by Section 6.08 and, if applicable, Section 6.02;
(viii) the acquisition of the capital stock of the Target pursuant to
the Acquisition Documents;
(ix) investments of the Target and its subsidiaries (i) existing on
the date hereof or (ii) made after the date hereof and prior to the
Acquisition Date, so long as such investments are permitted to be made by
the terms of the Merger Agreement;
(x) at any time on or after the Bridge Payout Date, acquisitions of a
Person or the assets of a Person constituting a business unit in the same
line of business conducted by the Borrower on the date hereof in an
aggregate amount not to exceed $600,000,000 over the term of this
Agreement; provided that acquisitions of equity interests in a Person
which do not result in such Person constituting a Subsidiary shall not
exceed an aggregate amount of $200,000,000; and
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(xi) investments not otherwise permitted pursuant to this Section
6.04 in an aggregate amount not to exceed $20,000,000 at any time
outstanding.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any Hedging Agreement, other than (i) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities, (ii) any Hedging Agreements to
hedge interest rate risk with respect to the loans outstanding under the Bridge
Agreement and (iii) Hedging Agreements constituting "treasury-locks" or similar
hedging arrangements entered into by the Borrower in anticipation of an
issuance of Debt by the Borrower pursuant to a capital markets transaction.
SECTION 6.05. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties and (b)
transactions between or among the Borrower and its wholly owned Subsidiaries
not involving any other Affiliate.
SECTION 6.06. Reserved.
SECTION 6.07. Fixed Charges Coverage. At the end of each Fiscal
Quarter set forth below, the ratio of (i) Consolidated EBITDAR for the period
of four Fiscal Quarters then ended to (ii) Consolidated Fixed Charges for such
period, shall not have been less than the ratio set forth below opposite such
Fiscal Quarter (subject to the proviso set forth below):
Period Ratio
------ -----
First Fiscal Quarter ended on or immediately after the 2.25:1
Effective Date - Third Fiscal Quarter 2001
Fourth Fiscal Quarter 2001 - Third Fiscal Quarter 2002 2.50:1
Fourth Fiscal Quarter 2002 - Third Fiscal Quarter 2003 2.75:1
Fourth Fiscal Quarter 2003 and thereafter 3.00:1
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; provided that at the end of any Fiscal Quarter ended prior to the Acquisition
Date, such ratio shall not have been less than 3:00:1.
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR. At no date will the ratio of (i) Consolidated Adjusted Debt at such
date to (ii) Consolidated EBITDAR for the period of four consecutive Fiscal
Quarters ended on or most recently prior to such date exceed the ratio set
forth below opposite the period in which such date falls (subject to the
provisio set forth below):
Period Ratio
------ -----
Effective Date - day immediately preceding last day of 4.50:1
Fourth Fiscal Quarter 2001
Last day of Fourth Fiscal Quarter 2001- day immediately 4.00:1
preceding last day of Fourth Fiscal Quarter 2002
Last day of Fourth Fiscal Quarter 2002 - day immediately 3.75:1
preceding last day of Fourth Fiscal Quarter 2003
Last day of Fourth Fiscal Quarter 2003 and thereafter 3.50:1
; provided that at any date prior to the Acquisition Date, such ratio will not
exceed 3:00:1.
SECTION 6.09. Limitation on Sales of Assets. The Borrower will not,
nor will it permit any Subsidiary to, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets, whether now owned
or hereafter acquired, or discontinue or eliminate any business line or
segment, except:
(a) the sale or other disposition of obsolete, surplus or worn out
property in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) as permitted by Section 6.03(a);
(d) (i) sales of assets in a single transaction or in a series of
related transactions the aggregate book value of which is not greater than
$25,000,000 in any one such transaction or series of related transactions and
(ii) sales of assets the consummation of which is an express condition (either
precedent or subsequent) to the approval by the Federal Trade Commission of the
Acquisition; provided that the book value of the assets disposed of in assets
sales consummated in
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reliance on this clause (ii) does not exceed $258,000,000 and provided, further
that if, within 180 days of any such assets sales, the Borrower or any
Subsidiary acquires similar assets having a use similar to and a fair market
value at least equal to the assets sold, then the value of the assets sold
shall not be included in calculating future assets sales permitted under this
Section 6.09;
(e) dispositions and discontinuances of a business line or segment
not otherwise permitted pursuant to this Section 6.09, provided that the
aggregate assets to be so disposed of or the aggregate assets utilized in a
business line or segment to be so discontinued (in a single transaction or in a
series of related transactions), when combined with all other assets disposed
of (including, without limitation, pursuant to a sale and leaseback
transaction) and all other assets utilized in all other business lines or
segments discontinued, during the period from the date of this Agreement
through and including the date of any such disposition or discontinuation would
not exceed 5% of Consolidated Total Assets as determined by reference to the
Borrower's most recently audited financial statements provided to the
Administrative Agent and the Lenders pursuant to Section 5.01(a) and provided,
further that if, within 180 days of the sale of any assets, the Borrower or any
Subsidiary acquires similar assets having a use similar to and a fair market
value at least equal to the assets so sold, then the value of the assets sold
shall not be included in calculating future assets permitted to be sold under
this Section 6.09; and
(f) conveyances, sales, leases, assignments, transfers or other
dispositions of assets from the Borrower to a wholly owned Subsidiary
(including without limitation pursuant to the Reorganization), from a
Subsidiary to the Borrower or from a Subsidiary to a wholly owned Subsidiary.
SECTION 6.10. Modifications to Acquisition Documents. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
amendment, modification or waiver of any material term or condition of any
Acquisition Document without the prior written consent of the Majority Lenders.
SECTION 6.11. Restrictions Affecting Subsidiaries. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, be bound by or
suffer to exist any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make other distributions or pay any Debt or
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary, (d) create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, (e) Guarantee any Debt or Indebtedness of the Borrower or
another Subsidiary or (f) suffer to exist any Lien on capital stock or other
equity interests issued by it;
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except for any such encumbrance or restriction existing under or by reason of
(i) any agreement in effect on the Effective Date as any such agreement is in
effect on such date, (ii) this Agreement, (iii) any agreement with respect to
Indebtedness of any Subsidiary permitted to be incurred under Section 6.02(b)
or secured by a Lien permitted to be incurred under Section 6.01(d) and
provided such encumbrance or restriction shall not apply to any assets of the
Borrower or its Subsidiaries other than the assets of such Subsidiary subject
to such Lien, (iv) any agreement binding upon such Subsidiary prior to the date
on which such Subsidiary was acquired by the Borrower and outstanding on such
date and provided such encumbrance or restriction shall not apply to any assets
of the Borrower or its Subsidiaries other than such Subsidiary, (v) customary
provisions restricting subletting or assignment of any lease governing any
leasehold interest of any Subsidiary, (vi) applicable law, (vii) licenses or
other agreements, including with respect to property, in the ordinary course of
business consistent with prior practice and (viii) any agreement binding upon
such Subsidiary so long as such encumbrance or restriction is no more
restrictive than those contained in this Agreement.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default. If any of the following events
("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Section) payable under this Agreement, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of five
days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any amendment or modification hereof, or in any report,
certificate, financial statement or other document delivered pursuant to this
Agreement or any amendment or modification hereof, shall prove to have been
incorrect in any material way when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower's existence) or 5.08 or in Article 6;
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(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent (given at the request of any Lender) to the Borrower;
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled maturity; provided that this clause (g) shall not apply to secured
Indebtedness that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or their respective debts, or of a
substantial part of their respective assets, under any federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of their respective assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part
of their respective assets, (iv) file an answer admitting the material
allegations of a petition filed against either of them in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
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(j) the Borrower or any Subsidiary shall become unable, or admit in
writing or fail generally, to pay their respective debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, bonded or vacated, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
or
(m) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Lenders shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in case of any event with respect to the Borrower described in clause (h)
or (i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
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ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent. Each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent
is required to exercise in writing by the Majority Lenders, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates
in any capacity. The Administrative Agent shall not be liable for any action
taken or not taken by it with the consent or at the request of the Majority
Lenders or in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by
the Borrower or a Lender, and the Administrative Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.
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The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right (so long as no Default
has occurred and is continuing with consent of the Borrower which consent shall
not be unreasonably withheld) to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent which shall be a bank
with an office in New York, New York, or an Affiliate of any such bank. Upon
the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
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Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 2110 Executive Drive, Salisbury,
North Carolina 28145-1330, Attention of Richard James, Treasurer/Director of
Finance (Telecopy No. 704-636-5024);
(b) if to the Administrative Agent, J.P. Morgan Services Inc., 500
Stanton Christiana Road, Newark, Delaware 19713, Attention of Jeannie Mattson,
Associate (Telecopy No. 302-634-1092); and
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
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exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders or by the Borrower and
the Administrative Agent with the consent of the Majority Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any
Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such payment, or postpone the scheduled date of expiration
of any Commitment, without the written consent of each Lender affected thereby,
(iv) change Section 2.16(b) or (c) in a manner that would alter the pro rata
sharing of payments required thereby, without the written consent of each
Lender adversely affected thereby, or (v) change any of the provisions of this
Section or the definition of "Majority Lenders" or any other provision hereof
specifying the number or percentage of Lenders required to waive, amend or
modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; provided further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent hereunder without the prior written consent of the
Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable out-of-pocket expenses incurred by the Administrative Agent or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its
rights under this Section, or in connection with the
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Loans made hereunder, including in connection with any workout, restructuring
or negotiations in respect thereof including, without limitation, actions in
connection with this Agreement or the Loans, arising, occurring or continuing
subsequent to the Maturity Date (other than any such expenses directly related
to a court enforcement action in which the Borrower prevails on the merits in a
final and nonappealable judgment).
(b) The Borrower shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or
(iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of
such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this
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Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its Commitment and the Loans at the time owing to it); provided that (i)
except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a
Lender or an assignment of the entire remaining amount of the assigning
Lender's Commitment, the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $10,000,000 unless each of the Borrower and the
Administrative Agent otherwise consent, (iii) the parties to each assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500, and (iv)
the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire; provided further that any consent of the
Borrower otherwise required under this paragraph shall not be required if an
Event of Default under clause (h) or (i) of Article 7 has occurred and is
continuing. Upon acceptance and recording pursuant to paragraph (d) of this
Section, from and after the effective date specified in each Assignment and
Acceptance, the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations
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under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply
with this paragraph shall be treated for purposes of this Agreement as a sale
by such Lender of a participation in such rights and obligations in accordance
with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument
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may provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the first proviso
to Section 9.02(b) that affects such Participant. Subject to paragraph (f) of
this Section, the Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement or any promissory note
issued pursuant hereto to such Lender to secure obligations of such Lender,
including any such pledge or assignment to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or assignment of a security
interest; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such assignee for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article 8 shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
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SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court for the Southern District of New York, and any appellate court
from
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any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that the Administrative Agent or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred
to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
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Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to a written
agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (g)
with the consent of the Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
or (ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes
of this Section, "Information" means all information received from the Borrower
relating to the Borrower, its Subsidiaries or their businesses, other than any
such information that is available to the Administrative Agent or any Lender on
a nonconfidential basis prior to disclosure by the Borrower; provided that, in
the case of information received from the Borrower after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
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Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.
ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization. Notwithstanding anything to
the contrary contained herein, the Borrower may effect the Reorganization or
any portion thereof so long as no Default shall have occurred and be continuing
or would occur after giving effect to the Reorganization or such portion
thereof. Promptly upon completion of the Reorganization, the Borrower shall
give the Administrative Agent notice thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
DELHAIZE AMERICA, INC.
By: /s/ Richard James
------------------------------------
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
individually and as
Administrative Agent
By: /s/ Kathryn Sayko-Yanes
------------------------------------
Title: Vice President
<PAGE>
BANK OF AMERICA, N.A.
By: /s/ Bill Manley
------------------------------------
Title: Managing Director
CITIBANK, N.A.
By: /s/ Marc Merlino
------------------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ Timothy R. Hileman
------------------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Howard F. Bascom, Jr.
------------------------------------
Title: Vice President
BANK ONE, NA
By: /s/ Catherine A. Muszynski
------------------------------------
Title: Vice President
<PAGE>
BBL INTERNATIONAL (U.K.) LIMITED
By: /s/ C.F. Wright / M-C Swinnen
------------------------------------
Title: Authorised Signatory / Authorised
Signatory
CREDIT AGRICOLE INDOSUEZ
By: /s/ Craig Welch
------------------------------------
Title: First Vice President
By: /s/ Rene LeBlanc
------------------------------------
Title: Vice President, Senior Relationship
Manager
DEUTSCHE BANK AG, NEW YORK BRANCH
and/or Cayman Islands Branch
By: /s/ Oliver Schwarz / Stefan Hafke
------------------------------------
Title: Assistant Vice President /
Vice President
FIRST UNION NATIONAL BANK
By: /s/ Thomas M. Harper
------------------------------------
Title: Vice President
<PAGE>
FORTIS (USA) FINANCE LLC
By: /s/ David Snyder / Eddie Matthews
------------------------------------
Title: Senior Vice President /
Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Minami Miura
------------------------------------
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
By: /s/ Theodore W. Cox / Edward Peyser
------------------------------------
Title: Vice President / Vice President
SUNTRUST BANK, ATLANTA
By: /s/ Andrew J. Hines
------------------------------------
Title: Vice President
COBANK, ACB
By: /s/ Brian J. Klatt
------------------------------------
Title: Vice President
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Nicholas A. Fiore
------------------------------------
Title: Assistant Vice President
THE FUJI BANK, LIMITED
By: /s/ Yuji Tanaka
------------------------------------
Title: Vice President and Manager
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ Henry F. Setina
------------------------------------
Title: Vice President
BRANCH BANKING & TRUST COMPANY
By: /s/ Cory Boyte
------------------------------------
Title: Vice President
CIBC INC.
By: /s/ Dominic Sorresso
------------------------------------
Title: Executive Director
<PAGE>
CREDIT COMMERCIALE DE FRANCE S.A.
By: /s/ Chantal Peters / Bernard de Bellefroid
-------------------------------------------
Title: Directeur / Directeur General
FLEET NATIONAL BANK
By: /s/ Thomas J. Bullard
-------------------------------------------
Title: Vice President
PARIBAS
By: /s/ A. Boulanger / D. Stroobants
-------------------------------------------
Title: Branch Manager / Structure and
Finance
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ Mark O' Connor
------------------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ J. William Bloore
-----------------------------------------
Title: Vice President
<PAGE>
BANCA DI ROMA-NEW YORK BRANCH
By: /s/ S.F. Paley
------------------------------------
Title: Vice President
By: /s/ Alessandro Paoli
------------------------------------
Title: Assistant Treasurer
CREDIT COMMUNAL DE BELGIQUE-NEW
YORK BRANCH
By: /s/ Caroline Junius / Jan e. van Panhuys
-----------------------------------------
Title: Vice President / General Manager
<PAGE>
Schedule 2.01
Commitment Schedule
Bank Commitment
- ---- ----------
Morgan Guaranty Trust Company of New York $30,000,000
Bank of America, N.A. $27,500,000
Citibank, N.A. $27,500,000
Wachovia Bank, N.A. $27,500,000
The Bank of New York $20,500,000
Bank One, NA $20,500,000
BBL International (U.K.) Limited $20,500,000
Credit Agricole Indosuez $20,500,000
Deutsche Bank AG-New York Branch $20,500,000
First Union National Bank $20,500,000
Fortis (USA) Finance LLC $20,500,000
The Industrial Bank of Japan, Limited $20,500,000
Cooperatieve Centrale Raiffeisen-Boerenleenbank $20,500,000
B.A., "Rabobank International", New York Branch
SunTrust Bank, Atlanta $20,500,000
CoBank, ACB $19,000,000
The Dai-Ichi Kangyo Bank, Ltd. $19,000,000
The Fuji Bank, Limited $19,000,000
Banque Nationale de Paris, Houston Agency $19,000,000
Branch Banking & Trust Company $12,500,000
CIBC Inc. $12,500,000
Credit Commerciale de France S.A. $12,500,000
Fleet National Bank $12,500,000
76
<PAGE>
Bank Commitment
- ---- ----------
Paribas $12,500,000
Bank of Tokyo-Mitsubishi Trust Company $ 9,500,000
Union Bank of California, N.A. $ 9,500,000
Banca di Roma-New York Branch $12,500,000
Credit Communal de Belgique-New York Branch $12,500,000
Total: $500,000,000
77
<PAGE>
Schedule 3.06
Disclosed Matters
Incorporated by reference are the relevant portions of the following documents
for the Borrower and as of the Acquisition Date, the Target:
Delhaize America, Inc.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999 filed
April 1, 1999, as amended by Amendment No. 1 to Annual Report on Form
10-K/A filed August 17, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended September 11, 1999
filed October 26, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended June 19, 1999 filed
July 30, 1999, as amended by Amendment No. 1 to Quarterly Report on Form
10-Q/A filed August 17, 1999.
4. Quarterly Report on Form 10-Q for the quarter ended March 27, 1999 filed
May 5, 1999, as amended by Amendment No. 1 to Quarterly Report on Form
10-Q/A filed August 17, 1999.
5. Current Report on Form 8-K filed September 17, 1999
6. Current Report on Form 8-K filed August 19, 1999.
7. Registration Statement on Form 8-A filed September 2, 1999, as amended by
Amendment No. 1 to Registration Statement on Form 8-A/A filed September 3,
1999.
Hannaford Bros. Co.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999 filed
March 11, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended October 2, 1999 filed
November 9, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended July 3, 1999 filed
August 11, 1999.
78
<PAGE>
4. Quarterly Report on Form 10-Q for the quarter ended April 3, 1999 filed
May 14, 1999.
5. Current Report on Form 8-K filed September 1, 1999.
6. Current Report on Form 8-K filed August 19, 1999.
7. Current Report on Form 8-K filed June 21, 1999.
8. Current Report on Form 8-K filed June 17, 1999.
79
<PAGE>
Schedule 3.14
Subsidiaries of Borrower
FLI Holding Corp., a Delaware corporation ("FLI"), and a wholly-owned
subsidiary of the Borrower.
Risk Management Services, Inc., a North Carolina corporation, and a wholly-
owned subsidiary of the Borrower.
FL Acquisition Sub., Inc., a Maine corporation, and a wholly-owned subsidiary of
the Borrower.
Kash n' Karry Food Stores, Inc., a Delaware corporation, and a wholly-owned
subsidiary of FLI.1
FL Food Lion, Inc., a Florida corporation, and a wholly-owned subsidiary of FLI.
Barnwell, Inc., a Delaware corporation, and a wholly-owned subsidiary of FLI.
- --------
1 KNK 702 Delaware Business Trust, KNK 886 Delaware Business Trust, KNK 891
Delaware Business Trust, all Delaware business trusts, are wholly-owned by Kash
n' Karry Food Stores, Inc.
80
<PAGE>
Schedule 6.01
Existing Liens
Liens representing the interest of the lessor under Capitalized Leases in
existence on the date of this Agreement have an aggregate outstanding principal
amount not exceeding $510,000,000.
81
<PAGE>
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of _____________
___, 1999 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among DELHAIZE AMERICA, INC., the Lenders party
therein, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent
(in such capacity, the "Administrative Agent"). Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "Assignor") and the
Assignee identified on Schedule l hereto (the "Assignee") agree as follows:
i. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Effective Date (as defined below), the interest described in Schedule 1 hereto
(the "Assigned Interest") in and to the Assignor's rights and obligations under
the Credit Agreement, in a principal amount as set forth on Schedule 1 hereto.
ii. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other instrument or
document furnished pursuant thereto or with respect to the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement or any other instrument or document furnished pursuant thereto, other
than that the Assignor has not created any adverse claim upon the interest
being assigned by it hereunder and that such interest is free and clear of any
such adverse claim; (b) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any of
its Subsidiaries or any other obligor or the performance or observance by the
Borrower, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any promissory
notes held by it evidencing the Assigned Interest and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached
promissory notes for a new promissory note or promissory notes payable to the
Assignee and (ii) if the Assignor has retained any interest under the Credit
Agreement, requests that the
A-1
<PAGE>
Administrative Agent exchange the attached promissory notes for a new
promissory note or promissory notes payable to the Assignor, in each case in
amounts which reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the Effective Date).
iii. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 3.4 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Credit
Agreement or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it
will be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender including, if it is
organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to Section 2.15(e) of the Credit Agreement.
iv. The effective date of this Assignment and Acceptance shall be the
Effective Date of Assignment described in Schedule 1 hereto (the "Effective
Date"). Following the execution of this Assignment and Acceptance, it will be
delivered to the Administrative Agent for acceptance by it and recording by the
Administrative Agent pursuant to the Credit Agreement, effective as of the
Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).
v. Upon such acceptance and recording, from and after the Effective
Date, the Administrative Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
A-2
<PAGE>
vi. From and after the Effective Date, (a) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment
and Acceptance, have the rights and obligations of a Lender thereunder and
shall be bound by the provisions thereof and (b) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement.
vii. This Assignment and Acceptance shall be governed by and construed
in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their
respective duly authorized officers on Schedule 1 hereto.
A-3
<PAGE>
Schedule 1
to Assignment and Acceptance
Name of Assignor:_________________________
Name of Assignee:_________________________
Effective Date of Assignment:_____________
Principal
Amount Assigned Commitment Percentage Assigned2
- --------------------------- -------------------------------------------------
$__________ __._____%
[Name of Assignee] [Name of Assignor]
By:_________________________________ By:___________________________________
Title: Title:
Accepted: Consented To:
MORGAN GUARANTY TRUST DELHAIZE AMERICA, INC.,
COMPANY OF NEW YORK, Borrower
as Administrative Agent
By:_________________________________ By:___________________________________
Title: Title:
- --------
2Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all Lenders.
A-1
<PAGE>
EXHIBIT B-1
FORM OF OPINION OF COUNSEL OF BORROWER
November ___, 1999
Morgan Guaranty Trust Company of New York
as Administrative Agent
60 Wall Street
New York, NY 10260
Each of the Lenders named on Annex A
Dear Sirs:
We have acted as counsel for Delhaize America, Inc., a North Carolina
corporation (the "Borrower"), in connection with the Credit Agreement, dated as
of November __, 1999 (the "Credit Agreement"), among the Borrower, the Lenders
party thereto (the "Lenders") and Morgan Guaranty Trust Company of New York
("MGT"), as Administrative Agent.
The opinions expressed here are furnished to you pursuant to
Subsection 4.01(b) of the Credit Agreement. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given in the Credit Agreement.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Credit Agreement,
the certificate referred to in Subsection 4.01(f) of the Credit Agreement, and
such corporate documents and records of the Borrower as we have deemed
necessary or appropriate. As to questions of fact relevant to this opinion, we
have, without independent investigation, relied upon representations made to us
by the Borrower including the representations contained in the Loan Documents,
and in various certificates delivered by the Borrower, including, but not
limited to, certificates presented to the Lenders and the Administrative Agent,
and certain representations of public officials, all of which we assume to be
true. In our examination, we have assumed (i) the genuineness of all signatures
of all parties other than signatures of the Borrower, (ii) the authenticity of
all corporate records, agreements, documents, instruments and certificates
submitted to us as originals, the conformity to original agreements, documents
and instruments of all agreements and instruments submitted to us as conformed,
certified or photostatic copies thereof and the authenticity of the originals
of such conformed, certified or
B-1-1
<PAGE>
photosttic copies; (iii) the due authorization, execution and delivery of all
agreements, documents and instruments by all parties other than the Borrower;
and (iv) the legal right and power of all such parties other than the Borrower
under all applicable laws and regulations to enter into, execute and deliver
such agreements, documents and instruments. We have further assumed that the
Lenders and the Administrative Agent have the requisite power and authority to
enter into the Loan Documents and to consummate the transactions contemplated
thereby and the absence of any requirement of consent, approval or
authorization by any Person or by any governmental body, agency or official
with respect to the Lenders and the Administrative Agent and that the Loan
Documents are legal, valid and binding obligations of the Lenders and the
Administrative Agent enforceable against such Persons in accordance with their
respective terms.
This law firm is a registered limited liability partnership organized
under the laws of the State of Texas. We express no opinion as to the laws of
any jurisdiction other than the laws of the State of New York, the United
States of America and The North Carolina Business Corporation Act. As to
matters governed by the laws of the State of North Carolina, we are relying
upon an opinion of Linn Evans, Esq. of even date herewith, a copy of which is
attached hereto. The opinions expressed in paragraph 1(b) below are based
solely upon our review of certain certificates of public officials of various
jurisdictions and are not based upon any examination of the laws of any such
jurisdiction.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower (a) is duly incorporated, validly existing and in good
standing under the laws of North Carolina and has all requisite power and
authority, to carry on its business as now conducted and (b) is qualified to do
business in, and is in good standing in, each jurisdiction listed on Schedule I
attached hereto.
2. The Transactions to be effected on the date hereof are each within
the Borrower's corporate powers and have each been duly authorized by all
necessary corporate and, if required, stockholder action. The Credit Agreement
has been duly executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower.
3. To our knowledge, the Transactions to be effected on the date
hereof (a) will not require any consent or approval of, registration or filing
with, or any other action by, any Federal, New York or North Carolina
Governmental Authority, except for consents, approvals, registrations, filings
or other actions as have been obtained, made or waived and are in full force
and effect and which are not required to have been effected prior to the date
hereof, (b) will not violate any
B-1-2
<PAGE>
applicable Federal, New York or North Carolina corporate law or regulations or
the charter, bylaws or other organizational documents of the Borrower or any
order of any Federal or New York Governmental Authority, (c) will not violate
or result in a default under any indenture, agreement or other instrument
binding upon the Borrower or its assets other than defaults or violations for
which consents or waivers have been obtained or which defaults or violations,
individually or in the aggregate, could not have a Material Adverse Effect, or
(d) will not give rise under any indenture, agreement or other instrument
binding upon the Borrower to any requirement for any payments be made by the
Borrower, or (e) will not result in the creation or imposition of any Lien on
any asset of the Borrower.
4. To our knowledge, there are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or threatened
against the Borrower (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve the Credit
Agreement or the Transactions to be effected on the date hereof.
5. The Borrower is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
The foregoing opinions are subject to the exceptions, limitations and
qualifications contained herein, including the following:
A. The enforceability of the Loan Documents may be (a) limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer and other similar laws affecting creditors'
rights, (b) subject to general principles of equity (regardless of whether
considered in a proceeding in equity or at law), commercial reasonableness and
good faith, and (c) limited by the power of courts to award damages in lieu of
equitable remedies. In addition, the right to indemnification contained in the
Loan Documents may be limited by Federal or New York state laws or the policies
of such laws.
B. We express no opinions as to enforceability of any provisions (i)
purporting to vest jurisdiction on any property of the Borrower in the Supreme
Court of the State of New York sitting in New York County or the United States
District Court of the Southern District of New York to the extent that such
property is not situated in New York, New York, (ii) purporting to waive or
B-1-3
<PAGE>
restrict access to legal or equitable remedies (including venue, forum non
conveniens or the right to assert a setoff) or the right to collect damages
(including special, indirect, consequential or punitive damages), (iii)
prohibiting oral amendments or waivers of provisions of the Loan Documents;
(iv) establishing evidentiary standards or (v) permitting a Lender to set off
against any debtor's accounts any amounts belonging to a third party or
otherwise held in a fiduciary capacity.
C. When used in this opinion, the phrase "to our knowledge" means
known to attorneys in our firm who have rendered services to the Borrower in
connection with the Transactions.
This opinion is as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
the Borrower or any other Person or any other circumstance. This opinion is
delivered to you in connection with the transactions referenced above and may
be relied upon only by you and any permitted assignee of an assigning Lender or
Participant under the Credit Agreement in connection with such transaction and
may not be relied upon in any manner or for any purpose by any other person
without our prior written consent.
Very truly yours,
B-1-4
<PAGE>
SCHEDULE I
Delaware Certificate of the Secretary of State of the State of
Delaware dated October 8, 1999
Florida Certificate of the Secretary of State of the State of
Florida dated October 11, 1999
Georgia Certificate of Existence of the Secretary of State of
the State of Georgia dated October 22, 1999
Kentucky Certificate of Authorization of the Secretary of
State of the Commonwealth of Kentucky dated
October 18, 1999
Maryland Certificate of the State Department of Assessments
and Taxation of the State of North Carolina dated
October 12, 1999
North Carolina Articles of Incorporation of Food Lion, Inc.,
certified by the Secretary of State of the State of
North Carolina dated October 8, 1999
Certificate of Existence of the Secretary of State of
the State of North Carolina dated October 8, 1999
Pennsylvania Certificate of the Secretary of the Department of
State of the Commonwealth of Pennsylvania dated
October 8, 1999
South Carolina Certificate of Authorization of the Secretary of the
State of South Carolina dated October 8, 1999
Tennessee Certificate of Authorization of the Secretary of
State of the State of Tennessee dated October 19, 1999
Virginia Certificate of Authority of the State Corporate
Commission of the Commonwealth of Virginia
dated October 21, 1999
West Virginia Certificate of Authority of the Secretary of the State
of West Virginia dated October 12, 1999
Certificate of Good Standing of the
Secretary of State of the State of West
Virginia dated October 18, 1999
B-1-5
<PAGE>
ANNEX A
LENDER
Morgan Guaranty Trust Company of New York
Bank of America, N.A.
Citibank, N.A.
Wachovia Bank, N.A.
The Bank of New York
Bank One, NA
BBL International (U.K.) Limited
Credit Agricole Indosuez
Deutsche Bank AG-New York Branch
First Union National Bank
Fortis (USA) Finance LLC
The Industrial Bank of Japan, Limited
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International",
New York Branch
SunTrust Bank, Atlanta
CoBank, ACB
The Dai-Ichi Kangyo Bank, Ltd.
The Fuji Bank, Limited
Banque Nationale de Paris, Houston Agency
Branch Banking & Trust Company
CIBC Inc.
Credit Commerciale de France S.A.
Fleet National Bank
Paribas
Bank of Tokyo-Mitsubishi Trust Company
Union Bank of California, N.A.
Banca di Roma-New York Branch
Credit Communal de Belgique-New York Branch
B-1-6
[CONFORMED COPY]
================================================================================
CREDIT AGREEMENT
dated as of
January 26, 2000
among
DELHAIZE AMERICA, INC.,
The LENDERS Party Hereto,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
$2,500,000,000 364-DAY TERM LOAN FACILITY
--------------------------------------------------------------------
J.P. MORGAN SECURITIES INC.,
as Lead Arranger and Bookrunner
--------------------------------------------------------------------------
BANK OF AMERICA, N.A.,
CITIBANK, N.A.
and
WACHOVIA SECURITIES, INC.,
as Co-Arrangers
================================================================================
<PAGE>
TABLE OF CONTENTS
----------------------
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms...................................................2
SECTION 1.02. Classification of Loans and Borrowing..........................24
SECTION 1.03. Terms Generally................................................24
SECTION 1.04. Accounting Terms; GAAP.........................................25
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments....................................................26
SECTION 2.02. Loans and Borrowings...........................................26
SECTION 2.03. Requests for Borrowing.........................................26
SECTION 2.04. Reserved.......................................................27
SECTION 2.05. Funding of Borrowings..........................................27
SECTION 2.06. Interest Elections.............................................28
SECTION 2.07. Termination and Reduction of Commitments.......................29
SECTION 2.08. Repayment of Loans; Evidence of Debt...........................30
SECTION 2.09. Mandatory and Optional Prepayment of Loans.....................31
SECTION 2.10. Fees...........................................................32
SECTION 2.11. Interest.......................................................32
SECTION 2.12. Alternate Rate of Interest.....................................33
SECTION 2.13. Increased Costs................................................34
SECTION 2.14. Break Funding Payments.........................................35
SECTION 2.15. Taxes..........................................................36
SECTION 2.16. Payments Generally; Pro Rata Treatment;
Sharing of Set-offs........................................37
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.................39
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers...........................................40
SECTION 3.02. Authorization; Enforceability..................................40
SECTION 3.03. Governmental Approvals; No Conflicts...........................41
SECTION 3.04. Financial Condition; No Material Adverse Change................41
SECTION 3.05. Properties.....................................................42
SECTION 3.06. Litigation and Environmental Matters...........................42
i
<PAGE>
PAGE
SECTION 3.07. Compliance with Laws and Agreements............................43
SECTION 3.08. Investment and Holding Company Status..........................43
SECTION 3.09. Taxes..........................................................43
SECTION 3.10. ERISA..........................................................43
SECTION 3.11. Disclosure.....................................................43
SECTION 3.12. Margin Stock...................................................44
SECTION 3.13. No Burdensome Restrictions.....................................44
SECTION 3.14. Subsidiaries...................................................44
SECTION 3.15. Solvency.......................................................44
SECTION 3.16. Year 2000 Matters..............................................44
SECTION 3.17. Acquisition Documents..........................................45
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date.................................................45
SECTION 4.02. First Credit Event.............................................46
SECTION 4.03. Each Credit Event..............................................48
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information.....................48
SECTION 5.02. Notices of Material Events.....................................50
SECTION 5.03. Existence; Conduct of Business.................................50
SECTION 5.04. Payment of Obligations.........................................51
SECTION 5.05. Maintenance of Properties; Insurance...........................51
SECTION 5.06. Books and Records; Inspection Rights...........................51
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations................................................51
SECTION 5.08. Use of Proceeds................................................52
SECTION 5.09. Change in Ratings..............................................52
SECTION 5.10. Copies of Other Bank Agreements................................52
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. Liens..........................................................52
SECTION 6.02. Indebtedness of Subsidiaries...................................53
SECTION 6.03. Fundamental Changes............................................54
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements...........................55
ii
<PAGE>
PAGE
SECTION 6.05. Transactions with Affiliates...................................56
SECTION 6.06. Reserved.......................................................56
SECTION 6.07. Fixed Charges Coverage.........................................57
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR....................................................57
SECTION 6.09. Limitation on Sales of Assets..................................58
SECTION 6.10. Modifications to Acquisition Documents.........................59
SECTION 6.11. Restrictions Affecting Subsidiaries............................59
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default..............................................59
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent.......................................62
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices........................................................64
SECTION 9.02. Waivers; Amendments............................................65
SECTION 9.03. Expenses; Indemnity; Damage Waiver.............................66
SECTION 9.04. Successors and Assigns.........................................67
SECTION 9.05. Survival.......................................................69
SECTION 9.06. Counterparts; Integration; Effectiveness.......................70
SECTION 9.07. Severability...................................................70
SECTION 9.08. Right of Setoff................................................70
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process....................................................71
SECTION 9.10. WAIVER OF JURY TRIAL...........................................71
SECTION 9.11. Headings.......................................................72
SECTION 9.12. Confidentiality................................................72
SECTION 9.13. Interest Rate Limitation.......................................73
ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization.....................................73
iii
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SCHEDULES:
Schedule 2.01 Commitments
Schedule 3.06 Disclosed Matters
Schedule 3.14 Subsidiaries
Schedule 6.01 Existing Liens
EXHIBITS:
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Opinion of Borrower's Counsel - First Borrowing Date
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CREDIT AGREEMENT dated as of January 26, 2000, among DELHAIZE AMERICA,
INC., the LENDERS party hereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as
Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition" means the Merger and all other transactions contemplated
by the Acquisition Documents to be consummated on or before the First Borrowing
Date.
"Acquisition Date" means the date of consummation of the Acquisition.
"Acquisition Documents" means the Merger Agreement, including the
exhibits and schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith.
"Acquisition Sub" means FL Acquisition Sub, Inc., a Maine corporation.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Morgan, in its capacity as administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
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"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
Eurodollar Loan, or with respect to the commitment fees payable hereunder, as
the case may be, the applicable rate per annum set forth below under the caption
"ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate", as the case may be,
based upon the ratings by Moody's and S&P, respectively, applicable on such date
to the Index Debt:
S&P/Moody's ABR Eurodollar Commitment
Index Debt Ratings: Spread Spread Fee Rate
- ---------------------------------------------------------------------
Category 1
A-/A3 or higher.......... .0% .50% .09%
Category 2
BBB+/Baa1................ .0% .625% .10%
Category 3
BBB/Baa2................. .0% .75% .125%
Category 4
BBB-/Baa3................ .25% 1.25% .175%
Category 5
BB+/Ba1.................. .75% 1.75% .30%
- ------------------------- -----------------------------------------
Category 6
Below.................... 1.25% 2.25% .50%
========================= =========================================
In addition,
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(a) On any date on which:
(x) (i) the sum of (1) the aggregate principal amount of loans
outstanding under the 5-Year Agreement (if the 5-Year Agreement is in effect on
such date) plus (2) the aggregate principal amount of loans outstanding under
the 364-Day Credit Agreement (if the 364-Day Credit Agreement is in effect on
such date) plus (3) the aggregate principal amount of Loans outstanding
hereunder, in each case on such date, exceeds 33% of the sum of (1) the
aggregate amount of the commitments under the 5-Year Agreement (or, if the
commitments under the 5- Year Agreement (if the 5-Year Agreement is in effect on
such date) shall have terminated, the aggregate principal amount of loans
outstanding thereunder) plus (2) the aggregate amount of the commitments under
the 364-Day Credit Agreement (if the 364-Day Credit Agreement is in effect on
such date) (or, if the commitments under the 364-Day Credit Agreement shall have
terminated, the aggregate principal amount of loans outstanding thereunder) plus
(3) the aggregate Commitments hereunder (or, if the Commitments hereunder (or if
the Commitments hereunder shall have terminated, the aggregate principal amount
of Loans outstanding hereunder), in each case on such date and (ii) Category 1
ratings, Category 2 ratings or Category 3 ratings are applicable on such date
or
(y) any Loans are outstanding hereunder (regardless of which Category
ratings are applicable on such date),
the "ABR Spread" and the "Eurodollar Spread" will each be increased by
.125%; provided that on any date on which the events in clause (x) and clause
(y) are both in effect, the "ABR Spread" and the "Eurodollar Spread" will each
be increased by .125%; and
(b) On any date on or after the date that falls six months after the
First Borrowing Date, the "ABR Spread" and the "Eurodollar Spread" will each be
increased by .375% (regardless in each case of which Category ratings are
applicable on such date).
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this definition), then such
rating agency shall be deemed to have established a rating in Category 6; (ii)
if the ratings established or deemed to have been established by Moody's and S&P
for the Index Debt shall fall within different Categories, the Applicable Rate
shall be based on the lower of the two ratings unless one of the two ratings is
two or more Categories lower than the other, in which case the Applicable Rate
shall be determined by reference to
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the Category next below that of the higher of the two ratings; and (iii) if the
ratings established or deemed to have been established by Moody's and S&P for
the Index Debt shall be changed (other than as a result of a change in the
rating system of Moody's or S&P), such change shall be effective as of the date
on which it is first announced by the applicable rating agency. Each change in
the Applicable Rate shall apply during the period commencing on the effective
date of such change and ending on the date immediately preceding the effective
date of the next such change. If the rating system of Moody's or S&P shall
change, or if either such rating agency shall cease to be in the business of
rating corporate debt obligations, the Borrower and the Lenders shall negotiate
in good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by the Borrower or
any of its Subsidiaries of any asset, including without limitation any
sale-leaseback transaction, whether or not involving a capital lease, but
excluding (i) dispositions in the ordinary course of business of inventory, (ii)
dispositions of Cash Equivalents and cash payments otherwise permitted under
this Agreement, (iii) dispositions to the Borrower or a Subsidiary, (iv)
dispositions constituting mergers or consolidations permitted by Section 6.03,
(v) dispositions constituting Investments permitted by Section 6.04, (vi)
dispositions of obsolete, unused or worn out equipment, (vii) dispositions of
assets not described in clauses (i) through (vi) hereof in any single
transaction or series of related transactions so long as the Net Cash Proceeds
therefrom do not exceed $1,000,000, and (viii) any disposition of assets not
described in clauses (i) through (vii) hereof consummated in any Fiscal Year,
but only to the extent that the Net Cash Proceeds therefrom, together with the
Net Cash Proceeds of all other dispositions consummated in such Fiscal Year and
not constituting an "Asset Sale" by reliance on this clause (viii), do not
exceed $5,000,000.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate. As used
in this definition, "Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup
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"B" (or a comparable successor risk classification) within the meaning of 12
C.F.R. Part 327 (or any successor provision) to the Federal Deposit Insurance
Corporation for insurance by such Corporation of time deposits made in Dollars
at the offices of such member in the United States; provided that if, as a
result of any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Delhaize America, Inc., a North Carolina corporation.
"Borrowing" means Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that, when used in connection with a Eurodollar Loan,
the term "Business Day" shall also exclude any day on which banks are not open
for dealings in Dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Capital Stock" means any capital stock of the Borrower or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"Capitalized Lease" means any lease which is required to be capitalized
on a consolidated balance sheet of the lessee and its subsidiaries in accordance
with GAAP.
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"Cash Equivalents" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America),
in each case maturing within one year from the date of acquisition
thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
rating of at least P-1 by Moody's or A-1 by S&P;
(c) investments in certificates of deposit, banker's acceptances and
time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $250,000,000;
(d) investments consisting of cash deposits in operating accounts
maintained by the Borrower or any Subsidiary; and
(e) repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c)
above.
"Change in Control" means (a) the failure of Delhaize Belgium or any
wholly-owned subsidiary of Delhaize Belgium to own, directly or indirectly,
beneficially or of record, shares representing more than a majority of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Borrower; (b) occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who were
neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group other than Delhaize
Belgium or any wholly-owned subsidiary of Delhaize Belgium.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding
7
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company, if any) with any request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the date of
this Agreement.
"Charges" has the meaning set forth in Section 9.13.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Commitment" means, with respect to each Lender, the commitment of such
Lender to make Loans hereunder, as such commitment may be (a) reduced from time
to time pursuant to Section 2.07 and (b) reduced or increased from time to time
pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable.
"Consolidated" means, when used in connection with any defined term,
and not otherwise defined, such term as it applies to the Borrower and its
Subsidiaries on a consolidated basis, after eliminating all intercompany items.
"Consolidated Adjusted Debt" means at any date (i) the Debt of the
Borrower and its Consolidated Subsidiaries plus (ii) 8 times Rentals (but
excluding any payments with respect to a Capital Lease to the extent such
Capital Lease is included in clause (i)) payable by the Borrower and its
Consolidated Subsidiaries for the period of four consecutive Fiscal Quarters
ended on or most recently prior to such date, determined on a consolidated basis
as of such date.
"Consolidated EBITDAR" for any period means the sum of (i) Consolidated
Net Income for such period plus, in each case to the extent deducted in
determining such Consolidated Net Income and without duplication, (ii)
Consolidated Depreciation expenses of the Borrower and its Consolidated
Subsidiaries, (iii) Consolidated Amortization expenses of the Borrower and its
Consolidated Subsidiaries, (iv) all federal, state, local and foreign income
taxes of the Borrower and its Consolidated Subsidiaries, and (v) Consolidated
Fixed Charges.
"Consolidated Fixed Charges" for any period means, without duplication,
on a consolidated basis the sum of (i) all Rentals payable during such period by
the Borrower and its Consolidated Subsidiaries, and (ii) Consolidated Interest
Expense for such period.
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"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" for any period means the gross revenues of
the Borrower and its Consolidated Subsidiaries for such period less all expenses
and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any unusual or extraordinary gains or losses on the sale or other
disposition of investments (excluding Cash Equivalents) or fixed or
capital assets, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Consolidated Subsidiary
accrued prior to the date it became a Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04) substantially all
the assets of which have been acquired in any manner by the Borrower or
any Consolidated Subsidiary, realized by such corporation prior to the
date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04(b)) with which the
Borrower or a Consolidated Subsidiary shall have consolidated or which
shall have merged into or with the Borrower or a Consolidated
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings and losses of any business entity (other than a
Consolidated Subsidiary) in which the Borrower or any Consolidated
Subsidiary has an ownership interest unless such net earnings shall
have actually been received by the Borrower or such Consolidated
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings and losses of any Consolidated
Subsidiary which for any reason is unavailable for payment of dividends
to the Borrower or any other Consolidated Subsidiary;
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(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the equity
in any Subsidiary at the date of acquisition thereof over the amount
invested in such Subsidiary;
(j) any gain arising from the acquisition of any Capital Stock;
(k) any reversal of any contingency reserve except to the extent that
provision for such contingency reserve shall have been made from income
arising during such period; provided, however, that any reversal of a
contingency reserve from a prior period shall only be excluded from
Consolidated Net Income to the extent that the aggregate amount of such
reversals exceeds $10,000,000 during the immediately preceding four
Fiscal Quarters; and
(l) any other unusual or extraordinary gain or loss.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means at any time the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis,
as set forth or reflected on the most recent consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Credit Exposure" means, with respect to any Lender at any time, the
sum of the outstanding principal amount of such Lender's Loans at such time.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person
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evidenced by bonds, debentures, notes or other similar instruments, (iii) all
obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable and accrued expenses arising in the
ordinary course of business, (iv) all Capital Lease Obligations, (v) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts payable under a banker's acceptance, (vi) all Redeemable Preferred Stock
of such Person (in the event such Person is a corporation), (vii) all
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid under a letter of credit or similar instrument, (viii) all Debt of
others secured by a Lien on any asset of such Person, whether or not such Debt
is assumed by such Person, and (ix) all Debt of others Guaranteed by such
Person.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Delhaize Belgium" means Etablissements Delhaize Freres et Cie "Le
Lion" S.A., a Belgian corporation.
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed on Schedule 3.06.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any
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Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Issuance" means any issuance of equity securities (including
any Redeemable Preferred Stock or other preferred equity securities) by the
Borrower or a Subsidiary, other than (i) equity securities issued to the
Borrower or a Subsidiary, (ii) common stock of the Borrower issued as
consideration for the Acquisition, (iii) equity securities issued to officers
and directors of the Borrower pursuant to the exercise of stock options held by
such Persons so long as the Net Cash Proceeds therefrom do not exceed $5,000,000
and (iv) equity securities issued pursuant to employee benefit plans in the
ordinary course of business.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
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"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 7.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
or is attributable to such Foreign Lender's failure or inability to comply with
Section 2.15(e), except to the extent that such Foreign Lender's assignor (if
any) was entitled, at the time of assignment, to receive additional amounts from
the Borrower with respect to such withholding tax pursuant to Section 2.15(a).
"Existing Public Debt" means the Borrower's $150,000,000 aggregate
principal amount of 7.55% Notes due 2007 and its $150,000,000 aggregate
principal amount of 8.05% Notes due 2027.
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"First Borrowing Date" means the date of the first Borrowing hereunder.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
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"Fiscal Year" means any fiscal year of the Borrower.
"5-YearAgreement" means the $500,000,000 5-Year Revolving Credit
Agreement dated as of January 26, 2000 among the Borrower, the lenders party
thereto and Morgan, as administrative agent, as amended from time to time.
"Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
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"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
(excluding current accounts payable incurred in the ordinary course of
business), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of property
or services (excluding current accounts payable incurred in the ordinary course
of business), (f) all Indebtedness of others secured by (or for which the holder
of such Indebtedness has an existing right, contingent or otherwise, to be
secured by) any Lien on property owned or acquired by such Person, whether or
not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such
Person, (i) all obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty and (j)
all obligations, contingent or otherwise, of such Person in respect of bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness of
any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such
Person's ownership interest in or other relationship with such entity, except to
the extent the terms of such Indebtedness provide that such Person is not liable
therefor.
