SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: June 26, 1998
THE KROGER CO.
(Exact name of registrant as specified in its charter)
An Ohio Corporation No. 1-303 31-0345740
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Number)
1014 Vine Street
Cincinnati, OH 45201
(Address of principal
executive offices)
Registrant's telephone number: (513) 762-4000
<PAGE>
Item 5. Other Events
- ------- ------------
On April 