"Indebtedness Incurrence" means the incurrence of Indebtedness by the
Borrower or any of its Subsidiaries, other than (i) Indebtedness of the Borrower
under the 364-Day Credit Agreement or the 5-Year Credit Agreement, (ii)
Indebtedness of the Borrower incurred pursuant to uncommitted existing lines of
credit in existence on the Effective Date in an aggregate principal amount
outstanding at any time not in excess of $90,000,000 and maturing no more than
30 days after the date of incurrence thereof, (iii) Indebtedness of the Borrower
consisting of Capital Lease Obligations, (iv) Indebtedness of the Borrower
secured by a Lien permitted by Section 6.01(d) and (v) Indebtedness of any
Subsidiary permitted by Section 6.02.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.03(b).
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"Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Borrower that is not guaranteed by any other Person (other
than Subsidiaries) or subject to any other credit enhancement.
"Information" has the meaning set forth in Section 9.12.
"Interest Election Request" means a request by the Borrower to convert
or continue a Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided, that (i) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless, in the case of a Eurodollar
Borrowing only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day, (ii) any Interest Period that commences on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the last calendar month of such Interest Period) shall end
on the last Business Day of the last calendar month of such Interest Period and
(iii) any Interest Period that would otherwise end after the Maturity Date shall
end on the Maturity Date. For purposes hereof, the date of a Borrowing initially
shall be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on
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such page of such Service, as determined by the Administrative Agent from time
to time for purposes of providing quotations of interest rates applicable to
Dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for Dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which Dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Major Casualty Proceeds" means (i) the aggregate insurance proceeds
received in connection with one or more related events by the Borrower or any of
its Subsidiaries under any insurance policy maintained by the Borrower or any of
its Subsidiaries covering losses with respect to tangible real or personal
property or improvements (including coverage for losses from business
interruption) or (ii) any award or other cash compensation with respect to any
one or more related condemnations of property (or any transfer or disposition of
property in lieu of condemnation) received by the Borrower or any of its
Subsidiaries if, in the case of either clause (i) or (ii), the amount of such
aggregate insurance proceeds or award or other cash compensation exceeds
$15,000,000.
"Majority Lenders" means, at any time, Lenders having Commitments
representing more than 50% of the aggregate amount of the Commitments at such
time (or, if the Commitments shall have terminated, Lenders holding Credit
Exposures representing more than 50% of the total Credit Exposures at such
time).
"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.
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"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Agreement or (c) the
rights of or benefits available to the Lenders under this Agreement.
"Material Indebtedness" means Indebtedness, or obligations in respect
of one or more Hedging Agreements, of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $20,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required
to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means the date that falls 364 days after the First
Borrowing Date.
"Maximum Rate" has the meaning set forth in Section 9.13.
"Medium Term Notes" means the medium term notes of the Borrower having
interest rates ranging from 8.40% to 8.73% with due dates ranging from 2000 to
2006 and having an aggregate principal balance of $123,300,000.
"Merger" means the merger of Acquisition Sub with and into the Target
(with the Target as the surviving Person) pursuant to the Merger Agreement on
the First Borrowing Date concurrently with the making of the initial Loans
hereunder, thereby consummating the Acquisition.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 17, 1999, as amended by Amendment No. 1 dated as of November, 1999 to be
effective as of August 17, 1999, among the Borrower, Acquisition Sub and the
Target.
"Minority Interests" means any shares of stock of any class of a
Consolidated Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and/or one or more of its Consolidated
Subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York.
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"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"Net Cash Proceeds" means, with respect to any Reduction Event, an
amount equal to the cash proceeds received by the Borrower or any of its
Subsidiaries from or in respect of such Reduction Event (including any cash
proceeds received as interest or similar income on, or other cash proceeds of,
any noncash proceeds of any Asset Sale, but only as and when received), less (a)
any out-of-pocket fees, costs and expenses incurred by such Person in respect of
such Reduction Event and (b) if such Reduction Event is an Asset Sale, (i) any
taxes actually paid or to be payable by such Person (as estimated by the chief
financial officer or chief accounting officer of the Borrower, giving effect to
the overall tax position of the Borrower) in respect of such Asset Sale,
including any taxes resulting from the transfer of the proceeds of such sale to
such Person, (ii) the amount of all Indebtedness secured by any assets subject
to such Asset Sale and subject to mandatory prepayment or repayment as a result
of such Asset Sale and (iii) the amount of any reserves established by the
Borrower and its Subsidiaries to fund contingent liabilities payable by the
Borrower and its Subsidiaries attributable to such Asset Sale (as estimated by
the chief financial officer or chief accounting officer of the Borrower)
including, without limitation, liabilities under any indemnification
obligations, environmental liabilities and liabilities with respect to employee
benefit plans and other post retirement benefit liabilities, in each case
associated with such Asset Sale, until such time as such amounts are no longer
reserved or such reserve is no longer necessary (at which time any remaining
amounts will become Net Cash Proceeds). Solely for purposes of calculating Net
Cash Proceeds pursuant to this definition, a "Reduction Event" shall include any
disposition of assets not constituting an "Asset Sale" by reliance on clauses
(vii) and (viii) of the definition thereof and any issuance of equity securities
not constituting an "Equity Issuance" by reliance on clause (iii) of the
definition thereof.
"Operating Lease" means any lease other than a Capitalized Lease.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 9.04(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
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"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments and other governmental
charges that are not yet due or are being contested in compliance with
Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's,
landlords' and other like Liens imposed by law, arising in the ordinary
course of business and securing obligations that are not overdue by
more than 30 days or are being contested in compliance with Section
5.04;
(c) Liens granted to a landlord pursuant to a lease to secure the
obligations of the lessee under such lease which apply only to property
or assets of the lessee located at the leased premises;
(d) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(e) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds (so long as,
with respect to any such appeal bonds posted with respect to any
judgment, no Event of Default then exists under Section 7(k)),
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(f) judgment liens provided no Event of Default then exists
under Section 7(k); and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the
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Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section
3(5) of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Morgan as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Maturity Date either (i)
mandatorily redeemable (by sinking fund or similar payments or otherwise) or
(ii) redeemable at the option of the holder thereof.
"Reduction Event" means (i) any Asset Sale, (ii) any Indebtedness
Incurrence, (iii) any Equity Issuance or (iv) the receipt by the Borrower or any
Subsidiary of Major Casualty Proceeds, provided that clause (iv), so long as no
Default has occurred and is continuing, shall not give rise to a Reduction Event
to the extent that (x) within 5 Business Days after receipt of the related Major
Casualty Proceeds, the Borrower shall have delivered to the Agent the
certificate referred to in Section 5.01(f) with respect thereto and (y) within
180 days after receipt of the related Major Casualty Proceeds, the Borrower or a
Subsidiary shall have actually expended such Major Casualty Proceeds for the
restoration or replacement of the related asset(s) so that the Reduction Event,
if any, occurring by reason of the receipt of such Major Casualty Proceeds shall
be deemed to occur on (1) the 5th Business Day following receipt thereof, as to
the amount thereof, if no certificate with respect thereto has been delivered by
the Borrower to the Agent pursuant to Section 5.01(f) and (2) the 180th day
following receipt thereof, with respect to 100% of the amount thereof not so
expended. The description of any transaction as falling within the above
definition does not affect any limitation on such transaction imposed by Article
6 of this Agreement.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Rentals" means and includes as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Borrower or a Consolidated Subsidiary, as lessee or
sublessee under an Operating Lease or Capitalized Lease of real or personal
property, but
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shall be exclusive of any amounts required to be paid by the Borrower or a
Consolidated Subsidiary (whether or not designated as rents or additional rents)
on account of maintenance, repairs, insurance, taxes and similar charges. Fixed
rents under any so-called "percentage leases" shall be computed solely on the
basis of the minimum rents, if any, required to be paid by the lessee regardless
of sales volume or gross revenues.
"Reorganization" means the collective reference to the following series
of related transactions: The Borrower will create a new direct, wholly-owned
subsidiary, to be named Food Lion, Inc. ("New Food Lion"). The Borrower will
contribute to New Food Lion substantially all of the assets of the Borrower
other than the capital stock of (i) the Target, (ii) FLI Holding Corp., a
Delaware corporation ("FLI Holding"), (iii) Risk Management Services, Inc., a
North Carolina corporation ("RMS"), (iv) FL Food Lion, Inc., a Florida
corporation ("FL Food Lion") and (v) Barnwell, Inc., a Delaware corporation
("Barnwell"). After giving effect to such contribution, New Food Lion, FLI
Holding, RMS, FL Food Lion and Barnwell will each be direct wholly-owned
subsidiaries of the Borrower. FLI Holding will be merged into the Borrower and
Kash n' Karry Food Stores, Inc. will become a direct wholly-owned Subsidiary of
the Borrower.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.
"Solvent", when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person and its subsidiaries, taken as a whole, will, as of
such date, exceed the amount that will be required to pay all "liabilities of
such Person and its subsidiaries, taken as a whole, contingent or otherwise", as
of such date (as such quoted terms are determined in accordance with applicable
federal and state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person and its subsidiaries,
taken as a whole, will not have, as of such date, an unreasonably small amount
of capital with which to conduct their businesses, taking into account the
particular capital requirements of such Person and its projected capital
requirements and availability and (c) such Person and its subsidiaries, taken as
a whole, will be able to pay their debts as they mature, taking into account the
timing of and amounts of cash to be received
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by such Person and its subsidiaries, taken as a whole, and the timing of and
amounts of cash to be payable on or in respect of indebtedness of such Person
and its subsidiaries, taken as a whole. For purposes of this definition, (i)
"debt" means liability on a "claim", and (ii) "claim" means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal
or equitable, secured or unsecured or (y) right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or unsecured.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject (a) with
respect to the Base CD Rate, for new negotiable nonpersonal time deposits in
Dollars of over $100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held by such Person or one or more subsidiaries
of such Person or by such Person and one or more subsidiaries of such Person.
"Subsidiary" means any subsidiary of the Borrower.
"Stub End Date" has the meaning set forth in Section 1.04(b).
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"Target" means Hannaford Bros. Co., a Maine corporation.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Termination Date" means the earlier of the close of business, New York
City time, on the First Borrowing Date or 3:00 p.m., New York City time, on
August 17, 2000.
"364-Day Credit Agreement" means the $500,000,000 364-Day Revolving
Agreement dated as of November 19, 1999 among the Borrower, the lenders party
thereto and Morgan, as administrative agent, as amended from time to time.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans and the use of the proceeds
thereof and the consummation of the Acquisition and all other transactions
contemplated by the Acquisition Documents.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowing. For purposes of
this Agreement, Loans may be classified and referred to by Type (e.g., a
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"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
(b) For purposes of calculating compliance with Section 6.07 on the
last day of any Fiscal Quarter ended on or after the Acquisition Date and prior
to the first date (the "Stub End Date") on which four full Fiscal Quarters have
begun and ended on or after the Acquisition Date and Section 6.08 on any date on
or after the Acquisition Date and prior to the Stub End Date, Consolidated
EBITDAR (and
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each component thereof), Consolidated Fixed Charges (and each component thereof)
and Rentals for purposes of determining Consolidated Adjusted Debt for any
relevant period shall be adjusted on a pro forma basis as if (i) the Acquisition
had been consummated on the first day of such period, (ii) the borrowings to
finance the Acquisition (including without limitation the Loans and any loans
under the 5-Year Agreement and the 364-Day Credit Agreement) had been made on
the first day of such period and (iii) any Indebtedness of the Target and its
subsidiaries repaid in connection with the consummation of the Acquisition had
been repaid on the first day of such period.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender with a Commitment agrees to make one term Loan to the
Borrower on the First Borrowing Date in an aggregate principal amount not
exceeding such Lender's Commitment. The Commitments are not revolving in nature,
and amounts repaid or prepaid may not be reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part
of a Borrowing consisting of Loans made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith. Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign branch or Affiliate of such Lender to make such
Loan; provided that any exercise of such option shall not affect the obligation
of the Borrower to repay such Loan in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$5,000,000 and not less than $25,000,000 (or, if less, the unused portion of the
Commitments).
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
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SECTION 2.03. Requests for Borrowing. To request a Borrowing, the
Borrower shall notify the Administrative Agent of such request by telephone (a)
in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, on
the date of the proposed Borrowing; provided that the Borrower may request only
one Borrowing pursuant to this Section 2.03. Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated
by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.05.
If no election as to the Type of Borrowing is specified, then the
requested Borrowing shall be an ABR Borrowing. If no Interest Period is
specified with respect to any requested Eurodollar Borrowing, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
Promptly following receipt of a Borrowing Request in accordance with this
Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender's Loan to be made as part of the
requested Borrowing.
SECTION 2.04. Reserved.
SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
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notice to the Lenders. The Administrative Agent will make such Loans available
to the Borrower by promptly crediting the amounts so received, in like funds, to
an account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the
case of the Borrower, the interest rate applicable to ABR Loans. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Borrowing initially shall be
of the Type specified in the applicable Borrowing Request and, in the case of a
Eurodollar Borrowing, shall have an initial Interest Period as specified in such
Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section. The Borrower may elect different options with respect to different
portions of the affected Borrowing, in which case each such portion shall be
allocated ratably among the Lenders holding the Loans comprising such Borrowing,
and the Loans comprising each such portion shall be considered a separate
Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
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(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of
the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Majority Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
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SECTION 2.07. Termination and Reduction of Commitments. (a) The
Commitments shall terminate on the Termination Date (regardless of whether any
Loans have been made on the Termination Date).
(b) On the date on which the Borrower or any of its Subsidiaries
receives any Net Cash Proceeds in respect of any Reduction Event, the
Commitments shall be reduced by an amount equal to such Net Cash Proceeds;
provided that if the Net Cash Proceeds in respect of any Reduction Event is less
than $5,000,000, no such reduction shall be required until the Net Cash Proceeds
with respect to such Reduction Event, together with the Net Cash Proceeds with
respect to all other Reduction Events in respect of which no reduction under
this paragraph (b) shall have theretofore been made, is equal to at least
$5,000,000.
(c) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that each reduction of any Commitments shall
be in an amount that is an integral multiple of $5,000,000 and not less than
$25,000,000.
(d) The Borrower shall notify the Administrative Agent of any
mandatory reduction of the Commitments under paragraph (b) of this Section or
any election to terminate or reduce the Commitments under paragraph (c) of this
Section, in each case at least three Business Days prior to the effective date
of such termination or reduction, specifying such mandatory reduction or such
election, as the case may be, and, in the case of any such election, the
effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of election to terminate the Commitments as permitted
under paragraph (c) delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or prior to the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments shall be permanent.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender with a Commitment the then unpaid principal amount of
such Lender's Loans on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender
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resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or interest
due and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
SECTION 2.09. Mandatory and Optional Prepayment of Loans. (a) On the
date on which the Borrower or any of its Subsidiaries shall receive Net Cash
Proceeds in respect of any Reduction Event, the Borrower shall prepay Loans in
an aggregate amount equal to such Net Cash Proceeds; provided that if the Net
Cash Proceeds in respect of any Reduction Event is less than $10,000,000, no
such prepayment shall be required until the Net Cash Proceeds with respect to
such Reduction Event, together with the Net Cash Proceeds with respect to all
other Reduction Events in respect of which no prepayment under this paragraph
(a) shall have theretofore been made, is equal to at least $10,000,000.
(b) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (c) of this Section.
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(c) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment permitted by paragraph (b) is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. Promptly following receipt of any such
notice relating to a Borrowing, the Administrative Agent shall advise the
Lenders of the contents thereof. Each prepayment of Loans pursuant to paragraph
(a) shall be applied to such Borrowings as the Borrower may designate (or,
failing such designation, as determined by the Administrative Agent). Each
partial prepayment of any Borrowing permitted by paragraph (b) shall be in an
amount that would be permitted in the case of an advance of a Borrowing of the
same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing. Prepayments
shall be accompanied by accrued interest to the extent required by Section 2.11.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily amount by which such Lender's
Commitment exceeds the aggregate amount of such Lender's outstanding Loans
during the period from and including the date hereof to but excluding the date
on which such Commitment terminates. Accrued commitment fees shall be payable in
arrears on the last day of March, June, September and December of each year and
on the date on which the Commitments terminate, commencing on the first such
date to occur after the date hereof. All commitment fees shall be computed on
the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
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SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest
at a rate per annum equal to the Adjusted LIBO Rate for the Interest Period in
effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided above or (ii) in the case of
any other amount, 2% plus the rate applicable to ABR Loans as provided above.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued pursuant
to paragraph (c) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Loan prior to the end of the Availability Period), accrued interest on the
principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, (iii) in the event of any conversion of any Eurodollar
Loan prior to the end of the current Interest Period therefor, accrued interest
on such Loan shall be payable on the effective date of such conversion and (iv)
all accrued interest shall be payable upon termination of the Commitments.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
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(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or Eurodollar Loans made by
such Lender or any participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received or
receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender, to a level
below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or such Lender's holding company, as the case may be, such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered.
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(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 15 days after
receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
compensate a Lender (or such Lender's holding company) pursuant to this Section
for any increased costs or reductions incurred more than ninety days prior to
the date that such Lender notifies the Borrower of the Change in Law giving rise
to such increased costs or reductions and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the ninety-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow any
Eurodollar Loan, convert any ABR Loan into a Eurodollar Loan, continue any
Eurodollar Loan or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice is permitted
to be revocable under Section 2.09(c) and is revoked in accordance herewith), or
(d) the assignment of any Eurodollar Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Borrower
pursuant to Section 2.17, then, in any such event, the Borrower shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurodollar Loan, the loss to any Lender attributable to any such event
shall be deemed to include an amount determined by such Lender to be equal to
the excess, if any, of (i) the amount of interest that such Lender would pay for
a deposit equal to the principal amount of such Loan for the period from the
date of such payment, conversion, failure or assignment to the last day of the
then current Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the duration of the Interest Period that would have
resulted from such borrowing, conversion or continuation) if the interest rate
payable on such deposit were equal to the Adjusted LIBO Rate for such Interest
Period, over (ii) the amount of interest that such Lender would earn on such
principal amount for such period if such Lender were to invest such
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principal amount for such period at the interest rate that would be bid by such
Lender (or an affiliate of such Lender) for Dollar deposits from other banks in
the eurodollar market at the commencement of such period. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to
receive pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate within 15 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if the
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes
imposed or asserted on or attributable to amounts payable under this Section)
paid by the Administrative Agent or such Lender, as the case may be, and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender, or by the Administrative Agent on its own behalf or on
behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
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(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law or reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate. The Borrower shall not be
obligated to make any payments to a Foreign Lender pursuant to Section 2.15(a)
to the extent that such Indemnified Taxes or Other Taxes became payable as a
consequence of such Foreign Lender having failed to comply with this Section
2.15(e).
(f) If any Lender shall become aware that it is entitled to receive a
refund or credit (such credit to include any increase in any foreign tax credit)
as a result of Indemnified Taxes (including any penalties or interest with
respect thereto) as to which it has been indemnified by the Borrower pursuant to
this Section 2.15, it shall promptly notify the Borrower of the availability of
such refund or credit and shall, within 30 days after receipt of a request by
the Borrower, apply for such refund or credit at the Borrower's expense, and in
the case of any application for such refund or credit by the Borrower, shall, if
legally able to do so, deliver to the Borrower such certificates, forms or other
documentation as may be reasonably necessary to assist the Borrower in such
application. If any Lender receives a refund or credit (such credit to include
any increase in any foreign tax credit) in respect to any Indemnified Taxes as
to which it has been indemnified by the Borrower pursuant to this Section 2.15,
it shall promptly notify the Borrower of such refund or credit and shall, within
30 days after receipt of such refund or the benefit of such credit (such benefit
to include any reduction of the taxes for which any Lender would otherwise be
liable due to any increase in any foreign tax credit available to such Lender),
repay the amount of such refund or benefit of such credit (with respect to the
credit, as determined by the Lender in its sole judgment) to the Borrower (to
the extent of amounts that have been paid by the Borrower under this Section
2.15 with respect to Indemnified Taxes giving rise to such refund or credit),
plus any interest received with respect thereto, net of all reasonable
out-of-pocket expenses of such Lender and without interest (other than interest
actually received from the relevant taxing authority or other Governmental
Authority with respect to such refund or credit); provided, however, that the
Borrower, upon the request of such Lender, agrees to return the amount of such
refund or benefit of such credit (plus interest) to such Lender in the event
such Lender is required to repay the amount of such refund or benefit of such
credit to the relevant taxing authority or other Governmental Authority.
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SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 60 Wall Street, New
York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If
any payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in Dollars.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions
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of this paragraph shall apply). The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders hereunder that the Borrower will not make
such payment, the Administrative Agent may assume that the Borrower has made
such payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due. In such event, if the
Borrower has not in fact made such payment, then each of the Lenders severally
agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the Federal Funds Effective Rate.
(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(b) or 2.16(d), then the Administrative Agent may,
in its discretion (notwithstanding any contrary provision hereof), apply any
amounts thereafter received by the Administrative Agent for the account of such
Lender to satisfy such Lender's obligations under such Sections until all such
unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, or to file any
certificate or document reasonably requested by the Borrower, if, in the
judgment of such Lender, such designation or assignment or filing (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if
the Borrower is required to pay any additional amount to any Lender or any
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Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement to
an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); provided that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (iii)
in the case of any such assignment resulting from a claim for compensation under
Section 2.13 or payments required to be made pursuant to Section 2.15, such
assignment will result in a reduction in such compensation or payments. A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to apply.
A Lender shall not be required to pay any fee to the Administrative Agent in
connection with such assignment and delegation (any such fee to be paid by the
Borrower or the assignee).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders (including, in the
case of any representation and warranty made or deemed made before the
consummation of the Acquisition, at the time such representation and warranty is
made or deemed made and immediately after giving effect to the consummation of
the Acquisition) that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary
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corporate and, if required, stockholder action. Each of this Agreement, the
Acquisition Documents and the other documents executed and delivered in
connection with the Transactions, has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (x) such consents,
approvals, registrations or filings with respect to the Acquisition which will
be obtained or made prior to the consummation of the Acquisition and will
thereafter be in full force and effect, (y) such consents, approvals,
registrations or filings with respect to the Acquisition which will be obtained
or made after the consummation of the Acquisition and the failure to obtain or
make prior to the Acquisition will not, individually or in the aggregate, have a
Material Adverse Effect and (z) such other consents, approvals, registrations or
filings as have been obtained or made and are in full force and effect, (b) will
not violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
(i) any indenture, agreement or instrument relating to the Existing Public Debt
or the Medium Term Notes or (ii) any other indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or its assets,
other than defaults or violations for which consents or waivers have been
obtained or, solely with respect to any indenture, agreement or instrument
described in clause (ii), which defaults or violations, individually or in the
aggregate could not reasonably be expected to result in a Material Adverse
Effect, (d) will not give rise to a right under any indenture, agreement or
other instrument binding upon the Borrower or any of its Subsidiaries or its
assets to require any payment to be made by the Borrower or any of its
Subsidiaries other than any payments contemplated to be made in connection with
the Transactions, and (e) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the Fiscal Year ended January 2, 1999, reported on by PricewaterhouseCoopers
LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the Fiscal Year ended September 11, 1999, certified by its
Financial Officer. Such financial statements present fairly, in all
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material respects, the financial condition and results of operations and cash
flows of Borrower and its Consolidated Subsidiaries as of such dates and for
such periods in accordance with GAAP, subject to year-end audit adjustments and
the absence of footnotes in the case of the statements referred to in clause
(ii) above.
(b) The Borrower has heretofore furnished to the Lenders the
consolidated balance sheet and statements of income, stockholders equity and
cash flows of the Target and its subsidiaries (i) as of and for the Fiscal Year
ended January 2, 1999, reported on by PricewaterhouseCoopers LLP, independent
public accountants, and (ii) as of and for the fiscal quarter and the portion of
the Fiscal Year ended July 3, 1999, certified by a Financial Officer of the
Borrower. Such financial statements present fairly, in all material respects,
the financial condition and results of operations and cash flows of the Target
and its consolidated subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
(c) Since June 19, 1999, there has been no Material Adverse Change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its Subsidiaries
has good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes and except as may be
permitted pursuant to Section 6.01.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries or that involve
this Agreement or the Transactions as to which there is a reasonable possibility
of an adverse determination and that, if adversely determined, could reasonably
be expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters).
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(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower
and its Subsidiaries is in compliance with all laws, regulations and orders of
any Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books reserves as and to the extent required by
GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed by more
than
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$8,000,000 the fair market value of the assets of such Plan, and the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) did not, as of the date of the most recent financial statements
reflecting such amounts, exceed by more than $15,000,000 the fair market value
of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to its knowledge to
which it or any of its Subsidiaries is subject, and all other matters known to
it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation of
this Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits to
state any material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided that,
with respect to projected financial information, the Borrower represents only
that such information was prepared in good faith based upon assumptions believed
to be reasonable at the time. Any forward looking statements contained therein
are inherently subject to risk and uncertainties, many of which cannot be
predicted with accuracy, and some of which might not be anticipated. Future
events and actual results, financial and otherwise, could differ materially from
those set forth therein or contemplated by the forward looking statements
contained therein.
SECTION 3.12. Margin Stock. Not more than 25% of the consolidated
assets of the Borrower consists of "margin stock" within the meaning of such
term under Regulation U of the Board of Governors of the Federal Reserve System.
SECTION 3.13. No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably
be expected to have a Material Adverse Effect.
SECTION 3.14. Subsidiaries. Schedule 3.14 sets forth all of the
Subsidiaries of the Borrower at the date hereof.
SECTION 3.15. Solvency. As of the date hereof and on the occasion of
any Borrowing, the Borrower is Solvent.
SECTION 3.16. Year 2000 Matters. Any reprogramming required to
permit the proper functioning (but only to the extent that such functioning
would otherwise be impaired by the occurrence of the year 2000) in and following
the
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year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries has been substantially completed. The costs to the Borrower and its
Subsidiaries that have not been incurred as of the date hereof for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. The computer systems of the Borrower and its
Subsidiaries are and, with ordinary course of upgrading and maintenance, will
continue for the term of this Agreement to be sufficient for the conduct of
their business as currently conducted.
SECTION 3.17. Acquisition Documents. As of the Acquisition Date, each
of the representations and warranties made in the Acquisition Documents by each
of the parties thereto is true and correct in all material respects, and such
representations and warranties are hereby incorporated herein by reference with
the same effect as though set forth in their entirety herein, as qualified
therein.
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such party
or (ii) written evidence satisfactory to the Administrative Agent (which may
include telecopy transmission of a signed signature page of this Agreement) that
such party has signed a counterpart of this Agreement.
(b) (i) The Lenders shall have received true, correct and complete
copies of the Acquisition Documents as in effect on the Effective Date, and (ii)
the material terms of such Acquisition Documents shall be in form and substance
satisfactory to the Majority Lenders.
With respect to the condition set forth in paragraph (b)(ii) of this
Section, each Lender shall be deemed to have determined that such condition has
been satisfied unless the Administrative Agent shall have received notice from
such Lender prior to the Effective Date that such Lender does not consider such
condition to have been satisfied.
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The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02. First Credit Event. The obligation of each Lender to make
a Loan on the occasion of the Borrowing to occur on the First Borrowing Date is
subject to the satisfaction of the following conditions (or waiver thereof in
accordance with Section 9.02):
(a) The Effective Date shall have occurred.
(b) (i) The Merger shall have been consummated (or shall be
consummated contemporaneously with the making of the Loans on the First
Borrowing Date) in accordance with the Acquisition Documents on or prior to
August 17, 2000, and (ii) no term or condition of any Acquisition Document shall
have been amended, modified or waived except as permitted by Section 6.10
hereof.
(c) The Administrative Agent shall have received true, correct and
complete copies of the Acquisition Documents as in effect on the First Borrowing
Date.
(d) (i) All governmental, shareholder and third-party consents
(including Hart-Scott-Rodino clearance) and approvals necessary or desirable in
connection with the Acquisition shall have been obtained and shall be in full
force and effect, except for such consents or approvals the failure of which to
obtain will not, individually or in the aggregate, have a Material Adverse
Effect, (ii) all applicable waiting periods shall have expired without any
action being taken by any competent authority that could restrain, prevent or
impose any materially adverse conditions on the Acquisition or that could seek
or threaten to restrain, prevent or impose any materially adverse conditions on
any of the foregoing, and (iii) no law or regulation shall be applicable which
in the judgment of the Lenders could have any such effect.
(e) There shall be no actions, suits or proceedings by or before any
arbitrator or governmental authority pending against or to the knowledge of the
Borrower threatened against or affecting the Borrower or any of its Subsidiaries
or the Target or any of its subsidiaries or that involve the credit facility
contemplated by this Agreement or the refinancing thereof or this Agreement as
to which there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected to have a Material Adverse
Effect or that challenge the Acquisition.
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(f) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
First Borrowing Date) of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for
the Borrower, substantially in the form of Exhibit B, and covering such other
matters relating to the Borrower, this Agreement or the Transactions as the
Majority Lenders shall reasonably request. The Borrower hereby requests such
counsel to deliver such opinion.
(g) The Administrative Agent shall have received a certificate, dated
the First Borrowing Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the conditions set
forth in paragraphs (b), (d) and (e) of this Section and paragraphs (a) and (b)
of Section 4.03.
(h) The Lenders and the Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the First Borrowing Date,
including, to the extent invoiced, reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder.
(i) The Administrative Agent shall have received such other legal
opinions, documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good standing
of the Borrower, the authorization of the Transactions and any other legal
matters relating to the Borrower, this Agreement or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its counsel.
With respect to any condition set forth in paragraph (d)(iii) of this
Section, each Lender shall be deemed to have determined that such condition has
been satisfied unless the Administrative Agent shall have received notice from
such Lender prior to the First Borrowing Date that such Lender does not consider
such condition to have been satisfied.
The obligations of the Lenders to make Loans hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time, on
August 17, 2000 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.03. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including without limitation on the
First Borrowing Date) is subject to the satisfaction of the following conditions
(or waiver thereof in accordance with Section 9.02):
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(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing, including, without limitation, the representations and warranties set
forth in Sections 3.04 and 3.06, except to the extent such representations and
warranties expressly relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default or Event of Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full, the Borrower covenants and agrees with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each Fiscal Year, its audited
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures as of the end of and for the previous
Fiscal Year, all reported on by PricewaterhouseCoopers LLP or other independent
public accountants of recognized national standing (without a "going concern" or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of each Fiscal Year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous Fiscal Year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Borrower and its
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Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
of the financial covenants set forth in Sections 6.02, 6.07 and 6.08 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section
3.04(a) and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
(excluding exhibits) by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;
(f) within 5 Business Days of receipt of any Major Casualty Proceeds
that would constitute a Reduction Event but for the delivery of a certificate
pursuant to this subsection, a certificate of the Borrower setting forth the
amount of such Major Casualty Proceeds, the transaction giving rise to them and
setting forth the amount of such Major Casualty Proceeds that will be expended
by the Borrower and its Subsidiaries for the restoration or replacement of
related assets within 180 days of receipt thereof and a reasonably detailed plan
of such restoration or replacement; and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
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SECTION 5.02. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$20,000,000 subsequent to the date hereof; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole except to that extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations, including Tax liabilities,
that, if not paid, could result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest could not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
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material to the conduct of its business in adequate working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound and
reputable insurance companies, insurance in such amounts and against such risks
as are customarily maintained by companies engaged in the same or similar
businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent or any Lender, upon reasonable prior notice, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations. The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property and all material Contractual
Obligations, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect; provided that the foregoing shall not be construed to prevent the
Borrower or any such Subsidiary from contesting any of the same by appropriate
proceedings.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used
only (i) to finance the Acquisition (including the payment of related
transaction fees and expenses), (ii) to refinance existing Indebtedness of the
Target and (iii) for general corporate purposes of the Borrower and its
Subsidiaries, including as credit support for the Borrower's commercial paper
programs. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X.
SECTION 5.09. Change in Ratings. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of any change in
ratings established or deemed to have been established by Moody's and S&P for
any of its indebtedness for borrowed money, including, without limitation, the
Index Debt or its senior, unsecured, short-term indebtedness for borrowed money
(including, without limitation, commercial paper).
SECTION 5.10. Copies of Other Bank Agreements. Promptly upon
entering into the 5-Year Agreement, the Borrower will deliver to each Lender
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(other than a Lender who is a party to such 5-Year Agreement) a true, correct
and complete copy thereof.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full,
the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, or assign or sell any income or
revenues (including accounts receivable) or rights in respect of any thereof,
except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth on Schedule 6.01 or
resulting from operating leases existing on the date hereof being reclassified
as capital leases in accordance with GAAP; provided that (i) such Lien shall not
apply to any other property or asset (other than accessions, modifications and
proceeds thereof) of the Borrower or any Subsidiary and (ii) such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary on or after the date
hereof prior to the time such Person becomes a Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such
Lien shall not apply to any other property or assets (other than accessions,
modifications and proceeds thereof) of the Borrower or any Subsidiary and (iii)
such Lien shall secure only those obligations which it secures on the date of
such acquisition or the date such Person becomes a Subsidiary, as the case may
be and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or improved
by the Borrower or any Subsidiary; provided that (i) such Liens and the
Indebtedness
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secured thereby are incurred prior to or within 180 days after such acquisition
or the completion of such construction or improvement, (ii) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets and (iii) such Liens shall not apply to
any other property or assets (other than accessions, modifications and proceeds
thereof) of the Borrower or any Subsidiary; and
(e) Liens not otherwise permitted pursuant to this Section 6.01
securing Indebtedness of the Borrower or any Subsidiary (not otherwise
prohibited hereunder) in an aggregate principal amount at no time exceeding (i)
$30,000,000 minus (ii) the aggregate principal amount of Indebtedness of
Subsidiaries permitted solely by clause (e) of Section 6.02 outstanding at such
time.
SECTION 6.02. Indebtedness of Subsidiaries. The Borrower will not
permit any Subsidiary to create, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except to the extent otherwise permitted
hereunder:
(a) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(b);
(b) (i) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(c) in an aggregate
principal amount not to exceed $140,000,000, (ii) Indebtedness (other than
Indebtedness permitted by clause (i)) consisting of Capital Lease Obligations
and (iii) on and after the date on which Bel-Thai Supermarket Company Ltd.
("Bel- Thai") becomes a Subsidiary, Indebtedness of Bel-Thai in an aggregate
principal amount not exceeding $60,000,000;
(c) Indebtedness of any Subsidiary owed to the Borrower or any other
Subsidiary;
(d) Indebtedness of the Target and its subsidiaries outstanding on
the Acquisition Date and not incurred in contemplation of the Acquisition; and
(e) additional Indebtedness of the Subsidiaries in an aggregate
principal amount (for all Subsidiaries) at no time exceeding (i) $30,000,000
minus (ii) the aggregate principal amount of Indebtedness secured by Liens
permitted solely by clause (e) of Section 6.01 outstanding at such time;
provided that at any date the aggregate amount of Capital Lease Obligations of
all Subsidiaries (other than any such Capital Lease Obligations incurred in
reliance
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on clause (i) of subsection (b)) and the aggregate amount of Capital Lease
Obligations of the Borrower will not exceed $1,000,000,000.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole (whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing (i) the
Borrower may merge into any other Person in a transaction in which the Borrower
is the surviving corporation, (ii) any Subsidiary may merge into the Borrower in
a transaction in which the Borrower is the surviving corporation, (iii) any
Subsidiary may merge into any Subsidiary in a transaction in which the surviving
entity is a Subsidiary, (iv) any Subsidiary may merge into any other Person in a
transaction in which the surviving entity is a Subsidiary or in a transaction
permitted by Section 6.09 and in which the surviving Person is not a Subsidiary,
(v) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to the Borrower or to another Subsidiary or in a transaction not constituting
all or substantially all of the assets of the Borrower and its Subsidiaries
taken as a whole and which is permitted by Section 6.08, (vi) Acquisition Sub
may consummate the Merger, (vii) subject to Section 10.01, the Borrower and its
Subsidiaries may consummate the Reorganization and (viii) any Subsidiary may
liquidate or dissolve if the Borrower determines in good faith that such
liquidation or dissolution is in the best interests of the Borrower and is not
materially disadvantageous to the Lenders; provided that any such merger
involving a Person that is not a wholly owned Subsidiary immediately prior to
such merger shall not be permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries and Hannaford and its
subsidiaries on the date of execution of this Agreement and businesses
reasonably related or incidental thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements. (a) The Borrower will not, and will not permit
any of its Subsidiaries to, purchase, hold or acquire (including pursuant to any
merger with any Person that was not a wholly owned Subsidiary prior to such
merger) any capital stock, evidences of Indebtedness or other securities
(including any option, warrant or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or
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permit to exist any investment or any other interest in, any other Person, or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person constituting a business unit, except:
(i) Cash Equivalents;
(ii) extensions of trade credit in the ordinary course of
business;
(iii) investments arising from the settlement of debts or as a
result of bankruptcy or insolvency proceedings or as a result of
enforcement proceedings;
(iv) investments of the Borrower and the Subsidiaries existing on
the date hereof;
(v) investments by the Borrower existing on the date hereof in
the capital stock of its Subsidiaries;
(vi) loans, advances and other investments made by the Borrower
to or in any Subsidiary and made by any Subsidiary to or in the
Borrower or any other Subsidiary;
(vii) Guarantees to the extent that the resulting Debt would be
permitted by Section 6.08 and, if applicable, Section 6.02;
(viii) the acquisition of the capital stock of the Target
pursuant to the Acquisition Documents;
(ix) investments of the Target and its subsidiaries (i) existing
on the date hereof or (ii) made after the date hereof and prior to the
Acquisition Date, so long as such investments are permitted to be made
by the terms of the Merger Agreement; and
(x) investments not otherwise permitted pursuant to this Section
6.04 in an aggregate amount not to exceed $20,000,000 at any time
outstanding.
(b) The Borrower will not, and will not permit any of its Subsidiaries
to, enter into any Hedging Agreement, other than (i) Hedging Agreements entered
into in the ordinary course of business to hedge or mitigate risks to which the
Borrower or any Subsidiary is exposed in the conduct of its business or the
management of its liabilities, (ii) any Hedging Agreements to hedge interest
rate risk with respect to the loans outstanding hereunder and (iii) Hedging
Agreements
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constituting "treasury-locks" or similar hedging arrangements entered into by
the Borrower in anticipation of an issuance of Debt by the Borrower pursuant to
a capital markets transaction.
SECTION 6.05. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties and (b)
transactions between or among the Borrower and its wholly owned Subsidiaries not
involving any other Affiliate.
SECTION 6.06. Reserved.
SECTION 6.07. Fixed Charges Coverage. At the end of each Fiscal Quarter
set forth below, the ratio of (i) Consolidated EBITDAR for the period of four
Fiscal Quarters then ended to (ii) Consolidated Fixed Charges for such period,
shall not have been less than the ratio set forth below opposite such Fiscal
Quarter (subject to the proviso set forth below):
Fiscal Quarter Ratio
- --------------------------------------------------------------------------------
First Fiscal Quarter ended on or immediately after the 2.25:1
Effective Date - Third Fiscal Quarter 2001
Fourth Fiscal Quarter 2001 - Third Fiscal Quarter 2002 2.50:1
Fourth Fiscal Quarter 2002 - Third Fiscal Quarter 2003 2.75:1
Fourth Fiscal Quarter 2003 and thereafter 3.00:1
; provided that at the end of any Fiscal Quarter ended prior to the Acquisition
Date, such ratio shall not have been less than 3:00:1.
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR. At no date will the ratio of (i) Consolidated Adjusted Debt at such
date to (ii) Consolidated EBITDAR for the period of four consecutive Fiscal
Quarters ended on or most recently prior to such date exceed the ratio set forth
below opposite the period in which such date falls (subject to the proviso set
forth below):
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Period Ratio
- --------------------------------------------------------------------------------
Effective Date - day immediately preceding last day of 4.50:1
Fourth Fiscal Quarter 2001
Last day of Fourth Fiscal Quarter 2001- day immediately 4.00:1
preceding last day of Fourth Fiscal Quarter 2002
Last day of Fourth Fiscal Quarter 2002 - day immediately 3.75:1
preceding last day of Fourth Fiscal Quarter 2003
Last day of Fourth Fiscal Quarter 2003 and thereafter 3.50:1
; provided that at any date prior to the Acquisition Date, such ratio will not
exceed 3:00:1.
SECTION 6.09. Limitation on Sales of Assets. The Borrower will not, nor
will it permit any Subsidiary to, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets, whether now owned
or hereafter acquired, or discontinue or eliminate any business line or segment,
except:
(a) the sale or other disposition of obsolete, surplus or worn out
property in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) as permitted by Section 6.03(a);
(d) (i) sales of assets in a single transaction or in a series of
related transactions the aggregate book value of which is not greater than
$25,000,000 in any one such transaction or series of related transactions and
(ii) sales of assets the consummation of which is an express condition (either
precedent or subsequent) to the approval by the Federal Trade Commission of the
Acquisition; provided that the book value of the assets disposed of in assets
sales consummated in reliance on this clause (ii) does not exceed $258,000,000
and provided, further that if, within 180 days of any such assets sales, the
Borrower or any Subsidiary acquires similar assets having a use similar to and a
fair market value at least equal to the assets sold, then the value of the
assets sold shall not be included in calculating future assets sales permitted
under this Section 6.09;
(e) dispositions and discontinuances of a business line or segment not
otherwise permitted pursuant to this Section 6.09, provided that the aggregate
assets to be so disposed of or the aggregate assets utilized in a business line
or segment to be so discontinued (in a single transaction or in a series of
related
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transactions), when combined with all other assets disposed of (including,
without limitation, pursuant to a sale and leaseback transaction) and all other
assets utilized in all other business lines or segments discontinued, during the
period from the date of this Agreement through and including the date of any
such disposition or discontinuation would not exceed 5% of Consolidated Total
Assets as determined by reference to the Borrower's most recently audited
financial statements provided to the Administrative Agent and the Lenders
pursuant to Section 5.01(a) and provided, further that if, within 180 days of
the sale of any assets, the Borrower or any Subsidiary acquires similar assets
having a use similar to and a fair market value at least equal to the assets so
sold, then the value of the assets sold shall not be included in calculating
future assets permitted to be sold under this Section 6.09; and
(f) conveyances, sales, leases, assignments, transfers or other
dispositions of assets from the Borrower to a wholly owned Subsidiary (including
without limitation pursuant to the Reorganization), from a Subsidiary to the
Borrower or from a Subsidiary to a wholly owned Subsidiary.
SECTION 6.10. Modifications to Acquisition Documents. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into any amendment,
modification or waiver of any material term or condition of any Acquisition
Document without the prior written consent of the Majority Lenders.
SECTION 6.11. Restrictions Affecting Subsidiaries. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, be bound by or
suffer to exist any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make other distributions or pay any Debt or Indebtedness
owed to the Borrower or any Subsidiary, (b) make loans or advances to the
Borrower or any Subsidiary, (c) transfer any of its properties or assets to the
Borrower or any Subsidiary, (d) create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, (e) Guarantee any Debt or Indebtedness of the Borrower or
another Subsidiary or (f) suffer to exist any Lien on capital stock or other
equity interests issued by it; except for any such encumbrance or restriction
existing under or by reason of (i) any agreement in effect on the Effective Date
as any such agreement is in effect on such date, (ii) this Agreement, (iii) any
agreement with respect to Indebtedness of any Subsidiary permitted to be
incurred under Section 6.02(b) or secured by a Lien permitted to be incurred
under Section 6.01(d) and provided such encumbrance or restriction shall not
apply to any assets of the Borrower or its Subsidiaries other than the assets of
such Subsidiary subject to such Lien, (iv) any agreement binding upon such
Subsidiary prior to the date on which such Subsidiary was acquired by the
Borrower and outstanding on such date and provided such encumbrance or
restriction shall not apply to any assets of the
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Borrower or its Subsidiaries other than such Subsidiary, (v) customary
provisions restricting subletting or assignment of any lease governing any
leasehold interest of any Subsidiary, (vi) applicable law, (vii) licenses or
other agreements, including with respect to property, in the ordinary course of
business consistent with prior practice and (viii) any agreement binding upon
such Subsidiary so long as such encumbrance or restriction is no more
restrictive than those contained in this Agreement.
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default.
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount referred to in clause (a) of this
Section) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower or any Subsidiary in or in connection with this Agreement or any
amendment or modification hereof, or in any report, certificate, financial
statement or other document delivered pursuant to this Agreement or any
amendment or modification hereof, shall prove to have been incorrect in any
material way when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower's existence) or 5.08 or in Article 6;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent (given at the request of any Lender) to the Borrower;
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(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its or
their behalf to cause any Material Indebtedness to become due, or to require the
prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or their respective debts, or of a
substantial part of their respective assets, under any federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of their respective assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part of
their respective assets, (iv) file an answer admitting the material allegations
of a petition filed against either of them in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, or admit in
writing or fail generally, to pay their respective debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged for
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a period of 30 consecutive days during which execution shall not be effectively
stayed, bonded or vacated, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any Subsidiary to
enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
or
(m) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Lenders shall, by notice to the Borrower, take either of
the following actions: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, or (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate or the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent. Each of the Lenders hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof,
together with such actions and powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in
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any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Majority Lenders, and (c) except as
expressly set forth herein, the Administrative Agent shall not have any duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity. The Administrative Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Majority Lenders or
in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the
Borrower or a Lender, and the Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement, (ii) the contents
of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the
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Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. Upon any such resignation, the
Majority Lenders shall have the right (so long as no Default has occurred and is
continuing with consent of the Borrower which consent shall not be unreasonably
withheld) to appoint a successor. If no successor shall have been so appointed
by the Majority Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New York,
New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Administrative Agent hereunder by a successor, such successor
shall succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the Administrative Agent's resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at 2110 Executive Drive, Salisbury, North
Carolina 28145-1330, Attention of Richard James, Treasurer/Director of Finance
(Telecopy No. 704-636-5024);
(b) if to the Administrative Agent, J.P. Morgan Services Inc., 500
Stanton Christiana Road, Newark, Delaware 19713, Attention of Jeannie Mattson,
Associate (Telecopy No. 302-634-1092); and
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver of
any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
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(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders or by the Borrower and the
Administrative Agent with the consent of the Majority Lenders; provided that no
such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) postpone the
scheduled date of payment of the principal amount of any Loan or any interest
thereon, or any fees payable hereunder, or reduce the amount of, waive or excuse
any such payment, or postpone the scheduled date of expiration of any
Commitment, without the written consent of each Lender affected thereby, (iv)
change Section 2.16(b) or (c) in a manner that would alter the pro rata sharing
of payments required thereby, without the written consent of each Lender
adversely affected thereby, or (v) change any of the provisions of this Section
or the definition of "Majority Lenders" or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent hereunder without the prior written consent of the
Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of this Agreement or any amendments, modifications or waivers of
the provisions hereof (whether or not the transactions contemplated hereby or
thereby shall be consummated) and (ii) all reasonable out-of-pocket expenses
incurred by the Administrative Agent or any Lender, including the fees, charges
and disbursements of any counsel for the Administrative Agent or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made hereunder, including in connection with any workout,
restructuring or negotiations in respect thereof including, without limitation,
actions in connection with this Agreement or the Loans, arising, occurring or
continuing subsequent to the Maturity Date (other than any such expenses
directly related to a court enforcement action in which the Borrower prevails on
the merits in a final and nonappealable judgment).
(b) The Borrower shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such Person
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<PAGE>
being called an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee, incurred
by or asserted against any Indemnitee arising out of, in connection with, or as
a result of (i) the execution or delivery of this Agreement or any agreement or
instrument contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of the Transactions or any
other transactions contemplated hereby, (ii) any Loan or the use of the proceeds
therefrom, (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross
negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder
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without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (other than the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly contemplated hereby, the
Related Parties of each of the Administrative Agent and the Lenders) any legal
or equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it); provided that (i) except
in the case of an assignment to a Lender or an Affiliate of a Lender, each of
the Borrower and the Administrative Agent must give their prior written consent
to such assignment (which consent shall not be unreasonably withheld), (ii)
except in the case of an assignment to a Lender or an Affiliate of a Lender or
an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (iv) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default under
clause (h) or (i) of Article 7 has occurred and is continuing. Upon acceptance
and recording pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
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(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Commitment and the Loans
owing to it); provided that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.13 or 2.15 than the applicable Lender would have been entitled
to
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<PAGE>
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower's prior
written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement or any promissory note
issued pursuant hereto to such Lender to secure obligations of such Lender,
including any such pledge or assignment to a Federal Reserve Bank, and this
Section shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article 8 shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received
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counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court for the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent or any Lender may otherwise
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have to bring any action or proceeding relating to this Agreement against the
Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by
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any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to a written agreement containing provisions
substantially the same as those of this Section, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of the Borrower
or (h) to the extent such Information (i) becomes publicly available other than
as a result of a breach of this Section or (ii) becomes available to the
Administrative Agent or any Lender on a nonconfidential basis from a source
other than the Borrower. For the purposes of this Section, "Information" means
all information received from the Borrower relating to the Borrower, its
Subsidiaries or their businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by the Borrower; provided that, in the case of information
received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
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ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization. Notwithstanding anything to
the contrary contained herein, the Borrower may effect the Reorganization or any
portion thereof so long as no Default shall have occurred and be continuing or
would occur after giving effect to the Reorganization or such portion thereof.
Promptly upon completion of the Reorganization, the Borrower shall give the
Administrative Agent notice thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
DELHAIZE AMERICA, INC.
By: /s/ Richard James
-------------------------------
Title: Treasurer
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
individually and as
Administrative Agent
By: /s/ Kathryn Sayko-Yanes
-------------------------------
Title: Vice President
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BANK OF AMERICA, N.A.
By: /s/ Timothy H. Spanos
-----------------------------
Title: Managing Director
CITIBANK, N.A.
By: /s/ Marc Merlino
-----------------------------
Title: Vice President
WACHOVIA BANK, N.A.
By: /s/ Christopher L. Fincher
-----------------------------
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Michael V. Flannery
-----------------------------
Title: Vice President
BANK ONE, NA
By: /s/ Catherine A. Muszynski
-----------------------------
Title: Vice President
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BBL INTERNATIONAL (U.K.) LIMITED
By: /s/ C.F. Wright/G.R.M. Walker
------------------------------
Title: Authorised Signatories
CREDIT AGRICOLE INDOSUEZ
By: /s/ Craig Welch
-----------------------------
Title: First Vice President
By: /s/ Rene LeBlanc
-----------------------------
Title: Vice President
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By: /s/ Stefan Hafke
-----------------------------
Title: Vice President
By: /s/ Barbara Anne Hoeltz
-----------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Mary J. Amatore
-----------------------------
Title: Vice President
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FORTIS (USA) FINANCE LLC
By: /s/ Eddie Matthews
-----------------------------
Title: Senior Vice President
By: /s/ Robert Fakhoury
-----------------------------
Title: Treasurer
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By: /s/ Minami Miura
-----------------------------
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
By: /s/ Polly Coe/Karen Boyer
-----------------------------
Title: Senior Vice President/
Vice President
SUNTRUST BANK, ATLANTA
By: /s/ Jennifer P. Harrelson
-----------------------------
Title: Managing Director
COBANK, ACB
By: /s/ Brian J. Klatt
-----------------------------
Title: Vice President/
Relationship Manager
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<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By: /s/ Nicholas A. Fiore
-----------------------------
Title: Assistant Vice President
THE FUJI BANK, LIMITED
By: /s/ Raymond Ventura
-----------------------------
Title: Vice President & Manager
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By: /s/ Henry F. Setina
-----------------------------
Title: Vice President
BRANCH BANKING & TRUST COMPANY
By: /s/ Cory Boyte
-----------------------------
Title: Vice President
CIBC INC.
By: /s/ Dominic Sorresso
-----------------------------
Title: Executive Director
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<PAGE>
CREDIT COMMERCIAL DE FRANCE S.A.
By: /s/ Bernard de Bellefroid/Chantal Peters
------------------------------------------
Title: Directeur General/Directeur
FLEET NATIONAL BANK
By: /s/ Thomas J. Bullard
------------------------------------------
Title: Vice President
PARIBAS
By: /s/ Andre Boulanger/Dimitri Stroobants
------------------------------------------
Title: Branch Manager/Structured Finance
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By: /s/ Mark O'Connor
------------------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By: /s/ J. William Bloore
------------------------------------------
Title: Vice President
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Schedule 2.01
Commitment Schedule
Bank Commitment
- --------------------------------------------------------- ------------
Morgan Guaranty Trust Company of New York $185,000,000
Bank of America, N.A. $155,000,000
Citibank, N.A. $155,000,000
Wachovia Bank, N.A. $155,000,000
The Bank of New York $150,000,000
Bank One, NA $150,000,000
BBL International (U.K.) Limited $150,000,000
Credit Agricole Indosuez $150,000,000
Deutsche Bank AG New York and/or Cayman Islands $150,000,000
Branch
First Union National Bank $150,000,000
Fortis (USA) Finance LLC $150,000,000
The Industrial Bank of Japan, Limited $150,000,000
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., $150,000,000
"Rabobank International", New York Branch
SunTrust Bank, Atlanta $150,000,000
CoBank, ACB $ 50,000,000
The Dai-Ichi Kangyo Bank, Ltd. $ 50,000,000
The Fuji Bank, Limited $ 50,000,000
Banque Nationale de Paris, Houston Agency $ 25,000,000
Branch Banking & Trust Company $ 25,000,000
CIBC Inc. $ 25,000,000
Credit Commercial de France S.A. $ 25,000,000
Fleet National Bank $ 25,000,000
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Paribas $25,000,000
Bank of Tokyo-Mitsubishi Trust Company $25,000,000
Union Bank of California, N.A. $25,000,000
Total: $2,500,000,000
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Schedule 3.06
Disclosed Matters
Incorporated by reference are the relevant portions of the following documents
for the Borrower and as of the Acquisition Date, the Target:
Delhaize America, Inc.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999
filed April 1, 1999, as amended by Amendment No. 1 to Annual Report on
Form 10-K/A filed August 17, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended September 11, 1999
filed October 26, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended June 19, 1999 filed
July 30, 1999, as amended by Amendment No. 1 to Quarterly Report on
Form 10-Q/A filed August 17, 1999.
4. Quarterly Report on Form 10-Q for the quarter ended March 27, 1999
filed
May 5, 1999, as amended by Amendment No. 1 to Quarterly Report on
Form 10-Q/A filed August 17, 1999.
5. Current Report on Form 8-K filed September 17, 1999
6. Current Report on Form 8-K filed August 19, 1999.
7. Registration Statement on Form 8-A filed September 2, 1999, as amended
by Amendment No. 1 to Registration Statement on Form 8-A/A filed
September 3, 1999.
Hannaford Bros. Co.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999
filed March 11, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended October 2, 1999
filed November 9, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended July 3, 1999 filed
August 11, 1999.
82
<PAGE>
4. Quarterly Report on Form 10-Q for the quarter ended April 3, 1999 filed
May 14, 1999.
5. Current Report on Form 8-K filed September 1, 1999.
6. Current Report on Form 8-K filed August 19, 1999.
7. Current Report on Form 8-K filed June 21, 1999.
8. Current Report on Form 8-K filed June 17, 1999.
83
<PAGE>
Schedule 3.14
Subsidiaries of Borrower
FLI Holding Corp., a Delaware corporation ("FLI"), and a wholly-owned
subsidiary of the Borrower.
Risk Management Services, Inc., a North Carolina corporation, and a wholly-
owned subsidiary of the Borrower.
FL Acquisition Sub., Inc., a Maine corporation, and a wholly-owned subsidiary of
the Borrower.
Kash n' Karry Food Stores, Inc., a Delaware corporation, and a wholly-owned
subsidiary of FLI.1/
-
FL Food Lion, Inc., a Florida corporation, and a wholly-owned subsidiary of FLI.
Barnwell, Inc., a Delaware corporation, and a wholly-owned subsidiary of FLI.
- --------
1/ KNK 702 Delaware Business Trust, KNK 886 Delaware Business Trust, KNK 891
Delaware Business Trust, all Delaware business trusts, are wholly-owned by Kash
n' Karry Food Stores, Inc.
84
<PAGE>
Schedule 6.01
Existing Liens
Liens representing the interest of the lessor under Capitalized Leases in
existence on the date of this Agreement have an aggregate outstanding principal
amount not exceeding $510,000,000.
85
<PAGE>
EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of January
26, 2000 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among DELHAIZE AMERICA, INC., the Lenders party therein,
and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent (in such
capacity, the "Administrative Agent"). Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "Assignor")
and the Assignee identified on Schedule l hereto (the "Assignee") agree as
follows:
i. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest described in Schedule 1
hereto (the "Assigned Interest") in and to the Assignor's rights and obligations
under the Credit Agreement, in a principal amount as set forth on Schedule 1
hereto.
ii. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
instrument or document furnished pursuant thereto or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto, other than that the Assignor has not created any adverse claim upon the
interest being assigned by it hereunder and that such interest is free and clear
of any such adverse claim; (b) makes no representation or warranty and assumes
no responsibility with respect to the financial condition of the Borrower, any
of its Subsidiaries or any other obligor or the performance or observance by the
Borrower, any of its Subsidiaries or any other obligor of any of their
respective obligations under the Credit Agreement or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any promissory
notes held by it evidencing the Assigned Interest and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached
promissory notes for a new promissory note or promissory notes payable to the
Assignee and (ii) if the Assignor has retained any interest under the Credit
Agreement, requests that the Administrative Agent exchange the attached
promissory notes for a new promissory note or promissory notes payable to the
Assignor, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which have become effective on
the Effective Date).
86
<PAGE>
iii. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 3.04 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Credit Agreement
or any other instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to Section
2.15(e) of the Credit Agreement.
iv. The effective date of this Assignment and Acceptance shall
be the Effective Date of Assignment described in Schedule 1 hereto (the
"Effective Date"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to the Credit Agreement, effective as of
the Effective Date (which shall not, unless otherwise agreed to by the
Administrative Agent, be earlier than five Business Days after the date of such
acceptance and recording by the Administrative Agent).
v. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
vi. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and shall be bound by the provisions thereof and (b) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.
vii. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
87
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
88
<PAGE>
Schedule 1
to Assignment and Acceptance
Name of Assignor:________________________________
Name of Assignee:________________________________
Effective Date of Assignment:____________________
Principal
- --------------------------- ------------------------------------------------
$________ __._____________%
[Name of Assignee] [Name of Assignor]
By:___________________________ By:___________________________
Title: Title:
Accepted: Consented To:
MORGAN GUARANTY TRUST DELHAIZE AMERICA, INC.,
COMPANY OF NEW YORK, Borrower
as Administrative Agent
By:___________________________ By:___________________________
Title: Title:
- --------
2/ Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all
Lenders.
89
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL OF BORROWER
March ___, 2000
Morgan Guaranty Trust Company of New York
as Administrative Agent
60 Wall Street
New York, NY 10260
Each of the Lenders named on Annex A
Dear Sirs:
We have acted as counsel for Delhaize America, Inc., a North Carolina
corporation (the "Borrower"), in connection with the Credit Agreement, dated as
of January 26, 2000 (the "Credit Agreement"), among the Borrower, the Lenders
party thereto (the "Lenders") and Morgan Guaranty Trust Company of New York
("MGT"), as Administrative Agent.
The opinions expressed here are furnished to you pursuant to Subsection
4.02(f) of the Credit Agreement. Unless otherwise defined herein, terms defined
in the Credit Agreement and used herein shall have the meanings given in the
Credit Agreement.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Credit Agreement,
the certificate referred to in Subsection 4.02(g) of the Credit Agreement, and
such corporate documents and records of the Borrower as we have deemed necessary
or appropriate. As to questions of fact relevant to this opinion, we have,
without independent investigation, relied upon representations made to us by the
Borrower including the representations contained in the Loan Documents, and in
various certificates delivered by the Borrower, including, but not limited to,
certificates presented to the Lenders and the Administrative Agent, and certain
representations of public officials, all of which we assume to be true. In our
examination, we have assumed (i) the genuineness of all signatures of all
parties other than signatures of the Borrower, (ii) the authenticity of all
corporate records, agreements, documents, instruments and certificates submitted
to us as originals, the conformity to original agreements, documents and
instruments of all agreements and instruments submitted to us as conformed,
certified or photostatic copies thereof and the authenticity of the originals of
such conformed, certified or photostatic copies; (iii) the due authorization,
execution and delivery of all agreements, documents and instruments by all
parties other than the Borrower; and (iv) the legal right and power of all such
parties other than the Borrower under all applicable laws and regulations to
enter into, execute and deliver such agreements, documents and instruments. We
have further assumed that the Lenders and the Administrative Agent have the
B-1 - 1
<PAGE>
requisite power and authority to enter into the Loan Documents and to consummate
the transactions contemplated thereby and the absence of any requirement of
consent, approval or authorization by any Person or by any governmental body,
agency or official with respect to the Lenders and the Administrative Agent and
that the Loan Documents are legal, valid and binding obligations of the Lenders
and the Administrative Agent enforceable against such Persons in accordance with
their respective terms.
This law firm is a registered limited liability partnership organized
under the laws of the State of Texas. We express no opinion as to the laws of
any jurisdiction other than the laws of the State of New York, the United States
of America and The North Carolina Business Corporation Act. As to matters
governed by the laws of the State of North Carolina, we are relying upon an
opinion of Linn Evans, Esq. of even date herewith, a copy of which is attached
hereto. The opinions expressed in paragraph 1(b) below are based solely upon our
review of certain certificates of public officials of various jurisdictions and
are not based upon any examination of the laws of any such jurisdiction.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower (a) is duly incorporated, validly existing and in good
standing under the laws of North Carolina and has all requisite power and
authority, to carry on its business as now conducted and (b) is qualified to do
business in, and is in good standing in, each jurisdiction listed on Schedule I
attached hereto.
2. The Transactions to be effected on the date hereof are each within
the Borrower's corporate powers and have each been duly authorized by all
necessary corporate and, if required, stockholder action. The Credit Agreement
has been duly executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower.
3. To our knowledge, the Transactions to be effected on the date hereof
(a) will not require any consent or approval of, registration or filing with, or
any other action by, any Federal, New York or North Carolina Governmental
Authority, except for consents, approvals, registrations, filings or other
actions as have been obtained, made or waived and are in full force and effect
or which are not required to have been effected prior to the date hereof, (b)
will not violate any applicable Federal, New York or North Carolina corporate
law or regulations or the charter, bylaws or other organizational documents of
the Borrower or any order of any Federal or New York Governmental Authority, (c)
will not violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or its assets other than defaults or
violations for which consents or waivers have been obtained or which defaults or
violations, individually or in the aggregate, could not have a Material Adverse
Effect, or (d) will not give rise under any indenture, agreement or other
instrument binding upon the Borrower to any requirement for any payments be made
by the Borrower, or (e) will not result in the creation or imposition of any
Lien on any asset of the Borrower.
B-1 - 2
<PAGE>
4. To our knowledge, there are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or threatened
against the Borrower (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve the Credit
Agreement or the Transactions to be effected on the date hereof.
5. The Borrower is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
The foregoing opinions are subject to the exceptions, limitations and
qualifications contained herein, including the following:
A. The enforceability of the Loan Documents may be (a) limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer and other similar laws affecting creditors'
rights, (b) subject to general principles of equity (regardless of whether
considered in a proceeding in equity or at law), commercial reasonableness and
good faith, and (c) limited by the power of courts to award damages in lieu of
equitable remedies. In addition, the right to indemnification contained in the
Loan Documents may be limited by Federal or New York state laws or the policies
of such laws.
B. We express no opinions as to enforceability of any provisions (i)
purporting to vest jurisdiction on any property of the Borrower in the Supreme
Court of the State of New York sitting in New York County or the United States
District Court of the Southern District of New York to the extent that such
property is not situated in New York, New York, (ii) purporting to waive or
restrict access to legal or equitable remedies (including venue, forum non
conveniens or the right to assert a setoff) or the right to collect damages
(including special, indirect, consequential or punitive damages), (iii)
prohibiting oral amendments or waivers of provisions of the Loan Documents; (iv)
establishing evidentiary standards or (v) permitting a Lender to set off against
any debtor's accounts any amounts belonging to a third party or otherwise held
in a fiduciary capacity.
C. When used in this opinion, the phrase "to our knowledge" means known
to attorneys in our firm who have rendered services to the Borrower in
connection with the Transactions.
This opinion is as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
the Borrower or any other Person or any other circumstance. This opinion is
delivered to you in connection with the transactions referenced above and may be
relied upon only by you and any permitted assignee of an assigning Lender or
Participant under the Credit Agreement in connection with such transaction and
may not be
B-1 - 3
<PAGE>
relied upon in any manner or for any purpose by any other person without our
prior written consent.
Very truly yours,
B-1 - 4
<PAGE>
SCHEDULE I
Delaware Certificate of the Secretary of State of the State of
Delaware dated ____________ ___, 2000
Florida Certificate of the Secretary of State of the State of
Florida dated ____________ ___, 2000
Georgia Certificate of Existence of the Secretary of State of
the State of Georgia dated ____________ ___, 2000
Kentucky Certificate of Authorization of the Secretary of
State of the Commonwealth of Kentucky dated
____________ ___, 2000
Maryland Certificate of the State Department of Assessments
and Taxation of the State of North Carolina dated
____________ ___, 2000
North Carolina Articles of Incorporation of Food Lion, Inc.,
certified by the Secretary of State of the State of
North Carolina dated ____________ ___, 2000
Certificate of Existence of the Secretary of State of
the State of North Carolina dated ____________ ___,
2000
Pennsylvania Certificate of the Secretary of the Department of
State of the Commonwealth of Pennsylvania dated
____________ ___, 2000
South Carolina Certificate of Authorization of the Secretary of the
State of South Carolina dated ____________ ___, 2000
Tennessee Certificate of Authorization of the Secretary of
State of the State of Tennessee dated ____________
___, 2000
Virginia Certificate of Authority of the State Corporate
Commission of the Commonwealth of Virginia
dated ____________ ___, 2000
West Virginia Certificate of Authority of the Secretary of the State
of West Virginia dated ____________ ___, 2000
Certificate of Good Standing of the Secretary of
State of the State of West Virginia dated
____________ ___, 2000
B-1 - 5
<PAGE>
ANNEX A
LENDER
- ------
Morgan Guaranty Trust Company of New York
Bank of America, N.A.
Citibank, N.A.
Wachovia Bank, N.A.
The Bank of New York
Bank One, NA
BBL International (U.K.) Limited
Credit Agricole Indosuez
Deutsche Bank AG New York and/or Cayman Islands Branch
First Union National Bank
Fortis (USA) Finance LLC
The Industrial Bank of Japan, Limited
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International",
New York Branch
SunTrust Bank, Atlanta
CoBank, ACB
The Dai-Ichi Kangyo Bank, Ltd.
The Fuji Bank, Limited
Banque Nationale de Paris, Houston Agency
Branch Banking & Trust Company
CIBC Inc.
Credit Commercial de France S.A.
Fleet National Bank
Paribas
Bank of Tokyo-Mitsubishi Trust Company
Union Bank of California, N.A.
B-1 - 6
<PAGE>
[EXECUTION COPY]
================================================================================
CREDIT AGREEMENT
dated as of
January 26, 2000
among
DELHAIZE AMERICA, INC.,
The LENDERS Party Hereto,
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent
$500,000,000 5-YEAR REVOLVING CREDIT FACILITY
-----------------------------------------------------------------------
J.P. MORGAN SECURITIES INC.,
as Lead Arranger and Bookrunner
-----------------------------------------------------------------------
BANK OF AMERICA, N.A.,
CITIBANK, N.A.
and
WACHOVIA SECURITIES, INC.,
as Co-Arrangers
================================================================================
<PAGE>
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms...................................................2
SECTION 1.02. Classification of Loans and Borrowing..........................22
SECTION 1.03. Terms Generally................................................23
SECTION 1.04. Accounting Terms; GAAP.........................................23
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments....................................................24
SECTION 2.02. Loans and Borrowings...........................................24
SECTION 2.03. Requests for Revolving Borrowings..............................25
SECTION 2.04. Reserved.......................................................25
SECTION 2.05. Funding of Borrowings..........................................25
SECTION 2.06. Interest Elections.............................................26
SECTION 2.07. Termination and Reduction of Commitments.......................28
SECTION 2.08. Repayment of Loans; Evidence of Debt...........................28
SECTION 2.09. Prepayment of Loans............................................29
SECTION 2.10. Fees...........................................................30
SECTION 2.11. Interest.......................................................30
SECTION 2.12. Alternate Rate of Interest.....................................31
SECTION 2.13. Increased Costs................................................31
SECTION 2.14. Break Funding Payments.........................................33
SECTION 2.15. Taxes..........................................................33
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs.......................................................35
SECTION 2.17. Mitigation Obligations; Replacement of Lenders.................37
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers...........................................38
SECTION 3.02. Authorization; Enforceability..................................38
SECTION 3.03. Governmental Approvals; No Conflicts...........................38
SECTION 3.04. Financial Condition; No Material Adverse Change................39
SECTION 3.05. Properties.....................................................39
SECTION 3.06. Litigation and Environmental Matters...........................40
i
<PAGE>
PAGE
----
SECTION 3.07. Compliance with Laws and Agreements............................40
SECTION 3.08. Investment and Holding Company Status..........................40
SECTION 3.09. Taxes..........................................................41
SECTION 3.10. ERISA..........................................................41
SECTION 3.11. Disclosure.....................................................41
SECTION 3.12. Margin Stock...................................................42
SECTION 3.13. No Burdensome Restrictions.....................................42
SECTION 3.14. Subsidiaries...................................................42
SECTION 3.15. Solvency.......................................................42
SECTION 3.16. Year 2000 Matters..............................................42
SECTION 3.17. Acquisition Documents..........................................42
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date.................................................43
SECTION 4.02. First Credit Event.............................................44
SECTION 4.03. Each Credit Event..............................................46
ARTICLE 5
AFFIRMATIVE COVENANTS
SECTION 5.01. Financial Statements and Other Information.....................46
SECTION 5.03. Existence; Conduct of Business.................................48
SECTION 5.04. Payment of Obligations.........................................48
SECTION 5.05. Maintenance of Properties; Insurance...........................49
SECTION 5.06. Books and Records; Inspection Rights...........................49
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations................................................49
SECTION 5.08. Use of Proceeds................................................49
SECTION 5.09. Change in Ratings..............................................49
SECTION 5.10. Copies of Other Bank Agreements................................50
ARTICLE 6
NEGATIVE COVENANTS
SECTION 6.01. Liens..........................................................50
SECTION 6.02. Indebtedness of Subsidiaries...................................51
SECTION 6.03. Fundamental Changes............................................52
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements...........................53
SECTION 6.05. Transactions with Affiliates...................................54
ii
<PAGE>
PAGE
----
SECTION 6.06. Reserved.......................................................54
SECTION 6.07. Fixed Charges Coverage.........................................54
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR....................................................55
SECTION 6.09. Limitation on Sales of Assets..................................55
SECTION 6.10. Modifications to Acquisition Documents.........................56
SECTION 6.11. Restrictions Affecting Subsidiaries............................56
ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default..............................................57
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent.......................................60
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices........................................................62
SECTION 9.02. Waivers; Amendments............................................62
SECTION 9.03. Expenses; Indemnity; Damage Waiver.............................63
SECTION 9.04. Successors and Assigns.........................................65
SECTION 9.05. Survival.......................................................67
SECTION 9.06. Counterparts; Integration; Effectiveness.......................68
SECTION 9.07. Severability...................................................68
SECTION 9.08. Right of Setoff................................................68
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process....................................................68
SECTION 9.10. WAIVER OF JURY TRIAL...........................................69
SECTION 9.11. Headings.......................................................69
SECTION 9.12. Confidentiality................................................70
SECTION 9.13. Interest Rate Limitation.......................................70
ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization.....................................71
iii
<PAGE>
SCHEDULES:
Schedule 2.01 Commitments
Schedule 3.06 Disclosed Matters
Schedule 3.14 Subsidiaries
Schedule 6.01 Existing Liens
EXHIBITS:
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Opinion of Borrower's Counsel - First Borrowing Date
2
<PAGE>
CREDIT AGREEMENT dated as of January 26, 2000, among DELHAIZE AMERICA,
INC., the LENDERS party hereto and MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
as Administrative Agent.
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"Acquisition" means the Merger and all other transactions contemplated
by the Acquisition Documents to be consummated on or before the First Borrowing
Date.
"Acquisition Date" means the date of consummation of the Acquisition.
"Acquisition Documents" means the Merger Agreement, including the
exhibits and schedules thereto, and all agreements, documents and instruments
executed and delivered pursuant thereto or in connection therewith.
"Acquisition Sub" means FL Acquisition Sub, Inc., a Maine corporation.
"Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"Administrative Agent" means Morgan, in its capacity as administrative
agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
3
<PAGE>
"Alternate Base Rate" means, for any day, a rate per annum equal to
the greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate
in effect on such day plus 1% and (c) the Federal Funds Effective Rate in
effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to
a change in the Prime Rate, the Base CD Rate or the Federal Funds Effective
Rate shall be effective from and including the effective date of such change in
the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate,
respectively.
"Amortization" means for any period the sum of all amortization
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Applicable Percentage" means, with respect to any Lender, the
percentage of the total Commitments represented by such Lender's Commitment. If
the Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments.
"Applicable Rate" means, for any day, with respect to any ABR Loan or
Eurodollar Revolving Loan, or with respect to the commitment fees payable
hereunder, as the case may be, the applicable rate per annum set forth below
under the caption "ABR Spread", "Eurodollar Spread" or "Commitment Fee Rate",
as the case may be, based upon the ratings by Moody's and S&P, respectively,
applicable on such date to the Index Debt:
ABR Eurodollar Commitment
S&P/Moody's Spread Spread Fee Rate
- -----------------------------------------------------------------------
Category 1
A-/A3 or higher.......... .0% .50% .11%
Category 2
BBB+/Baa1................ .0% .625% .125%
Category 3
BBB/Baa2................. .0% .75% .15
Category 4
BBB-/Baa3................ .25% 1.25% .225%
Category 5
BB+/Ba1.................. .75% 1.75% .375%
- --------------------------------------------------------------------
Category 6
Below.................... 1.25% 2.25% .50%
====================================================================
In addition,
4
<PAGE>
(x) if (i) the sum of (1) the aggregate principal amount of loans
outstanding under the Bridge Agreement (if the Bridge Agreement is in effect on
such date) plus (2) the aggregate principal amount of loans outstanding under
the 364-Day Credit Agreement (if the Credit Agreement is in effect on such
date) plus (3) the aggregate principal amount of Revolving Loans outstanding
hereunder, in each case on such date, exceeds 33% of the sum of (1) the
aggregate amount of the commitments under the Bridge Agreement (or, if the
commitments under the Bridge Agreement (if the Bridge Agreement is in effect on
such date) shall have terminated, the aggregate principal amount of loans
outstanding thereunder) plus (2) the aggregate amount of the commitments under
the 364-Day Credit Agreement (if the Credit Agreement is in effect on such
date) (or, if the commitments under the 364-Day Credit Agreement shall have
terminated, the aggregate principal amount of loans outstanding thereunder)
plus (3) the aggregate Commitments hereunder (or, if the Commitments hereunder
shall have terminated, the aggregate principal amount of Revolving Loans
outstanding hereunder), in each case on such date and (ii) Category 1 ratings,
Category 2 ratings or Category 3 ratings are applicable on such date
or
(y) if any Loans are outstanding under the Bridge Agreement (if the
Bridge Agreement is in effect on such date) (regardless of which Category
ratings are applicable on such date),
the "ABR Spread" and the "Eurodollar Spread" will each be increased by
.125%; provided that on any date on which the events in clause (x) and clause
(y) are both in effect, the "ABR Spread" and the "Eurodollar Spread" will each
be increased by .125%.
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the last sentence of this definition), then such
rating agency shall be deemed to have established a rating in Category 6; (ii)
if the ratings established or deemed to have been established by Moody's and
S&P for the Index Debt shall fall within different Categories, the Applicable
Rate shall be based on the lower of the two ratings unless one of the two
ratings is two or more Categories lower than the other, in which case the
Applicable Rate shall be determined by reference to the Category next below
that of the higher of the two ratings; and (iii) if the ratings established or
deemed to have been established by Moody's and S&P for the Index Debt shall be
changed (other than as a result of a change in the rating system of Moody's or
S&P), such change shall be effective as of the date on which it is first
announced by the applicable rating agency. Each change in the Applicable Rate
shall apply during the period commencing on the effective date of
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such change and ending on the date immediately preceding the effective date of
the next such change. If the rating system of Moody's or S&P shall change, or
if either such rating agency shall cease to be in the business of rating
corporate debt obligations, the Borrower and the Lenders shall negotiate in
good faith to amend this definition to reflect such changed rating system or
the unavailability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Rate shall be determined by
reference to the rating most recently in effect prior to such change or
cessation.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent
is required by Section 9.04), and accepted by the Administrative Agent, in the
form of Exhibit A or any other form approved by the Administrative Agent.
"Availability Period" means the period from and including the
Effective Date to but excluding the earlier of the Maturity Date and the date
of termination of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate. As used
in this definition, "Assessment Rate" means, for any day, the annual assessment
rate in effect on such day that is payable by a member of the Bank Insurance
Fund classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in Dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to
determine the Assessment Rate as aforesaid, then the Assessment Rate shall be
such annual rate as shall be determined by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Board" means the Board of Governors of the Federal Reserve System of
the United States of America.
"Borrower" means Delhaize America, Inc., a North Carolina corporation.
"Borrowing" means Revolving Loans of the same Type, made, converted or
continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect.
"Borrowing Request" means a request by the Borrower for a Revolving
Borrowing in accordance with Section 2.03.
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"Bridge Agreement" means the $2,500,000,000 364-Day Term Loan
Agreement dated as of January 26, 2000 among the Borrower, the lenders party
thereto, and Morgan, as administrative agent, as amended from time to time.
"Bridge Payout Date" means the first date on which the commitments
under the Bridge Agreement have terminated and all loans outstanding
thereunder, together with accrued and unpaid interest thereon, and all fees and
expenses payable with respect thereto, have been repaid in full.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by
law to remain closed; provided that, when used in connection with a Eurodollar
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in Dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under GAAP,
and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with GAAP.
"Capital Stock" means any capital stock of the Borrower or any
Consolidated Subsidiary (to the extent issued to a Person other than the
Borrower), whether common or preferred.
"Capitalized Lease" means any lease which is required to be
capitalized on a consolidated balance sheet of the lessee and its subsidiaries
in accordance with GAAP.
"Cash Equivalents" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
of America (or by any agency thereof to the extent such obligations
are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of
acquisition thereof;
(b) investments in commercial paper maturing within 270 days from
the date of acquisition thereof and having, at such date of
acquisition, a rating of at least P-1 by Moody's or A-1 by S&P;
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<PAGE>
(c) investments in certificates of deposit, banker's acceptances
and time deposits maturing within 180 days from the date of acquisition
thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any
commercial bank organized under the laws of the United States of
America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $250,000,000;
(d) investments consisting of cash deposits in operating accounts
maintained by the Borrower or any Subsidiary; and
(e) repurchase agreements with a term of not more than 30 days
for securities described in clause (a) above and entered into with a
financial institution satisfying the criteria described in clause (c)
above.
"Change in Control" means (a) the failure of Delhaize Belgium or any
wholly-owned subsidiary of Delhaize Belgium to own, directly or indirectly,
beneficially or of record, shares representing more than a majority of the
aggregate ordinary voting power represented by the issued and outstanding
Capital Stock of the Borrower; (b) occupation of a majority of the seats (other
than vacant seats) on the board of directors of the Borrower by Persons who
were neither (i) nominated by the board of directors of the Borrower nor (ii)
appointed by directors so nominated; or (c) the acquisition of direct or
indirect Control of the Borrower by any Person or group other than Delhaize
Belgium or any wholly-owned subsidiary of Delhaize Belgium.
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender (or, for
purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"Charges" has the meaning set forth in Section 9.13.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Commitment" means, with respect to each Lender, the commitment of
such Lender to make Revolving Loans hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section 2.07 and (b) reduced or increased
8
<PAGE>
from time to time pursuant to assignments by or to such Lender pursuant to
Section 9.04. The initial amount of each Lender's Commitment is set forth on
Schedule 2.01, or in the Assignment and Acceptance pursuant to which such
Lender shall have assumed its Commitment, as applicable.
"Consolidated" means, when used in connection with any defined term,
and not otherwise defined, such term as it applies to the Borrower and its
Subsidiaries on a consolidated basis, after eliminating all intercompany items.
"Consolidated Adjusted Debt" means at any date (i) the Debt of the
Borrower and its Consolidated Subsidiaries plus (ii) 8 times Rentals (but
excluding any payments with respect to a Capital Lease to the extent such
Capital Lease is included in clause (i)) payable by the Borrower and its
Consolidated Subsidiaries for the period of four consecutive Fiscal Quarters
ended on or most recently prior to such date, determined on a consolidated
basis as of such date.
"Consolidated EBITDAR" for any period means the sum of (i)
Consolidated Net Income for such period plus, in each case to the extent
deducted in determining such Consolidated Net Income and without duplication,
(ii) Consolidated Depreciation expenses of the Borrower and its Consolidated
Subsidiaries, (iii) Consolidated Amortization expenses of the Borrower and its
Consolidated Subsidiaries, (iv) all federal, state, local and foreign income
taxes of the Borrower and its Consolidated Subsidiaries, and (v) Consolidated
Fixed Charges.
"Consolidated Fixed Charges" for any period means, without
duplication, on a consolidated basis the sum of (i) all Rentals payable during
such period by the Borrower and its Consolidated Subsidiaries, and (ii)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense" for any period means interest, whether
expensed or capitalized, in respect of Debt of the Borrower or any of its
Consolidated Subsidiaries outstanding during such period.
"Consolidated Net Income" for any period means the gross revenues of
the Borrower and its Consolidated Subsidiaries for such period less all
expenses and other proper charges (including taxes on income), determined on a
consolidated basis after eliminating earnings or losses attributable to
outstanding Minority Interests, but excluding in any event:
(a) any unusual or extraordinary gains or losses on the sale or
other disposition of investments (excluding Cash Equivalents) or fixed
or
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<PAGE>
capital assets, and any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) net earnings and losses of any Consolidated Subsidiary
accrued prior to the date it became a Consolidated Subsidiary;
(d) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04) substantially all
the assets of which have been acquired in any manner by the Borrower
or any Consolidated Subsidiary, realized by such corporation prior to
the date of such acquisition;
(e) net earnings and losses of any corporation (other than a
Consolidated Subsidiary and subject to Section 1.04(b)) with which the
Borrower or a Consolidated Subsidiary shall have consolidated or which
shall have merged into or with the Borrower or a Consolidated
Subsidiary prior to the date of such consolidation or merger;
(f) net earnings and losses of any business entity (other than a
Consolidated Subsidiary) in which the Borrower or any Consolidated
Subsidiary has an ownership interest unless such net earnings shall
have actually been received by the Borrower or such Consolidated
Subsidiary in the form of cash distributions;
(g) any portion of the net earnings and losses of any
Consolidated Subsidiary which for any reason is unavailable for
payment of dividends to the Borrower or any other Consolidated
Subsidiary;
(h) earnings resulting from any reappraisal, revaluation or
write-up of assets;
(i) any deferred or other credit representing any excess of the
equity in any Subsidiary at the date of acquisition thereof over the
amount invested in such Subsidiary;
(j) any gain arising from the acquisition of any Capital Stock;
(k) any reversal of any contingency reserve except to the extent
that provision for such contingency reserve shall have been made from
income arising during such period; provided, however, that any
reversal of a contingency reserve from a prior period shall only be
excluded from
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<PAGE>
Consolidated Net Income to the extent that the aggregate amount of
such reversals exceeds $10,000,000 during the immediately preceding
four Fiscal Quarters; and
(l) any other unusual or extraordinary gain or loss.
"Consolidated Subsidiary" means at any date any Subsidiary or other
entity the accounts of which, in accordance with GAAP, would be consolidated
with those of the Borrower in its consolidated financial statements as of such
date.
"Consolidated Total Assets" means at any time the total assets of the
Borrower and its Consolidated Subsidiaries, determined on a consolidated basis,
as set forth or reflected on the most recent consolidated balance sheet of the
Borrower and its Consolidated Subsidiaries.
"Contractual Obligation" means, as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Control" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Debt" of any Person means at any date, without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments,
(iii) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable and accrued expenses
arising in the ordinary course of business, (iv) all Capital Lease Obligations,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations of such Person to reimburse any bank or other Person in
respect of amounts paid under a letter of credit or similar instrument, (viii)
all Debt of others secured by a Lien on any asset of such Person, whether or
not such Debt is assumed by such Person, and (ix) all Debt of others Guaranteed
by such Person.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
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"Delhaize Belgium" means Etablissements Delhaize Freres et Cie "Le
Lion" S.A., a Belgian corporation.
"Depreciation" means for any period the sum of all depreciation
expenses of the Borrower and its Consolidated Subsidiaries for such period, as
determined in accordance with GAAP.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed on Schedule 3.06.
"Dollars" or "$" refers to lawful money of the United States of
America.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation,
fines, penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan
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<PAGE>
(other than an event for which the 30-day notice period is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate
of any notice, or the receipt by any Multiemployer Plan from the Borrower or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article 7.
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement or is attributable to such Foreign Lender's failure or inability to
comply with Section 2.15(e), except to the extent that such Foreign Lender's
assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such withholding tax
pursuant to Section 2.15(a).
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"Existing Public Debt" means the Borrower's $150,000,000 aggregate
principal amount of 7.55% Notes due 2007 and its $150,000,000 aggregate
principal amount of 8.05% Notes due 2027.
"Federal Funds Effective Rate" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates
on overnight federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next succeeding
Business Day by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day that is a Business Day, the average (rounded upwards,
if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or controller of the Borrower.
"First Borrowing Date" means the date of the first Borrowing hereunder.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"Foreign Lender" means any Lender that is organized under the laws of
a jurisdiction other than that in which the Borrower is located. For purposes
of this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having
the economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or
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<PAGE>
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party in respect of
any letter of credit or letter of guaranty issued to support such Indebtedness
or obligation; provided, that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person upon which interest charges are customarily paid
(excluding current accounts payable incurred in the ordinary course of
business), (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property acquired by such Person, (e)
all obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty and (j) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances. The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person's ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
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<PAGE>
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Indemnitee" has the meaning set forth in Section 9.03(b).
"Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Borrower that is not guaranteed by any other Person
(other than Subsidiaries) or subject to any other credit enhancement.
"Information" has the meaning set forth in Section 9.12.
"Interest Election Request" means a request by the Borrower to convert
or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, and (b) with respect to
any Eurodollar Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurodollar
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
(or, to the extent available to each Lender, twelve months) thereafter, as the
Borrower may elect; provided, that (i) if any Interest Period would end on a
day other than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless, in the case of a Eurodollar Borrowing
only, such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business
Day, (ii) any Interest Period that commences on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period and (iii) any
Interest Period that would otherwise end after the Maturity Date shall end on
the Maturity Date. For purposes hereof, the date of a Borrowing initially shall
be the date on which such Borrowing is made and thereafter shall be the
effective date of the most recent conversion or continuation of such Borrowing.
"Lenders" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto
pursuant to an Assignment and Acceptance.
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"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Telerate Service (or on
any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to Dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for Dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to
such Eurodollar Borrowing for such Interest Period shall be the rate at which
Dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest
in, on or of such asset and (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset.
"Loans" means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
"Majority Lenders" means, at any time, Lenders having Commitments
representing more than 50% of the aggregate amount of the Commitments at such
time (or, if the Commitments shall have terminated, Lenders holding Revolving
Credit Exposures representing more than 50% of the total Revolving Credit
Exposures at such time).
"Material Adverse Change" means any event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise,
of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the
Borrower to perform any of its obligations under this Agreement or (c) the
rights of or benefits available to the Lenders under this Agreement.
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"Material Indebtedness" means Indebtedness, or obligations in respect
of one or more Hedging Agreements, of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $20,000,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that the Borrower or such Subsidiary would be required
to pay if such Hedging Agreement were terminated at such time.
"Maturity Date" means the date that falls 5 years after the First
Borrowing Date.
"Maximum Rate" has the meaning set forth in Section 9.13.
"Medium Term Notes" means the medium term notes of the Borrower having
interest rates ranging from 8.40% to 8.73% with due dates ranging from 2000 to
2006 and having an aggregate principal balance of $123,300,000.
"Merger" means the merger of Acquisition Sub with and into the Target
(with the Target as the surviving Person) pursuant to the Merger Agreement on
the First Borrowing Date concurrently with the making of the initial Loans
hereunder, thereby consummating the Acquisition.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
August 17, 1999, as amended by Amendment No. 1 dated as of November, 1999 to be
effective as of August 17, 1999, among the Borrower, Acquisition Sub and the
Target.
"Minority Interests" means any shares of stock of any class of a
Consolidated Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Borrower and/or one or more of its Consolidated
Subsidiaries.
"Moody's" means Moody's Investors Service, Inc.
"Morgan" means Morgan Guaranty Trust Company of New York.
"Multiemployer Plan" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Operating Lease" means any lease other than a Capitalized Lease.
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"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant" has the meaning set forth in Section 9.04(e).
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes, assessments and other
governmental charges that are not yet due or are being contested in
compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlords' and other like Liens imposed by law, arising
in the ordinary course of business and securing obligations that are
not overdue by more than 30 days or are being contested in compliance
with Section 5.04;
(c) Liens granted to a landlord pursuant to a lease to secure the
obligations of the lessee under such lease which apply only to
property or assets of the lessee located at the leased premises;
(d) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(e) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds (so long as,
with respect to any such appeal bonds posted with respect to any
judgment, no Event of Default then exists under Section 7(k)),
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business;
(f) judgment liens provided no Event of Default then exists
under Section 7(k); and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not
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materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Borrower or any
Subsidiary.
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower
or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by Morgan as its prime rate in effect at its principal office
in New York City; each change in the Prime Rate shall be effective from and
including the date such change is publicly announced as being effective.
"Redeemable Preferred Stock" of any Person means any preferred stock
issued by such Person which is at any time prior to the Maturity Date either
(i) mandatorily redeemable (by sinking fund or similar payments or otherwise)
or (ii) redeemable at the option of the holder thereof.
"Register" has the meaning set forth in Section 9.04(c).
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Rentals" means and includes as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of the
property) payable by the Borrower or a Consolidated Subsidiary, as lessee or
sublessee under an Operating Lease or Capitalized Lease of real or personal
property, but shall be exclusive of any amounts required to be paid by the
Borrower or a Consolidated Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance, taxes and
similar charges. Fixed rents under any so-called "percentage leases" shall be
computed solely on the basis of the minimum rents, if any, required to be paid
by the lessee regardless of sales volume or gross revenues.
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"Reorganization" means the collective reference to the following
series of related transactions: The Borrower will create a new direct,
wholly-owned subsidiary, to be named Food Lion, Inc. ("New Food Lion"). The
Borrower will contribute to New Food Lion substantially all of the assets of
the Borrower other than the capital stock of (i) the Target, (ii) FLI Holding
Corp., a Delaware corporation ("FLI Holding"), (iii) Risk Management Services,
Inc., a North Carolina corporation ("RMS"), (iv) FL Food Lion, Inc., a Florida
corporation ("FL Food Lion") and (v) Barnwell, Inc., a Delaware corporation
("Barnwell"). After giving effect to such contribution, New Food Lion, FLI
Holding, RMS, FL Food Lion and Barnwell will each be direct wholly-owned
subsidiaries of the Borrower. FLI Holding will be merged into the Borrower and
Kash n' Karry Food Stores, Inc. will become a direct wholly-owned Subsidiary of
the Borrower.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person
or any of its property is subject.
"Revolving Borrowing" means a Borrowing made pursuant to Section
2.03.
"Revolving Credit Exposure" means, with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Revolving
Loans at such time.
"Revolving Loan" means a Loan made under the Commitments pursuant to
Section 2.03.
"S&P" means Standard & Poor's Ratings Group, a division of The McGraw
Hill Companies, Inc.
"Solvent", when used with respect to any Person, means that, as of any
date of determination, (a) the amount of the "present fair saleable value" of
the assets of such Person and its subsidiaries, taken as a whole, will, as of
such date, exceed the amount that will be required to pay all "liabilities of
such Person and its subsidiaries, taken as a whole, contingent or otherwise",
as of such date (as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the insolvency of
debtors) as such debts become absolute and matured, (b) such Person and its
subsidiaries, taken as a whole, will not have, as of such date, an unreasonably
small amount of capital with which to conduct their businesses, taking into
account the particular capital requirements of
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such Person and its projected capital requirements and availability and (c)
such Person and its subsidiaries, taken as a whole, will be able to pay their
debts as they mature, taking into account the timing of and amounts of cash to
be received by such Person and its subsidiaries, taken as a whole, and the
timing of and amounts of cash to be payable on or in respect of indebtedness of
such Person and its subsidiaries, taken as a whole. For purposes of this
definition, (i) "debt" means liability on a "claim", and (ii) "claim" means any
(x) right to payment, whether or not such a right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal or equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a right
to payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured or unmatured, disputed, undisputed,
secured or unsecured.
"Statutory Reserve Rate" means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Board to which the Administrative Agent is subject
(a) with respect to the Base CD Rate, for new negotiable nonpersonal time
deposits in Dollars of over $100,000 with maturities approximately equal to
three months and (b) with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as
any other corporation, limited liability company, partnership, association or
other entity of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests are,
as of such date, owned, controlled or held by such Person or one or more
subsidiaries of such Person or by such Person and one or more subsidiaries of
such Person.
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"Subsidiary" means any subsidiary of the Borrower.
"Stub End Date" has the meaning set forth in Section 1.04(b).
"Target" means Hannaford Bros. Co., a Maine corporation.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"364-Day Credit Agreement" means the $500,000,000 364-Day Revolving
Agreement dated as of November 19, 1999 among the Borrower, the lenders party
thereto and Morgan, as administrative agent, as amended from time to time.
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or
such next preceding Business Day, the average of the secondary market
quotations for three-month certificates of deposit of major money center banks
in New York City received at approximately 10:00 a.m., New York City time, on
such day (or, if such day is not a Business Day, on the next preceding Business
Day) by the Administrative Agent from three negotiable certificate of deposit
dealers of recognized standing selected by it.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the borrowing of Loans and the use of the proceeds
thereof and the consummation of the Acquisition and all other transactions
contemplated by the Acquisition Documents.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the
Alternate Base Rate.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowing. For purposes of
this Agreement, Loans may be classified and referred to by Type (e.g., a
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"Eurodollar Loan"). Borrowings also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth
herein), (b) any reference herein to any Person shall be construed to include
such Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words "asset" and "property" shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. (a) Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
(b) For purposes of calculating compliance with Section 6.07 on the
last day of any Fiscal Quarter ended on or after the Acquisition Date and prior
to the first date (the "Stub End Date") on which four full Fiscal Quarters have
begun and ended on or after the Acquisition Date and Section 6.08 on any date
on or after the Acquisition Date and prior to the Stub End Date, Consolidated
EBITDAR (and
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each component thereof), Consolidated Fixed Charges (and each component
thereof) and Rentals for purposes of determining Consolidated Adjusted Debt for
any relevant period shall be adjusted on a pro forma basis as if (i) the
Acquisition had been consummated on the first day of such period, (ii) the
borrowings to finance the Acquisition (including without limitation the Loans
and any loans under the Bridge Agreement and the 364-Day Credit Agreement) had
been made on the first day of such period and (iii) any Indebtedness of the
Target and its subsidiaries repaid in connection with the consummation of the
Acquisition had been repaid on the first day of such period.
ARTICLE 2
THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions set
forth herein, each Lender with a Commitment agrees to make Revolving Loans to
the Borrower from time to time during the Availability Period in an aggregate
principal amount that will not result in such Lender's Revolving Credit
Exposure exceeding such Lender's Commitment. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each Revolving Loan shall be
made as part of a Borrowing consisting of Revolving Loans made by the Lenders
ratably in accordance with their respective Commitments. The failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments of the
Lenders are several and no Lender shall be responsible for any other Lender's
failure to make Loans as required.
(b) Subject to Section 2.12, each Revolving Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith. Each Lender at its option may make any Eurodollar Loan
by causing any domestic or foreign branch or Affiliate of such Lender to make
such Loan; provided that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms of
this Agreement.
(c) At the commencement of each Interest Period for any Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of
$5,000,000 and not less than $25,000,000 (or, if less, the unused portion of
the Commitments). Borrowings of more than one Type may be outstanding at the
same time; provided that there shall not at any time be more than a total of 10
Eurodollar Revolving Borrowings outstanding.
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(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing if the Interest Period requested with respect thereto would end
after the Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a
Revolving Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business
Day;
(iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
(iv) in the case of a Eurodollar Borrowing, the initial
Interest Period to be applicable thereto, which shall be a period
contemplated by the definition of the term "Interest Period"; and
(v) the location and number of the Borrower's account to
which funds are to be disbursed, which shall comply with the
requirements of Section 2.05.
If no election as to the Type of Revolving Borrowing is specified,
then the requested Revolving Borrowing shall be an ABR Borrowing. If no
Interest Period is specified with respect to any requested Eurodollar Revolving
Borrowing, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. Promptly following receipt of a Borrowing
Request in accordance with this Section, the Administrative Agent shall advise
each Lender of the details thereof and of the amount of such Lender's Loan to
be made as part of the requested Borrowing.
SECTION 2.04. Reserved.
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SECTION 2.05. Funding of Borrowings. (a) Each Lender shall make each
Loan to be made by it hereunder on the proposed date thereof by wire transfer
of immediately available funds by 12:00 noon, New York City time, to the
account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower maintained with the Administrative
Agent in New York City and designated by the Borrower in the applicable
Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the Federal Funds Effective Rate or (ii) in the
case of the Borrower, the interest rate applicable to ABR Loans. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Revolving Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans comprising such Borrowing, and the Loans comprising
each such portion shall be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that
a Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election
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Request shall be irrevocable and shall be confirmed promptly by hand delivery
or telecopy to the Administrative Agent of a written Interest Election Request
in a form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect
to different portions thereof, the portions thereof to be
allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing
or a Eurodollar Revolving Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Revolving
Borrowing, the Interest Period to be applicable thereto after
giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing
but does not specify an Interest Period, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Revolving Borrowing prior to the end of
the Interest Period applicable thereto, then, unless such Borrowing is repaid
as provided herein, at the end of such Interest Period such Borrowing shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof,
if an Event of Default has occurred and is continuing and the Administrative
Agent, at the request of the Majority Lenders, so notifies the Borrower, then,
so long as an Event of Default is continuing (i) no outstanding Revolving
Borrowing may be converted to or continued as a Eurodollar Revolving Borrowing
and (ii) unless
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repaid, each Eurodollar Revolving Borrowing shall be converted to an ABR
Borrowing at the end of the Interest Period applicable thereto.
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
(b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of any Commitments
shall be in an amount that is an integral multiple of $5,000,000 and not less
than $25,000,000 and (ii) the Borrower shall not terminate or reduce any
Commitments if, after giving effect to any concurrent prepayment of the Loans
in accordance with Section 2.09, the sum of the total Revolving Credit
Exposures would exceed the total Commitments.
(c) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (b) of this
Section at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
of termination of the Commitments delivered by the Borrower may state that such
notice is conditioned upon the effectiveness of other credit facilities, in
which case such notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent. Each reduction of the Commitments shall be made ratably
among the Lenders in accordance with their respective Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) The Borrower
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender with a Commitment the then unpaid principal amount of
such Lender's Revolving Loans on the Maturity Date.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The Administrative Agent shall maintain accounts in which it
shall record (i) the amount of each Loan made hereunder, the Type thereof and
the Interest Period applicable thereto, (ii) the amount of any principal or
interest due
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and payable or to become due and payable from the Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered
assigns).
SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to prior notice in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurodollar Revolving Borrowing, not later than 11:00 a.m., New
York City time, three Business Days before the date of prepayment or (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of prepayment. Each
such notice shall be irrevocable and shall specify the prepayment date and the
principal amount of each Borrowing or portion thereof to be prepaid; provided
that, if a notice of prepayment is given in connection with a conditional
notice of termination of the Commitments as contemplated by Section 2.07, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.07. Promptly following receipt of any such
notice relating to a Revolving Borrowing, the Administrative Agent shall advise
the Lenders of the contents thereof. Each partial prepayment of any Revolving
Borrowing shall be in an amount that would be permitted in the case of an
advance of a Revolving Borrowing of the same Type as provided in Section 2.02.
Each prepayment of a Revolving Borrowing shall be applied ratably to the Loans
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included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.11.
SECTION 2.10. Fees. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee, which
shall accrue at the Applicable Rate on the daily amount by which such Lender's
Commitment exceeds the aggregate amount of such Lender's outstanding Loans
during the period from and including the date hereof to but excluding the date
on which such Commitment terminates. Accrued commitment fees shall be payable
in arrears on the last day of March, June, September and December of each year
and on the date on which the Commitments terminate, commencing on the first
such date to occur after the date hereof. All commitment fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number
of days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed
upon between the Borrower and the Administrative Agent.
(c) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent for distribution, in
the case of facility fees, to the Lenders. Fees paid shall not be refundable
under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate plus
the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear
interest at a rate per annum equal to the Adjusted LIBO Rate for the Interest
Period in effect for such Borrowing plus the Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus
the rate otherwise applicable to such Loan as provided above or (ii) in the
case of any other amount, 2% plus the rate applicable to ABR Loans as provided
above.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued
pursuant to paragraph (c) of this Section shall be payable on demand, (ii) in
the event of any
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repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest
on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, (iii) in the event of any conversion of any Eurodollar
Revolving Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion and (iv) all accrued interest shall be payable upon termination of
the Commitments.
(e) All interest hereunder shall be computed on the basis of a year
of 360 days, except that interest computed by reference to the Alternate Base
Rate at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative
Agent, and such determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Majority Lenders that
the Adjusted LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans included
in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Revolving Borrowing to, or
continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be
ineffective, and (ii) if any Borrowing Request requests a Eurodollar Revolving
Borrowing, such Borrowing shall be made as an ABR Borrowing.
SECTION 2.13. Increased Costs. (a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the
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account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such
Lender or any participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received
or receivable by such Lender hereunder (whether of principal, interest or
otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or
reduction suffered.
(b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on
such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender, to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or such Lender's holding company, as the case may be, such additional amount or
amounts as will compensate such Lender or such Lender's holding company for any
such reduction suffered.
(c) A certificate of a Lender setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case may be,
as specified in paragraph (a) or (b) of this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 15 days
after receipt thereof.
(d) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right
to demand such compensation; provided that the Borrower shall not be required
to compensate a Lender (or such Lender's holding company) pursuant to this
Section for any increased costs or reductions incurred more than ninety days
prior to the date that such Lender notifies the Borrower of the Change in Law
giving rise to such increased costs or reductions and of such Lender's
intention to claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the ninety-day period
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referred to above shall be extended to include the period of retroactive effect
thereof.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurodollar Loan other than on the last day of an
Interest Period applicable thereto (including as a result of an Event of
Default), (b) the conversion of any Eurodollar Loan other than on the last day
of the Interest Period applicable thereto, (c) the failure to borrow any
Eurodollar Loan, convert any ABR Loan into a Eurodollar Loan, continue any
Eurodollar Loan or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice is
permitted to be revocable under Section 2.09(b) and is revoked in accordance
herewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.17, then, in any such event, the Borrower shall
compensate each Lender for the loss, cost and expense attributable to such
event. In the case of a Eurodollar Loan, the loss to any Lender attributable to
any such event shall be deemed to include an amount determined by such Lender
to be equal to the excess, if any, of (i) the amount of interest that such
Lender would pay for a deposit equal to the principal amount of such Loan for
the period from the date of such payment, conversion, failure or assignment to
the last day of the then current Interest Period for such Loan (or, in the case
of a failure to borrow, convert or continue, the duration of the Interest
Period that would have resulted from such borrowing, conversion or
continuation) if the interest rate payable on such deposit were equal to the
Adjusted LIBO Rate for such Interest Period, over (ii) the amount of interest
that such Lender would earn on such principal amount for such period if such
Lender were to invest such principal amount for such period at the interest
rate that would be bid by such Lender (or an affiliate of such Lender) for
Dollar deposits from other banks in the eurodollar market at the commencement
of such period. A certificate of any Lender setting forth any amount or amounts
that such Lender is entitled to receive pursuant to this Section shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 15 days after receipt thereof.
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if
the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Administrative Agent or Lender
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions
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and (iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and each
Lender, within 10 days after written demand therefor, for the full amount of
any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) paid by the Administrative Agent or such Lender, as the case may be,
and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental
Authority. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender, or by the Administrative Agent on its
own behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy
of the return reporting such payment or other evidence of such payment
reasonably satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by
applicable law or reasonably requested by the Borrower, such properly completed
and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate. The Borrower
shall not be obligated to make any payments to a Foreign Lender pursuant to
Section 2.15(a) to the extent that such Indemnified Taxes or Other Taxes became
payable as a consequence of such Foreign Lender having failed to comply with
this Section 2.15(e).
(f) If any Lender shall become aware that it is entitled to receive a
refund or credit (such credit to include any increase in any foreign tax
credit) as a result of Indemnified Taxes (including any penalties or interest
with respect thereto) as to which it has been indemnified by the Borrower
pursuant to this Section 2.15, it shall promptly notify the Borrower of the
availability of such
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refund or credit and shall, within 30 days after receipt of a request by the
Borrower, apply for such refund or credit at the Borrower's expense, and in the
case of any application for such refund or credit by the Borrower, shall, if
legally able to do so, deliver to the Borrower such certificates, forms or
other documentation as may be reasonably necessary to assist the Borrower in
such application. If any Lender receives a refund or credit (such credit to
include any increase in any foreign tax credit) in respect to any Indemnified
Taxes as to which it has been indemnified by the Borrower pursuant to this
Section 2.15, it shall promptly notify the Borrower of such refund or credit
and shall, within 30 days after receipt of such refund or the benefit of such
credit (such benefit to include any reduction of the taxes for which any Lender
would otherwise be liable due to any increase in any foreign tax credit
available to such Lender), repay the amount of such refund or benefit of such
credit (with respect to the credit, as determined by the Lender in its sole
judgment) to the Borrower (to the extent of amounts that have been paid by the
Borrower under this Section 2.15 with respect to Indemnified Taxes giving rise
to such refund or credit), plus any interest received with respect thereto, net
of all reasonable out-of-pocket expenses of such Lender and without interest
(other than interest actually received from the relevant taxing authority or
other Governmental Authority with respect to such refund or credit); provided,
however, that the Borrower, upon the request of such Lender, agrees to return
the amount of such refund or benefit of such credit (plus interest) to such
Lender in the event such Lender is required to repay the amount of such refund
or benefit of such credit to the relevant taxing authority or other
Governmental Authority.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-
offs. (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees, or under Section 2.13, 2.14 or
2.15, or otherwise) prior to 12:00 noon, New York City time, on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 60 Wall Street, New
York, New York, except that payments pursuant to Sections 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto. The Administrative
Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof.
If any payment hereunder shall be due on a day that is not a Business Day, the
date for payment shall be extended to the next succeeding Business Day, and, in
the case of any payment accruing interest, interest thereon shall be payable
for the period of such extension. All payments hereunder shall be made in
Dollars.
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(b) If at any time insufficient funds are received by and available
to the Administrative Agent to pay fully all amounts of principal, interest and
fees then due hereunder, such funds shall be applied (i) first, to pay interest
and fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal then due to such
parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans resulting in such Lender receiving
payment of a greater proportion of the aggregate amount of its Revolving Loans
and accrued interest thereon than the proportion received by any other Lender,
then the Lender receiving such greater proportion shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Revolving Loans; provided that (i) if any
such participations are purchased and all or any portion of the payment giving
rise thereto is recovered, such participations shall be rescinded and the
purchase price restored to the extent of such recovery, without interest, and
(ii) the provisions of this paragraph shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any
assignee or participant, other than to the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
(d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the Federal Funds
Effective Rate.
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(e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(b) or 2.16(d), then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender's obligations under such Sections until all
such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender requests compensation under Section 2.13, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.15, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, or to file any
certificate or document reasonably requested by the Borrower, if, in the
judgment of such Lender, such designation or assignment or filing (i) would
eliminate or reduce amounts payable pursuant to Section 2.13 or 2.15, as the
case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.13, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (i) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (ii) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans, accrued interest thereon, accrued fees and all other amounts payable to
it hereunder, from the assignee (to the extent of such outstanding principal
and accrued interest and fees) or the Borrower (in the case of all other
amounts) and (iii) in the case of any such assignment resulting from a claim
for compensation under Section 2.13 or payments required to be made pursuant to
Section 2.15, such assignment will result in a reduction in such compensation
or payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result
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of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply. A Lender
shall not be required to pay any fee to the Administrative Agent in connection
with such assignment and delegation (any such fee to be paid by the Borrower or
the assignee).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders (including, in the
case of any representation and warranty made or deemed made before the
consummation of the Acquisition, at the time such representation and warranty
is made or deemed made and immediately after giving effect to the consummation
of the Acquisition) that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Borrower's corporate powers and have been duly authorized by all
necessary corporate and, if required, stockholder action. Each of this
Agreement, the Acquisition Documents and the other documents executed and
delivered in connection with the Transactions, has been duly executed and
delivered by the Borrower and constitutes a legal, valid and binding obligation
of the Borrower, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except (x) such consents,
approvals, registrations or filings with respect to the Acquisition, all of
which will be obtained or made prior to the consummation of the Acquisition and
will thereafter be in full force and effect, (y) such consents, approvals,
registrations or filings with respect to the Acquisition which will be obtained
or made after the consummation of the Acquisition or the failure to obtain or
make prior to the Acquisition will not, individually or in the aggregate, have
a Material Adverse
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Effect and (z) such other consents, approvals, registrations or filings as have
been obtained or made and are in full force and effect, (b) will not violate
any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any
order of any Governmental Authority, (c) will not violate or result in a
default under (i) any indenture, agreement or instrument relating to the
Existing Public Debt or the Medium Term Notes or (ii) any other indenture,
agreement or other instrument binding upon the Borrower or any of its
Subsidiaries or its assets, other than defaults or violations for which
consents or waivers have been obtained or, solely with respect to any
indenture, agreement or instrument described in clause (ii), which defaults or
violations, individually or in the aggregate could not reasonably be expected
to result in a Material Adverse Effect, (d) will not give rise to a right under
any indenture, agreement or other instrument binding upon the Borrower or any
of its Subsidiaries or its assets to require any payment to be made by the
Borrower or any of its Subsidiaries other than any payments contemplated to be
made in connection with the Transactions, and (e) will not result in the
creation or imposition of any Lien on any asset of the Borrower or any of its
Subsidiaries.
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the Fiscal Year ended January 2, 1999, reported on by PricewaterhouseCoopers
LLP, independent public accountants, and (ii) as of and for the fiscal quarter
and the portion of the Fiscal Year ended September 11, 1999, certified by its
Financial Officer. Such financial statements present fairly, in all material
respects, the financial condition and results of operations and cash flows of
Borrower and its Consolidated Subsidiaries as of such dates and for such
periods in accordance with GAAP, subject to year-end audit adjustments and the
absence of footnotes in the case of the statements referred to in clause (ii)
above.
(b) The Borrower has heretofore furnished to the Lenders the
consolidated balance sheet and statements of income, stockholders equity and
cash flows of the Target and its subsidiaries (i) as of and for the Fiscal Year
ended January 2, 1999, reported on by PricewaterhouseCoopers LLP, independent
public accountants, and (ii) as of and for the fiscal quarter and the portion
of the Fiscal Year ended July 3, 1999, certified by a Financial Officer of the
Borrower. Such financial statements present fairly, in all material respects,
the financial condition and results of operations and cash flows of the Target
and its consolidated subsidiaries as of such dates and for such periods in
accordance with GAAP, subject to year-end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
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(c) Since June 19, 1999, there has been no Material Adverse Change in
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and its Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to its business, except for defects in title
that do not interfere with its ability to conduct its business as currently
conducted or to utilize such properties for their intended purposes and except
as may be permitted pursuant to Section 6.01.
(b) Each of the Borrower and its Subsidiaries owns, or is licensed to
use, all trademarks, tradenames, copyrights, patents and other intellectual
property material to its business, and the use thereof by the Borrower and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Subsidiaries or that involve
this Agreement or the Transactions as to which there is a reasonable
possibility of an adverse determination and that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters).
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any
of its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the
Borrower and its Subsidiaries is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property and all
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indentures, agreements and other instruments binding upon it or its property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. No Default has
occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
Borrower nor any of its Subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns and reports required to have
been filed and has paid or caused to be paid all Taxes required to have been
paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, has set aside on its books reserves as and to the extent required
by GAAP or (b) to the extent that the failure to do so could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect. The present value of all
accumulated benefit obligations under each Plan (based on the assumptions used
for purposes of Statement of Financial Accounting Standards No. 87) did not, as
of the date of the most recent financial statements reflecting such amounts,
exceed by more than $8,000,000 the fair market value of the assets of such
Plan, and the present value of all accumulated benefit obligations of all
underfunded Plans (based on the assumptions used for purposes of Statement of
Financial Accounting Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$15,000,000 the fair market value of the assets of all such underfunded Plans.
SECTION 3.11. Disclosure. The Borrower has disclosed to the Lenders
all agreements, instruments and corporate or other restrictions to its
knowledge to which it or any of its Subsidiaries is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect. None of the reports,
financial statements, certificates or other information furnished by or on
behalf of the Borrower to the Administrative Agent or any Lender in connection
with the negotiation of this Agreement or delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any
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material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that, with
respect to projected financial information, the Borrower represents only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time. Any forward looking statements contained therein are
inherently subject to risk and uncertainties, many of which cannot be predicted
with accuracy, and some of which might not be anticipated. Future events and
actual results, financial and otherwise, could differ materially from those set
forth therein or contemplated by the forward looking statements contained
therein.
SECTION 3.12. Margin Stock. Not more than 25% of the consolidated
assets of the Borrower consists of "margin stock" within the meaning of such
term under Regulation U of the Board of Governors of the Federal Reserve
System.
SECTION 3.13. No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrower or any of its Subsidiaries could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.14. Subsidiaries. Schedule 3.14 sets forth all of the
Subsidiaries of the Borrower at the date hereof.
SECTION 3.15. Solvency. As of the date hereof and on the occasion of
any Borrowing, the Borrower is Solvent.
SECTION 3.16. Year 2000 Matters. Any reprogramming required to permit
the proper functioning (but only to the extent that such functioning would
otherwise be impaired by the occurrence of the year 2000) in and following the
year 2000 of computer systems and other equipment containing embedded
microchips, in either case owned or operated by the Borrower or any of its
Subsidiaries has been substantially completed. The costs to the Borrower and
its Subsidiaries that have not been incurred as of the date hereof for such
reprogramming and testing and for the other reasonably foreseeable consequences
to them of any improper functioning of other computer systems and equipment
containing embedded microchips due to the occurrence of the year 2000 could not
reasonably be expected to result in a Default or Event of Default or to have a
Material Adverse Effect. The computer systems of the Borrower and its
Subsidiaries are and, with ordinary course of upgrading and maintenance, will
continue for the term of this Agreement to be sufficient for the conduct of
their business as currently conducted.
SECTION 3.17. Acquisition Documents. As of the Acquisition Date, each
of the representations and warranties made in the Acquisition Documents by each
of the parties thereto is true and correct in all material respects, and such
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representations and warranties are hereby incorporated herein by reference with
the same effect as though set forth in their entirety herein, as qualified
therein.
ARTICLE 4
CONDITIONS TO FUNDING
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this Agreement)
that such party has signed a counterpart of this Agreement.
(b) (i) The Lenders shall have received true, correct and complete
copies of the Acquisition Documents as in effect on the Effective Date, and
(ii) the material terms of such Acquisition Documents shall be in form and
substance satisfactory to the Majority Lenders.
With respect to the condition set forth in paragraph (b)(ii) of this
Section, each Lender shall be deemed to have determined that such condition has
been satisfied unless the Administrative Agent shall have received notice from
such Lender prior to the Effective Date that such Lender does not consider such
condition to have been satisfied.
The Administrative Agent shall notify the Borrower and the Lenders of
the Effective Date, and such notice shall be conclusive and binding.
SECTION 4.02. First Credit Event. The obligation of each Lender to
make a Loan on the occasion of the Borrowing to occur on the First Borrowing
Date is subject to the satisfaction of the following conditions (or waiver
thereof in accordance with Section 9.02):
(a) The Effective Date shall have occurred.
(b) (i) The Merger shall have been consummated (or shall be
consummated contemporaneously with the making of the Loans on the First
Borrowing Date) in accordance with the Acquisition Documents on or prior to
August 17, 2000, and (ii) no term or condition of any Acquisition Document
shall have been amended, modified or waived except as permitted by Section 6.10
hereof.
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(c) The Administrative Agent shall have received true, correct and
complete copies of the Acquisition Documents as in effect on the First
Borrowing Date.
(d) (i) All governmental, shareholder and third-party consents
(including Hart-Scott-Rodino clearance) and approvals necessary or desirable in
connection with the Acquisition shall have been obtained and shall be in full
force and effect, except for such consents or approvals the failure of which to
obtain will not, individually or in the aggregate, have a Material Adverse
Effect, (ii) all applicable waiting periods shall have expired without any
action being taken by any competent authority that could restrain, prevent or
impose any materially adverse conditions on the Acquisition or that could seek
or threaten to restrain, prevent or impose any materially adverse conditions on
any of the foregoing, and (iii) no law or regulation shall be applicable which
in the judgment of the Lenders could have any such effect.
(e) There shall be no actions, suits or proceedings by or before any
arbitrator or governmental authority pending against or to the knowledge of the
Borrower threatened against or affecting the Borrower or any of its
Subsidiaries or the Target or any of its subsidiaries or that involve the
credit facility contemplated by this Agreement or the refinancing thereof or
this Agreement as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected
to have a Material Adverse Effect or that challenge the Acquisition.
(f) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
First Borrowing Date) of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel for
the Borrower, substantially in the form of Exhibit B, and covering such other
matters relating to the Borrower, this Agreement or the Transactions as the
Majority Lenders shall reasonably request. The Borrower hereby requests such
counsel to deliver such opinion.
(g) The Administrative Agent shall have received a certificate, dated
the First Borrowing Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the conditions
set forth in paragraphs (b), (d) and (e) of this Section and paragraphs (a) and
(b) of Section 4.03.
(h) The Lenders and the Administrative Agent shall have received all
fees and other amounts due and payable on or prior to the First Borrowing Date,
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including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
(i) The Administrative Agent shall have received such other legal
opinions, documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of the Transactions and any other
legal matters relating to the Borrower, this Agreement or the Transactions, all
in form and substance satisfactory to the Administrative Agent and its counsel.
With respect to any condition set forth in paragraph (d)(iii) of this
Section, each Lender shall be deemed to have determined that such condition has
been satisfied unless the Administrative Agent shall have received notice from
such Lender prior to the First Borrowing Date that such Lender does not
consider such condition to have been satisfied.
The obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or
waived pursuant to Section 9.02) at or prior to 3:00 p.m., New York City time,
on August 17, 2000 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.03. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing (including without limitation on the
First Borrowing Date) is subject to the satisfaction of the following
conditions (or waiver thereof in accordance with Section 9.02):
(a) The representations and warranties of the Borrower set forth in
this Agreement shall be true and correct on and as of the date of such
Borrowing, including, without limitation, the representations and warranties
set forth in Sections 3.04 and 3.06, except to the extent such representations
and warranties expressly relate to an earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing, no Default or Event of Default shall have occurred and be
continuing.
Each Borrowing shall be deemed to constitute a representation and
warranty by the Borrower on the date thereof as to the matters specified in
paragraphs (a) and (b) of this Section.
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ARTICLE 5
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall
have been paid in full, the Borrower covenants and agrees with the Lenders
that:
SECTION 5.01. Financial Statements and Other Information. The
Borrower will furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each Fiscal Year, its audited
consolidated balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures as of the end of and for the previous
Fiscal Year, all reported on by PricewaterhouseCoopers LLP or other independent
public accountants of recognized national standing (without a "going concern"
or like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of each Fiscal Year, its consolidated balance sheet and related
statements of operations, stockholders' equity and cash flows as of the end of
and for such fiscal quarter and the then elapsed portion of the Fiscal Year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous Fiscal Year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its Consolidated Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
of the financial covenants set forth in Sections 6.02, 6.07 and 6.08 and (iii)
stating whether any change in GAAP or in the application thereof has occurred
since the date of the audited financial statements referred to in Section
3.04(a) and, if any such change has
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occurred, specifying the effect of such change on the financial statements
accompanying such certificate;
(d) concurrently with any delivery of financial statements under
clause (a) above, a certificate of the accounting firm that reported on such
financial statements stating whether they obtained knowledge during the course
of their examination of such financial statements of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed
(excluding exhibits) by the Borrower or any Subsidiary with the Securities and
Exchange Commission, or any Governmental Authority succeeding to any or all of
the functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;
and
(f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender through the Administrative Agent may
reasonably request.
Section 5.02. Notices of Material Events. The Borrower will furnish to
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount
exceeding $20,000,000 subsequent to the date hereof; and
(d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting
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forth the details of the event or development requiring such notice and any
action taken or proposed to be taken with respect thereto.
SECTION 5.03. Existence; Conduct of Business. The Borrower will, and
will cause each of its Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of the business of the Borrower and its Subsidiaries taken as a
whole except to that extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing shall
not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 6.03.
SECTION 5.04. Payment of Obligations. The Borrower will, and will
cause each of its Subsidiaries to, pay its obligations, including Tax
liabilities, that, if not paid, could result in a Material Adverse Effect
before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect.
SECTION 5.05. Maintenance of Properties; Insurance. The Borrower will,
and will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in adequate working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.
SECTION 5.06. Books and Records; Inspection Rights. The Borrower will,
and will cause each of its Subsidiaries to, keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated
by the Administrative Agent or any Lender, upon reasonable prior notice, to
visit and inspect its properties, to examine and make extracts from its books
and records, and to discuss its affairs, finances and condition with its
officers and independent accountants, all at such reasonable times and as often
as reasonably requested.
SECTION 5.07. Compliance with Laws and Material Contractual
Obligations. The Borrower will, and will cause each of its Subsidiaries to,
comply with all laws, rules, regulations and orders of any Governmental
Authority applicable to it or its property and all material Contractual
Obligations, except
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where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect; provided that
the foregoing shall not be construed to prevent the Borrower or any such
Subsidiary from contesting any of the same by appropriate proceedings.
SECTION 5.08. Use of Proceeds. The proceeds of the Loans will be used
only (i) to finance the Acquisition (including the payment of related
transaction fees and expenses), (ii) to refinance existing Indebtedness of the
Target and (iii) for general corporate purposes of the Borrower and its
Subsidiaries, including as credit support for the Borrower's commercial paper
programs. No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that entails a violation of any of the Regulations
of the Board, including Regulations U and X.
SECTION 5.09. Change in Ratings. The Borrower will furnish to the
Administrative Agent and each Lender prompt written notice of any change in
ratings established or deemed to have been established by Moody's and S&P for
any of its indebtedness for borrowed money, including, without limitation, the
Index Debt or its senior, unsecured, short-term indebtedness for borrowed money
(including, without limitation, commercial paper).
SECTION 5.10. Copies of Other Bank Agreements. Promptly upon entering
into the Bridge Agreement, the Borrower will deliver to each Lender (other than
a Lender who is a party to such Bridge Agreement) a true, correct and complete
copy thereof.
ARTICLE 6
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in
full, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof and set forth on Schedule 6.01 or
resulting from
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operating leases existing on the date hereof being reclassified as capital
leases in accordance with GAAP; provided that (i) such Lien shall not apply to
any other property or asset (other than accessions, modifications and proceeds
thereof) of the Borrower or any Subsidiary and (ii) such Lien shall secure only
those obligations which it secures on the date hereof and extensions, renewals
and replacements thereof that do not increase the outstanding principal amount
thereof;
(c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary on or after the date
hereof prior to the time such Person becomes a Subsidiary; provided that (i)
such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such
Lien shall not apply to any other property or assets (other than accessions,
modifications and proceeds thereof) of the Borrower or any Subsidiary and (iii)
such Lien shall secure only those obligations which it secures on the date of
such acquisition or the date such Person becomes a Subsidiary, as the case may
be and extensions, renewals and replacements thereof that do not increase the
outstanding principal amount thereof;
(d) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (i) such Liens and
the Indebtedness secured thereby are incurred prior to or within 180 days after
such acquisition or the completion of such construction or improvement, (ii)
the Indebtedness secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets and (iii) such Liens
shall not apply to any other property or assets (other than accessions,
modifications and proceeds thereof) of the Borrower or any Subsidiary; and
(e) Liens not otherwise permitted pursuant to this Section 6.01
securing Indebtedness of the Borrower or any Subsidiary (not otherwise
prohibited hereunder) in an aggregate principal amount at no time exceeding (i)
$30,000,000 minus (ii) the aggregate principal amount of Indebtedness of
Subsidiaries permitted solely by clause (e) of Section 6.02 outstanding at such
time.
SECTION 6.02. Indebtedness of Subsidiaries. The Borrower will not
permit any Subsidiary to create, incur, assume, become liable in respect of or
suffer to exist any Indebtedness, except to the extent otherwise permitted
hereunder:
(a) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(b);
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(b) (i) Indebtedness (including, without limitation, Capital Lease
Obligations) secured by Liens permitted under Section 6.01(c) in an aggregate
principal amount not to exceed $140,000,000, (ii) Indebtedness (other than
Indebtedness permitted by clause (i)) consisting of Capital Lease Obligations
and (iii) on and after the date on which Bel-Thai Supermarket Company Ltd.
("Bel- Thai") becomes a Subsidiary, Indebtedness of Bel-Thai in an aggregate
principal amount not exceeding $60,000,000;
(c) Indebtedness of any Subsidiary owed to the Borrower or any other
Subsidiary;
(d) Indebtedness of the Target and its subsidiaries outstanding on
the Acquisition Date and not incurred in contemplation of the Acquisition; and
(e) additional Indebtedness of the Subsidiaries in an aggregate
principal amount (for all Subsidiaries) at no time exceeding (i) $30,000,000
minus (ii) the aggregate principal amount of Indebtedness secured by Liens
permitted solely by clause (e) of Section 6.01 outstanding at such time;
provided that at any date the aggregate amount of Capital Lease Obligations of
all Subsidiaries (other than any such Capital Lease Obligations incurred in
reliance on clause (i) of subsection (b)) and the aggregate amount of Capital
Lease Obligations of the Borrower will not exceed $1,000,000,000.
SECTION 6.03. Fundamental Changes. (a) The Borrower will not, and will
not permit any Subsidiary to, merge into or consolidate with any other Person,
or permit any other Person to merge into or consolidate with it, or sell,
transfer, lease or otherwise dispose of (in one transaction or in a series of
transactions) all or substantially all of the assets of the Borrower and its
Subsidiaries taken as a whole (whether now owned or hereafter acquired), or
liquidate or dissolve, except that, if at the time thereof and immediately
after giving effect thereto no Default shall have occurred and be continuing
(i) the Borrower may merge into any other Person in a transaction in which the
Borrower is the surviving corporation, (ii) any Subsidiary may merge into the
Borrower in a transaction in which the Borrower is the surviving corporation,
(iii) any Subsidiary may merge into any Subsidiary in a transaction in which
the surviving entity is a Subsidiary, (iv) any Subsidiary may merge into any
other Person in a transaction in which the surviving entity is a Subsidiary or
in a transaction permitted by Section 6.09 and in which the surviving Person is
not a Subsidiary, (v) any Subsidiary may sell, transfer, lease or otherwise
dispose of its assets to the Borrower or to another Subsidiary or in a
transaction not constituting all or substantially all of the assets of the
Borrower and its Subsidiaries taken as a whole
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and which is permitted by Section 6.08, (vi) Acquisition Sub may consummate the
Merger, (vii) subject to Section 10.01, the Borrower and its Subsidiaries may
consummate the Reorganization and (viii) any Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders; provided that any such merger involving a
Person that is not a wholly owned Subsidiary immediately prior to such merger
shall not be permitted unless also permitted by Section 6.04.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, engage to any material extent in any business other than
businesses of the type conducted by the Borrower and its Subsidiaries and
Hannaford and its subsidiaries on the date of execution of this Agreement and
businesses reasonably related or incidental thereto.
SECTION 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Hedging Agreements. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
prior to such merger) any capital stock, evidences of Indebtedness or other
securities (including any option, warrant or other right to acquire any of the
foregoing) of, make or permit to exist any loans or advances to, guarantee any
obligations of, or make or permit to exist any investment or any other interest
in, any other Person, or purchase or otherwise acquire (in one transaction or a
series of transactions) any assets of any other Person constituting a business
unit, except:
(i) Cash Equivalents;
(ii) extensions of trade credit in the ordinary course of
business;
(iii) investments arising from the settlement of debts or as a
result of bankruptcy or insolvency proceedings or as a result of
enforcement proceedings;
(iv) investments of the Borrower and the Subsidiaries existing on
the date hereof;
(v) investments by the Borrower existing on the date hereof in
the capital stock of its Subsidiaries;
(vi) loans, advances and other investments made by the Borrower to
or in any Subsidiary and made by any Subsidiary to or in the Borrower
or any other Subsidiary;
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(vii) Guarantees to the extent that the resulting Debt would be
permitted by Section 6.08 and, if applicable, Section 6.02;
(viii) the acquisition of the capital stock of the Target pursuant
to the Acquisition Documents;
(ix) investments of the Target and its subsidiaries (i)
existing on the date hereof or (ii) made after the date hereof and
prior to the Acquisition Date, so long as such investments are
permitted to be made by the terms of the Merger Agreement;
(x) at any time on or after the Bridge Payout Date, acquisitions
of a Person or the assets of a Person constituting a business unit in
the same line of business conducted by the Borrower on the date hereof
in an aggregate amount not to exceed $600,000,000 over the term of
this Agreement; provided that acquisitions of equity interests in a
Person which do not result in such Person constituting a Subsidiary
shall not exceed an aggregate amount of $200,000,000; and
(xi) investments not otherwise permitted pursuant to this Section
6.04 in an aggregate amount not to exceed $20,000,000 at any time
outstanding.
(b) The Borrower will not, and will not permit any of its
Subsidiaries to, enter into any Hedging Agreement, other than (i) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities, (ii) any Hedging Agreements to
hedge interest rate risk with respect to the loans outstanding under the Bridge
Agreement and (iii) Hedging Agreements constituting "treasury-locks" or similar
hedging arrangements entered into by the Borrower in anticipation of an
issuance of Debt by the Borrower pursuant to a capital markets transaction.
SECTION 6.05. Transactions with Affiliates. The Borrower will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on
terms and conditions not less favorable to the Borrower or such Subsidiary than
could be obtained on an arm's-length basis from unrelated third parties and (b)
transactions between or among the Borrower and its wholly owned Subsidiaries
not involving any other Affiliate.
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SECTION 6.06. Reserved.
SECTION 6.07. Fixed Charges Coverage. At the end of each Fiscal
Quarter set forth below, the ratio of (i) Consolidated EBITDAR for the period
of four Fiscal Quarters then ended to (ii) Consolidated Fixed Charges for such
period, shall not have been less than the ratio set forth below opposite such
Fiscal Quarter (subject to the proviso set forth below):
Fiscal Quarter Ratio
- ------------------------------------------------------------------------------
First Fiscal Quarter ended on or immediately after the 2.25:1
Effective Date - Third Fiscal Quarter 2001
Fourth Fiscal Quarter 2001 - Third Fiscal Quarter 2002 2.50:1
Fourth Fiscal Quarter 2002 - Third Fiscal Quarter 2003 2.75:1
Fourth Fiscal Quarter 2003 and thereafter 3.00:1
- ------------------------------------------------------------------------------
; provided that at the end of any Fiscal Quarter ended prior to the Acquisition
Date, such ratio shall not have been less than 3:00:1.
SECTION 6.08. Ratio of Consolidated Adjusted Debt to Consolidated
EBITDAR. At no date will the ratio of (i) Consolidated Adjusted Debt at such
date to (ii) Consolidated EBITDAR for the period of four consecutive Fiscal
Quarters ended on or most recently prior to such date exceed the ratio set
forth below opposite the period in which such date falls (subject to the
proviso set forth below):
Period Ratio
- ------------------------------------------------------------------------------
Effective Date - day immediately preceding last day of 4.50:1
Fourth Fiscal Quarter 2001
Last day of Fourth Fiscal Quarter 2001- day immediately 4.00:1
preceding last day of Fourth Fiscal Quarter 2002
Last day of Fourth Fiscal Quarter 2002 - day immediately 3.75:1
preceding last day of Fourth Fiscal Quarter 2003
Last day of Fourth Fiscal Quarter 2003 and thereafter 3.50:1
- ------------------------------------------------------------------------------
; provided that at any date prior to the Acquisition Date, such ratio will not
exceed 3:00:1.
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SECTION 6.09. Limitation on Sales of Assets. The Borrower will not,
nor will it permit any Subsidiary to, convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets, whether now owned
or hereafter acquired, or discontinue or eliminate any business line or
segment, except:
(a) the sale or other disposition of obsolete, surplus or worn out
property in the ordinary course of business;
(b) the sale of inventory in the ordinary course of business;
(c) as permitted by Section 6.03(a);
(d) (i) sales of assets in a single transaction or in a series of
related transactions the aggregate book value of which is not greater than
$25,000,000 in any one such transaction or series of related transactions and
(ii) sales of assets the consummation of which is an express condition (either
precedent or subsequent) to the approval by the Federal Trade Commission of the
Acquisition; provided that the book value of the assets disposed of in assets
sales consummated in reliance on this clause (ii) does not exceed $258,000,000
and provided, further that if, within 180 days of any such assets sales, the
Borrower or any Subsidiary acquires similar assets having a use similar to and
a fair market value at least equal to the assets sold, then the value of the
assets sold shall not be included in calculating future assets sales permitted
under this Section 6.09;
(e) dispositions and discontinuances of a business line or segment
not otherwise permitted pursuant to this Section 6.09, provided that the
aggregate assets to be so disposed of or the aggregate assets utilized in a
business line or segment to be so discontinued (in a single transaction or in a
series of related transactions), when combined with all other assets disposed
of (including, without limitation, pursuant to a sale and leaseback
transaction) and all other assets utilized in all other business lines or
segments discontinued, during the period from the date of this Agreement
through and including the date of any such disposition or discontinuation would
not exceed 5% of Consolidated Total Assets as determined by reference to the
Borrower's most recently audited financial statements provided to the
Administrative Agent and the Lenders pursuant to Section 5.01(a) and provided,
further that if, within 180 days of the sale of any assets, the Borrower or any
Subsidiary acquires similar assets having a use similar to and a fair market
value at least equal to the assets so sold, then the value of the assets sold
shall not be included in calculating future assets permitted to be sold under
this Section 6.09; and
(f) conveyances, sales, leases, assignments, transfers or other
dispositions of assets from the Borrower to a wholly owned Subsidiary
(including
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without limitation pursuant to the Reorganization), from a Subsidiary to the
Borrower or from a Subsidiary to a wholly owned Subsidiary.
SECTION 6.10. Modifications to Acquisition Documents. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
amendment, modification or waiver of any material term or condition of any
Acquisition Document without the prior written consent of the Majority Lenders.
SECTION 6.11. Restrictions Affecting Subsidiaries. The Borrower will
not, and will not permit any of its Subsidiaries to, enter into, be bound by or
suffer to exist any encumbrance or restriction on the ability of any Subsidiary
to (a) pay dividends or make other distributions or pay any Debt or
Indebtedness owed to the Borrower or any Subsidiary, (b) make loans or advances
to the Borrower or any Subsidiary, (c) transfer any of its properties or assets
to the Borrower or any Subsidiary, (d) create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, (e) Guarantee any Debt or Indebtedness of the Borrower or
another Subsidiary or (f) suffer to exist any Lien on capital stock or other
equity interests issued by it; except for any such encumbrance or restriction
existing under or by reason of (i) any agreement in effect on the Effective
Date as any such agreement is in effect on such date, (ii) this Agreement,
(iii) any agreement with respect to Indebtedness of any Subsidiary permitted to
be incurred under Section 6.02(b) or secured by a Lien permitted to be incurred
under Section 6.01(d) and provided such encumbrance or restriction shall not
apply to any assets of the Borrower or its Subsidiaries other than the assets
of such Subsidiary subject to such Lien, (iv) any agreement binding upon such
Subsidiary prior to the date on which such Subsidiary was acquired by the
Borrower and outstanding on such date and provided such encumbrance or
restriction shall not apply to any assets of the Borrower or its Subsidiaries
other than such Subsidiary, (v) customary provisions restricting subletting or
assignment of any lease governing any leasehold interest of any Subsidiary,
(vi) applicable law, (vii) licenses or other agreements, including with respect
to property, in the ordinary course of business consistent with prior practice
and (viii) any agreement binding upon such Subsidiary so long as such
encumbrance or restriction is no more restrictive than those contained in this
Agreement.
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ARTICLE 7
EVENTS OF DEFAULT
SECTION 7.01. Events of Default.
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when and
as the same shall become due and payable, whether at the due date thereof or at
a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Section) payable under this Agreement, when and as the same shall become due
and payable, and such failure shall continue unremedied for a period of five
days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in or in connection with this
Agreement or any amendment or modification hereof, or in any report,
certificate, financial statement or other document delivered pursuant to this
Agreement or any amendment or modification hereof, shall prove to have been
incorrect in any material way when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.03 (with respect to the
Borrower's existence) or 5.08 or in Article 6;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Administrative
Agent (given at the request of any Lender) to the Borrower;
(f) the Borrower or any Subsidiary shall fail to make any payment
(whether of principal or interest and regardless of amount) in respect of any
Material Indebtedness, when and as the same shall become due and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without the giving of notice, the lapse of time or both) the
holder or holders of any Material Indebtedness or any trustee or agent on its
or their behalf to cause any Material Indebtedness to become due, or to require
the prepayment, repurchase, redemption or defeasance thereof, prior to its
scheduled
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maturity; provided that this clause (g) shall not apply to secured Indebtedness
that becomes due as a result of the voluntary sale or transfer of the property
or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Subsidiary or their respective debts, or of a
substantial part of their respective assets, under any federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Subsidiary or for a
substantial part of their respective assets, and, in any such case, such
proceeding or petition shall continue undismissed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
(i) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in clause (h) of this Article, (iii) apply for or consent to
the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Subsidiary or for a substantial part
of their respective assets, (iv) file an answer admitting the material
allegations of a petition filed against either of them in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
(j) the Borrower or any Subsidiary shall become unable, or admit in
writing or fail generally, to pay their respective debts as they become due;
(k) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain undischarged
for a period of 30 consecutive days during which execution shall not be
effectively stayed, bonded or vacated, or any action shall be legally taken by
a judgment creditor to attach or levy upon any assets of the Borrower or any
Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Majority Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
or
(m) a Change in Control shall occur;
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then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Majority Lenders shall, by notice to the Borrower, take either
or both of the following actions, at the same or different times: (i) terminate
the Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower;
and in case of any event with respect to the Borrower described in clause (h)
or (i) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE 8
THE ADMINISTRATIVE AGENT
SECTION 8.01. The Administrative Agent.
Each of the Lenders hereby irrevocably appoints the Administrative
Agent as its agent and authorizes the Administrative Agent to take such actions
on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof, together with such actions and powers
as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary
or other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the
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Administrative Agent shall not have any duty to take any discretionary action
or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby that the Administrative Agent is required to
exercise in writing by the Majority Lenders, and (c) except as expressly set
forth herein, the Administrative Agent shall not have any duty to disclose, and
shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Subsidiaries that is communicated to or obtained by
the bank serving as Administrative Agent or any of its Affiliates in any
capacity. The Administrative Agent shall not be liable for any action taken or
not taken by it with the consent or at the request of the Majority Lenders or
in the absence of its own gross negligence or wilful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default
unless and until written notice thereof is given to the Administrative Agent by
the Borrower or a Lender, and the Administrative Agent shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement, (ii) the
contents of any certificate, report or other document delivered hereunder or in
connection herewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth herein, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in Article IV or elsewhere herein, other than to confirm
receipt of items expressly required to be delivered to the Administrative
Agent.
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by
telephone and believed by it to be made by the proper Person, and shall not
incur any liability for relying thereon. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.
The Administrative Agent may perform any and all its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
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Subject to the appointment and acceptance of a successor
Administrative Agent as provided in this paragraph, the Administrative Agent
may resign at any time by notifying the Lenders and the Borrower. Upon any such
resignation, the Majority Lenders shall have the right (so long as no Default
has occurred and is continuing with consent of the Borrower which consent shall
not be unreasonably withheld) to appoint a successor. If no successor shall
have been so appointed by the Majority Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent gives notice
of its resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent which shall be a bank
with an office in New York, New York, or an Affiliate of any such bank. Upon
the acceptance of its appointment as Administrative Agent hereunder by a
successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent's resignation hereunder, the provisions of this Article
and Section 9.03 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make
its own decisions in taking or not taking action under or based upon this
Agreement, any related agreement or any document furnished hereunder or
thereunder.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
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(a) if to the Borrower, to it at 2110 Executive Drive, Salisbury,
North Carolina 28145-1330, Attention of Richard James, Treasurer/Director of
Finance (Telecopy No. 704-636-5024);
(b) if to the Administrative Agent, J.P. Morgan Services Inc., 500
Stanton Christiana Road, Newark, Delaware 19713, Attention of Jeannie Mattson,
Associate (Telecopy No. 302-634-1092); and
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices
and other communications hereunder by notice to the other parties hereto. All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent or any Lender in exercising any right or power hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right or power, or any abandonment or discontinuance of steps to
enforce such a right or power, preclude any other or further exercise thereof
or the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder are cumulative and are not
exclusive of any rights or remedies that they would otherwise have. No waiver
of any provision of this Agreement or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall
not be construed as a waiver of any Default, regardless of whether the
Administrative Agent or any Lender may have had notice or knowledge of such
Default at the time.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Majority Lenders or by the Borrower and
the Administrative Agent with the consent of the Majority Lenders; provided
that no such agreement shall (i) increase the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any
Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, without the written consent of each Lender affected thereby, (iii)
postpone the scheduled date of payment of the principal amount of any Loan or
any interest thereon, or any fees payable hereunder, or reduce the amount of,
waive or excuse any such
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payment, or postpone the scheduled date of expiration of any Commitment,
without the written consent of each Lender affected thereby, (iv) change
Section 2.16(b) or (c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender adversely
affected thereby, or (v) change any of the provisions of this Section or the
definition of "Majority Lenders" or any other provision hereof specifying the
number or percentage of Lenders required to waive, amend or modify any rights
hereunder or make any determination or grant any consent hereunder, without the
written consent of each Lender; provided further that no such agreement shall
amend, modify or otherwise affect the rights or duties of the Administrative
Agent hereunder without the prior written consent of the Administrative Agent.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, and its Affiliates, including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent in connection
with the syndication of the credit facilities provided for herein, the
preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable out-of-pocket expenses incurred by the Administrative Agent or any
Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent or any Lender, in connection with the enforcement or
protection of its rights in connection with this Agreement, including its
rights under this Section, or in connection with the Loans made hereunder,
including in connection with any workout, restructuring or negotiations in
respect thereof including, without limitation, actions in connection with this
Agreement or the Loans, arising, occurring or continuing subsequent to the
Maturity Date (other than any such expenses directly related to a court
enforcement action in which the Borrower prevails on the merits in a final and
nonappealable judgment).
(b) The Borrower shall indemnify the Administrative Agent and each
Lender, and each Related Party of any of the foregoing Persons (each such
Person being called an "Indemnitee") against, and hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned or
operated by the Borrower or any of its
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Subsidiaries, or any Environmental Liability related in any way to the Borrower
or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the
gross negligence or wilful misconduct of such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly
after written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby, except that the
Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion
of its rights and obligations under this Agreement (including all or a portion
of its
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Commitment and the Loans at the time owing to it); provided that (i) except in
the case of an assignment to a Lender or an Affiliate of a Lender, each of the
Borrower and the Administrative Agent must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld), (ii) except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender's Commitment,
the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, (iii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $3,500, and (iv) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; provided further that any consent of the Borrower otherwise
required under this paragraph shall not be required if an Event of Default
under clause (h) or (i) of Article 7 has occurred and is continuing. Upon
acceptance and recording pursuant to paragraph (d) of this Section, from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of
a Lender under this Agreement, and the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of Sections 2.13, 2.14, 2.15
and 9.03). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary.
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(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more banks or other
entities (a "Participant") in all or a portion of such Lender's rights and
obligations under this Agreement (including all or a portion of its Commitment
and the Loans owing to it); provided that (i) such Lender's obligations under
this Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Administrative Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement. Any agreement or
instrument pursuant to which a Lender sells such a participation shall provide
that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this
Agreement; provided that such agreement or instrument may provide that such
Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in the first proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.13 or 2.15 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 2.15
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with
Section 2.15(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest
in all or any portion of its rights under this Agreement or any promissory note
issued pursuant hereto to such Lender to secure obligations of such Lender,
including any such pledge or assignment to a Federal Reserve Bank, and this
Section shall not
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apply to any such pledge or assignment of a security interest; provided that no
such pledge or assignment of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such assignee for such
Lender as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any
Loans, regardless of any investigation made by any such other party or on its
behalf and notwithstanding that the Administrative Agent or any Lender may have
had notice or knowledge of any Default or incorrect representation or warranty
at the time any credit is extended hereunder, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement is outstanding and
unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.13, 2.14, 2.15 and 9.03 and Article 8 shall survive
and remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which
when taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been
executed by the Administrative Agent and when the Administrative Agent shall
have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining
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provisions hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
SECTION 9.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender is hereby authorized at any time and
from time to time, to the fullest extent permitted by law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement held
by such Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 9.09. Governing Law; Jurisdiction; Consent of Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court for the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent permitted by law, in such federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent
or any Lender may otherwise have to bring any action or proceeding relating to
this Agreement against the Borrower or its properties in the courts of any
jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred
to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such
court.
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(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as
defined below), except that Information may be disclosed (a) to its and its
Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority, (c) to the extent required by
applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party to this Agreement, (e) in connection with the exercise of
any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to a written
agreement containing provisions substantially the same as those of this
Section, to any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement, (g)
with the consent of the Borrower or (h) to the extent such Information (i)
becomes publicly available other than as a result of a breach of this Section
or (ii) becomes available to the Administrative Agent or any Lender on a
nonconfidential basis from a source other than the Borrower. For the
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purposes of this Section, "Information" means all information received from the
Borrower relating to the Borrower, its Subsidiaries or their businesses, other
than any such information that is available to the Administrative Agent or any
Lender on a nonconfidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower after the date
hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section shall be considered to have complied
with its obligation to do so if such Person has exercised the same degree of
care to maintain the confidentiality of such Information as such Person would
accord to its own confidential information.
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the "Charges"), shall
exceed the maximum lawful rate (the "Maximum Rate") which may be contracted
for, charged, taken, received or reserved by the Lender holding such Loan in
accordance with applicable law, the rate of interest payable in respect of such
Loan hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and Charges
that would have been payable in respect of such Loan but were not payable as a
result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.
ARTICLE 10
PROVISIONS RELATING TO THE REORGANIZATION
SECTION 10.01. Consent to Reorganization. Notwithstanding anything to
the contrary contained herein, the Borrower may effect the Reorganization or
any portion thereof so long as no Default shall have occurred and be continuing
or would occur after giving effect to the Reorganization or such portion
thereof. Promptly upon completion of the Reorganization, the Borrower shall
give the Administrative Agent notice thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
DELHAIZE AMERICA, INC.
By:\s\Richard James
------------------------------------
Name:
Title:
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK,
individually and as
Administrative Agent
By:\s\Kathryn Sayko Yanes
------------------------------------
Name: Kathryn Sayko Yanes
Title: Vice President
<PAGE>
BANK OF AMERICA, N.A.
By:\s\Timothy H. Spanos
------------------------------------
Name:Timothy H. Spanos
Title:Managing Director
CITIBANK, N.A.
By: \s\Marc Merlino
------------------------------------
Name: Marc Merlino
Title: Vice President
WACHOVIA BANK, N.A.
By:\s\ Christopher L. Fincher
------------------------------------
Name:Christopher L. Fincer
Title:Senior Vice President
THE BANK OF NEW YORK
By:\s\Michael V. Flannery
------------------------------------
Name:Michael V. Flannery
Title: Vice President
BANK ONE, NA
By:\s\Catherine A. Muszynski
------------------------------------
Name: Catherine A. Muszynski
Title: Vice President
<PAGE>
BBL INTERNATIONAL (U.K.) LIMITED
By:\s\C.F.Wright, Authorised Signatory
\s\G.R.M. Walker, Authorised Signatory
------------------------------------
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
By: \s\Craig Welch
------------------------------------
Name:Craig Welch
Title:First Vice President
By:\s\Rene LeBlanc
------------------------------------
Name:Rene LeBlanc
Title:Vice President, Senior
Relationship Manager
DEUTSCHE BANK AG NEW YORK AND/OR
CAYMAN ISLANDS BRANCH
By:\s\Stefan Hafke
------------------------------------
Name:Stefan Hafke
Title:Vice President
By:\s\Barbara Anne Hoeltz
------------------------------------
Name:Barbara Anne Hoeltz
Title:Vice President
FIRST UNION NATIONAL BANK
By:\s\Mary J. Amatore
------------------------------------
Name:Mary J. Amatore
Title:Vice President
<PAGE>
FORTIS (USA) FINANCE LLC
By:\s\Eddie Matthews
------------------------------------
Name:Eddie Matthews
Title:Senior Vice President
By:\s\David Snyder
------------------------------------
Name:David Snyder
Title:Senior Vice President
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By:\s\Minami Miura
------------------------------------
Name: Minami Miura
Title: Vice President
COOPERATIEVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK
INTERNATIONAL", NEW YORK BRANCH
By:\s\Polly Coe \s\ Karen Boyer
------------------------------------
Name:Polly Coe,Karen Boyer
Title:Senior Vice President,
Vice President
SUNTRUST BANK, ATLANTA
By:\s\Jennifer P. Harrelson
------------------------------------
Name:Jennifer P. Harrelson
Title:Managing Director
COBANK, ACB
By:\s\Brian J. Klatt
------------------------------------
Name:Brian J.Klatt
Title:Vice President
<PAGE>
THE DAI-ICHI KANGYO BANK, LTD.
By:\s\Nicholas A. Fiore
------------------------------------
Name:Nicholas A. Fiore
Title:Assistant Vice President
THE FUJI BANK, LIMITED
By:\s\Raymond Ventura
------------------------------------
Name:Raymond Ventura
Title:Vice President & Manager
BANQUE NATIONALE DE PARIS, HOUSTON
AGENCY
By:\s\Henry F. Setina
------------------------------------
Name:Henry F. Setina
Title:Vice President
BRANCH BANKING & TRUST COMPANY
By:\s\Cory Boyte
------------------------------------
Name:Cory Boyte
Title:Vice President
CIBC INC.
By:\s\Dominic Sorresso
------------------------------------
Name: Dominic Sorresso
Title:Executive Director
CIBC World Markets Corp. as agent
<PAGE>
CREDIT COMMERCIAL DE FRANCE S.A.
By:\s\Bernard de Bellefroid
\s\Chantal Peters
------------------------------------
Name:Bernard de Bellefroid
Title: Directeur General
Name: Chantal Peters
Directeur
FLEET NATIONAL BANK
By:\s\Thomas J. Bullard
------------------------------------
Name:Thomas J. Bullard
Title: Vice President
PARIBAS
By:\s\Andre Boulanger
\s\Dimitri Stroobants
------------------------------------
Name:Andre Boulanger
Title:Branch Manager
Name: Dimitri Stroobants
Title: Structure and Finance
BANK OF TOKYO-MITSUBISHI TRUST
COMPANY
By:\s\Mark O'Connor
------------------------------------
Name:Mark O'Connor
Title:Vice President
UNION BANK OF CALIFORNIA, N.A.
By:\s\J.William Bloore
------------------------------------
Name:J.William Bloore
Title:Vice President
<PAGE>
BANCA DI ROMA-NEW YORK BRANCH
By:\s\Alessandro Paoli,\s\S.F. Paley
------------------------------------
Name:Alessandro Paoli, S.F. Paley
Title: Assistant Treasurer,
Vice President
CREDIT COMMUNAL DE BELGIQUE-NEW
YORK BRANCH
By:\s\Caroline Junius,Jan E. van Panhuys
------------------------------------
Name:Caroline Junius, Jan E. van Panhuys
Title:Vice President, General Manager
<PAGE>
Schedule 2.01
Commitment Schedule
Bank Commitment
- -----------------------------------------------------------------------------
Morgan Guaranty Trust Company of New York $30,000,000
Bank of America, N.A. $27,500,000
Citibank, N.A. $27,500,000
Wachovia Bank, N.A. $27,500,000
The Bank of New York $20,500,000
Bank One, NA $20,500,000
BBL International (U.K.) Limited $20,500,000
Credit Agricole Indosuez $20,500,000
Deutsche Bank AG New York and/or Cayman $20,500,000
Islands Branch
First Union National Bank $20,500,000
Fortis (USA) Finance LLC $20,500,000
The Industrial Bank of Japan, Limited $20,500,000
Cooperatieve Centrale Raiffeisen-Boerenleenbank $20,500,000
B.A., "Rabobank International", New York Branch
SunTrust Bank, Atlanta $20,500,000
CoBank, ACB $19,000,000
The Dai-Ichi Kangyo Bank, Ltd. $19,000,000
The Fuji Bank, Limited $19,000,000
Banque Nationale de Paris, Houston Agency $19,000,000
Branch Banking & Trust Company $12,500,000
CIBC Inc. $12,500,000
Credit Commercial de France S.A. $12,500,000
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<PAGE>
Fleet National Bank $12,500,000
Paribas $12,500,000
Bank of Tokyo-Mitsubishi Trust Company $ 9,500,000
Union Bank of California, N.A. $ 9,500,000
Banca di Roma-New York Branch $12,500,000
Credit Communal de Belgique-New York Branch $12,500,000
- -----------------------------------------------------------------------------
Total: $500,000,000
- -----------------------------------------------------------------------------
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Schedule 3.06
Disclosed Matters
Incorporated by reference are the relevant portions of the following documents
for the Borrower and as of the Acquisition Date, the Target:
Delhaize America, Inc.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999
filed April 1, 1999, as amended by Amendment No. 1 to Annual Report on
Form 10-K/A filed August 17, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended September 11, 1999
filed October 26, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended June 19, 1999
filed July 30, 1999, as amended by Amendment No. 1 to Quarterly Report
on Form 10-Q/A filed August 17, 1999.
4. Quarterly Report on Form 10-Q for the quarter ended March 27, 1999
filed May 5, 1999, as amended by Amendment No. 1 to Quarterly Report
on Form 10-Q/A filed August 17, 1999.
5. Current Report on Form 8-K filed September 17, 1999
6. Current Report on Form 8-K filed August 19, 1999.
7. Registration Statement on Form 8-A filed September 2, 1999, as amended
by Amendment No. 1 to Registration Statement on Form 8-A/A filed
September 3, 1999.
Hannaford Bros. Co.
1. Annual Report on Form 10-K for the fiscal year ended January 2, 1999
filed March 11, 1999.
2. Quarterly Report on Form 10-Q for the quarter ended October 2, 1999
filed November 9, 1999.
3. Quarterly Report on Form 10-Q for the quarter ended July 3, 1999 filed
August 11, 1999.
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4. Quarterly Report on Form 10-Q for the quarter ended April 3, 1999
filed May 14, 1999.
5. Current Report on Form 8-K filed September 1, 1999.
6. Current Report on Form 8-K filed August 19, 1999.
7. Current Report on Form 8-K filed June 21, 1999.
8. Current Report on Form 8-K filed June 17, 1999.
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Schedule 3.14
Subsidiaries of Borrower
FLI Holding Corp., a Delaware corporation ("FLI"), and a wholly-owned
subsidiary of the Borrower.
Risk Management Services, Inc., a North Carolina corporation, and a
wholly-owned subsidiary of the Borrower.
FL Acquisition Sub., Inc., a Maine corporation, and a wholly-owned subsidiary
of the Borrower.
Kash n' Karry Food Stores, Inc., a Delaware corporation, and a wholly-owned
subsidiary of FLI.1/
FL Food Lion, Inc., a Florida corporation, and a wholly-owned subsidiary of
FLI.
Barnwell, Inc., a Delaware corporation, and a wholly-owned subsidiary of FLI.
- --------
1 KNK 702 Delaware Business Trust, KNK 886 Delaware Business Trust, KNK 891
Delaware Business Trust, all Delaware business trusts, are wholly-owned by Kash
n' Karry Food Stores, Inc.
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Schedule 6.01
Existing Liens
Liens representing the interest of the lessor under Capitalized Leases in
existence on the date of this Agreement have an aggregate outstanding principal
amount not exceeding $510,000,000.
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EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of
January 26, 2000 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among DELHAIZE AMERICA, INC., the Lenders party
therein, and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent
(in such capacity, the "Administrative Agent"). Unless otherwise defined
herein, terms defined in the Credit Agreement and used herein shall have the
meanings given to them in the Credit Agreement.
The Assignor identified on Schedule l hereto (the "Assignor")
and the Assignee identified on Schedule l hereto (the "Assignee") agree as
follows:
i. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the interest described in Schedule 1
hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Credit Agreement, in a principal amount as set forth on
Schedule 1 hereto.
ii. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
instrument or document furnished pursuant thereto or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other instrument or document furnished
pursuant thereto, other than that the Assignor has not created any adverse
claim upon the interest being assigned by it hereunder and that such interest
is free and clear of any such adverse claim; (b) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower, any of its Subsidiaries or any other obligor or the
performance or observance by the Borrower, any of its Subsidiaries or any other
obligor of any of their respective obligations under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; and (c)
attaches any promissory notes held by it evidencing the Assigned Interest and
(i) requests that the Administrative Agent, upon request by the Assignee,
exchange the attached promissory notes for a new promissory note or promissory
notes payable to the Assignee and (ii) if the Assignor has retained any
interest under the Credit Agreement, requests that the Administrative Agent
exchange the attached promissory notes for a new
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promissory note or promissory notes payable to the Assignor, in each case in
amounts which reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the Effective Date).
iii. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received a copy of the Credit Agreement, together with copies of
the financial statements referred to in Section 3.04 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement or
any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers and discretion under the Credit
Agreement or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Administrative Agent by the terms thereof,
together with such powers as are incidental thereto; and (e) agrees that it
will be bound by the provisions of the Credit Agreement and will perform in
accordance with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender including, if it is
organized under the laws of a jurisdiction outside the United States, its
obligation pursuant to Section 2.15(e) of the Credit Agreement.
iv. The effective date of this Assignment and Acceptance
shall be the Effective Date of Assignment described in Schedule 1 hereto (the
"Effective Date"). Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent for acceptance by it and
recording by the Administrative Agent pursuant to the Credit Agreement,
effective as of the Effective Date (which shall not, unless otherwise agreed to
by the Administrative Agent, be earlier than five Business Days after the date
of such acceptance and recording by the Administrative Agent).
v. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and
other amounts) to the Assignor for amounts which have accrued to the Effective
Date and to the Assignee for amounts which have accrued subsequent to the
Effective Date. The Assignor and the Assignee shall make all appropriate
adjustments in payments by the Administrative Agent for periods prior to the
Effective Date or with respect to the making of this assignment directly
between themselves.
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vi. From and after the Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and shall be bound by the provisions thereof and (b) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.
vii. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
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Schedule 1
to Assignment and Acceptance
Name of Assignor:__________________________
Name of Assignee:__________________________
Effective Date of Assignment:______________
Principal
Amount Assigned Commitment Percentage Assigned(2)
- ------------------- ---------------------------------
$______ ___.______%
[Name of Assignee] [Name of Assignor]
By:_________________________________ By:_________________________________
Title: Title:
Accepted: Consented To:
MORGAN GUARANTY TRUST DELHAIZE AMERICA, INC.,
COMPANY OF NEW YORK, Borrower
as Administrative Agent
By:_________________________________ By:_________________________________
Title: Title:
- ------------------
2 Calculate the Commitment Percentage that is assigned to at least 15 decimal
places and show as a percentage of the aggregate commitments of all Lenders.
<PAGE>
EXHIBIT B
FORM OF OPINION OF COUNSEL OF BORROWER
March ___, 2000
Morgan Guaranty Trust Company of New York
as Administrative Agent
60 Wall Street
New York, NY 10260
Each of the Lenders named on Annex A
Dear Sirs:
We have acted as counsel for Delhaize America, Inc., a North Carolina
corporation (the "Borrower"), in connection with the Credit Agreement, dated as
of January 26, 2000 (the "Credit Agreement"), among the Borrower, the Lenders
party thereto (the "Lenders") and Morgan Guaranty Trust Company of New York
("MGT"), as Administrative Agent.
The opinions expressed here are furnished to you pursuant to
Subsection 4.02(f) of the Credit Agreement. Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein shall have the meanings
given in the Credit Agreement.
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Credit Agreement,
the certificate referred to in Subsection 4.02(g) of the Credit Agreement, and
such corporate documents and records of the Borrower as we have deemed
necessary or appropriate. As to questions of fact relevant to this opinion, we
have, without independent investigation, relied upon representations made to us
by the Borrower including the representations contained in the Loan Documents,
and in various certificates delivered by the Borrower, including, but not
limited to, certificates presented to the Lenders and the Administrative Agent,
and certain representations of public officials, all of which we assume to be
true. In our examination, we have assumed (i) the genuineness of all signatures
of all parties other than signatures of the Borrower, (ii) the authenticity of
all corporate records, agreements, documents, instruments and certificates
submitted to us as originals, the conformity to original agreements, documents
and instruments of all agreements and instruments submitted to us as conformed,
certified or photostatic copies thereof and the authenticity of the originals
of such conformed, certified or
2
<PAGE>
photostatic copies; (iii) the due authorization, execution and delivery of all
agreements, documents and instruments by all parties other than the Borrower;
and (iv) the legal right and power of all such parties other than the Borrower
under all applicable laws and regulations to enter into, execute and deliver
such agreements, documents and instruments. We have further assumed that the
Lenders and the Administrative Agent have the requisite power and authority to
enter into the Loan Documents and to consummate the transactions contemplated
thereby and the absence of any requirement of consent, approval or
authorization by any Person or by any governmental body, agency or official
with respect to the Lenders and the Administrative Agent and that the Loan
Documents are legal, valid and binding obligations of the Lenders and the
Administrative Agent enforceable against such Persons in accordance with their
respective terms.
This law firm is a registered limited liability partnership organized
under the laws of the State of Texas. We express no opinion as to the laws of
any jurisdiction other than the laws of the State of New York, the United
States of America and The North Carolina Business Corporation Act. As to
matters governed by the laws of the State of North Carolina, we are relying
upon an opinion of Linn Evans, Esq. of even date herewith, a copy of which is
attached hereto. The opinions expressed in paragraph 1(b) below are based
solely upon our review of certain certificates of public officials of various
jurisdictions and are not based upon any examination of the laws of any such
jurisdiction.
Upon the basis of the foregoing, we are of the opinion that:
1. The Borrower (a) is duly incorporated, validly existing and in good
standing under the laws of North Carolina and has all requisite power and
authority, to carry on its business as now conducted and (b) is qualified to do
business in, and is in good standing in, each jurisdiction listed on Schedule I
attached hereto.
2. The Transactions to be effected on the date hereof are each within
the Borrower's corporate powers and have each been duly authorized by all
necessary corporate and, if required, stockholder action. The Credit Agreement
has been duly executed and delivered by the Borrower and constitutes a legal,
valid and binding obligation of the Borrower.
3. To our knowledge, the Transactions to be effected on the date
hereof (a) will not require any consent or approval of, registration or filing
with, or any other action by, any Federal, New York or North Carolina
Governmental Authority, except for consents, approvals, registrations, filings
or other actions as have been obtained, made or waived and are in full force
and effect or which are not required to have been effected prior to the date
hereof, (b) will not violate any
3
<PAGE>
applicable Federal, New York or North Carolina corporate law or regulations or
the charter, bylaws or other organizational documents of the Borrower or any
order of any Federal or New York Governmental Authority, (c) will not violate
or result in a default under any indenture, agreement or other instrument
binding upon the Borrower or its assets other than defaults or violations for
which consents or waivers have been obtained or which defaults or violations,
individually or in the aggregate, could not have a Material Adverse Effect, or
(d) will not give rise under any indenture, agreement or other instrument
binding upon the Borrower to any requirement for any payments be made by the
Borrower, or (e) will not result in the creation or imposition of any Lien on
any asset of the Borrower.
4. To our knowledge, there are no actions, suits or proceedings by or
before any arbitrator or Governmental Authority pending against or threatened
against the Borrower (i) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than the Disclosed Matters) or (ii) that involve the Credit
Agreement or the Transactions to be effected on the date hereof.
5. The Borrower is not (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
The foregoing opinions are subject to the exceptions, limitations and
qualifications contained herein, including the following:
A. The enforceability of the Loan Documents may be (a) limited by
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium,
fraudulent conveyance or transfer and other similar laws affecting creditors'
rights, (b) subject to general principles of equity (regardless of whether
considered in a proceeding in equity or at law), commercial reasonableness and
good faith, and (c) limited by the power of courts to award damages in lieu of
equitable remedies. In addition, the right to indemnification contained in the
Loan Documents may be limited by Federal or New York state laws or the policies
of such laws.
B. We express no opinions as to enforceability of any provisions (i)
purporting to vest jurisdiction on any property of the Borrower in the Supreme
Court of the State of New York sitting in New York County or the United States
District Court of the Southern District of New York to the extent that such
property is not situated in New York, New York, (ii) purporting to waive or
4
<PAGE>
restrict access to legal or equitable remedies (including venue, forum non
conveniens or the right to assert a setoff) or the right to collect damages
(including special, indirect, consequential or punitive damages), (iii)
prohibiting oral amendments or waivers of provisions of the Loan Documents;
(iv) establishing evidentiary standards or (v) permitting a Lender to set off
against any debtor's accounts any amounts belonging to a third party or
otherwise held in a fiduciary capacity.
C. When used in this opinion, the phrase "to our knowledge" means
known to attorneys in our firm who have rendered services to the Borrower in
connection with the Transactions.
This opinion is as of the date hereof, and we undertake no, and hereby
disclaim any, obligation to advise you of any change in any matter set forth
herein, whether based on a change in the law, a change in any fact relating to
the Borrower or any other Person or any other circumstance. This opinion is
delivered to you in connection with the transactions referenced above and may
be relied upon only by you and any permitted assignee of an assigning Lender or
Participant under the Credit Agreement in connection with such transaction and
may not be relied upon in any manner or for any purpose by any other person
without our prior written consent.
Very truly yours,
5
<PAGE>
SCHEDULE I
Delaware Certificate of the Secretary of State of the State of
Delaware dated ____________ ___, 2000
Florida Certificate of the Secretary of State of the State of
Florida dated ____________ ___, 2000
Georgia Certificate of Existence of the Secretary of State of
the State of Georgia dated ____________ ___, 2000
Kentucky Certificate of Authorization of the Secretary of State of the
Commonwealth of Kentucky dated ____________ ___, 2000
Maryland Certificate of the State Department of Assessments and Taxation
of the State of North Carolina dated ____________ ___, 2000
North Carolina Articles of Incorporation of Food Lion, Inc., certified
by the Secretary of State of the State of North Carolina dated
____________ ___, 2000
Certificate of Existence of the Secretary of State of the State
of North Carolina dated ____________ ___, 2000
Pennsylvania Certificate of the Secretary of the Department of State of the
Commonwealth of Pennsylvania dated ____________ ___, 2000
South Carolina Certificate of Authorization of the Secretary of the State of
South Carolina dated ____________ ___, 2000
Tennessee Certificate of Authorization of the Secretary of State of the
State of Tennessee dated ____________ ___, 2000
Virginia Certificate of Authority of the State Corporate Commission of
the Commonwealth of Virginia dated ____________ ___, 2000
West Virginia Certificate of Authority of the Secretary of the State of West
Virginia dated ____________ ___, 2000
Certificate of Good Standing of the Secretary of State of the
State of West Virginia dated ____________ ___, 2000
6
<PAGE>
ANNEX A
LENDER
Morgan Guaranty Trust Company of New York
Bank of America, N.A.
Citibank, N.A.
Wachovia Bank, N.A.
The Bank of New York
Bank One, NA
BBL International (U.K.) Limited
Credit Agricole Indosuez
Deutsche Bank AG New York and/or Cayman Islands Branch
First Union National Bank
Fortis (USA) Finance LLC
The Industrial Bank of Japan, Limited
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
International", New York Branch
SunTrust Bank, Atlanta
CoBank, ACB
The Dai-Ichi Kangyo Bank, Ltd.
The Fuji Bank, Limited
Banque Nationale de Paris, Houston Agency
Branch Banking & Trust Company
CIBC Inc.
Credit Commercial de France S.A.
Fleet National Bank
Paribas
Bank of Tokyo-Mitsubishi Trust Company
Union Bank of California, N.A.
Banca di Roma-New York Branch
Credit Communal de Belgique-New York Branch
7
Exhibit 13
Portions of the Annual Report to Shareholders for the fiscal year ended January
1, 2000
Ten Year Summary of Operations
(Dollars in thousands
except per share amounts) 1999 1998 1997
(52 weeks) (52 weeks) (53 weeks)
Financial Data:
1. Net sales $ 10,878,684 10,219,474 10,194,385
2. Same store sales percent
change % 1.82 2.57 0.22
3. Cost of goods sold $ 8,370,894 7,925,844 7,975,659
4. Selling and administrative
expenses $ 1,919,396 1,770,314 1,736,559
5. Asset impairment reserve $ 0 0 0
6. Store closing $ 0 0 84,402
charge/(income)
7. Operating income $ 588,394 523,316 397,765
8. Depreciation and $ 258,512 236,021 219,833
amortization
9. Interest expense $ 103,820 95,334 115,389
10. Income before income taxes $ 484,574 427,982 282,376
11. Net income $ 300,435 272,585 172,250
12. Current assets $ 1,676,227 1,512,277 1,328,511
13. Non-current assets $ 2,297,185 2,163,684 2,167,625
14. Total assets $ 3,973,412 3,675,961 3,496,136
15. Current liabilities $ 1,280,193 1,040,417 960,788
16. Long-term debt $ 426,930 429,763 586,355
17. Capital lease obligations,
deferred taxes and other
liabilities $ 587,423 606,859 615,808
18. Shareholders' equity $ 1,678,866 1,598,922 1,333,185
19. Cash dividends
Class A $ 41,045 36,832 31,825
Class B $ 37,949 34,439 30,923
20. Weighted average shares
outstanding (000) 157,109 159,361 156,305
21. Basic earnings per share(a) $ 1.91 1.71 1.10
22. Dividends per share (a) $ .503 .447 .401
23. Book value per share (a) $ 10.69 10.03 8.53
24. Asset turnover X 2.84 2.85 2.88
25. Return on sales % 2.76 2.67 1.69
26. Return on assets % 7.86 7.60 4.86
27. Total debt/ total capital % 42.38 39.59 46.94
28. Return on equity % 18.33 18.59 13.47
29. Return on investment % 19.56 18.64 15.81
30. Current ratio X 1.31 1.45 1.38
Other Data:
31. Store count 1,276 1,207 1,157
32. Stores opened/acquired 100 79 164
33. Stores relocated (21) (17) (25)
34. Stores closed (10) (12) (94)
35. Total retail square
footage (000) 43,020 38,887 36,107
36. Capital expenditures $ 410,888 356,058 346,134
37. Number of employees 93,668 92,125 83,871
38. Recapitalization and
stock splits 1 for 3
-20-
Ten Year Summary of Operations
(Dollars in thousands
except per share amounts) 1996 1995 1994
(52 (52 (52
weeks) weeks) weeks)
Financial Data:
1. Net sales $ 9,005,932 8,210,884 7,932,592
2. Same store sales percent
change % 5.70 2.33 3.34
3. Cost of goods sold $ 7,087,177 6,516,637 6,323,693
4. Selling and administrative
expenses $ 1,490,878 1,337,702 1,269,637
5. Asset impairment reserve $ 22,187 0 0
6. Store closing $ (27,600) 0 0
charge/(income)
7. Operating income $ 433,290 356,545 339,262
8. Depreciation and $ 165,286 146,170 139,834
amortization
9. Interest expense $ 80,520 73,484 86,564
10. Income before income taxes $ 352,770 283,061 252,698
11. Net income $ 215,220 172,361 152,898
12. Current assets $ 1,539,039 1,149,235 1,125,471
13. Non-current assets $ 2,052,496 1,496,030 1,356,470
14. Total assets $ 3,591,535 2,645,265 2,481,941
15. Current liabilities $ 1,248,028 698,695 690,062
16. Long-term debt $ 495,111 355,300 355,300
17. Capital lease obligations,
deferred taxes and other
liabilities $ 623,308 488,760 409,226
18. Shareholders' Equity $ 1,225,088 1,102,510 1,027,353
19. Cash dividends
Class A $ 26,436 23,621 22,021
Class B $ 25,874 22,672 21,131
20. Weighted average shares
outstanding (000) 156,739 160,385 161,236
21. Basic earnings per share(a) $ 1.37 1.07 .95
22. Dividends per share (a) $ .334 .0289 .0268
23. Book value per share (a) $ 7.82 6.87 6.37
24. Asset turnover X 2.89 3.20 3.18
25. Return on sales % 2.39 2.10 1.93
26. Return on assets % 6.90 6.72 6.13
27. Total debt/total capital % 50.24 40.26 40.16
28. Return on equity % 18.49 16.18 15.72
29. Return on investment % 18.61 17.31 16.69
30. Current ratio X 1.23 1.64 1.63
Other Data:
31. Store count 1,112 1,073 1,039
32. Stores opened/acquired 64 47 30
33. Stores relocated (22) (12) (3)
34. Stores closed (3) (1) (84)
35. Total retail square
footage (000) 32,615 30,056 27,335
36. Capital expenditures $ 283,564 219,905 117,312
37. Number of employees 73,170 69,345 64,840
38. Recapitalization and
stock splits
-21-
Ten Year Summary of Operations
(Dollars in thousands
except per share amounts) 1993 1992 1991
(52 (53 (52
weeks) weeks) weeks)
Financial Data:
1. Net sales $ 7,609,817 7,195,923 6,438,507
2. Same store sales percent
change % (2.58) (0.42) 2.68
3. Cost of goods sold $ 6,121,274 5,759,534 5,102,977
4. Selling and administrative
expenses $ 1,239,348 1,096,727 960,423
5. Asset impairment reserve $ 0 0 0
6. Store closing $ 170,500 0 0
charge/(income)
7. Operating income $ 78,695 339,662 375,107
8. Depreciation and $ 143,042 121,616 104,614
amortization
9. Interest expense $ 72,343 49,057 34,436
10. Income before income taxes $ 6,352 290,605 340,671
11. Net income $ 3,852 178,005 205,171
12. Current assets $ 1,135,200 1,147,849 982,112
13. Non-current assets $ 1,368,483 1,373,643 1,037,180
14. Total assets $ 2,503,683 2,521,492 2,019,292
15. Current liabilities $ 619,271 986,274 676,768
16. Long-term debt $ 569,350 240,537 240,810
17. Capital lease obligations,
deferred taxes and other
liabilities $ 397,508 338,962 270,659
18. Shareholders' Equity $ 917,554 955,719 831,055
19. Cash dividends
Class A $ 21,483 27,355 24,393
Class B $ 20,603 26,457 23,638
20. Weighted average shares
outstanding (000) 161,234 161,221 161,172
21. Basic earnings per share $ .02 1.10 1.27
(a)
22. Dividends per share (a) $ .261 .334 .298
23. Book value per share (a) $ 5.69 5.93 5.16
24. Asset turnover X 3.03 3.17 3.58
25. Return on sales % .05 2.47 3.19
26. Return on assets % .15 7.84 11.40
27. Total debt / total capital % 49.19 49.89 40.41
28. Return on equity % .41 19.92 27.28
29. Return on investment % 5.68 20.02 26.09
30. Current ratio X 1.83 1.16 1.45
Other Data:
31. Store count 1,096 1,012 881
32. Stores opened/acquired 100 140 111
33. Stores relocated (4) (4) (6)
34. Stores closed (12) (5) (2)
35. Total retail square
footage (000) 28,950 26,428 22,480
36. Capital expenditures $ 159,857 402,327 305,879
37. Number of employees 65,494 59,721 53,583
38. Recapitalization and 3 for 2
stock splits
-21-
Ten Year Summary of Operations
(Dollars in thousands
except per share amounts) 1990
(52
weeks)
Financial Data:
1. Net sales $ 5,584,410
2. Same store sales percent
change % 4.50
3. Cost of goods sold $ 4,447,177
4. Selling and administrative
expenses $ 820,175
5. Asset impairment reserve $ 0
6. Store closing $ 0
charge/(income)
7. Operating income $ 317,058
8. Depreciation and $ 81,432
amortization
9. Interest expense $ 32,587
10. Income before income taxes $ 284,471
11. Net income $ 172,571
12. Current assets $ 787,869
13. Non-current assets $ 791,996
14. Total assets $ 1,579,865
15. Current liabilities $ 597,392
16. Long-term debt $ 91,721
17. Capital lease obligations,
deferred taxes and other
liabilities $ 217,694
18. Shareholders' Equity $ 673,058
19. Cash dividends
Class A $ 21,926
Class B $ 21,082
20. Weighted average shares
outstanding (000) 161,070
21. Basic earnings per share(a) $ 1.07
22. Dividends per share (a) $ .267
23. Book value per share (a) $ 4.18
24. Asset turnover X 3.90
25. Return on sales % 3.09
26. Return on assets % 12.06
27. Total debt/ total capital % 36.06
28. Return on equity % 28.49
29. Return on investment % 29.33
30. Current ratio X 1.32
Other Data:
31. Store count 778
32. Stores opened/acquired 121
33. Stores relocated (5)
34. Stores closed (1)
35. Total retail square
footage (000) 19,424
36. Capital expenditures $ 206,391
37. Number of employees 47,276
38. Recapitalization and
stock splits
-21-
Notes to Ten Year Summary of Operations
(a) Amounts are based upon the weighted average number of the Class A and
Class B common shares outstanding.
DEFINITIONS
Line
20. Weighted average shares outstanding: Weighted average shares outstanding
have been restated to reflect the reverse stock split in 1999 and the
stock split in 1992.
21. Basic earnings per share: Net income per common share (line 11 , line 20).
22. Dividends per share: Cash dividends per common share (line 19 , line 20).
23. Book value per share: Book value of shareholders' equity per common
share (line 18 , line 20).
24. Asset turnover: The ratio of sales per dollar of assets employed during
the year. It is calculated by dividing sales by the average total assets
(line 1 , average line 14).
25. Return on sales: The percentage of net income earned on each dollar of
sales (line 11 , line 1).
26. Return on assets: The percentage of net income earned on average total
assets (line 11 , average line 14).
27. Total debt/ total capital: The percentage of debt to shareholders'
equity. It is calculated by dividing long-term debt and capital lease
obligations by debt and shareholders' equity.
28. Return on equity: The percentage of net income earned on average
shareholders' equity (line 11 , average line 18).
29. Return on investment: The percentage of net income, excluding interest
expense, to invested capital ([line 11 + line 9] , [average line 16 +
average line 18]).
30. Current ratio: The ratio of current assets to current liabilities
(line 12 , line 15).
31. Store count: Number of stores operating at year-end.
37. Number of employees: Number of full-time and part-time employees at
year-end.
-21-
Consolidated Statements of Income
Year Ended Year Ended Year Ended
(Dollars in thousands January 1, January 2, January 3,
except per share 2000 2000 2000
amounts)
Net sales $10,878,684 $10,219,474 $10,194,385
Cost of goods sold 8,370,894 7,925,844 7,975,659
Selling and
administrative
expenses 1,919,396 1,770,314 1,736,559
Store closing charge - - 84,402
Operating income 588,394 523,316 397,765
Interest expense 103,820 95,334 115,389
Income before income
taxes 484,574 427,982 282,376
Provision for income
taxes 184,139 155,397 110,126
Net income $300,435 $272,585 $172,250
Earnings per share:
Basic $1.91 $1.71 $1.10
Diluted $1.91 $1.71 $1.09
(Results as a percentage
of net sales)
Net sales 100.00% 100.00% 100.00%
Cost of goods sold 76.95 77.56 78.24
Selling and
administrative
expenses 17.65 17.32 17.04
Store closing charge - - .82
Operating income 5.40 5.12 3.90
Interest expense 0.95 0.93 1.13
Income before income
taxes 4.45 4.19 2.77
Provision for income
taxes 1.69 1.52 1.08
Net income 2.76% 2.67% 1.69%
The accompanying notes are an integral part of the consolidated financial
statements.
-22-
Consolidated Balance Sheets
(Dollars in thousands January January
except per share amounts) 1, 2000 2, 1999
Assets
Current assets:
Cash and cash equivalents $ 195,502 123,592
Receivables 235,457 199,101
Inventories 1,157,695 1,103,635
Prepaid expenses 31,962 20,552
Deferred tax asset 55,611 65,397
Total current assets 1,676,227 1,512,277
Property, at cost, less accumulated
depreciation 2,039,314 1,897,080
Deferred tax asset - 4,707
Intangible assets less accumulated 254,276 258,402
amortization
Other assets 3,595 3,495
Total asset $3,973,412 $3,675,961
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 302,000 $ 61,000
Accounts payable 569,592 545,015
Accrued expenses 369,230 360,105
Capital lease obligations - current 23,877 21,940
Long term debt - current 2,834 42,518
Other liabilities - current 12,660 9,839
Total current liabilities 1,280,193 1,040,417
Long-term debt 426,930 429,763
Capital lease obligations 478,942 492,660
Deferred income taxes 7,421 -
Other liabilities 101,060 114,199
Total liabilities 2,294,546 2,077,039
Shareholders' equity:
Class A non-voting common stock,
$.50 par value; authorized
1,500,000,000 shares; issued and
outstanding 79,931,000
shares at January 1, 2000 and
82,631,000 shares at January 2, 1999 39,965 123,946
Class B voting common stock, $.50
par value; authorized 1,500,000,000
shares; issued and outstanding
75,290,000 shares at January 1, 2000
and 76,943,333 shares at January 2,
1999 37,645 115,415
Additional capital 155,280 60,332
Retained earnings 1,445,976 1,299,229
Total shareholders' equity 1,678,866 1,598,922
Total liabilities and
shareholders'equity $3,973,412 $3,675,961
The accompanying notes are an integral part of the consolidated financial
statements.
-23-
Consolidated Statements of Cash Flows
January January
1, 2000 2, 1999
(Dollars in thousands)
Cash flows from operating
activities
Net income $ 300,435 $ 272,585
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 258,512 236,021
(Gain)loss on disposals of
property (2,819) (8,953)
Store closing charge - -
Deferred income taxes 30,116 44,999
Changes in operating assets
and liabilities:
Receivables (36,356) (32,311)
Inventories (54,060) (120,891)
Prepaid expenses (11,410) 1,962
Other assets (100) 2,225
Accounts payable and accrued 33,702 56,040
expenses
Income taxes payable - -
Other liabilities (10,318) (10,598)
Total adjustments 207,267 168,494
Net cash provided by
operating activities 507,702 441,079
Cash flows from investing
activities
Capital expenditures (410,888) (356,058)
Proceeds from sale of property 19,622 109,850
Net cash used in investing
activities (391,266) (246,208)
Cash flows from financing
activities
Net proceeds(payments) under
short-term borrowings 241,000 (19,000)
Principal payments on long-term
debt (42,517) (6,154)
Proceeds from issuance of long- - -
term debt
Principal payments under capital
lease obligations (22,518) (22,172)
Dividends paid (78,994) (71,271)
Repurchase of common stock (142,694) (50,192)
Net proceeds from issuance of
common stock 1,197 4,170
Net cash used in
financing activities (44,526) (164,619)
Net increase (decrease) in cash
and cash equivalents 71,910 30,252
Cash and cash equivalents at
beginning of year 123,592 93,340
Cash and cash equivalents at end
of year $ 195,502 $ 123,592
The accompanying notes are an integral part of the consolidated financial
statements
-24-
Consolidated Statements of Cash Flows
January
3, 1998
(Dollars in thousands)
Cash flows from operating
activities
Net income $ 172,250
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 219,833
(Gain)loss on disposals of
property 964
Store closing charge 84,402
Deferred income taxes (36,527)
Changes in operating assets
and liabilities:
Receivables (15,627)
Inventories 82,999
Prepaid expenses 8,377
Other assets (2,951)
Accounts payable and accrued
expenses (116,816)
Income taxes payable (5,578)
Other liabilities (36,416)
Total adjustments 182,660
Net cash provided by
operating activities 354,910
Cash flows from investing
activities
Capital expenditures (346,134)
Proceeds from sale of property 32,572
Net cash used in investing
activities (313,562)
Cash flows from financing
activities
Net (payments)proceeds under
short-term borrowings (170,010)
Principal payments on long-term
debt (212,027)
Proceeds from issuance of long-
term debt 304,823
Principal payments under capital
lease obligations (22,076)
Dividends paid (62,748)
Repurchase of common stock (2,960)
Proceeds from issuance of common
stock 1,555
Net cash used in
financing activities (163,443)
Net increase (decrease) in cash
and cash equivalents (122,095)
Cash and cash equivalents at
beginning of year 215,435
Cash and cash equivalents at end
of year $ 93,340
The accompanying notes are an integral part of the consolidated financial
statements
-24-
Consolidated Statements of Shareholders' Equity
Class A Class B
(Dollars and shares in Common Common
thousands except per share Stock Stock
amounts) Shares Shares
Amount Shares Amount
Balances December 28, 1996 236,166 $118,083 232,902 $116,451
Cash dividends declared:
Class A - $.4044 per share
Class B - $.3984 per share
Sale of stock 293 147
Repurchase of common stock (235) (118) (175) (87)
Net income
Balances January 3, 1998 236,224 118,112 232,727 116,364
Cash dividends declared:
Class A - $.4500 per share
Class B - $.4440 per share
Sale of stock 746 373
Repurchase of common stock (3,086) (1,543) (1,897) (949)
Restricted shares 29 14
Converted debt 13,980 6,990
Net income
Balances January 2, 1999 247,893 123,946 230,830 115,415
Cash dividends declared:
Class A - $.5040 per share
Class B - $.4980 per share
Sale of stock 158 79
Repurchase of common stock (8,279) (4,140) (4,908) (2,454)
Restricted shares 84 42
Reverse split (159,925) (79,962) (150,632) (75,316)
Net income
Balances January 1, 2000 79,931 $39,965 75,290 $37,645
The accompanying notes are an integral part of the consolidated financial
statements
-25-
Additional Retained Total
Capital Earnings
Balances December 28, 1996 $, 1,708 $988,846 $1,225,088
Cash dividends declared:
Class A - $.4044 per
share (31,825) (31,825)
Class B - $.3984 per
share (30,923) (30,923)
Sale of stock 1,408 1,555
Repurchase of common
stock (2,322) (433) (2,960)
Net income 172,250 172,250
Balances January 3, 1998 794 1,097,915 1,333,185
Cash dividends declared:
Class A - $.4500 per
share (36,832) (36,832)
Class B - $.4440 per
share (34,439) (34,439)
Sale of stock 3,585 3,958
Repurchase of common
stock (47,700) (50,192)
Restricted shares 198 212
Converted debt 103,455 110,445
Net income 272,585 272,585
Balances January 2, 1999 60,332 1,299,229 1,598,922
Cash dividends declared:
Class A - $.5040 per
share (41,045) (41,045)
Class B - $.4980 per
share (37,949) (37,949)
Sale of stock 1,137 1,216
Repurchase of common
stock (62,026) (74,074) (142,694)
Restricted shares 578 620
Reverse split 155,259 (620) (639)
Net income 300,435 300,435
Balances January 1, 2000 $155,280 $1,445,976 $1,678,866
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Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Nature of Operations
As of January 1, 2000, the Company operated 1,276 retail food supermarkets and
eight distribution centers in 11 states in the Southeast and Mid-Atlantic United
States. The Company's stores, which are operated under the names of "Food Lion,"
"Kash n' Karry" and "Save `n Pack," sell a wide variety of groceries, produce,
meats, dairy products, seafood, frozen foods, deli/bakery and non-food items,
such as health and beauty care, prescriptions, and other household and personal
products.
Principles of Consolidation
On September 7, 1999, the shareholders of the Company approved a holding company
structure. Delhaize America, Inc., the holding company, will serve as the
consolidating entity for all of the Company's supermarket chains, currently
including stores carrying the Food Lion, Kash n' Karry and Save `n Pack banners.
The consolidated financial statements include the accounts of Delhaize America,
Inc. and its wholly-owned subsidiaries. All significant intercompany accounts
and transactions are eliminated in consolidation.
Operating Segment
The Company engages in one line of business, the operation of general food
supermarkets.
Fiscal Year
The Company's fiscal year ends on the Saturday nearest to December 31. The years
ended January 1, 2000 and January 2, 1999 each included 52 weeks. The year ended
January 3, 1998 included 53 weeks. The 1999 disclosed amounts represent the year
ended January 1, 2000.
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investment instruments purchased with an
original maturity of three months or less to be cash equivalents.
Inventories
Inventories are stated at the lower of cost or market. Inventories valued using
the last-in, first out (LIFO) method comprised approximately 83% and 87% of
inventories, in 1999 and 1998, respectively. Meat, produce and deli inventories
are valued on the first-in, first-out (FIFO) method. If the FIFO method were
used entirely, inventories would have been $142.9 million and $139.1 million
greater in 1999 and 1998, respectively. Application of the LIFO method resulted
in increases in the cost of goods sold of $3.8, $24.7 and $10.0 million for
1999, 1998 and 1997, respectively.
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Statements of Cash Flows
Selected cash payments and non-cash activities were as follows:
(Dollars in thousands) 1999 1998 1997
Cash payments for income taxes $175,816 $127,352 $158,543
Cash payments for interest,
net of amounts capitalized 103,717 103,820 108,743
Non-cash investing and financing
activities:
Capitalized lease obligations
incurred for store properties
and equipment 43,173 62,608 80,207
Capitalized lease obligations
terminated for store properties
and equipment 32,436 36,191 38,781
Conversion of long term debt to - 110,445 -
stock
Deferred tax asset(see Note 4) 8,202 - -
Property
Property is stated at historical cost and depreciated on a straight-line basis
over the estimated service lives of assets, generally as follows:
Buildings 40 years
Furniture, fixtures and equipment 3 - 14 years
Leasehold improvements 8 years
Vehicles 7 - 10 years
Property under capital leases Lease term
In conjunction with the Company's compliance with Financial Accounting Standards
Board Statement No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of" (FAS No. 121), the Company reviews the
value of all long-lived assets by store location whenever events or changes in
business circumstances indicate the carrying value of the assets may not be
recoverable.
Intangible Assets
Intangible assets primarily include goodwill, tradenames and favorable leasehold
interests, all of which have been acquired in conjunction with acquisitions
accounted for under the purchase method of accounting. Intangible assets are
amortized on a straight-line basis over the estimated useful lives ranging from
three to 40 years.
The Company evaluates the period of amortization for intangible assets, on an
ongoing basis, to determine whether current circumstances warrant revised
estimates of useful lives. In addition, the Company evaluates, on an ongoing
basis, the carrying value of intangible assets based on projections of
undiscounted cash flows. If impairment is identified, the Company compares the
asset's future discounted cash flows to its current carrying value and records
specific provisions as appropriate.
Deferred Income Taxes
Deferred tax liabilities or assets are established for temporary differences
between financial and tax reporting bases and are subsequently adjusted to
reflect changes in tax rates expected to be in effect when the temporary
differences reverse.
Revenue Recognition
Revenues from the sale of products are recognized at the point of sale to the
Company's customers.
Cost of Goods Sold
Purchases are recorded net of cash discounts and other supplier discounts. Cost
of goods sold includes warehousing and distribution costs.
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Advertising Costs
Advertising costs are expensed as incurred. The Company recorded advertising
expense of $67.3 million in 1999, $67.0 million in 1998 and $72.0 million in
1997.
Capitalized Interest
The Company capitalizes interest costs incurred to bring certain assets to their
intended use.
Store Opening Costs
Costs associated with the opening of new stores are expensed as incurred.
Store Closing Costs
When a decision is made to close a store, the Company records a charge to cover
the estimated costs of the planned store closing, including (1) the
unrecoverable portion of the present value of the remaining lease payments on
leased stores (recorded in Other Liabilities on the Company's Consolidated
Balance Sheet), (2) the write down of store assets (building, equipment, etc.)
to reflect estimated realizable values (recorded as a reduction of the
recorded asset cost on the Company's Consolidated Balance Sheet), and (3) other
costs associated with the store closing (recorded in Accrued Expenses on the
Company's Consolidated Balance Sheet).
The Company intends to close stores within a year after the decision to close is
made.
Recoverable and realizable values are determined based on historical disposition
of similar assets and current economic conditions, and are
reviewed as new information becomes available or economic conditions change.
The Company makes adjustments to the valuation reserves as needed.
At the store closing date, the Company discontinues depreciation on all assets
related to closed store properties. Disposition efforts on these assets begin
immediately following the store closing.
Significant cash outflows associated with store closings relate to ongoing rent
payments on leased stores. The principal portion of the rent payments is charged
against the lease liability established for closed stores (discussed above),
while the interest portion of the rent payments is recorded against current year
earnings in interest expense.
Self Insurance
The Company is self-insured for workers' compensation, general liability and
vehicle accident claims. The self-insurance liability is determined actuarially,
based on claims filed and an estimate of claims incurred but not yet reported.
Maximum self-insured retention, including defense costs per occurrence, is
$500,000 for workers' compensation, automobile liability and general liability.
The Company is insured for covered costs, including defense costs, in excess of
these limits.
Self insurance expense related to the above totaled $32.0 million in 1999, $34.2
million in 1998, and $32.9 million in 1997. Total claim payments were $32.9
million in 1999, $31.2 million in 1998, and $30.3 million in 1997.
Earnings Per Share
Basic earnings per share is computed by dividing income available
to common shareholders by the weighted average number of common shares
outstanding (157,109,000 shares in 1999, 159,361,000 shares in 1998 and
156,305,000 shares in 1997). Diluted earnings per share is computed by dividing
income available to common shareholders by the weighted average number of common
shares outstanding and the weighted average number of potential common shares
outstanding. The common stock equivalents that were added to the weighted
average shares outstanding for purposes of diluted EPS were 188,000, 346,000 and
246,000 for outstanding stock options in 1999, 1998
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and 1997, respectively. Additionally, common stock equivalents in 1997 included
4,813,000 shares issuable upon conversion of 5% convertible subordinated
debentures due 2003. During the second quarter of 1998, the Company's
convertible subordinated debentures were redeemed.
Fair Value of Financial Instruments
Generally accepted accounting principles require the disclosure of the fair
value of certain financial instruments where estimates of fair value are
practicable. Significant judgment is required to develop estimates of fair
value. Estimates presented are not necessarily indicative of the amounts that
the Company could realize in a current market exchange. Fair values stated are
as of year-end and may differ significantly from current estimates.
Cash and cash equivalents: The carrying amount of these items approximates fair
value.
Long-term debt: At January 1, 2000 and January 2, 1999, the Company estimated
that the fair value of its long-term debt was approximately $413.6 million and
$522.0 million, respectively. The fair value of the Company's long-term debt is
estimated based on the current rates offered to the Company for debt with the
same remaining maturities.
Off-balance sheet instruments: The fair value of "Treasury Lock" agreements is
estimated using the present value of the difference between the locked Treasury
yield and the forward Treasury yield. At January 1, 2000, the net unrealized
gain on such agreements was $7.2 million.
Reclassification
Certain financial statement items have been reclassified to conform to the
current year's format.
Recently Issued Accounting Standards
In June of 1998, the FASB issued FAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to report all
derivatives at fair value as assets or liabilities in their statements of
financial position. This pronouncement will be effective in fiscal 2001.
The Company has not yet determined the impact of this pronouncement.
2. Acquisition
On August 17, 1999, the Company entered into a definitive merger agreement to
acquire all the outstanding shares of Hannaford Bros. Co. in a cash and stock
transaction valued at approximately $3.6 billion, including the assumption of
debt. The aggregate cash consideration is expected to be approximately $2.7
billion and the balance of the total consideration will be paid in Class A
common stock based on the closing price of such stock for the 10 trading days
prior to the closing of the acquisition, subject to certain limitations.
Delhaize America will also assume approximately $300 million of Hannaford debt.
The Company expects to finalize the acquisition in fiscal 2000. Upon completion
of the acquisition, Hannaford will operate as a subsidiary of Delhaize America.
The acquisition will be accounted for as a purchase transaction.
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3. Property
Property consists of the
following:
1999 1998
(Dollars in thousands)
Land and improvements $107,811 $103,820
Buildings 395,168 377,736
Furniture, fixtures and
equipment 1,484,643 1,343,514
Vehicles 98,863 100,370
Leasehold improvements 602,105 478,848
Construction in progress 57,307 44,895
2,745,897 2,449,183
Less accumulated depreciation 1,149,260 1,012,193
1,596,637 1,436,990
Property under capital leases 588,038 584,931
Less accumulated depreciation 145,361 124,841
442,677 460,090
$2,039,314 $1,897,080
Depreciation expense totaled $248,895, $226,030 and $209,703 for 1999, 1998 and
1997, respectively.
At January 1, 2000 and January 2, 1999, the Company had $18.6 million and $21.0
million (net book value), respectively, in property held for sale.
4. Intangible Asset
Intangible assets is comprised of the following:
(Dollars in thousands) 1999 1998
Goodwill $207,901 $203,286
Tradenames 58,000 58,000
Leasehold interests 17,750 18,438
283,651 279,724
Less accumulated amortization 29,375 21,322
$254,276 $258,402
During 1999, Goodwill increased by $14.4 million related to the acquisition of
individual stores during the year and was partially offset by a decrease of $8.2
million from the reversal of a valuation allowance established at the time of
the Kash n' Karry acquisition in 1996. The valuation allowance was originally
established to reflect the uncertainty associated with full utilization of the
acquired Kash n' Karry tax loss carryforwards. Due to the issuance of revised
Treasury Regulations in 1999, the allowance is no longer necessary as the tax
loss carryforwards are expected to be fully utilized in the future.
5. Accrued Expenses
Accrued expenses consist of the following:
(Dollars in thousands) 1999 1998
Employee benefit plan $114,875 $100,647
Self insurance 73,540 76,207
Payroll 75,061 66,887
Other 105,754 116,364
$369,230 $360,105
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6. Employee Benefit Plan
The Company has a non-contributory retirement plan covering all employees with
one or more years of service. Employees' benefits under the plan become vested
after five years of consecutive service. Forfeitures of the plan are treated as
contributions and are allocated to the remaining participants at year end. The
plan provides benefits to participants upon death, retirement or termination of
employment with the Company. Contributions to the retirement plan are determined
by the Company's Board of Directors. Expense related to the plan totaled $108.8
million in 1999, $94.9 million in 1998 and $97.8 million in 1997.
7. Long-Term Debt
Long-term debt consists of the following:
(Dollars in thousands)
1999 1998
Medium-term notes, due from
2000 to 2006. Interest
ranges from 8.40% to 8.73%. $123,300 $150,300
Debt securities, 7.55%, due
2007. 150,000 150,000
Debt securities, 8.05%, due
2027. 150,000 150,000
Mortgage payables due from
2000 through 2011. Interest
ranges from 7.50% to 9.30%. 5,148 19,029
Other 1,316 2,952
429,764 472,281
Less current portion 2,834 42,518
$426,930 $429,763
At January 1, 2000, $10.7 million (net book value) in property was pledged as
collateral for mortgage payables.
Approximate maturities of long-term debt in the years 2000 through 2004 are
$2.8, $106.3, $1.6, $11.0 and $.1 million, respectively.
The Company entered into "Treasury Lock" agreements to hedge against a potential
increase in interest rates on future bond issues related to the announced
acquisition of Hannaford Bros. Co.(see Note 2). The notional amount of the
agreements totals $1.75 billion. At January 1, 2000, the unrealized gain related
to these agreements was $7.2 million. The differential to be paid or received
will be recognized as an adjustment to interest expense over the life of the
underlying debt. The Company is subject to risk of nonperformance by the
counterparties to the agreement. The Company does not anticipate nonperformance
by the counterparties, who are major U.S. financial institutions. The Company
believes that market risk associated with changes in interest rates should not
be significant.
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8. Credit Arrangements
The Company maintains a revolving credit facility with a syndicate of commercial
banks providing $500.0 million in committed lines of credit, which will expire
on November 17, 2000. These lines replaced the previous $625.0 million revolving
credit facility. There was $205.0 million outstanding at January 1, 2000 at a
weighted average interest rate of 7.75%. The Company had average borrowings of
$81.2 million at a daily weighted average interest rate of 7.53% during 1999.
There were no borrowings outstanding at January 2, 1999.
Additionally, the Company had other committed short-term lines of credit with
banks totaling $20.0 million, of which the full amount was outstanding at both
January 1, 2000 and January 2, 1999. During 1999, the Company had average
borrowings of $8.3 million at a daily weighted average interest rate of 5.33%
with a maximum amount outstanding of $20.0 million.
In addition, the Company has periodic short-term borrowings under other informal
arrangements. Outstanding borrowings under these arrangements were $77.0
million at January 1, 2000 at an average interest rate of 6.37% and $41.0
million at January 2, 1999 at an average interest rate of 5.64%.
The Company has a $250.0 million commercial paper program. No borrowings were
outstanding during the years ended January 1, 2000 and January 2, 1999.
9. Leases
The Company's stores operate principally in leased premises. Lease terms for
open stores generally range from 10 to 20 years with renewal options ranging
from five to 20 years. The average remaining lease term for closed stores is
8.6 years. The following schedule shows, as of January 1, 2000, the future
minimum lease payments under capital and operating leases.
Captial
Leases Operating Leases
(Dollars in thousands) Open Closed
Stores Stores
2000 $82,899 $172,505 $21,166
2001 82,352 171,747 20,709
2002 82,265 170,734 20,569
2003 82,003 168,616 19,175
2004 81,364 165,677 17,345
Thereafter 770,019 1,533,911 109,898
Total minimum payments 1,180,902 $2,383,190 $208,862
Less estimated executory
costs 50,096
Net minimum lease
payments 1,130,806
Less amount representing
interest 627,987
Present value of net
minimum lease payments $ 502,819
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Minimum payments have not been reduced by minimum sublease income of $38.1
million due over the term of non-cancelable subleases.
Total rent payments (net of sublease income) under operating leases for open and
closed stores are as follows:
(Dollars in 1999 1998 1997
thousands)
Minimum rents $169,954 $172,481 $133,786
Contingent rents,
based on sales 101 255 371
$170,055 $172,736 $134,157
In addition, the Company has signed lease agreements for additional store
facilities, the construction of which were not complete at January 1, 2000. The
leases expire on various dates extending to 2024 with renewal options generally
ranging from 10 to 20 years. Total future minimum rents under these agreements
are approximately $683 million.
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10. Income Taxes
Provisions for income taxes for 1999, 1998 and 1997 consist of the following:
(Dollars in Current Deferred Total
thousands)
1999
Federal $134,195 $ 27,123 $161,318
State 19,828 2,993 22,821
$154,023 $ 30,116 $184,139
1998
Federal $ 95,839 $ 40,199 $136,038
State 14,559 4,800 19,359
$110,398 $ 44,999 $155,397
1997
Federal $119,553 $(30,327) $ 89,226
State 27,100 (6,200) 20,900
$146,653 $(36,527) $110,126
The Company's effective tax rate varied from the federal statutory rate as
follows:
1999 1998 1997
Federal statutory 35.0% 35.0% 35.0%
rate
State income taxes,
net of federal tax
benefit 3.1 2.9 4.8
Federal refund 0.0 (1.7) 0.0
Other (0.1) 0.1 (0.8)
38.0% 36.3% 39.0%
The components of deferred income tax assets and liabilities at January 1, 2000
and January 2, 1999 are as follows:
(Dollars in thousands)
1999 1998
Current assets:
Inventories $ 5,233 $14,818
Accrued expenses 50,378 50,579
Total current assets 55,611 65,397
Non-current
assets/(liability):
Depreciation (145,853)(142,389)
Leases 45,786 43,560
Provision for store
closings 68,116 73,777
Tax loss carryforwards 18,358 22,737
Other deferred charges 6,172 7,022
Total non-current
assets/(liability) (7,421) 4,707
Net deferred taxes $ 48,190 $ 70,104
As of January 1, 2000, the Company had net operating loss carryforwards for tax
purposes of approximately $46.7 million related to Kash n' Karry. Due to certain
change of ownership requirements of Section 382 of the Internal Revenue Code,
utilization of the Kash n' Karry net operating losses is expected to be limited
to approximately $3.6 million or $6.9 million per year, depending upon the year
in which the loss was generated. Loss carryovers will expire during the years
2008 through 2011.
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11. Other Liabilities
Other liabilities consist of the following:
(Dollars in thousands) 1999 1998
Remaining lease liability - closed
stores $104,277 $113,161
Other 9,443 10,877
113,720 124,038
Less current portion 12,660 9,839
$101,060 $114,199
The Company uses a discount rate based on the current treasury note rates to
calculate the present value of the remaining rent payments on closed stores.
12. Stock Options and Restricted Stock Plans
The Company has a stock option plan under which options to purchase up to 3.3
million shares of Class A common stock may be granted to officers and key
employees at prices equal to fair market value on the date of the grant. Options
become exercisable as determined by the Stock Option Committee of the Board of
Directors of the Company on the date of grant, provided that no
option may be exercised more than ten years after the date of grant.
The Company has a restricted stock plan for executive employees pursuant to the
1996 Stock Incentive Plan. Under this stock plan, the Company granted 62,317
shares in 1999 (15,160 shares forfeited), 53,848 shares in 1998 (8,920 shares
forfeited) and 65,334 shares in 1997 (3,508 shares forfeited). Currently, the
Company has 160,048 shares of restricted Class A common stock outstanding under
the plan. These shares of stock will vest over five years from the grant dates.
The weighted average grant date fair value for these shares is $27.17, $24.42
and $21.09 for 1999, 1998 and 1997, respectively. As of January 1, 2000, 37,770
of these restricted shares had vested.
A summary of shares reserved for outstanding options and restricted stock for
the last three fiscal years, activity during each year and related weighted
average exercise price is presented below:
Weighted
Average
Shares Exercise Price
1999
Outstanding at beginning of 1,081,105 $21.42
year
Granted 650,670 26.33
Exercised (81,493) 14.72
Forfeited/expired (144,639) 22.85
Outstanding at end of year 1,505,643 23.77
Options exercisable at end of 93,165 25.20
year
1998
Outstanding at beginning of 1,107,597 $19.89
year
Granted 393,906 26.19
Exercised (257,045) 15.30
Forfeited/expired (163,353) 19.29
Outstanding at end of year 1,081,105 21.42
Options exercisable at end of
year 45,535 26.31
1997
Outstanding at beginning of
year 851,278 $18.24
Granted 467,170 24.39
Exercised (96,611) 15.81
Forfeited/expired (114,240) 34.05
Outstanding at end of year 1,107,597 19.89
Options exercisable at end of
year 319,532 17.13
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As of January 1, 2000, there were 1,197,352 shares of Class A common stock
available for future grants.
The following table summarizes options outstanding and options exercisable as of
January 1, 2000, and the related weighted average remaining contractual life
(years) and weighted average exercise price (excluding restricted stock).
Options Outstanding
Range of Weighted
exercise Number Weighted Average
prices Outstanding Average Exercise
Remaining Price
Contractual
Life
$15.37 - $23.10 475,598 6.6 $20.71
$23.11 - $34.65 836,644 8.5 29.53
$34.66 - $37.78 33,353 2.7 36.87
$15.37 - $37.78 1,345,595 7.7 $26.59
Options Exercisable
Range of Weighted
exercise Number Average
prices Exercisable Exercise
Price
$15.37 - $23.10 67,773 $21.18
$23.11 - $34.65 2,892 25.96
$34.66 - $37.78 22,500 37.25
$15.37 - $37.78 93,165 $25.20
The weighted average fair value at date of grant for options granted during
1999, 1998, and 1997 was $10.57, $7.86, and $6.42 per option, respectively. The
fair value of options at date of grant was estimated using the Black-Scholes
model with the following weighted average assumptions:
1999 1998 1997
Expected dividend 1.8 1.5 1.5
yield (%)
Expected volatility 35.0 30.0 25.0
(%)
Risk-free interest 5.4 5.6 6.5
rate (%)
Expected term (years) 7.5 5.0 5.5
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost has been recognized for the stock options
granted in 1999, 1998 or 1997. Had compensation cost
been determined based on the fair value at the grant date consistent with the
provisions of this statement, the Company's pro forma net earnings and earnings
per share would have been as follows:
(Dollars in thousands, 1999 1998 1997
except per share data)
Net earnings - as reported $300,435 $272,585 $172,250
Net earnings - pro forma 299,687 272,144 171,656
Basic earnings per share - as
reported 1.91 1.71 1.10
Basic earnings per share - pro
forma 1.91 1.71 1.10
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13. Common Stock
The Company listed on the New York Stock Exchange beginning on September 9,
1999, after authorizing a one-for-three reverse stock split of all outstanding
shares of common stock at the close of business 12:01 a.m. on September 9, 1999.
All share and per share data have been restated to give retroactive effect to
the reverse stock split, except in the Statement of Shareholders' Equity. The
Company's two classes of stock are traded on the New York Stock Exchange under
the symbols "DZA" and "DZB."
On January 1, 2000, approximately 31.5% and 15.0% of the issued and outstanding
Class A non-voting common stock and 27.5% and 28.0% of the issued and
outstanding Class B voting common stock was held, respectively, by
Etablissements Delhaize Freres et Cie "Le Lion" S.A. (Delhaize) and Delhaize The
Lion America, Inc. (Detla), a wholly owned subsidiary of Delhaize. In the
aggregate, Delhaize and Detla owned approximately 55.5% of the Class B voting
common stock and 46.5% of the Class A non-voting common stock.
Holders of Class B common stock are entitled to one vote for each share of Class
B common stock held, while holders of Class A common stock are not entitled to
vote except as required by law.
The Board of Directors of the Company may declare dividends with respect to
Class A common stock without declaring and paying any dividends with respect to
the Class B common stock. When dividends are declared with respect to the Class
B common stock, the Board of Directors of the Company must declare a greater per
share dividend to the holders of Class A common stock.
14. Interest Expense
Interest expense consists of the following:
(Dollars in thousands)
1999 1998 1997
Interest on capital leases $58,138 $58,774 $56,809
Other interest (net of $2.8, $2.4 and
$2.0 million capitalized in 1999, 1998
and 1997, respectively) 45,682 36,560 58,580
$103,820 $95,334 $115,389
15. Reserves for Closed Stores
(Dollars in millions)
Reduction Lease Accrued
of Asset Liabilities Expenses Total
Values
Balance at December 28, 1996 $ 38.7 $150.1 $ 1.0 $ 189.8
Additions 98.8 22.6 13.7 135.1
Reductions (12.9) (20.0) (3.6) (36.5)
Recognition of unused reserves (20.8) (29.6) (3.7) (54.1)
Balance at January 3, 1998 103.8 123.1 7.4 234.3
Additions 2.7 19.2 9.4 31.3
Reductions (90.7) (21.9) (15.7) (128.3)
Recognition of unused reserves 0.0 (7.2) 0.0 (7.2)
Balance at January 2, 1999 15.8 113.2 1.1 130.1
Additions 2.5 9.5 5.2 17.2
Reductions (9.8) (18.4) (3.9) (32.1)
Balance at January 1, 2000 $ 8.5 $104.3 $ 2.4 $ 115.2
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1999 Activity:
During the year, the Company recorded $13.0 million in store closing costs
(included in Selling and Administrative Expenses on the Company's Consolidated
Statement of Income). These costs are included in the "Additions" line in the
table above.
Other significant additions of approximately $3.2 million were generated upon
the purchase of several store locations that the Company does not plan to open.
The costs associated with closing these stores were charged against Goodwill.
Significant reductions during the year include (1)ongoing rent payments of $8.3
million (net of $3.0 million in sub-lease income) made on remaining lease
obligations, (2) fees of $10.5 million for lease terminations, (3) incremental
direct costs to dispose of closed store properties and expenses arising from
contractual obligations totaling $7.0 million and (4) approximately $6.5 million
related to the disposition efforts of 23 closed stores.
During 1999, the Company closed 31 stores in the normal course of business,
including 21 relocation closings and 10 closings due to poor performance. The
revenues and operating results of these stores were not significant to the
Company's total revenues and operating results.
Of the 31 closings in 1999, eight were Kash n' Karry closings. Four of the
eight Kash n' Karry closings were included in the 23 planned closings at the
time of acquisition (see discussion below in 1998 activity).
During 1999, the Company completed disposition efforts related to 23 closed
stores.
At the end of 1999, the Company had $115.2 million in store closing costs
related to 161 stores and one closed distribution center. Of the 161 stores, 154
stores are closed, while 7 stores are scheduled to close over the next 12
months.
1998 Activity:
During the year, the Company recorded $15.2 million in store closing costs
(included in Selling and Administrative Expenses on the Company's Consolidated
Statement of Income), related to 26 stores which the Company plans to close in
the normal course of business generally over the next 12 months. These costs are
included in the "Additions" line in the table above.
Significant additions also include gains ($11.1 million) related to the disposal
of various properties ($5.1 million) and the sale of the Company's distribution
center in the Southwest market ($6 million).
Significant reductions in the reserves for closed stores in 1998 include $89.9
million for the disposition of 51 owned stores and the distribution center
facility in the Southwest market, which the Company closed in 1997 (see
discussion under 1997 Activity). Other significant reductions include (1)
ongoing rent payments of $7.3 million made on remaining lease obligations, (2)
fees of $17.5 million for lease terminations, and (3) incremental direct costs
to dispose of closed store properties and expenses arising from contractual
obligations totaling $13.2 million.
The Kash n' Karry acquisition strategy included plans to close 23 stores in
conjunction with the Company's store relocation program, and as a result of
identifying underperforming units. The purchase price allocation included $52.3
million in reserves related to these stores. Through the end of 1998,
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the Company had closed 13 of these store locations. The Company made a decision
in 1998 not to close three of the original 23 stores due to improved
performance. The original estimated store closing costs related to these three
stores totals $7.2 million and comprises the unused reserves recognized as a
reduction to Goodwill in fiscal 1998. It has taken the Company longer than
anticipated to execute this store closing plan due to a strategic repositioning
of the Kash n' Karry stores and a thorough review of the impact of such store
closings on plans for neighboring Food Lion store locations.
During 1998, the Company closed 29 stores in the normal course of business,
including 17 relocation closings and 12 closings due to poor performance. The
revenues and operating results of these stores were not significant to the
Company's total revenues and operating results.
During 1998, the Company completed disposition efforts related to 74 closed
stores.
At the end of 1998, the Company had $130.1 million in store closing costs
related to 157 stores and one closed distribution center. Of the 157 stores, 131
stores were closed, while 26 stores were scheduled to close over the next 12
months.
1997 Activity:
During 1997, the Company recorded a pre-tax charge of $116.5 million related to
the divestiture of its Southwest market. This charge included the write-down of
store and distribution center assets to reflect estimated realizable values
($92.1 million), the present value (calculated by applying an 8% discount rate)
of remaining rent payments on leased stores ($17.1 million) included in Other
Liabilities above, and other costs associated with the store closings. These
other costs include legal fees, commissions, severance costs, and certain other
costs to sell the related assets and/or expenses arising from contractual
obligations ($7.3 million) included in Accrued Expenses above. The Southwest
market had negatively impacted the Company's operating results by approximately
$0.01 per share annually.
During 1997, the Company reduced store closing costs by $54.1 million in unused
reserves which arose primarily from changes in estimated liabilities on
remaining lease obligations and in estimated recoverable values of owned
properties. Of this amount, $14.4 million related to stores closed in previous
years, and $17.7 million related to the 1997 store closings in the Southwest
market. These unused reserves were recorded into income. The remaining $22.0
million related to Kash n' Karry store closings and was reflected as an
adjustment to Goodwill.
The remaining 1997 activity represents store closing costs incurred, the
disposition of properties held for sale, and payments made on remaining lease
obligations, related to store closings in the normal course of business.
During 1997, the Company closed 58 stores in the normal course of business,
including 25 relocation closings and 33 closings due to poor performance. The
revenues and operating results of these stores were not significant to the
Company's total revenues and operating results.
During 1997, the Company completed disposition efforts related to 33 closed
stores.
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16. Commitments and Contingencies
The Company is involved in various claims and lawsuits arising out of the normal
conduct of its business. Although the ultimate outcome of these legal
proceedings cannot be predicted with certainty, the management of the Company
believes that the resulting liability, if any, will not have a material effect
upon the Company's consolidated results of operations, financial position or
liquidity.
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Report of Independent Accountants
To the Shareholders of Delhaize America, Inc.:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholders' equity, and cash flows present
fairly, in all material respects, the financial position of Delhaize America,
Inc. and subsidiaries (the "Company") at January 1, 2000 and January 2, 1999,
and the results of their operations and their cash flows for each of the three
years in the period ended January 1, 2000, in conformity with accounting
principles generally accepted in the United States. These financial statements
are the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 9, 2000
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Results by Quarter
(unaudited)
(Dollars in thousands except per share amounts)
1999
First Second Third Fourth
Quarter Quarter Quarter Quarter
(12 Weeks) (12 Weeks) (12 Weeks) (16 Weeks)
Net sales $2,407,046 $2,509,240 $2,583,945 $3,378,453
Cost of goods
sold 1,856,862 1,933,085 1,994,185 2,586,762
Selling and
administrative
expenses 431,301 440,528 447,404 600,163
Operating income 118,883 135,627 142,356 191,528
Net income $58,608 $68,351 $73,019 $ 100,457
Basic and
diluted earnings
per common share $0.36 $0.43 $0.47 $0.65
(Dollars in thousands except per share amounts)
1998
First Second Third Fourth
Quarter Quarter Quarter Quarter
(12 Weeks) (12 Weeks) (12 Weeks) (16 Weeks)
Net sales $2,305,473 $2,353,260 $2,378,922 $3,181,819
Cost of goods
sold 1,800,115 1,826,657 1,843,988 2,455,084
Selling and
administrative 388,713 406,621 411,820 563,160
expenses
Operating income 116,645 119,982 123,114 163,575
Net income $ 55,234 $ 60,033 $ 72,769 $ 84,549
Basic and
diluted earnings
per common share $0.35 $0.38 $0.45 $0.53
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Market Price of Common Stock
Year Ended January 1, 2000 Year Ended January 2, 1999
Class A Class B Class A Class B
Quater High Low High Low High Low High Low
First 33.38 27.56 32.06 27.38 33.75 25.41 34.14 24.39
Second 36.00 25.88 36.00 25.50 32.64 27.75 33.18 27.39
Third 38.16 23.44 37.50 24.00 34.32 26.43 33.18 27.00
Fourth 24.19 17.38 25.06 18.75 33.18 25.14 32.43 23.64
The Company's Class A and Class B common stock trade on the New York Stock
Exchange under the symbols DZA and DZB, respectively. Price quotations are
reported on the New York Stock Exchange. The closing market prices per share
for both Class A and Class B common stock at January 1, 2000 were $20.31 and
$20.88, respectively compared with $31.89 and $30.18, respectively for both
Class A and Class B common stock at January 2, 1999. On March 16, 2000, there
were 16,751 holders of record of Class A common stock and 12,217 holders of
record of Class B common stock. The closing market prices per share for the
Class A and the Class B common stock at March 16, 2000 were $17.94 and $18.00,
respectively.
Dividends Declared Per Share of Common Stock
Year Ended January 1, 2000 Year Ended January 2, 1999
Quarter Class A Class B Class A Class B
First $.1260 $.1245 $.1125 $.1110
Second .1260 .1245 .1125 .1110
Third .1260 .1245 .1125 .1110
Fourth .1260 .1245 .1125 .1110
Total $.5040 $.4980 $.4500 $.4440
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Results of Operations
During fiscal 1999, the Company posted record sales of $10.9 billion and
net earnings of $300.4 million, increases of 6.5% and 10.2%, respectively,
compared with fiscal 1998. The Company accomplished these results in a highly
competitive retail environment while continuing to sharpen its focus on "low
price leadership" and "convenience." The Company opened 100 new stores and
closed 31 existing stores (including 21 relocations) during the year. As a
result, at the end of 1999, the Company operated 1,276 stores compared with
1,207 at the end of 1998. The Company renovated 145 stores in 1999.
The Company announced in August 1999 its plan to acquire Hannaford Bros.
Co. for $3.6 billion, including the assumption of debt. Shareholders of
Hannaford approved the merger agreement at its shareholder meeting on February
10, 2000. Delhaize America expects this transaction to be completed in the
second quarter of 2000, and as a result, Delhaize America will have
approximately 1,400 stores throughout the eastern United States from Maine to
Florida and annual sales of approximately $15 billion in the first full year of
acquisition.
Sales
Sales were $10.9 billion for the 52 weeks of fiscal 1999 compared with
$10.2 billion during the 52 week period of fiscal 1998, and $10.2 billion for
the 53 week period in 1997, resulting in annual increases of 6.5%, 0.2%, and
13.2% , respectively. The Company's 1999 total sales are not comparable to 1998
and 1997 total sales due to a change in the method of collecting sales tax on
products discounted through the Food Lion MVP customer and the Kash n' Karry
Preferred Customer Club (PCC) loyalty card programs. This change impacted both
1998 and 1999 sales as the new method of reporting sales tax began in May 1998
(see discussion below). On a comparable basis, total sales increased 7.1% for
fiscal 1999 and 6.1% for fiscal 1998. In 1999, same store sales increased 1.8%
as compared with increases of 2.6% for 1998 and 0.2% for 1997.
Beginning in May 1998, after receiving permission from all state
departments of revenue, the Company began collecting sales tax on the net sales
price, after considering the MVP/PCC discount granted, rather than the full
retail price of the MVP/PCC items. The related impact to fiscal 1999 and 1998
sales for a prior year comparison is to reduce reported sales by approximately
$70.4 million and $127.1 million, respectively. This change does not impact the
same store sales calculation or the Company's net income, as gross profit and
expense dollars are the same under either method. The only difference is that
under the new method the discount granted is reflected in sales as opposed to in
cost of goods sold under the original method.
During 1999, the sales increase of 7.1% (on a comparable basis) resulted
from the Company's new store additions and renovations of existing stores, as
well as continued emphasis on category management and marketing initiatives. The
Company opened 100 new stores in 1999 and closed 31 existing stores (including
21 relocations), a net increase of 69 stores. The Company continues to
aggressively pursue store renovations and additions which, on average, add 10 to
20 percent to a store's sales. During 1999, 145 existing stores were renovated
to update equipment and properties, and in many locations, to add square footage
and deli/bakery departments. The average age of the Company's stores is five
years which compares favorably with the industry average of seven years.
The Company continued to benefit from the MVP card program and the PCC
program. These programs, which are primarily vendor supported, reward customers
with additional discounts on the Company's every day low prices on a selection
of featured
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items. Each week, 1,500 to 2,000 items are featured under the MVP/PCC programs.
In 1999, promotions using these programs included a back-to-school campaign, a
NASCAR-themed promotion, and participation in the "Delhaize 2000" global price
promotion. New in 1999 was the MVP Partners program, which offers MVP
cardholders discounts with local and national business partners such as dry
cleaners, hotels, and theme parks. In 2000, the Company plans to increase usage
of the expansive database to support targeted marketing and promotional
activity.
The 2000 business plan currently includes opening 85 new stores
(approximately 18 of these will replace older stores) and renovating
approximately 150 existing stores. The Company is committed to a growth
strategy, which includes plans to open new stores and strengthen existing stores
through renovations in order to maintain a competitive edge in its current
markets. In addition, the Company will continue to evaluate its store base and
may close stores to take advantage of relocation opportunities or to eliminate
operating losses in under-performing stores. The Company's growth strategy is
flexible, and the Company will listen to its consumers and revise its strategy
accordingly in an effort to meet current and future customer needs.
Gross Profit
In fiscal 1999, gross profit was 23.05% of sales compared with 22.44% and
21.76% in 1998 and 1997, respectively. The gross profit increase of .61% of
sales in 1999 is attributable to a continued focus on category management
initiatives designed to maximize product selection and merchandising through
increased variety (new items) and promotional activity through the Company's
customer loyalty card programs. Gross profit improvements were achieved in the
higher margin categories of perishables and nonfoods and gross profits continue
to be positively impacted by the Company's private label sales, which currently
represent 16.0% of consolidated total sales. Additional gross profit benefits
were achieved through efficient distribution and logistics operations.
Selling and Administrative Expenses
Selling and administrative expenses as a percentage of sales were 17.65 %
in 1999, 17.32% in 1998, and 17.04% in 1997. The Company has seen increasing
labor costs throughout the year due to the low unemployment rates in all
operating markets, which in turn has created higher turnover as well as wage and
benefit increases. In addition, rent costs have increased primarily as a result
of 92 new leased stores and expansions of existing stores.
Depreciation was 2.38% of sales in 1999 compared with 2.31% in 1998 and
2.16% in 1997. The Company constructed and equipped 92 leased stores and eight
owned stores and renovated an additional 145 stores in 1999. During 1998, the
Company constructed and equipped 72 leased stores and seven owned stores, and
renovated 141 existing stores. During 1997, the Company constructed and equipped
61 leased stores and three owned stores, and renovated 99 existing stores.
Delhaize America's 1999 business plan reflected the Company's commitment to
maintaining its existing store base as 145 store renovations were completed in
1999 compared with 141 in 1998 and 99 in 1997. The Company anticipates
completing approximately 150 renovations to existing stores in 2000. Store
renovations result in an average sales increase of 10% to 20% in the year
following the renovation. The Company plans to continue an aggressive renovation
program to maintain a modern and convenient shopping environment for customers
in all stores.
Store Closings
The Company continues to constantly evaluate its store base, and make
decisions about store openings and closings that are in the best interest of
shareholders. These store closings consist of both relocations, where a new
store is opened to replace an older location in the same neighborhood, and the
closing of stores due to poor performance. During 1999, 31 stores were closed
in the normal course of business as discussed above. The average cost to close a
store as part of the
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Company's normal business strategy is approximately $500,000 to $1,000,000.
During 1999, the Company recorded $13.0 million in store closing costs (included
in Selling and Administrative Expenses on the Company's Consolidated Statement
of Income), related to planned store closings (see Note 15 to the Consolidated
Financial Statements).
During 1998, the Company closed 29 stores in the normal course of business
and recorded store closing costs of $15.2 million. In 1997, the Company
recorded a pre-tax charge of $116.5 million related to the divestiture of stores
in its Southwest market. This charge included the write-down of store and
distribution center assets to reflect estimated realizable values ($92.1
million), the present value (calculated by applying an 8% discount rate) of
remaining rent payments on leased stores ($17.1 million), and other costs
associated with the store closings such as legal fees, commissions, severance
costs, and certain other costs to sell the related assets and/or expenses
arising from contractual obligations ($7.3 million). The Southwest market had
negatively impacted the Company's operating results by approximately $0.01 per
share annually.
Significant cash outflows associated with store closings relate to ongoing
rent payments on leased stores. These rent payments are funded by income from
operations. The projected rental payments on closed stores are included in Note
9 to the consolidated financial statements.
In conjunction with the Company's compliance with Financial Accounting
Standards Board Statement No. 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" (FAS No.121), the Company
reviews the value of all long-lived assets by store location whenever events or
changes in business circumstances indicate the carrying value of the assets may
not be recoverable. No adjustments were recorded during 1999.
Interest Expense
During 1999, interest expense increased slightly over the prior year.
Interest was 0.95% of sales in 1999, 0.93% in 1998 and 1.13% in 1997. This
increase was due to an increase in short-term borrowings for the year.
During 1998, the Company reached an agreement with the U.S. Internal Revenue
Service ("IRS") regarding its examination of tax years 1991-1994. As a result
of this agreement, the Company received a refund related to tax paid in previous
years. The refund included $7.2 million in tax (recorded during the year as a
reduction to the Provision for Income Taxes) and related interest income of $7.6
million (recorded during the year as a reduction to Interest Expense). In
addition, interest expense was impacted by (1) the conversion of the Company's
convertible subordinated debentures in 1998, and (2) the pre-payment of $50
million in note purchase agreements in late 1997.
LIFO
The LIFO reserve increased $3.8 million in 1999 as compared with increases
of $24.7 million in 1998 and $10.0 million in 1997. In 1999 and 1998, the
increase was primarily due to an increase in cigarette costs. In 1997, coffee,
paper and cigarette costs were the primary contributors to the LIFO increase.
Income Taxes
The provision for income taxes was $184.1 million in 1999, $155.4 million
in 1998, and $110.1 million in 1997. The Company's effective tax rate was 38.0%
in 1999, 36.3% in 1998 and 39.0% in 1997. The effective tax rate for 1998 was
reduced by a $7.2 million tax refund received from the IRS. Notwithstanding the
acquisition of Hannaford Bros. Co. (see Note 2 of the Financial Statements), the
Company expects its continuing effective tax rate to be 38.0%.
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Liquidity and Capital Resources
Cash provided by operating activities was $507.7 million in 1999 compared
with $441.1 million in 1998 and $354.9 million in 1997. The increase in 1999
over prior years was mainly due to improved earnings and a comparatively smaller
increase in inventory levels, net of trade payables. The increase in 1998 was
due to improved earnings, an increase in inventory levels, net of trade
payables, an increase in accrued expenses, and a reduction in deferred taxes.
The increase in 1997 over the prior years was due primarily to a decrease in
inventory levels resulting from continued inventory management efforts, the
consolidation of the Kash n' Karry warehouse operation into Food Lion's Plant
City, Florida distribution center, and closing the Southwest distribution
center.
Cash flows used in investing activities increased to $391.3 million in 1999
compared with $246.2 million in 1998 and $313.6 million in 1997. The increase
in investing activities in 1999 compared to 1998 is primarily the result of an
increase in capital expenditures. In addition, 1998 included proceeds from the
sale of properties associated with the divestiture of the Southwest market. The
decrease in investing activities in 1998 compared to 1997 is the result of an
increase in the proceeds received from the disposition of the assets related to
stores in the Southwest market. The decrease in investing activities in 1997
compared to 1996 reflects the investment in Kash n' Karry during 1996, partially
offset by an increase in capital expenditures in 1997.
Capital expenditures increased to $410.9 million in 1999 compared with
$356.1 million in 1998 and $346.1 million in 1997. During 1999, the Company
equipped a total of 100 new stores and renovated 145 existing stores (including
expanding square footage and adding deli/bakeries in many of these stores).
During 1998, the Company equipped a total of 79 new stores and renovated 141
existing stores. During 1997, the Company equipped a total of 64 new stores and
renovated 99 existing stores.
Total store square footage increased 10.6% from 38.9 million in 1998 to
43.0 million at the end of 1999. Total distribution space operated by the
Company was 8.7 million square feet at the end of each of 1999, 1998, and 1997.
In 2000, the Company plans to continue its three-fold growth plan, which
focuses on a combination of new store openings and renovations, as well as
growth through acquisitions, as appropriate. The Company anticipates opening 85
new stores (18 of these will replace older stores) and renovating approximately
150 stores in 2000. The Company anticipates that the majority of the new stores
will be opened under conventional leasing arrangements and, as a result, the
impact on liquidity of owning stores will be insignificant in 2000. Capital
expenditures for 2000 are expected to total $375 million, which includes
approximately $128 million for store expansion and new store construction and
$164 million to equip new and renovated stores.
The Company plans to finance capital expenditures for 2000 through funds
generated from operations and existing bank and credit lines. The Company will
consider the possibility of sale-leaseback transactions on certain free-standing
Company-owned stores in the future if advantageous opportunities are presented
by potential lessors.
Cash flows used in financing activities decreased to $44.5 million,
from $164.6 million in 1998, and $163.4 million in 1997. The decrease in 1999
was primarily the result of proceeds received under short-term borrowings offset
partially by shares purchased under the Company's share repurchase plan as
described below and principal payments on long-term debt. The increase in 1998
over 1997 was primarily the result of shares purchased under the Company's share
repurchase plan as described below, partially offset by a decrease in net
payments on debt.
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During the third quarter of 1999, the Company suspended the share
repurchase program as a result of the announced plan to acquire Hannaford Bros.
Co. (see discussion in "Debt" section below). During 1999, the Company expended
$142.7 million (including commissions) for the purchase of Class A and Class B
shares as part of its repurchase program, compared to $50.2 million in 1998, and
$3.0 million in 1997. See table below.
Class A Class B
1999
Shares purchased 2,759,700 1,636,100
Average purchase $32.37 $32.61
price
Total purchased $89,331,489 $53,353,221
1998
Shares purchased 1,028,567 632,333
Average purchase $31.11 $28.80
price
Total purchased $31,998,719 $18,211,190
1997
Shares purchased 78,333 58,333
Average purchase $22.02 $21.18
price
Total purchased $1,724,893 $1,235,493
Additional purchases may be made in the open market under the current program as
deemed in the best interest of shareholders (if the program is reinstated).
Debt
The Company currently has outstanding medium-term notes of $123.3 million
due from 2000 to 2006 at interest rates of 8.40% to 8.73%. Additionally, the
Company has long-term debt securities of $300.0 million of which $150.0 million
is due 2007 at 7.55% and $150.0 million matures in 2027 at an interest rate of
8.05%.
In December 1999, the Company replaced its $625.0 million revolving credit
facility. The current credit facility with a syndicate of commercial banks
provides for $500.0 million in committed lines of credit, which will expire on
November 17, 2000. As of January 1, 2000, the Company had $205.0 million in
outstanding borrowings related to this credit facility. The Company had average
borrowings of $81.2 million at a daily weighted average interest rate of 7.53%
during 1999.
The Company also maintains additional committed lines of credit totaling
$20.0 million, which are available when needed. The Company is not required to
maintain compensating balances related to these lines of credit, and borrowings
may occur periodically. As of January 1, 2000, the Company had outstanding
borrowings of $20.0 million. During 1999, the Company had average borrowings of
$8.3 million at a daily weighted average interest rate of 5.33% with a maximum
amount outstanding of $20.0 million.
The Company has a $250.0 million commercial paper program, of which no
borrowings were outstanding at January 1, 2000, January 2, 1999, and January 3,
1998, nor was the program used during these years.
Finally, the Company has periodic short-term borrowings under informal
credit arrangements which are available to the Company at the discretion of the
lender (see table below):
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Informal Credit Arrangements
(Dollars in millions)
1999 1998 1997
Outstanding borrowings
at year end $77.0 $41.0 $80.0
Average borrowings 20.7 12.2 8.2
Maximum amount outstanding 105.0 100.0 80.0
outstanding
Daily weighted average
interest 5.60% 5.47% 5.76%
On August 17, 1999, the Company entered into a definitive merger agreement
to acquire all of the outstanding shares of Hannaford Bros. Co. in a cash and
stock transaction valued at approximately $3.6 billion, including the assumption
of debt. Upon completion of the transaction, Hannaford will operate as a
subsidiary of Delhaize America, Inc. The Company expects to finalize the
acquisition in fiscal 2000.
The Company estimates that the total amount of cash required to complete
the merger with Hannaford will be approximately $2.7 billion. The cash
consideration required to complete the merger will be funded through (i) a 364-
day capital markets bridge facility for up to $2.5 billion; and (ii) a $500
million five-year syndicated revolving credit facility. The Company plans a
public bond offering for long term financing of the transaction.
Market Risk
Delhaize America finances its daily working capital requirements, when
necessary, through the use of its various committed and uncommitted lines of
credit. These financial instruments are sensitive to interest rate changes.
Outstanding borrowings under such agreements are discussed in Note 8 "Credit
Arrangements" of the financial statements.
Self Insurance
The Company is self-insured for its workers' compensation, general
liability and vehicle accident claims. The Company establishes reserves based
on an actuarial valuation of open claims reported and an estimate of claims
incurred but not yet reported. It is possible that the final resolution of some
of these claims may require significant expenditures by the Company in excess of
its existing reserves, over an extended period of time, and in a range of
amounts that cannot be reasonably estimated.
Impact of Inflation
During 1999, the inflation rate on merchandise purchases was 0.6%. The
Company experienced a 5% increase in its average hourly rate during the year.
Inventory and Labor, the Company's primary costs, increase with inflation and,
where possible, are recovered through operating efficiencies and gross profits.
Year 2000
The Company has not experienced any material adverse effects on its
operations relating to the century change. In addition, the Company has
not experienced any material adverse effects with its critical vendors and
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suppliers related to the century change. Except for the cost of
replacement systems, the Company expensed the cost of its Year 2000
Project as incurred. The Company funded the costs associated with its Year
2000 Project through operating cash flows and did not defer any
Information Technology projects in order to complete the Year 2000
Project.
The total incremental cost of the Year 2000 Project was approximately
$17 million, which included equipment and software replacements,
reprogramming, systems testing, and outside consulting services.
Approximately $4 million of the total cost for the Year 2000 Project
related to reprogramming or remediation of existing software and new
systems, while the remaining cost of approximately $13 million related to
the implementation of certain replacement systems. The Company expensed
approximately $4 million as incurred and capitalized approximately $13
million for replacement systems.
Other
Information provided by the Company, including written or oral
statements made by its representatives, may contain forward-looking
information as defined in the Private Securities Litigation Reform Act of
1995. All statements, other than statements of historical facts, which
address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as
expansion and growth of the Company's business, future capital
expenditures and the Company's business strategy, are forward-looking
statements. In reviewing such information, it should be kept in mind that
actual results may differ materially from those projected or suggested in
such forward-looking statements. This forward-looking information is
based on various factors and was derived utilizing numerous assumptions.
Many of these factors have previously been identified in filings or
statements made by or on behalf of the Company, including filings with the
Securities and Exchange Commission of Forms 10-Q, 10-K and 8-K.
Important assumptions and other important factors that could cause
actual results to differ materially from those set forth in the forward-
looking statements include: changes in the general economy or in the
Company's primary markets, changes in consumer spending, competitive
factors, the nature and extent of continued consolidation in the industry,
changes in the rate of inflation, changes in state or federal legislation
or regulation, changes in the availability of labor, adverse
determinations with respect to litigation or other claims, inability to
develop new stores or complete remodels as rapidly as planned, and
stability of product costs -- supply or quality control problems with the
Company's vendors detailed from time-to-time in the Company's filings with
the Securities and Exchange Commission.
-37-
Exhibit 21
Subsidiaries of Delhaize America, Inc.:
Entity State of
Incorporation
Kash n' Karry Food Stores, Inc. DE
FLI Holding Corp. DE
Barnwell, Inc. DE
Risk Management Services, Inc. NC
FL Food Lion, Inc. FL
FL Acquisition Sub.Inc. ME
Food Lion, LLC NC
Food Lion (Thailand), Inc. DE
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statements on Form S-8 (File No. 33-03669) and Form S-3
(File Nos. 33-40457 and 33-49620) of Delhaize America,Inc. of our
report dated February 9, 2000 relating to the financial statements,
which appears in the Annual Report to Shareholders, which is incorporated
in this Annual Report on Form 10-K.
PRICEWATERHOUSECOOPERS, LLP
Charlotte, North Carolina
March 30, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets, the Consolidated Statements of Income and the
Consolidated Statement of Cash Flows and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JAN-01-2000
<PERIOD-START> JAN-03-1999
<PERIOD-END> JAN-01-2000
<CASH> 195,502
<SECURITIES> 0
<RECEIVABLES> 235,457
<ALLOWANCES> 0
<INVENTORY> 1,157,695
<CURRENT-ASSETS> 1,676,227
<PP&E> 3,333,935
<DEPRECIATION> 1,294,621
<TOTAL-ASSETS> 3,973,412
<CURRENT-LIABILITIES> 1,280,193
<BONDS> 426,930
0
0
<COMMON> 232,890
<OTHER-SE> 1,445,976
<TOTAL-LIABILITY-AND-EQUITY> 3,973,412
<SALES> 10,878,684
<TOTAL-REVENUES> 10,878,684
<CGS> 8,370,894
<TOTAL-COSTS> 8,370,894
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,820
<INCOME-PRETAX> 484,574
<INCOME-TAX> 184,139
<INCOME-CONTINUING> 300,435
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 300,435
<EPS-BASIC> 1.91
<EPS-DILUTED> 1.91
</TABLE>
Exhibit 99
UNDERTAKING TO FILE EXHIBITS PURSUANT
TO ITEM 601(b)(4)(iii)(A) OF REGULATIONS S-K
The undersigned registrant acknowledges that it has not filed
with the Securities and Exchange Commission (the "Commission") copies
of certain instruments with respect to long-term debt of the
registrant representing obligations not exceeding 10% of the
registrant's total assets as of January 1, 2000, pursuant to the
provisions of Item 601(b)(4)(iii)(A) of Regulation S-K of the
Commission (the "Regulation").
Pursuant to the Regulation, the undersigned registrant hereby
undertakes to furnish to the Commission upon its request a copy of
any such instrument.
This is the 30th day of March, 2000.
DELHAIZE AMERICA, INC.
/s/Laura Kendall
Laura C. Kendall
Chief Financial Officer
Principal Accounting Officer
EMPLOYMENT SEVERANCE AGREEMENT
AND MUTUAL RELEASE
Food Lion, a division of Delhaize America, Inc. (the
"Company") and A. Edward Benner, Jr. (the "Executive") hereby
agree as follows:
1. Purpose of Severance Agreement and Release
The purpose of this Employment Severance Agreement and
Mutual Release of Liability ("Severance Agreement and Release")
is to set forth the terms of the Executive's severance from
employment with the Company, to resolve fully any and all
obligations arising out of his employment and severance from
employment, and to protect the Company's legitimate interest in
maintaining the confidentiality of information pertaining to its
business plans and operations known to, or possessed by, the
Executive.
2. Termination of Employment
A. The Executive's employment with the Company shall terminate
by his retirement effective January 1, 2000 (the "termination
date").
B. The Executive's participation in the Company's Profit
Sharing Retirement Plan and Profit Sharing Restoration Plan shall
terminate effective January 1, 2000. The Executive shall be
entitled to receive all vested benefits owing under the Company's
profit sharing and employee benefit plans in which the Executive
is participating as of the date of his retirement to the extent
specifically provided for by such plans and/or to the extent
otherwise required by law.
C. The Executive's 1999 Profit Sharing contribution will be
determined by the Board of Directors on the same basis as amounts
are determined for vice presidents of the Company who were
employed through January 1, 2000.
D. As provided in the stock option agreements governing such
stock options, all vested stock options of the Company held by
the Executive as of the retirement date shall remain exercisable
for eighty-nine (89) days following the retirement date.
3. Consideration
A. In consideration of the Executive's release of all claims
that may exist against the Company in connection with his
employment as more specifically set forth below in Paragraph 4,
and in consideration of the Executive's compliance with the
obligations set forth below in Paragraphs 7 and 8, and provided
the Executive complies with all other terms and conditions of
this Severance Agreement and Release, the Company agrees that:
1. The Company will pay the Executive an amount equal to his
weekly salary of $5,074.63 from January 1, 2000 through June 4,
2000. These payments shall be subject to all legally required
state and federal tax deductions and withholdings.
2. The Company shall continue until March 4, 2000 the
participation of the Executive and his eligible dependents in the
Group Benefit Plan and Executive Medical Plan. Following such
period, the Executive shall be entitled to continuation of health
care under COBRA.
3. The Executive will receive a 1999 incentive bonus in an
amount to be determined by the Board of Directors on the same
basis as amounts are determined for vice presidents of the
Company who were employed through January 1, 2000.
4. The Executive will receive annual bonus and wellness
payments for 1999.
The Company may withhold from any compensation or benefits
payable under this Agreement all federal, state or other taxes as
may be required pursuant to any law or regulation or ruling.
Except as specifically provided herein or as otherwise may
be required by law, the Executive shall not be entitled to
receive any other payment benefits or severance amount from the
Company following the retirement date.
B. The Executive acknowledges that the rights and payments
provided in Paragraph 3(A):
1. represent valuable consideration over and above what he is
otherwise entitled to in connection with the termination of his
employment and that his release of claims in Paragraph 4 and his
agreement to comply with the obligations of Paragraphs 7 and 8 of
this Severance agreement and Release are in return for this
consideration;
2. shall be in lieu of any and all claims for severance pay,
additional wages, bonus, salary, accrued vacation and sick leave
pay or other compensation, or benefits, or claim of damages he
may have as of his termination date other than vested benefits
described in Paragraph 2(C) and such rights as Executive may have
to obtain continued insurance coverage under COBRA; and
3. arise solely out of the terms of this Severance Agreement
and Release and are not part of any Company severance pay plan.
C. The Company acknowledges that its promises and releases
contained in this Severance Agreement and Release are for good
and valuable consideration.
4. Waiver and Release
As a material inducement for Executive and Company to enter
this Severance Agreement and Release, each of them hereby
irrevocably and unconditionally releases and forever discharges
the other as detailed below.
A. The Executive releases and forever discharges all claims he
may have against the Company, its subsidiaries, affiliates,
parents, predecessors, and all officers, directors,
representatives, agents or employees in any manner arising out of
or attributable to his employment with the Company. This release
includes all claims that may have existed on his termination date
relating to the Executive's employment with and termination from
the Company, including all claims and rights under his employment
contract whether brought by Executive or by a third party on his
behalf, including, but not limited to:
1. discrimination on the basis of age, including claims under
Title VII of the Civil Rights Act of 1964, the Age Discrimination
in Employment Act as amended, the Americans with Disabilities
Act, or other applicable federal statutes and other applicable
state and local statutes;
2. any claim under any statute, law or regulation, based on any
fact, matter, event or cause, whether known or unknown, arising
out of or relating to the employment relationship between the
Executive and the Company or the Executive's separation
therefrom.
B. The Executive agrees not to institute any legal or
administrative proceedings against the Company or those persons
described in Paragraph 4(A) as to any matter based upon, arising
out of or related to his employment, compensation during his
employment, or termination of his employment with the Company.
C. The Company, on behalf of its officers, directors,
employees, agents, counsel, successors, assigns and related
entities hereby releases and forever discharges the Executive,
his heirs, assigns and representatives from any and all claims,
liabilities, damages, costs, and other obligations in any manner
arising out of or attributable to his employment with the
Company, and will indemnify and hold harmless the Executive to
the fullest extent permitted under North Carolina law, including,
without limitation, the provisions of Part 5 (or any successor
provision) of the North Carolina Business Corporation Act, from
and against all losses, claims, damages, liabilities, costs and
expenses (including, without limitation, attorneys' fees), which
may, at any time, be suffered by the Executive as a result of the
fact that the Executive was an officer of the Company, or was
serving at the request of the Company as an officer, employee or
agent of an affiliate of the Company. The expenses incurred by
the Executive in any proceeding shall be paid promptly by the
Company in advance of the final disposition of any proceeding at
the written request of the Executive to the fullest extent
permitted by North Carolina law.
D. This Severance Agreement and Release does not waive or
release rights or claims for occurrences after the effective date
of this Severance Agreement and Release. This Severance
Agreement and Release does not preclude the Executive or Company
from filing a lawsuit against the other for purposes of enforcing
rights conferred to each other under this Severance Agreement and
Release.
5. Company Property
The Executive represents and agrees that he has not and will
not retain, distribute, or cause to be distributed, any Company
property, including but not limited to, originals and copies of
Company documents, files, memoranda, notes, computer-readable
information (maintained in disc or any other form) and video or
tape recordings of any kind other than personal materials
relating solely to the Executive.
6. Loans
The Company and the Executive acknowledges that, as of the
date of this Agreement, there is an outstanding balance in the
amount of $177,699.63 (the "Loan") owed by the Executive to the
Company pursuant to the Company's Low Interest Loan Plan. The
Executive agrees to repay the full outstanding balance on or
before March 31, 2003.
7.
Confidentiality
A. The Executive agrees that the existence and terms of the
Severance Agreement and Release are and shall remain
confidential, and further agrees not to disclose the existence or
terms of the Severance Agreement and Release to any third party,
except that:
1. the Executive may disclose to his family that he retired
from the Company and the amount of consideration he received in
connection with his separation and disclose the terms and
conditions of this Severance Agreement and Release to his
attorneys, tax consultants, state and federal authorities or as
may be required by law;
2. it is understood that the Company will disclose the terms
and conditions of this Severance Agreement and Release to the
extent necessary to carry out the terms of this Agreement to its
managers, officers and board of directors, insurers, consultants,
accountants, attorneys, state and federal tax authorities, or as
may be required by law, including but not limited to disclosure
as may be required in the Company's proxy statement and as
required by SEC public reporting requirements;
3. disclosure only that the Executive retired voluntarily and
that the parties parted amicably will not violate this Paragraph
7(A).
B. The Executive acknowledges that as a result of his
employment by the Company, he has acquired valuable proprietary
information of a sensitive and confidential nature pertaining to
the Company's business operations, trade secrets, its strategies
and plans, which, if disclosed to individuals or entities not
employed by the Company, would materially harm the Company and/or
provide an unfair advantage to its competitors. The Executive
covenants and agrees:
1. that he shall not, directly or indirectly, orally or in
writing, at any time in the future disclose any information of
the Company as defined in Paragraph 7(B)(2), whether such
information is a trade secret, confidential or proprietary, to
any person, partnership, corporation or other business entity,
except with the written permission of the Company.
2. That for purposes of Paragraph 7(B)(1), the term "any
information of the Company" means all information which relates
to matters such as, but not necessarily limited to, trade
secrets, research and development activities, books and records,
expansion strategies, operational plans or strategies, real
estate strategies, or other processes or strategies, distribution
channels, pricing information and private processes, real estate
site selection, projected store openings or closings, employee
communications, training or development strategies, and advice
given by any legal counsel or other consultants retained by the
Company whether or not protected by the attorney-client or work
product privileges.
3. Paragraph 7(B)(1) or (2) shall not be violated by the
disclosure of information pursuant to a court order or as
otherwise required by law, on condition that notice of the
requirement for such disclosure is given to the Company before
the Executive's making any disclosure and the Executive
cooperates in resisting such disclosure upon reasonable request
by the Company at the Company's expense.
C. The Executive acknowledges that, by virtue of the
responsibilities assigned to him throughout his employment, in
the event he should make any public statements relating to the
Company after his termination, such statements could be
attributed to the Company or be viewed as authoritative, and
based on information to which the Executive had access while
employed by the Company. Accordingly, the Executive agrees that
he will make no public comment in any way relating to the
Company, without the express written permission of the Company.
8. Agreement Not to Compete
The Executive acknowledges that the Company has legitimate
business interests in assuring that the skills and knowledge to
the nature and character of the Company's business obtained by
the Executive during his employment with the Company are not
converted to the use of entities in competition with the Company
or who are engaged in activities aimed at damaging the Company's
public image or are otherwise antithetical to the Company's
lawful interests. In recognition of these legitimate interests,
the Executive agrees that:
A. From the date of execution of this Severance Agreement and
Release until December 31, 2000, the Executive will not compete
with the Company, directly or indirectly, by acting either
individually or as an advisor, representative, agent, employee,
partner, shareholder, investor, consultant, or in any other
similar capacity, on behalf of any other membership clubs selling
groceries or other retail formats selling food products (but
which shall not include manufacturers of food products not
engaged in the retail grocery business, and shall not include
stores of 10,000 square feet or less), in the geographical area
defined in Paragraph 8(B). The Executive's ownership of not more
than one percent (1%) of the stock of any publicly-held grocery
chain shall not be deemed a violation of this Paragraph.
B. The Executive agrees not to act in the capacities set forth
in Paragraph 8(A) for entities operating in North Carolina, South
Carolina, Virginia, Tennessee, Georgia, Florida, Maryland,
Delaware, Kentucky, West Virginia, and Pennsylvania.
C. From the date of execution of this Severance Agreement and
Release to December 31, 2000, the Executive will not recruit,
solicit or otherwise contact employees of the Company on behalf
of any other entity, either directly or as an agent, in order to
solicit or induce any employee of the Company to accept
employment with another entity.
D. In the event the Company ceases to operate in any of the
states included above, then the restriction with respect to said
state shall cease upon the date the Company ceases operations in
said state.
9. Enforcement
The Executive agrees that he has received good and valuable
consideration for his agreement both to adhere to the
confidentiality provisions of Paragraph 7 and to the non-compete
provisions of Paragraph 8 and that in the event the Company
obtains evidence that Executive has violated Paragraphs 7 and 8
in any respect, the Company shall have the option to:
A. cease payment of any additional amounts provided for in
Paragraph 3(A) of this Severance Agreement and Release; or
B. obtain temporary and permanent injunctive relief in a
Superior Court of the State of North Carolina to remedy such
violation. The Executive consents to jurisdiction of that court
or provide such injunctive relief. The Executive agrees that
failure to comply with his obligations under Paragraphs 7(B),
7(C), or 8(A), 8(B) or 8(C) of this Severance Agreement and
Release shall constitute irreparable harm to the Company, without
regard to any demonstrable economic harm to the Company from
Executive's breach, and that the appropriate remedy for partial
or total breach of those provisions shall be an interim and
permanent order directing specific performance with each and
every term of this Severance Agreement and Release, with damages
resulting from the breach, and all costs and attorneys fees
incurred in obtaining enforcement of this Severance Agreement and
Release to be awarded to the Company. The Executive further
agrees that in such proceeding, he shall make no assertion of
mitigation in defense to the Company's prayer for injunctive
relief.
10. Acknowledgement of Voluntary Nature of Severance Agreement
and Release
By signing this Severance Agreement and Release, the
Executive and the Company acknowledge:
A. That each has entered into this Severance Agreement and
Release voluntarily and fully understands all of its terms;
B. That the Executive has been advised and has had the
opportunity to consult with an attorney prior to signing this
Severance Agreement and Release;
C. That the Executive has been given the opportunity to
consider this Severance Agreement and Release for a period of at
least twenty-one (21) days, and, after consulting with his
attorney, has voluntarily and freely executed this Agreement
prior to the expiration of the twenty-one day period, and has
voluntarily and freely waived the right to consider the Severance
Agreement and Release for the full twenty-one day period; and
D. That the Executive and Company are not relying on any
statement or promise other than as contained in this Severance
Agreement and Release.
11. Assistance
Upon reasonable notice, the Executive agrees to willingly
give his assistance, including his attendance, where appropriate,
to the Company's defense or prosecution of any existing or future
claims or litigation. The Company will reimburse the Executive
for all reasonable travel expenses incurred by the Executive in
complying with this section. In the event the Executive is no
longer entitled to the payments set forth in Section 3 of this
Agreement, then the Executive shall be compensated at the rate of
$100 per day for such assistance.
12. Revocation Period
The Executive understands that he has a seven (7) day period
after signing this Severance Agreement and Release in which to
revoke or rescind his agreement and release of claims by
informing the Company's Vice President of Legal Affairs in
writing of his decision to revoke. To be effective, the
rescission must either be delivered to the Company's Vice
President of Legal Affairs by hand within the seven day period,
or be sent by certified mail, return receipt requested, properly
addressed to the Company's Vice President of Legal Affairs in
accordance with Paragraph 16 of this Severance Agreement and
Release, and be postmarked within the seven day period.
13. Binding Agreement
A. This Severance Agreement and Release will become effective
and enforceable upon the expiration of the seven day revocation
period referred to in Section 12 (the "effective date"). The
Executive and the Company understand that following the seven day
revocation period, this Severance Agreement and Release will be
final and binding.
B. This Severance Agreement and Release constitutes the entire
agreement of the parities with respect to the subject matter set
forth herein and there are no promises, understandings or
representations, oral or written, other than those set forth
herein.
C. The Executive and the Company agree that, after the
Severance Agreement and Release becomes final and binding, they
will not pursue any claim which has been waived under the
Severance Agreement and Release and will not challenge the
enforceability of the Severance Agreement and Release by filing
or instigating any lawsuit or administrative complaint or
investigation arising out of the Executive's employment or
termination.
14. Law of North Carolina
This Severance Agreement and Release, having been prepared,
executed and delivered in the State of North Carolina, and shall
be governed by the laws of the State of North Carolina.
15. Severability
Each provision of this Severance Agreement and Release is
intended to be severable. If any provision, sentence, phrase or
word of this Severance Agreement and Release or the application
thereof to any person or circumstance shall be held invalid or
unenforceable, the remainder of this Severance Agreement and
Release, or the application of such provision, sentence, phrase
or word to persons or circumstances, other than those as to which
it is held invalid, shall not be affected thereby.
16. Notices
Any notices required or permitted to be given by the parties
shall be given in writing by certified mail, return receipt
requested, or by prepaid telegram, delivered to:
Lester C. Nail
Vice President of Legal Affairs
2110 Executive Drive
Post Office Box 1330
Salisbury, NC 28145-1330
and
A. Edward Benner, Jr.
7620 Bringle Ferry Road
Salisbury, NC 28146
17. Death of Executive
In the event of the death of the Executive, any payment due
under this Severance Agreement and Release will be made to the
beneficiary designated by the Executive in writing, and, if no
beneficiary is designated, to his Estate.
FOOD LION, a division of DELHAIZE
AMERICA, INC.
Dated:1/1/00 By: /s/Darrell Johnson
DARRELL JOHNSON
VICE PRESIDENT OF HUMAN
RESOURCES
EXECUTIVE
Dated:1/1/00 By:/s/Edward Benner, Jr.
A. EDWARD BENNER, JR.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 20 day of January,
2000 (the "Effective Date"), between KASH N' KARRY FOOD STORES,
INC., a Delaware corporation (the "Company") and a wholly-owned
subsidiary of Delhaize America, Inc., a North Carolina
corporation, with its principal place of business in Salisbury,
North Carolina, and W. Bruce Dawson, an individual residing at
18500 Peninsula Club Drive, Cornelius, North Carolina 28031
("Employee"),
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company as
its President;
WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Employee;
WHEREAS, the Board of Directors recognizes that Employee has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
Employee and to encourage the continued dedication and attention
of Employee to the Company;
WHEREAS, Employee is willing to continue to serve the
Company; and
WHEREAS, the Company and Employee desire to enter into this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Employee
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ Employee as its President for the Term of
Employment as herein set forth, and Employee hereby agrees to
continue to serve in such positions for such term.
2. Term of Employment. The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
third (3rd) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give written notice to the other
party no less than ninety (90) days prior to the expiration of
the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, Employee shall devote Employee's full professional
time to the business of the Company, shall use Employee's best
efforts to promote the interests of the Company and shall serve
as its President and in such other senior executive capacities
(at the Company, Delhaize America, Inc. or subsidiaries of the
Company or Delhaize America, Inc.) as the Board of Directors of
the Company or Delhaize America, Inc. shall hereafter designate
from time to time.
4. Vacation. Employee shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.
5. Compensation.
(a) Base Salary. As compensation for Employee's
services hereunder and for Employee's covenants set forth in
Sections 10, 11 and 12 below, the Company shall pay to Employee a
base salary which shall not be less than Two Hundred Thirty-Eight
Thousand Seven Hundred Six Dollars ($238,706) per annum;
provided, however, such amount may be reviewed for increase from
time to time by the Board of Directors of the Company. In no
event shall such review result in any reduction in base salary
provided in this Employment Agreement. Such compensation shall
be payable in accordance with the Company's payroll practices for
executive employees.
(b) Bonus Plans. In addition, Employee shall be
eligible to participate in the annual incentive bonus plan,
stock option plans and other compensation plans of the Company,
as they shall be administered by the Board of Directors of the
Company and the relevant committees thereof and in their sole
discretion.
6. Benefits. Employee shall be entitled to participate in
all health, accident, disability, medical, life and other
insurance programs and other benefit and compensation plans
maintained by the Company for the benefit of Employee and/or
other executive employees of the Company in accordance with the
Company's policies.
7. Termination. Termination of Employee's employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of Employee.
(b) Cause. Termination by the Company for "Cause" as
described in this Section 7(b). For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform Employee's material duties hereunder and Employee's
inability or unwillingness to correct such failure within
thirty (30) days after receipt of written notice, (ii) conviction
of Employee of a felony or plea of guilty or no contest to a
felony, (iii) perpetration of a material dishonest act or fraud
against the Company or any affiliate thereof or (iv) a material
violation of any Company policy or any state, federal or other
governmental statute or regulation. The definition of "Cause"
also includes the termination of Employee's employment by the
Company in connection with an assignment of this Employment
Agreement to Delhaize America, Inc. or a successor or subsidiary
of the Company or Delhaize America, Inc. in accordance with
Section 18 hereof. The definition of "Cause" also includes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or Delhaize America, Inc. or the successors or direct or
indirect subsidiaries of the Company or Delhaize America, Inc.
The definition of "Cause" expressly excludes any mistake of fact
or judgment made by Employee in good faith with respect to the
Company's business.
(c) Good Reason. Termination by Employee for "Good
Reason" as described in this Section 7(c). For purposes of this
Employment Agreement, "Good Reason" shall mean the occurrence of
any of the following circumstances without Employee's consent,
provided that Employee has provided notice to the Company of
Employee's intention to terminate his or her employment for Good
Reason within thirty (30) days after the occurrence of such event
and the Company has failed to cure such circumstance, if curable,
within thirty (30) days after receipt of notice thereof: (i) a
material diminution of the professional responsibilities of
Employee as such responsibilities existed on the date of this
Agreement, (ii) assignment of duties to Employee which are
materially adverse to and inconsistent with Employee's position,
(iii) failure of the Company to provide compensation and benefits
obligations to Employee as set forth herein, (iv) transfer of
Employee more than 50 miles from Tampa, Florida, without good
business reasons, as determined by the Company's Board of
Directors or (v) failure of the Company to require any successor
to the Company to assume and comply with this Employment
Agreement. The definition of "Good Reason" expressly excludes
any assignment of this Employment Agreement to Delhaize America,
Inc. or a successor or subsidiary of the Company or Delhaize
America, Inc. in accordance with Section 18 hereof and any
changes in responsibilities or duties resulting therefrom. In
addition, the definition of "Good Reason" expressly excludes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company or Delhaize America, Inc.
An election by Employee to terminate his or her employment
under this Section 7(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.
(d) Disability. Termination by the Company or
Employee upon Disability of Employee. For the termination by the
Company to be valid, (i) the Company must first give forty-
five (45) days' written Notice of Termination, as defined below
(which may occur before or after the end of the 180-day period
specified in the definition of Disability below), and (ii)
Employee shall not have returned to the performance of Employee's
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Employee's absence from continuous full-time employment with
the Company for a period of at least 180 consecutive days by
reason of a mental or physical illness. The Company shall have
the right to have Employee examined at such reasonable times by
such physicians satisfactory to Employee as the Company may
designate, and Employee will make himself available for and
submit to such examination as and when requested. Except as
otherwise provided in this Section 7(d), the inability of
Employee to perform Employee's duties hereunder, whether by
reason of injury, illness (physical or mental), or otherwise
shall not result in the termination of Employee's employment
hereunder, and Employee shall be entitled to continue to receive
Employee's base salary and other benefits as provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of Employee's employment by the Company or by Employee (other
than termination pursuant to Section 7(a) above) shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Employment Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
"Date of Termination" shall mean (i) if Employee's
employment is terminated by Employee's death, the date of
Employee's death, and (ii) if Employee's employment is terminated
pursuant to a Notice of Termination, the date specified in the
Notice of Termination; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date which is finally determined to be the Date of
Termination, either by mutual written agreement of the parties,
by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been
perfected).
8. Effect of Termination. In the event of termination of
employment as described in Section 7 hereof, and provided that
Employee (or Employee's beneficiary in the event of death) has
signed and agreed to be bound by a general release of claims
against the Company in form reasonably satisfactory to the
Company, the Company shall compensate Employee as follows:
(a) Death. If Employee's employment is terminated as
a result of Employee's death, as specified in Section 7(a), the
Company shall pay Employee's beneficiary the benefit called for
under the Salary Continuation Agreement, if any, between Employee
and the Company. Employee's beneficiary shall accept the payment
provided for in this Section 8(a) in full discharge and release
of the Company of and from any further obligations under this
Employment Agreement, except for any other benefits due under any
applicable plan or policy of the Company (including life
insurance policies and pension or similar plans), as determined
under the provisions of such plans or policies.
(b) Disability. If Employee's employment is
terminated by the Company or Employee as a result of Employee's
disability as specified in Section 7(d), then the Company shall
pay Employee his or her full compensation until the Date of
Termination. Within thirty (30) days after the termination of
Employee's employment, the Company shall pay Employee a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Employee during the remainder of
the Term of Employment under this Employment Agreement or for a
period of one (1) year, whichever is longer. Such lump sum
amount shall be calculated by using a discount rate equal to the
applicable Federal rate that is in effect on the date of payment
as determined under Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code") and the regulations thereunder, and by
assuming that Employee's annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of one (1) year, whichever is longer.
This payment shall be in addition to any payments Employee shall
be entitled to receive under any applicable disability insurance
policies maintained by the Company for Employee.
(c) Cause. If Employee's employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to Employee pursuant to
this Employment Agreement, except for the full amount of
Employee's base salary and all compensation earned prior to the
Date of Termination and payments pursuant to plans, programs or
arrangements, as determined under the provisions of such plans or
policies.
(d) Good Reason or Without Cause.
(i) If Employee's employment is terminated by
Employee for Good Reason as specified in Section 7(c) hereof, or
if Employee's employment is terminated by the Company without
Cause as specified in Section 7(e): (A) the Company shall pay
Employee the full amount of Employee's base salary and other
compensation earned prior to the Date of Termination; and (B) the
Company shall pay Employee an amount (the "Termination Payment")
equal to the product of the Employee's current monthly base
salary multiplied by the greater of (x) twelve (12) months or (y)
the number of full months remaining in the Term of this
Agreement. The Company may elect to pay the Termination Payment
(i) in monthly installments, beginning thirty (30) days after the
Date of Termination and payable thereafter on the date of the
last regularly scheduled payroll for each month, or (ii) in one
lump sum payment, due and payable thirty (30) days after the Date
of Termination, in an amount equal to the present value of all
such monthly payments calculated by using a discount rate equal
to the applicable Federal rate that is in effect on the date of
payment as determined under Section 1274(d) of the Code and the
regulations thereunder.
(ii) If prior to a Change in Control of the
Company (as defined below) (and if Section 8(d)(iii) hereof does
not apply), Employee's employment is terminated by Employee for
Good Reason or by the Company without Cause, the Company shall
maintain in full force and effect for the continued benefit of
Employee and Employee's eligible dependents for one (1) year
after the Date of Termination (or for the number of years
remaining in the Term of this Agreement, whichever is greater),
the employee fringe benefit plans and programs relating to
medical, dental, health and life insurance in which Employee was
entitled to participate immediately prior to the Date of
Termination, if Employee's continued participation is permitted
under the general terms and provisions of such plans and programs
and applicable law, but not including the Annual Incentive Bonus
Plan, the Wellness Bonus Plan, the Profit Sharing Plan and the
Profit Sharing Restoration Plan and any other bonus, retirement
or similar compensation plan.
(iii) If (A) Employee's employment is terminated by
the Company without Cause in contemplation of a Change in Control
of the Company within six (6) months prior to such Change in
Control or (B) Employee's employment is terminated by the Company
without Cause or by Employee with Good Reason within one (1) year
following a Change in Control of the Company, the Company shall
pay Employee the compensation and benefits set forth in clauses
(i) and (ii) above, and in addition, for one (1) year following
the Date of Termination (or for the number of years remaining in
the Term of this Agreement, whichever is greater), Employee shall
be paid an annual amount equal to the amounts, if any, which
would have been payable to Employee under the Annual Incentive
Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan and
the Profit Sharing Restoration Plan (or such other plans in which
Employee was entitled to participate as of the Date of
Termination) assuming Employee had remained employed for such one
(1) year (or greater) period and received an annual salary at the
rate in effect on Employee's Date of Termination.
(iv) For purposes of this Employment
Agreement, "a Change in Control of the Company" shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided that, without limitation,
a Change in Control of the Company shall be deemed to have
occurred if:
(A) an acquisition (other than
directly from the Company) by a Person (as defined below)
(excluding the Company or an employee benefit plan of the
Company or an entity controlled by the Company's
shareholders) results in the aggregate number of shares of
the Company's voting securities beneficially owned by any
other Person to exceed the number of shares of the Company's
voting securities beneficially owned, in the aggregate, by
Etablissements Delhaize Freres et Cie "Le Lion" S.A.
("Delhaize") and Delhaize The Lion America, Inc.;
(B) at any time during the term of this Employment
Agreement there is a change in the composition of the Board
of Directors of the Company resulting in a majority of the
directors of the Company who are in office on the date
hereof ("Incumbent Company Directors") no longer
constituting a majority of the directors of the Company;
provided that, in making such determination, persons who are
elected to serve as directors of the Company and who are
approved by at least 70% of the Incumbent Company Directors
in office on the date of such election (other than in
connection with an actual or threatened proxy contest) shall
be treated as Incumbent Company Directors;
(C) consummation of a complete liquidation
or dissolution of the Company or a merger, consolidation or
sale of all or substantially all of the Company's assets
(collectively, a "Business Combination") other than a
Business Combination in which all or substantially all of
the beneficial holders of voting securities of the Company
receive or retain fifty percent (50%) or more of the voting
securities of the company or entity resulting from the
Business Combination ("Resulting Company"), at least a
majority of the board of directors of the resulting
corporation were Incumbent Company Directors, and after
which no person or entity beneficially owns twenty percent
(20%) or more of the voting securities ("Beneficial
Ownership Threshold") of the Resulting Company, who did not
beneficially own such stock immediately before the Business
Combination; or
(D) occurrence of any of the events described in
Section 8(d)(iv)(B) or (C) to Delhaize or the acquisition by
any Person of more than thirty percent (30%) of the stock of
Delhaize. Notwithstanding any other provision of this
paragraph, for purposes of the definition of "Change in
Control of the Company," a change in control of Delhaize
shall not constitute a Change in Control of the Company
unless it involves an event contemplated by this Section
8(d)(iv)(D). With respect to Section 8(d)(iv)(C) as it
applies to Delhaize under Section 8(d)(iv)(D), the
Beneficial Ownership Threshold shall be thirty percent
(30%).
For the purpose of this paragraph, the term "beneficially owned"
shall have the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act, the term "Person" shall have the meaning set
forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act and
the term "voting securities" shall have the meaning set forth in
Rule 12b-2 under the Exchange Act.
9. Business Expenses. The Company agrees that during the
Term of Employment, the Company will reimburse Employee for
actual travel and other out-of-pocket expenses reasonably
incurred by Employee in connection with the performance of
Employee's duties hereunder and accounted for in accordance with
the policies and procedures currently established by the Company.
10. No Competing Employment.
(a) Employee agrees that, during the Term of Employment and for
a period of two (2) years after the date specified in the Notice
of Termination or, if applicable, the date of Employee's
resignation ("Restricted Period"), Employee will not, without the
written consent of the Board of Directors, own, operate, control
or be employed as an officer, director, manager or consultant, or
as an employee with management or executive level duties or
responsibilities, in any case, for or by any business engaged in
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or Delhaize
America, Inc. or a subsidiary of the Company or of Delhaize
America, Inc. on the date on which Employee's employment with the
Company ends; provided, however, that this restriction contained
in this Section 10(a) shall not apply if Employee works, consults
or accepts employment with a business that does not directly
compete with the Company or Delhaize America, Inc. or a
subsidiary of the Company or Delhaize America, Inc.
(b) Employee agrees that, during the Restricted Period, Employee
will not, without the written consent of the Board of Directors,
own, operate, control or be employed as an officer, director,
manager or consultant, or as an employee with management or
executive level duties or responsibilities, in any case, for or
by any entity whose business, or whose direct or indirect parent
entity's or direct or indirect subsidiary entity's business is
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company, Delhaize
America, Inc. or subsidiaries of the Company or Delhaize America,
Inc. on the date on which Employee's employment with the Company
ends.
(c) Employee understands and agrees that a portion of the
amounts payable to Employee under Section 5(a) and Section 8, if
applicable, is in consideration for Employee's covenants set
forth in Sections 10, 11 and 12.
11. No Solicitation. Employee agrees that, during the
Restricted Period, Employee will not, without the prior written
consent of the Board of Directors, directly or indirectly solicit
or recruit any employee or independent contractor of the Company
for the purpose of being employed by Employee, directly or
indirectly, or any other person or entity on behalf of which
Employee is acting as an agent, representative or employee.
Notwithstanding the above, if Employee's employment is terminated
for any reason specified in Section 7 hereof prior to the first
anniversary of the date on which a Change in Control (as defined
above) occurred, the covenants of Sections 10 and 11 shall not be
applicable.
12. Confidentiality. Employee agrees that, during the Term
of Employment and thereafter, Employee will not, without the
prior written consent of the Company, disclose to anyone not
entitled thereto, any confidential information relating to the
business, sales, financial condition or products of the Company
or any affiliate thereof. Employee also recognizes and
acknowledges that Employee has a common law and statutory law
obligation not to disclose trade secrets and other proprietary
information of the Company. Employee further agrees that, should
Employee leave the active service of the Company, Employee will
not take or retain, without the written authorization of the
Board of Directors, any papers, files or other documents or
copies thereof or other confidential information of any kind
belonging to the Company pertaining to its business, sales,
financial condition or products. Employee understands and agrees
that the rights and obligations set forth in this Section 12 are
perpetual and, in any case, shall extend beyond the Restricted
Period.
13. Failure to Comply. All payments to Employee hereunder,
including without limitation all such payments made pursuant to
Section 8 of this Agreement, are conditional upon Employee's full
compliance with the provisions of this Agreement, including
specifically Sections 10, 11 and 12 hereof, which provisions are
hereby expressly incorporated by reference as conditions to all
such payment. The provisions of sections 10, 11 and 12 will
remain incorporated as conditions to payments under this
Agreement, regardless of any judicial declaration of their
invalidity or unenforceability as affirmative covenants. In the
event that the Employee shall fail to comply with any provision
of Sections 10, 11 and 12, (a) all rights hereunder of the
Employee and any person claiming under or through him shall
thereupon terminate and no person shall be entitled to receive
any payments or benefits under this Agreement and (b) the
Employee agrees to immediately pay to the Company any and all
amounts previously paid to the Employee by the Company pursuant
to Section 8 of this Agreement. In addition to the foregoing and
without limiting any other remedies available to the Company,
Employee acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable
injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a
temporary restraining order or a preliminary injunction
restraining Employee from engaging in activities prohibited by
Sections 10, 11 and 12 or such other relief as may be required to
specifically enforce any of the covenants in such Sections.
14. Indemnification. The Company shall indemnify and hold
harmless Employee to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Article 8, Part 5 (or any successor provision) of the North
Carolina Business Corporation Act, from and against all losses,
claims, damages, liabilities, costs and expenses (including,
without limitation, attorneys' fees), which may, at any time, be
suffered by Employee as a result of the fact that Employee is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company. The expenses incurred by Employee in
any proceeding shall be paid promptly by the Company in advance
of the final disposition of any proceeding at the written request
of Employee to the fullest extent permitted under North Carolina
law. The indemnification provision of this Section 14 shall
survive the termination or expiration of this Employment
Agreement.
15. Gross-Up Payment. In the event that any payments to
which Employee becomes entitled under this Employment Agreement
(the "Agreement Payments") will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to
Employee at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee
(taking into account the Total Payments (as hereinafter defined)
and the Gross-Up Payment), after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax
and Excise Tax upon the Gross-Up Payment provided for by this
Section 15, but before deduction for any federal, state or local
income tax on the Total Payments, shall be equal to the "Total
Payments," as defined below. Except as otherwise provided
below, the Gross-Up Payment or portion thereof provided for in
this Section 15 shall be paid not later than the thirtieth (30th)
day following payment of any amounts under the Employment
Agreement that will be subject to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, the
Company shall pay on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event
later than the forty-fifth (45th) day after payment of any
amounts under the Employment Agreement that will be subject to
the Excise Tax. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to
Employee, payable on the fifth (5th) day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
For purposes of determining whether any of the Agreement
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments, accruals, vestings or other
compensatory benefits received or to be received by Employee in
connection with a Change in Control of the Company or the
termination of Employee's employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company), any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless, in the opinion of tax counsel
selected by the Company's independent auditors, such other
payments or benefits (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Payments, and (b) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above) and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and the
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, Employee
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid) if such repayment results in a
reduction in Excise Tax and/or a federal, state and local income
tax deduction, plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-Up Payment is
made (including, by reason of any payment, the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment
in respect of such excess (plus any interest payable with respect
to such excess) at the time that the amount of such excess is
finally determined.
16. Vesting. Upon a Change in Control of the Company or if
Employee's employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Employee by the Company to own or acquire stock of
Delhaize America, Inc. (including, without limitation, stock
options and restricted stock granted under its Stock Option Plan)
shall automatically vest upon the date of such Change in Control
or Date of Termination, respectively, without the need for
further action or consent by the Company; provided, however, that
(assuming no occurrence of a Change in Control) such rights shall
not vest if Employee's employment is terminated for Employee's
failure to adequately perform Employee's duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company. For purposes of
the preceding sentence, "Change in Control of the Company" shall
have the meaning set forth in Section 8(d)(iv) hereof except for
the portion thereof describing a Change in Control at Delhaize as
set forth in subsection 8(d)(iv)(D).
17. Mitigation. The Company recognizes that Employee has
no duty to mitigate the amounts due to Employee upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Employee is employed by
another employer after the termination of Employee's employment
with the Company.
18. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Employee and his or her legal
representatives. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform
this Employment 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. For purposes of this Section
18, Delhaize America, Inc. shall be deemed a successor to which
this Employment Agreement may be assigned. In addition, this
Employment Agreement may be assigned to an existing or future
direct or indirect subsidiary of the Company or Delhaize America,
Inc. Furthermore, after an assignment of this Employment
Agreement to Delhaize America, Inc. or any existing or future
direct or indirect subsidiary of the Company or Delhaize America,
Inc., this Employment Agreement may be reassigned to the Company
or Delhaize America, Inc., as the case may be.
19. Amendments. This Employment Agreement contains the
entire contractual understanding between the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties hereto with respect to the subject
matter hereof (except for the Salary Continuation Agreement, if
any, between Employee and the Company). This Employment
Agreement may not be changed orally but only by a written
instrument signed by the parties hereto.
20. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina without regard to the conflicts of law
principles thereof.
21. Waiver. The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.
22. Arbitration. Except as otherwise necessary to secure
the remedy specified in Section 13 of this Employment Agreement
(which remedy may be secured in a court of competent
jurisdiction), any dispute arising between the Company and
Employee with respect to the performance or interpretation of
this Employment Agreement shall be submitted to arbitration in
Salisbury, North Carolina for resolution in accordance with the
commercial arbitration rules of the American Arbitration
Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished
in writing, separately and specifically stating the findings of
fact and conclusions of law on which the decision is based and
shall be rendered within ninety (90) days following impanelment
of the arbitrators. The cost of arbitration shall initially be
borne by the party requesting arbitration. Following a decision
by the arbitrators, the costs of arbitration shall be divided as
directed by the arbitrators. Pursuant to North Carolina General
Statutes section 1-567.2, the provisions of Chapter 1, Subchapter
XV, Article 45A of the North Carolina General Statutes shall
apply to this Employment Agreement.
23. Severability. In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.
24. Notices. Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:
(a) If to Employee:
W. Bruce Dawson
18500 Peninsula Club Drive
Cornelius, North Carolina 28031
(b) If to the Company:
Kash n' Karry Food Stores, Inc.
c/o Delhaize America, Inc.
Post Office Box 1330
2110 Executive Drive
Salisbury, North Carolina 28145-1330
Attention: Secretary
with a copy to:
Akin, Gump,Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, TX 75201-4675
Attention: Michael E. Dillard, P.C.
or to such other address as shall have been specified in writing
by either party to the other. Any such notice or communication
shall be deemed to have been given on the second day (excluding
any days U.S. Post Offices are not open) after the date so
mailed.
[The next page is the signature page]
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Employee has hereunto set Employee's hand as of the date
first above written.
KASH N' KARRY FOOD STORES, INC.
Attest:
/s/Darrell Johnson By:/s/R.William McCanless
Name:R. William McCanless
EMPLOYEE:
Attest:
/s/Darrell Johnson /s/ W. Bruce Dawson
W. Bruce Dawson
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 13 day of March,
2000 (the "Effective Date"), between FOOD LION, a division of
Delhaize America, Inc., a North Carolina corporation with its
principal place of business in Salisbury, North Carolina (the
"Company"), and Joseph C. Hall, Jr., an individual residing at
345 Gregory Road, Salisbury, North Carolina 28147 ("Employee"),
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company in
its Food Lion division as its President;
WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Employee;
WHEREAS, the Board of Directors recognizes that Employee has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
Employee and to encourage the continued dedication and attention
of Employee to the Company;
WHEREAS, the Company is in the process of converting into a
holding company and will transfer substantially all of the assets
of the Food Lion division to a newly-formed, wholly-owned
subsidiary (the "Subsidiary") (such transfer is referred to
herein as the "Holding Company Restructuring");
WHEREAS, at the time of the Holding Company Restructuring,
Employee will continue in Employee's position as President but at
the Subsidiary level only, and this Employment Agreement will be
assigned to and assumed by the Subsidiary;
WHEREAS, Employee is willing to continue to serve the
Company and, from and after the Holding Company Restructuring,
the Subsidiary; and
WHEREAS, the Company and Employee desire to enter into this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Employee
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ Employee, prior to the Holding Company
Restructuring, as President at the Food Lion division level and,
after the Holding Company Restructuring, as President at the
Subsidiary level, for the Term of Employment as herein set forth,
and Employee hereby agrees to continue to serve the Company in
such positions for such term.
2. Term of Employment. The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
fifth (5th) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give written notice to the other
party no less than ninety (90) days prior to the expiration of
the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, Employee shall devote Employee's full professional
time to the business of the Company, shall use Employee's best
efforts to promote the interests of the Company and shall serve,
prior to the Holding Company Restructuring, as President of the
Food Lion division and, after the Holding Company Restructuring,
as President of the Subsidiary, and in such other senior
executive capacities (at the Company or at subsidiaries of the
Company) as the Board of Directors of the Company shall hereafter
designate from time to time.
4. Vacation. Employee shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.
5. Compensation.
(a) Base Salary. As compensation for Employee's
services hereunder and for Employee's covenants set forth in
Sections 10, 11 and 12 below, the Company shall pay to Employee a
base salary which shall not be less than Five Hundred Twenty-One
Thousand Three Hundred Ninety Dollars ($521,390) per annum;
provided, however, such amount may be reviewed for increase from
time to time by the Board of Directors of the Company. In no
event shall such review result in any reduction in base salary
provided in this Employment Agreement. Such compensation shall
be payable in accordance with the Company's payroll practices for
executive employees.
(b) Bonus Plans. In addition, Employee shall be
eligible to participate in the Company's annual incentive bonus
plan, stock option plans and other compensation plans of the
Company, as they shall be administered by the Board of Directors
of the Company and the relevant committees thereof and in their
sole discretion.
6. Benefits. Employee shall be entitled to participate in
all health, accident, disability, medical, life and other
insurance programs and other benefit and compensation plans
maintained by the Company for the benefit of Employee and/or
other executive employees of the Company in accordance with the
Company's policies. In addition, the Company shall maintain in
full force and effect on the life of Employee a life insurance
policy, subject to a split dollar arrangement, in the face amount
of three and one-half (3.5) times Employee's base salary if his
death occurs prior to his retirement (provided his retirement is
on terms consistent with the terms of the life insurance policy and
any split dollar arrangements between Employee and the Company relating
thereto) and two (2) times Employee's last base salary if his death
occurs after any such retirement. Employee shall be the owner of such
policy with the authority to designate the beneficiary thereof.
7. Termination. Termination of Employee's employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of Employee.
(b) Cause. Termination by the Company for "Cause" as
described in this Section 7(b). For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform Employee's material duties hereunder and Employee's
inability or unwillingness to correct such failure within
thirty (30) days after receipt of written notice, (ii) conviction
of Employee of a felony or plea of guilty or no contest to a
felony, (iii) perpetration of a material dishonest act or fraud
against the Company or any affiliate thereof or (iv) a material
violation of any Company policy or any state, federal or other
governmental statute or regulation. The definition of "Cause"
also includes the termination of Employee's employment by the
Company in connection with an assignment of this Employment
Agreement to a successor or subsidiary of the Company, including
but not limited to the Subsidiary, in accordance with Section 18
hereof. The definition of "Cause" also includes subsequent
terminations of Employee's employment in connection with
subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company. The definition of "Cause" expressly excludes any
mistake of fact or judgment made by Employee in good faith with
respect to the Company's business.
(c) Good Reason. Termination by Employee for "Good
Reason" as described in this Section 7(c). For purposes of this
Employment Agreement, "Good Reason" shall mean the occurrence of
any of the following circumstances without Employee's consent,
provided that Employee has provided notice to the Company of
Employee's intention to terminate his or her employment for Good
Reason within thirty (30) days after the occurrence of such event
and the Company has failed to cure such circumstance, if curable,
within thirty (30) days after receipt of notice thereof: (i) a
material diminution of the professional responsibilities of
Employee as such responsibilities existed on the date of this
Agreement, (ii) assignment of duties to Employee which are
materially adverse to and inconsistent with Employee's position,
(iii) failure of the Company to provide compensation and benefits
obligations to Employee as set forth herein, (iv) transfer of
Employee more than 50 miles from Salisbury, North Carolina,
without good business reasons, as determined by the Company's
Board of Directors or (v) failure of the Company to require any
successor to the Company to assume and comply with this
Employment Agreement. The definition of "Good Reason" expressly
excludes any assignment of this Employment Agreement to a
successor or subsidiary of the Company, including but not limited
to the Subsidiary, in accordance with Section 18 hereof and any
changes in responsibilities or duties resulting therefrom. In
addition, the definition of "Good Reason" expressly excludes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company.
An election by Employee to terminate his or her employment
under this Section 7(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.
(d) Disability. Termination by the Company or
Employee upon Disability of Employee. For the termination by the
Company to be valid, (i) the Company must first give forty-
five (45) days' written Notice of Termination, as defined below
(which may occur before or after the end of the 180-day period
specified in the definition of Disability below), and (ii)
Employee shall not have returned to the performance of Employee's
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Employee's absence from continuous full-time employment with
the Company for a period of at least 180 consecutive days by
reason of a mental or physical illness. The Company shall have
the right to have Employee examined at such reasonable times by
such physicians satisfactory to Employee as the Company may
designate, and Employee will make himself available for and
submit to such examination as and when requested. Except as
otherwise provided in this Section 7(d), the inability of
Employee to perform Employee's duties hereunder, whether by
reason of injury, illness (physical or mental), or otherwise
shall not result in the termination of Employee's employment
hereunder, and Employee shall be entitled to continue to receive
Employee's base salary and other benefits as provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of Employee's employment by the Company or by Employee (other
than termination pursuant to Section 7(a) above) shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Employment Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
"Date of Termination" shall mean (i) if Employee's
employment is terminated by Employee's death, the date of
Employee's death, and (ii) if Employee's employment is terminated
pursuant to a Notice of Termination, the date specified in the
Notice of Termination; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date which is finally determined to be the Date of
Termination, either by mutual written agreement of the parties,
by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been
perfected).
8. Effect of Termination. In the event of termination of
employment as described in Section 7 hereof, and provided that
Employee (or Employee's beneficiary in the event of death) has
signed and agreed to be bound by a general release of claims
against the Company in form reasonably satisfactory to the
Company, the Company shall compensate Employee as follows:
(a) Death. If Employee's employment is terminated as
a result of Employee's death, as specified in Section 7(a), the
Company shall pay Employee's beneficiary the benefit called for
under the Salary Continuation Agreement, if any, between Employee
and the Company. Employee's beneficiary shall accept the payment
provided for in this Section 8(a) in full discharge and release
of the Company of and from any further obligations under this
Employment Agreement, except for any other benefits due under any
applicable plan or policy of the Company (including life
insurance policies and pension or similar plans), as determined
under the provisions of such plans or policies.
(b) Disability. If Employee's employment is
terminated by the Company or Employee as a result of Employee's
disability as specified in Section 7(d), then the Company shall
pay Employee his or her full compensation until the Date of
Termination. Within thirty (30) days after the termination of
Employee's employment, the Company shall pay Employee a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Employee during the remainder of
the Term of Employment under this Employment Agreement or for a
period of one (1) year, whichever is longer. Such lump sum
amount shall be calculated by using a discount rate equal to the
applicable Federal rate that is in effect on the date of payment
as determined under Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code") and the regulations thereunder, and by
assuming that Employee's annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of one (1) year, whichever is longer.
This payment shall be in addition to any payments Employee shall
be entitled to receive under any applicable disability insurance
policies maintained by the Company for Employee.
(c) Cause. If Employee's employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to Employee pursuant to
this Employment Agreement, except for the full amount of
Employee's base salary and all compensation earned prior to the
Date of Termination and payments pursuant to plans, programs or
arrangements, as determined under the provisions of such plans or
policies.
(d) Good Reason or Without Cause.
(i) If Employee's employment is terminated by
Employee for Good Reason as specified in Section 7(c) hereof, or
if Employee's employment is terminated by the Company without
Cause as specified in Section 7(e): (A) the Company shall pay
Employee the full amount of Employee's base salary and other
compensation earned prior to the Date of Termination; and (B) the
Company shall pay Employee an amount (the "Termination Payment")
equal to the product of the Employee's current monthly base
salary multiplied by the greater of (x) twelve (12) months or (y)
the number of full months remaining in the Term of this
Agreement. The Company may elect to pay the Termination Payment
(i) in monthly installments, beginning thirty (30) days after the
Date of Termination and payable thereafter on the date of the
last regularly scheduled payroll for each month, or (ii) in one
lump sum payment, due and payable thirty (30) days after the Date
of Termination, in an amount equal to the present value of all
such monthly payments calculated by using a discount rate equal
to the applicable Federal rate that is in effect on the date of
payment as determined under Section 1274(d) of the Code and the
regulations thereunder.
(ii) If prior to a Change in Control of the Company
(as defined below) (and if Section 8(d)(iii) hereof does not
apply), Employee's employment is terminated by Employee for Good
Reason or by the Company without Cause, the Company shall
maintain in full force and effect for the continued benefit of
Employee and Employee's eligible dependents for one (1) year
after the Date of Termination (or for the number of years
remaining in the Term of this Agreement, whichever is greater),
the employee fringe benefit plans and programs relating to
medical, dental, health and life insurance in which Employee was
entitled to participate immediately prior to the Date of
Termination, if Employee's continued participation is permitted
under the general terms and provisions of such plans and programs
and applicable law, but not including the Annual Incentive Bonus
Plan, the Wellness Bonus Plan, the Profit Sharing Plan and the
Profit Sharing Restoration Plan and any other bonus, retirement
or similar compensation plan.
(iii) If (A) Employee's employment is
terminated by the Company without Cause in contemplation of a
Change in Control of the Company within six (6) months prior to
such Change in Control or (B) Employee's employment is terminated
by the Company without Cause or by Employee with Good Reason
within one (1) year following a Change in Control of the Company,
the Company shall pay Employee the compensation and benefits set
forth in clauses (i) and (ii) above, and in addition, for one (1)
year following the Date of Termination (or for the number of
years remaining in the Term of this Agreement, whichever is
greater), Employee shall be paid an annual amount equal to the
amounts, if any, which would have been payable to Employee under
the Annual Incentive Bonus Plan, the Wellness Bonus Plan, the
Profit Sharing Plan and the Profit Sharing Restoration Plan (or
such other plans in which Employee was entitled to participate as
of the Date of Termination) assuming Employee had remained
employed for such one (1) year (or greater) period and received
an annual salary at the rate in effect on Employee's Date of
Termination.
(iv) For purposes of this Employment
Agreement, "a Change in Control of the Company" shall mean a
change in control of a nature that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"); provided that, without limitation,
a Change in Control of the Company shall be deemed to have
occurred if:
(A) an acquisition (other than
directly from the Company) by a Person (as defined below)
(excluding the Company or an employee benefit plan of the
Company or an entity controlled by the Company's
shareholders) results in the aggregate number of shares of
the Company's voting securities beneficially owned by any
other Person to exceed the number of shares of the Company's
voting securities beneficially owned, in the aggregate, by
Etablissements Delhaize Freres et Cie "Le Lion" S.A.
("Delhaize") and Delhaize The Lion America, Inc.;
(B) at any time during the term of this Employment
Agreement there is a change in the composition of the Board
of Directors of the Company resulting in a majority of the
directors of the Company who are in office on the date
hereof ("Incumbent Company Directors") no longer
constituting a majority of the directors of the Company;
provided that, in making such determination, persons who are
elected to serve as directors of the Company and who are
approved by at least 70% of the Incumbent Company Directors
in office on the date of such election (other than in
connection with an actual or threatened proxy contest) shall
be treated as Incumbent Company Directors;
(C) consummation of a complete liquidation
or dissolution of the Company or a merger, consolidation or
sale of all or substantially all of the Company's assets
(collectively, a "Business Combination") other than a
Business Combination in which all or substantially all of
the beneficial holders of voting securities of the Company
receive or retain fifty percent (50%) or more of the voting
securities of the company or entity resulting from the
Business Combination ("Resulting Company"), at least a
majority of the board of directors of the resulting
corporation were Incumbent Company Directors, and after
which no person or entity beneficially owns twenty percent
(20%) or more of the voting securities ("Beneficial
Ownership Threshold") of the Resulting Company, who did not
beneficially own such stock immediately before the Business
Combination; or
(D) occurrence of any of the events described in
Section 8(d)(iv)(B) or (C) to Delhaize or the acquisition by
any Person of more than thirty percent (30%) of the stock of
Delhaize. Notwithstanding any other provision of this
paragraph, for purposes of the definition of "Change in
Control of the Company," a change in control of Delhaize
shall not constitute a Change in Control of the Company
unless it involves an event contemplated by this Section
8(d)(iv)(D). With respect to Section 8(d)(iv)(C) as it
applies to Delhaize under Section 8(d)(iv)(D), the
Beneficial Ownership Threshold shall be thirty percent
(30%).
For the purpose of this paragraph, the term "beneficially owned"
shall have the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act, the term "Person" shall have the meaning set
forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act and
the term "voting securities" shall have the meaning set forth in
Rule 12b-2 under the Exchange Act.
9. Business Expenses. The Company agrees that during the
Term of Employment, the Company will reimburse Employee for
actual travel and other out-of-pocket expenses reasonably
incurred by Employee in connection with the performance of
Employee's duties hereunder and accounted for in accordance with
the policies and procedures currently established by the Company.
10. No Competing Employment.
(a) Employee agrees that, during the Term of Employment and for
a period of two (2) years after the date specified in the Notice
of Termination or, if applicable, the date of Employee's
resignation ("Restricted Period"), Employee will not, without the
written consent of the Board of Directors, own, operate, control
or be employed as an officer, director, manager or consultant, or
as an employee with management or executive level duties or
responsibilities, in any case, for or by any business engaged in
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends; provided, however, that this restriction
contained in this Section 10(a) shall not apply if Employee
works, consults or accepts employment with a business that does
not directly compete with the Company or any subsidiary thereof.
(b) Employee agrees that, during the Restricted Period, Employee
will not, without the written consent of the Board of Directors,
own, operate, control or be employed as an officer, director,
manager or consultant, or as an employee with management or
executive level duties or responsibilities, in any case, for or
by any entity whose business, or whose direct or indirect parent
entity's or direct or indirect subsidiary entity's business is
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends.
(c) Employee understands and agrees that a portion of
the amounts payable to Employee under Section 5(a) and Section 8,
if applicable, is in consideration for Employee's covenants set
forth in Sections 10, 11 and 12.
11. No Solicitation. Employee agrees that, during the
Restricted Period, Employee will not, without the prior written
consent of the Board of Directors, directly or indirectly solicit
or recruit any employee or independent contractor of the Company
for the purpose of being employed by Employee, directly or
indirectly, or any other person or entity on behalf of which
Employee is acting as an agent, representative or employee.
Notwithstanding the above, if Employee's employment is terminated
for any reason specified in Section 7 hereof prior to the first
anniversary of the date on which a Change in Control (as defined
above) occurred, the covenants of Sections 10 and 11 shall not be
applicable.
12. Confidentiality. Employee agrees that, during the Term
of Employment and thereafter, Employee will not, without the
prior written consent of the Company, disclose to anyone not
entitled thereto, any confidential information relating to the
business, sales, financial condition or products of the Company
or any affiliate thereof. Employee also recognizes and
acknowledges that Employee has a common law and statutory law
obligation not to disclose trade secrets and other proprietary
information of the Company. Employee further agrees that, should
Employee leave the active service of the Company, Employee will
not take or retain, without the written authorization of the
Board of Directors, any papers, files or other documents or
copies thereof or other confidential information of any kind
belonging to the Company pertaining to its business, sales,
financial condition or products. Employee understands and agrees
that the rights and obligations set forth in this Section 12 are
perpetual and, in any case, shall extend beyond the Restricted
Period.
13. Failure to Comply. All payments to Employee hereunder,
including without limitation all such payments made pursuant to
Section 8 of this Agreement, are conditional upon Employee's full
compliance with the provisions of this Agreement, including
specifically Sections 10, 11 and 12 hereof, which provisions are
hereby expressly incorporated by reference as conditions to all
such payment. The provisions of sections 10, 11 and 12 will
remain incorporated as conditions to payments under this
Agreement, regardless of any judicial declaration of their
invalidity or unenforceability as affirmative covenants. In the
event that the Employee shall fail to comply with any provision
of Sections 10, 11 and 12, (a) all rights hereunder of the
Employee and any person claiming under or through him shall
thereupon terminate and no person shall be entitled to receive
any payments or benefits under this Agreement and (b) the
Employee agrees to immediately pay to the Company any and all
amounts previously paid to the Employee by the Company pursuant
to Section 8 of this Agreement. In addition to the foregoing and
without limiting any other remedies available to the Company,
Employee acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable
injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a
temporary restraining order or a preliminary injunction
restraining Employee from engaging in activities prohibited by
Sections 10, 11 and 12 or such other relief as may be required to
specifically enforce any of the covenants in such Sections.
14. Indemnification. The Company shall indemnify and hold
harmless Employee to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Article 8, Part 5 (or any successor provision) of the North
Carolina Business Corporation Act, from and against all losses,
claims, damages, liabilities, costs and expenses (including,
without limitation, attorneys' fees), which may, at any time, be
suffered by Employee as a result of the fact that Employee is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company. The expenses incurred by Employee in
any proceeding shall be paid promptly by the Company in advance
of the final disposition of any proceeding at the written request
of Employee to the fullest extent permitted under North Carolina
law. The indemnification provision of this Section 14 shall
survive the termination or expiration of this Employment
Agreement.
15. Gross-Up Payment. In the event that any payments to
which Employee becomes entitled under this Employment Agreement
(the "Agreement Payments") will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to
Employee at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee
(taking into account the Total Payments (as hereinafter defined)
and the Gross-Up Payment), after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax
and Excise Tax upon the Gross-Up Payment provided for by this
Section 15, but before deduction for any federal, state or local
income tax on the Total Payments, shall be equal to the "Total
Payments," as defined below. Except as otherwise provided
below, the Gross-Up Payment or portion thereof provided for in
this Section 15 shall be paid not later than the thirtieth (30th)
day following payment of any amounts under the Employment
Agreement that will be subject to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, the
Company shall pay on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event
later than the forty-fifth (45th) day after payment of any
amounts under the Employment Agreement that will be subject to
the Excise Tax. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to
Employee, payable on the fifth (5th) day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
For purposes of determining whether any of the Agreement
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments, accruals, vestings or other
compensatory benefits received or to be received by Employee in
connection with a Change in Control of the Company or the
termination of Employee's employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company), any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless, in the opinion of tax counsel
selected by the Company's independent auditors, such other
payments or benefits (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Payments, and (b) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above) and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and the
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, Employee
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid) if such repayment results in a
reduction in Excise Tax and/or a federal, state and local income
tax deduction, plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-Up Payment is
made (including, by reason of any payment, the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment
in respect of such excess (plus any interest payable with respect
to such excess) at the time that the amount of such excess is
finally determined.
16. Vesting. Upon a Change in Control of the Company or if
Employee's employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Employee by the Company to own or acquire stock of the
Company (including, without limitation, stock options and
restricted stock granted under the Company's Stock Option Plan)
shall automatically vest upon the date of such Change in Control
or Date of Termination, respectively, without the need for
further action or consent by the Company; provided, however, that
(assuming no occurrence of a Change in Control) such rights shall
not vest if Employee's employment is terminated for Employee's
failure to adequately perform Employee's duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company. For purposes of
the preceding sentence, "Change in Control of the Company" shall
have the meaning set forth in Section 8(d)(iv) hereof except for
the portion thereof describing a Change in Control at Delhaize as
set forth in subsection 8(d)(iv)(D).
17. Mitigation. The Company recognizes that Employee has
no duty to mitigate the amounts due to Employee upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Employee is employed by
another employer after the termination of Employee's employment
with the Company.
18. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Employee and his or her legal
representatives. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform
this Employment 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. For purposes of this Section
18, the Subsidiary shall be deemed a successor to which this
Employment Agreement may be assigned. In addition, this
Employment Agreement may be assigned to an existing or future
direct or indirect subsidiary of the Company. Furthermore, from
and after the Holding Company Restructuring and after an
assignment of this Employment Agreement to the Subsidiary or any
other existing or future direct or indirect subsidiary of the
Company, this Employment Agreement may be reassigned to the
Company.
19. Amendments. This Employment Agreement contains the
entire contractual understanding between the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties hereto with respect to the subject
matter hereof (except for the Salary Continuation Agreement, if
any, between Employee and the Company and except for the life
insurance policy, subject to a split dollar arrangement,
currently maintained by the Company with respect to Employee and
of which Employee is the owner). This Employment Agreement may
not be changed orally but only by a written instrument signed by
the parties hereto.
20. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina without regard to the conflicts of law
principles thereof.
21. Waiver. The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.
22. Arbitration. Except as otherwise necessary to secure
the remedy specified in Section 13 of this Employment Agreement
(which remedy may be secured in a court of competent
jurisdiction), any dispute arising between the Company and
Employee with respect to the performance or interpretation of
this Employment Agreement shall be submitted to arbitration in
Salisbury, North Carolina for resolution in accordance with the
commercial arbitration rules of the American Arbitration
Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished
in writing, separately and specifically stating the findings of
fact and conclusions of law on which the decision is based and
shall be rendered within ninety (90) days following impanelment
of the arbitrators. The cost of arbitration shall initially be
borne by the party requesting arbitration. Following a decision
by the arbitrators, the costs of arbitration shall be divided as
directed by the arbitrators. Pursuant to North Carolina General
Statutes section 1-567.2, the provisions of Chapter 1, Subchapter
XV, Article 45A of the North Carolina General Statutes shall
apply to this Employment Agreement.
23. Severability. In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.
24. Notices. Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:
(a) If to Employee:
Joseph C. Hall, Jr.
345 Gregory Road
Salisbury, North Carolina 28147
(b) If to the Company:
Delhaize America, Inc.
Post Office Box 1330
2110 Executive Drive
Salisbury, North Carolina 28145-1330
Attention: Secretary
with a copy to:
Akin, Gump,Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, TX
75201-4675
Attention: Michael E. Dillard, P.C.
or to such other address as shall have been specified in writing
by either party to the other. Any such notice or communication
shall be deemed to have been given on the second day (excluding
any days U.S. Post Offices are not open) after the date so
mailed.
[The next page is the signature page]
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Employee has hereunto set Employee's hand as of the date
first above written.
FOOD LION,
a division of Delhaize America, Inc.
Attest:
/s/ Darrell Johnson By:/s/ R. William McCanless
R. William McCanless
Chief Executive Officer
EMPLOYEE:
Attest:
/s/ Darrell Johnson /s/ Joseph C. Hall, Jr.
Joseph C. Hall, Jr.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, made this 14 day of March,
2000 (the "Effective Date"), between DELHAIZE AMERICA, INC., a
North Carolina corporation with its principal place of business
in Salisbury, North Carolina (the "Company"), and Laura C.
Kendall, an individual residing at 18900 River Wind Lane,
Davidson, North Carolina 28036 ("Employee"),
W I T N E S S E T H:
WHEREAS, Employee is currently employed by the Company at
the Company level as its Vice President and Chief Financial
Officer and in its Food Lion division as its Executive Vice
President of Finance and Chief Financial Officer;
WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Employee;
WHEREAS, the Board of Directors recognizes that Employee has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
Employee and to encourage the continued dedication and attention
of Employee to the Company;
WHEREAS, the Company is in the process of converting into a
holding company and will transfer substantially all of the assets
of the Food Lion division to a newly-formed, wholly-owned
subsidiary (the "Subsidiary") (such transfer is referred to
herein as the "Holding Company Restructuring");
WHEREAS, at the time of the Holding Company Restructuring,
Employee will continue in Employee's position as Vice President
of Finance and Chief Financial Officer at the Company level, and
Employee will continue in Employee's position as Executive Vice
President and Chief Financial Officer at the Subsidiary level;
WHEREAS, Employee is willing to continue to serve the
Company and, from and after the Holding Company Restructuring,
the Subsidiary; and
WHEREAS, the Company and Employee desire to enter into this
Employment Agreement.
NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Employee
hereby agree as follows:
1. Continue to Employ. The Company hereby agrees to
continue to employ Employee (i) as Vice President of Finance and
Chief Financial Officer at the Company level and (ii) prior to
the Holding Company Restructuring, as Executive Vice President
and Chief Financial Officer at the Food Lion division level and,
after the Holding Company Restructuring, at the Subsidiary level,
for the Term of Employment as herein set forth, and Employee
hereby agrees to continue to serve the Company in such positions
for such term.
2. Term of Employment. The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
third (3rd) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give written notice to the other
party no less than ninety (90) days prior to the expiration of
the applicable Term of Employment.
3. Employment During the Term. During the Term of
Employment, Employee shall devote Employee's full professional
time to the business of the Company, shall use Employee's best
efforts to promote the interests of the Company and shall serve
(i) as Vice President of Finance and Chief Financial Officer of
the Company and (ii) prior to the Holding Company Restructuring,
as Executive Vice President of Finance and Chief Financial
Officer of the Food Lion division and, from and after the Holding
Company Restructuring, of the Subsidiary, and in such other
senior executive capacities (at the Company or at subsidiaries of
the Company) as the Board of Directors of the Company shall
hereafter designate from time to time.
4. Vacation. Employee shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.
5. Compensation.
(a) Base Salary. As compensation for Employee's
services hereunder and for Employee's covenants set forth in
Sections 10, 11 and 12 below, the Company shall pay to Employee a
base salary which shall not be less than Three Hundred Thirty-Six
Thousand Two Hundred Six Dollars ($336,206) per annum; provided,
however, such amount may be reviewed for increase from time to
time by the Board of Directors of the Company. In no event shall
such review result in any reduction in base salary provided in
this Employment Agreement. Such compensation shall be payable in
accordance with the Company's payroll practices for executive
employees.
(b) Bonus Plans. In addition, Employee shall be
eligible to participate in the Company's annual incentive bonus
plan, stock option plans and other compensation plans of the
Company, as they shall be administered by the Board of Directors
of the Company and the relevant committees thereof and in their
sole discretion.
6. Benefits. Employee shall be entitled to participate in
all health, accident, disability, medical, life and other
insurance programs and other benefit and compensation plans
maintained by the Company for the benefit of Employee and/or
other executive employees of the Company in accordance with the
Company's policies.
7. Termination. Termination of Employee's employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:
(a) Death. Termination upon the death of Employee.
(b) Cause. Termination by the Company for "Cause" as
described in this Section 7(b). For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform Employee's material duties hereunder and Employee's
inability or unwillingness to correct such failure within
thirty (30) days after receipt of written notice, (ii) conviction
of Employee of a felony or plea of guilty or no contest to a
felony, (iii) perpetration of a material dishonest act or fraud
against the Company or any affiliate thereof or (iv) a material
violation of any Company policy or any state, federal or other
governmental statute or regulation. The definition of "Cause"
also includes the termination of Employee's employment by the
Company in connection with an assignment of this Employment
Agreement to a successor or subsidiary of the Company, including
but not limited to the Subsidiary, in accordance with Section 18
hereof. The definition of "Cause" also includes the termination
of Employee's employment at either the Company or any direct or
indirect subsidiary so long as Employee is also then employed by
any direct or indirect subsidiary of the Company or a successor
to the Company. The definition of "Cause" also includes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company. The definition of "Cause" expressly excludes any
mistake of fact or judgment made by Employee in good faith with
respect to the Company's business.
(c) Good Reason. Termination by Employee for "Good
Reason" as described in this Section 7(c). For purposes of this
Employment Agreement, "Good Reason" shall mean the occurrence of
any of the following circumstances without Employee's consent,
provided that Employee has provided notice to the Company of
Employee's intention to terminate his or her employment for Good
Reason within thirty (30) days after the occurrence of such event
and the Company has failed to cure such circumstance, if curable,
within thirty (30) days after receipt of notice thereof: (i) a
material diminution of the professional responsibilities of
Employee as such responsibilities existed on the date of this
Agreement, (ii) assignment of duties to Employee which are
materially adverse to and inconsistent with Employee's position,
(iii) failure of the Company to provide compensation and benefits
obligations to Employee as set forth herein, (iv) transfer of
Employee more than 50 miles from Salisbury, North Carolina,
without good business reasons, as determined by the Company's
Board of Directors or (v) failure of the Company to require any
successor to the Company to assume and comply with this
Employment Agreement. The definition of "Good Reason" expressly
excludes any assignment of this Employment Agreement to a
successor or subsidiary of the Company, including but not limited
to the Subsidiary, in accordance with Section 18 hereof and any
changes in responsibilities or duties resulting therefrom. The
definition of "Good Reason" also expressly excludes subsequent
terminations of Employee's employment in connection with
subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company. In addition, the definition of "Good Reason"
expressly excludes the termination of Employee's employment at
either the Company or any direct or indirect subsidiary so long
as Employee is also then employed by any direct or indirect
subsidiary of the Company or a successor to the Company.
An election by Employee to terminate his or her employment
under this Section 7(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.
(d) Disability. Termination by the Company or
Employee upon Disability of Employee. For the termination by the
Company to be valid, (i) the Company must first give forty-
five (45) days' written Notice of Termination, as defined below
(which may occur before or after the end of the 180-day period
specified in the definition of Disability below), and (ii)
Employee shall not have returned to the performance of Employee's
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Employee's absence from continuous full-time employment with
the Company for a period of at least 180 consecutive days by
reason of a mental or physical illness. The Company shall have
the right to have Employee examined at such reasonable times by
such physicians satisfactory to Employee as the Company may
designate, and Employee will make himself available for and
submit to such examination as and when requested. Except as
otherwise provided in this Section 7(d), the inability of
Employee to perform Employee's duties hereunder, whether by
reason of injury, illness (physical or mental), or otherwise
shall not result in the termination of Employee's employment
hereunder, and Employee shall be entitled to continue to receive
Employee's base salary and other benefits as provided herein.
(e) Without Cause. Termination by the Company without
Cause.
(f) Date and Notice of Termination. Any termination
of Employee's employment by the Company or by Employee (other
than termination pursuant to Section 7(a) above) shall be
communicated by written Notice of Termination to the other party
hereto. For purposes of this Employment Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.
"Date of Termination" shall mean (i) if Employee's
employment is terminated by Employee's death, the date of
Employee's death, and (ii) if Employee's employment is terminated
pursuant to a Notice of Termination, the date specified in the
Notice of Termination; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date which is finally determined to be the Date of
Termination, either by mutual written agreement of the parties,
by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been
perfected).
8. Effect of Termination. In the event of termination of
employment as described in Section 7 hereof, and provided that
Employee (or Employee's beneficiary in the event of death) has
signed and agreed to be bound by a general release of claims
against the Company in form reasonably satisfactory to the
Company, the Company shall compensate Employee as follows:
(a) Death. If Employee's employment is terminated as
a result of Employee's death, as specified in Section 7(a), the
Company shall pay Employee's beneficiary the benefit called for
under the Salary Continuation Agreement, if any, between Employee
and the Company. Employee's beneficiary shall accept the payment
provided for in this Section 8(a) in full discharge and release
of the Company of and from any further obligations under this
Employment Agreement, except for any other benefits due under any
applicable plan or policy of the Company (including life
insurance policies and pension or similar plans), as determined
under the provisions of such plans or policies.
(b) Disability. If Employee's employment is
terminated by the Company or Employee as a result of Employee's
disability as specified in Section 7(d), then the Company shall
pay Employee his or her full compensation until the Date of
Termination. Within thirty (30) days after the termination of
Employee's employment, the Company shall pay Employee a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Employee during the remainder of
the Term of Employment under this Employment Agreement or for a
period of one (1) year, whichever is longer. Such lump sum
amount shall be calculated by using a discount rate equal to the
applicable Federal rate that is in effect on the date of payment
as determined under Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code") and the regulations thereunder, and by
assuming that Employee's annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of one (1) year, whichever is longer.
This payment shall be in addition to any payments Employee shall
be entitled to receive under any applicable disability insurance
policies maintained by the Company for Employee.
(c) Cause. If Employee's employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to Employee pursuant to
this Employment Agreement, except for the full amount of
Employee's base salary and all compensation earned prior to the
Date of Termination and payments pursuant to plans, programs or
arrangements, as determined under the provisions of such plans or
policies.
(d) Good Reason or Without Cause.
(i) If Employee's employment is terminated by
Employee for Good Reason as specified in Section 7(c) hereof, or
if Employee's employment is terminated by the Company without
Cause as specified in Section 7(e): (A) the Company shall pay
Employee the full amount of Employee's base salary and other
compensation earned prior to the Date of Termination; and (B) the
Company shall pay Employee an amount (the "Termination Payment")
equal to the product of the Employee's current monthly base
salary multiplied by the greater of (x) twelve (12) months or (y)
the number of full months remaining in the Term of this
Agreement. The Company may elect to pay the Termination Payment
(i) in monthly installments, beginning thirty (30) days after the
Date of Termination and payable thereafter on the date of the
last regularly scheduled payroll for each month, or (ii) in one
lump sum payment, due and payable thirty (30) days after the Date
of Termination, in an amount equal to the present value of all
such monthly payments calculated by using a discount rate equal
to the applicable Federal rate that is in effect on the date of
payment as determined under Section 1274(d) of the Code and the
regulations thereunder.
(ii) If prior to a Change in Control of the Company
(as defined below) (and if Section 8(d)(iii) hereof does not
apply), Employee's employment is terminated by Employee for Good
Reason or by the Company without Cause, the Company shall
maintain in full force and effect for the continued benefit of
Employee and Employee's eligible dependents for one (1) year
after the Date of Termination (or for the number of years
remaining in the Term of this Agreement, whichever is greater),
the employee fringe benefit plans and programs relating to
medical, dental, health and life insurance in which Employee was
entitled to participate immediately prior to the Date of
Termination, if Employee's continued participation is permitted
under the general terms and provisions of such plans and programs
and applicable law, but not including the Annual Incentive Bonus
Plan, the Wellness Bonus Plan, the Profit Sharing Plan and the
Profit Sharing Restoration Plan and any other bonus, retirement
or similar compensation plan.
(iii) If (A) Employee's employment is terminated by
the Company without Cause in contemplation of a Change in Control
of the Company within six (6) months prior to such Change in
Control or (B) Employee's employment is terminated by the Company
without Cause or by Employee with Good Reason within one (1) year
following a Change in Control of the Company, the Company shall
pay Employee the compensation and benefits set forth in clauses
(i) and (ii) above, and in addition, for one (1) year following
the Date of Termination (or for the number of years remaining in
the Term of this Agreement, whichever is greater), Employee shall
be paid an annual amount equal to the amounts, if any, which
would have been payable to Employee under the Annual Incentive
Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan and
the Profit Sharing Restoration Plan (or such other plans in which
Employee was entitled to participate as of the Date of
Termination) assuming Employee had remained employed for such one
(1) year (or greater) period and received an annual salary at the
rate in effect on Employee's Date of Termination.
(iv) For purposes of this Employment Agreement, "a
Change in Control of the Company" shall mean a change in control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, a Change in Control of the
Company shall be deemed to have occurred if:
(A) an acquisition (other than directly from the
Company) by a Person (as defined below) (excluding the
Company or an employee benefit plan of the Company or an
entity controlled by the Company's shareholders) results in
the aggregate number of shares of the Company's voting
securities beneficially owned by any other Person to exceed
the number of shares of the Company's voting securities
beneficially owned, in the aggregate, by Etablissements
Delhaize Freres et Cie "Le Lion" S.A. ("Delhaize") and
Delhaize The Lion America, Inc.; or
(B) at any time during the term of this Employment
Agreement there is a change in the composition of the Board
of Directors of the Company resulting in a majority of the
directors of the Company who are in office on the date
hereof ("Incumbent Company Directors") no longer
constituting a majority of the directors of the Company;
provided that, in making such determination, persons who are
elected to serve as directors of the Company and who are
approved by at least 70% of the Incumbent Company Directors
in office on the date of such election (other than in
connection with an actual or threatened proxy contest) shall
be treated as Incumbent Company Directors; or
(C) consummation of a complete liquidation or
dissolution of the Company or a merger, consolidation or
sale of all or substantially all of the Company's assets
(collectively, a "Business Combination") other than a
Business Combination in which all or substantially all of
the beneficial holders of voting securities of the Company
receive or retain fifty percent (50%) or more of the voting
securities of the company or entity resulting from the
Business Combination ("Resulting Company"), at least a
majority of the board of directors of the resulting
corporation were Incumbent Company Directors, and after
which no person or entity beneficially owns twenty percent
(20%) or more of the voting securities ("Beneficial
Ownership Threshold") of the Resulting Company, who did not
beneficially own such stock immediately before the Business
Combination; or
(D) occurrence of any of the events described in
Section 8(d)(iv)(B) or (C) to Delhaize or the acquisition by
any Person of more than thirty percent (30%) of the stock of
Delhaize. Notwithstanding any other provision of this
paragraph, for purposes of the definition of "Change in
Control of the Company," a change in control of Delhaize
shall not constitute a Change in Control of the Company
unless it involves an event contemplated by this Section
8(d)(iv)(D). With respect to Section 8(d)(iv)(C) as it
applies to Delhaize under Section 8(d)(iv)(D), the
Beneficial Ownership Threshold shall be thirty percent
(30%).
For the purpose of this paragraph, the term "beneficially owned"
shall have the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act, the term "Person" shall have the meaning set
forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act and
the term "voting securities" shall have the meaning set forth in
Rule 12b-2 under the Exchange Act.
9. Business Expenses. The Company agrees that during the
Term of Employment, the Company will reimburse Employee for
actual travel and other out-of-pocket expenses reasonably
incurred by Employee in connection with the performance of
Employee's duties hereunder and accounted for in accordance with
the policies and procedures currently established by the Company.
10. No Competing Employment.
(a) Employee agrees that, during the Term of Employment and for
a period of two (2) years after the date specified in the Notice
of Termination or, if applicable, the date of Employee's
resignation ("Restricted Period"), Employee will not, without the
written consent of the Board of Directors, own, operate, control
or be employed as an officer, director, manager or consultant, or
as an employee with management or executive level duties or
responsibilities, in any case, for or by any business engaged in
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends; provided, however, that this restriction
contained in this Section 10(a) shall not apply if Employee
works, consults or accepts employment with a business that does
not directly compete with the Company or any subsidiary thereof.
(b) Employee agrees that, during the Restricted Period, Employee
will not, without the written consent of the Board of Directors,
own, operate, control or be employed as an officer, director,
manager or consultant, or as an employee with management or
executive level duties or responsibilities, in any case, for or
by any entity whose business, or whose direct or indirect parent
entity's or direct or indirect subsidiary entity's business is
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends.
(c) Employee understands and agrees that a portion of the
amounts payable to Employee under Section 5(a) and Section 8, if
applicable, is in consideration for Employee's covenants set
forth in Sections 10, 11 and 12.
11. No Solicitation. Employee agrees that, during the
Restricted Period, Employee will not, without the prior written
consent of the Board of Directors, directly or indirectly solicit
or recruit any employee or independent contractor of the Company
for the purpose of being employed by Employee, directly or
indirectly, or any other person or entity on behalf of which
Employee is acting as an agent, representative or employee.
Notwithstanding the above, if Employee's employment is terminated
for any reason specified in Section 7 hereof prior to the first
anniversary of the date on which a Change in Control (as defined
above) occurred, the covenants of Sections 10 and 11 shall not be
applicable.
12. Confidentiality. Employee agrees that, during the Term
of Employment and thereafter, Employee will not, without the
prior written consent of the Company, disclose to anyone not
entitled thereto, any confidential information relating to the
business, sales, financial condition or products of the Company
or any affiliate thereof. Employee also recognizes and
acknowledges that Employee has a common law and statutory law
obligation not to disclose trade secrets and other proprietary
information of the Company. Employee further agrees that, should
Employee leave the active service of the Company, Employee will
not take or retain, without the written authorization of the
Board of Directors, any papers, files or other documents or
copies thereof or other confidential information of any kind
belonging to the Company pertaining to its business, sales,
financial condition or products. Employee understands and agrees
that the rights and obligations set forth in this Section 12 are
perpetual and, in any case, shall extend beyond the Restricted
Period.
13. Failure to Comply. All payments to Employee hereunder,
including without limitation all such payments made pursuant to
Section 8 of this Agreement, are conditional upon Employee's full
compliance with the provisions of this Agreement, including
specifically Sections 10, 11 and 12 hereof, which provisions are
hereby expressly incorporated by reference as conditions to all
such payment. The provisions of sections 10, 11 and 12 will
remain incorporated as conditions to payments under this
Agreement, regardless of any judicial declaration of their
invalidity or unenforceability as affirmative covenants. In the
event that the Employee shall fail to comply with any provision
of Sections 10, 11 and 12, (a) all rights hereunder of the
Employee and any person claiming under or through him shall
thereupon terminate and no person shall be entitled to receive
any payments or benefits under this Agreement and (b) the
Employee agrees to immediately pay to the Company any and all
amounts previously paid to the Employee by the Company pursuant
to Section 8 of this Agreement. In addition to the foregoing and
without limiting any other remedies available to the Company,
Employee acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable
injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a
temporary restraining order or a preliminary injunction
restraining Employee from engaging in activities prohibited by
Sections 10, 11 and 12 or such other relief as may be required to
specifically enforce any of the covenants in such Sections.
14. Indemnification. The Company shall indemnify and hold
harmless Employee to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Article 8, Part 5 (or any successor provision) of the North
Carolina Business Corporation Act, from and against all losses,
claims, damages, liabilities, costs and expenses (including,
without limitation, attorneys' fees), which may, at any time, be
suffered by Employee as a result of the fact that Employee is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company. The expenses incurred by Employee in
any proceeding shall be paid promptly by the Company in advance
of the final disposition of any proceeding at the written request
of Employee to the fullest extent permitted under North Carolina
law. The indemnification provision of this Section 14 shall
survive the termination or expiration of this Employment
Agreement.
15. Gross-Up Payment. In the event that any payments to
which Employee becomes entitled under this Employment Agreement
(the "Agreement Payments") will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to
Employee at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee
(taking into account the Total Payments (as hereinafter defined)
and the Gross-Up Payment), after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax
and Excise Tax upon the Gross-Up Payment provided for by this
Section 15, but before deduction for any federal, state or local
income tax on the Total Payments, shall be equal to the "Total
Payments," as defined below. Except as otherwise provided
below, the Gross-Up Payment or portion thereof provided for in
this Section 15 shall be paid not later than the thirtieth (30th)
day following payment of any amounts under the Employment
Agreement that will be subject to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, the
Company shall pay on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event
later than the forty-fifth (45th) day after payment of any
amounts under the Employment Agreement that will be subject to
the Excise Tax. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to
Employee, payable on the fifth (5th) day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).
For purposes of determining whether any of the Agreement
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments, accruals, vestings or other
compensatory benefits received or to be received by Employee in
connection with a Change in Control of the Company or the
termination of Employee's employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company), any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless, in the opinion of tax counsel
selected by the Company's independent auditors, such other
payments or benefits (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Payments, and (b) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above) and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.
For purposes of determining the amount of the Gross-Up
Payment, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and the
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, Employee
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid) if such repayment results in a
reduction in Excise Tax and/or a federal, state and local income
tax deduction, plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code. In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-Up Payment is
made (including, by reason of any payment, the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment
in respect of such excess (plus any interest payable with respect
to such excess) at the time that the amount of such excess is
finally determined.
16. Vesting. Upon a Change in Control of the Company or if
Employee's employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Employee by the Company to own or acquire stock of the
Company (including, without limitation, stock options and
restricted stock granted under the Company's Stock Option Plan)
shall automatically vest upon the date of such Change in Control
or Date of Termination, respectively, without the need for
further action or consent by the Company; provided, however, that
(assuming no occurrence of a Change in Control) such rights shall
not vest if Employee's employment is terminated for Employee's
failure to adequately perform Employee's duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company. For purposes of
the preceding sentence, "Change in Control of the Company" shall
have the meaning set forth in Section 8(d)(iv) hereof except for
the portion thereof describing a Change in Control at Delhaize as
set forth in subsection 8(d)(iv)(D).
17. Mitigation. The Company recognizes that Employee has
no duty to mitigate the amounts due to Employee upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Employee is employed by
another employer after the termination of Employee's employment
with the Company.
18. Successors. This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Employee and his or her legal
representatives. The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform
this Employment 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. For purposes of this Section
18, the Subsidiary shall be deemed a successor to which this
Employment Agreement may be assigned. In addition, this
Employment Agreement may be assigned to an existing or future
direct or indirect subsidiary of the Company. Furthermore, from
and after the Holding Company Restructuring and after an
assignment of this Employment Agreement to the Subsidiary or any
other existing or future direct or indirect subsidiary of the
Company, this Employment Agreement may be reassigned to the
Company.
19. Amendments. This Employment Agreement contains the
entire contractual understanding between the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties hereto with respect to the subject
matter hereof (except for the Salary Continuation Agreement, if
any, between Employee and the Company). This Employment
Agreement may not be changed orally but only by a written
instrument signed by the parties hereto.
20. Governing Law. This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina without regard to the conflicts of law
principles thereof.
21. Waiver. The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.
22. Arbitration. Except as otherwise necessary to secure
the remedy specified in Section 13 of this Employment Agreement
(which remedy may be secured in a court of competent
jurisdiction), any dispute arising between the Company and
Employee with respect to the performance or interpretation of
this Employment Agreement shall be submitted to arbitration in
Salisbury, North Carolina for resolution in accordance with the
commercial arbitration rules of the American Arbitration
Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished
in writing, separately and specifically stating the findings of
fact and conclusions of law on which the decision is based and
shall be rendered within ninety (90) days following impanelment
of the arbitrators. The cost of arbitration shall initially be
borne by the party requesting arbitration. Following a decision
by the arbitrators, the costs of arbitration shall be divided as
directed by the arbitrators. Pursuant to North Carolina General
Statutes section 1-567.2, the provisions of Chapter 1, Subchapter
XV, Article 45A of the North Carolina General Statutes shall
apply to this Employment Agreement.
23. Severability. In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.
24. Notices. Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:
(a) If to Employee:
Laura C. Kendall
18900 River Wind Lane
Davidson, North Carolina 28036
(b) If to the Company:
Delhaize America, Inc.
Post Office Box 1330
2110 Executive Drive
Salisbury, North Carolina 28145-1330
Attention: Secretary
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
1700 Pacific Avenue
Suite 4100
Dallas, TX 75201-4675
Attention: Michael E. Dillard, P.C.
or to such other address as shall have been specified in writing
by either party to the other. Any such notice or communication
shall be deemed to have been given on the second day (excluding
any days U.S. Post Offices are not open) after the date so
mailed.
[The next page is the signature page]
IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Employee has hereunto set Employee's hand as of the date
first above written.
DELHAIZE AMERICA, INC.
Attest:
/s/Darrell Johnson BY: /s/R. William McCanless
R. William McCanless
Chief Executive Officer
EMPLOYEE:
Attest:
/s/ Darrell Johnson /s/ Laura C. Kendall
Name: Laura C. Kendall
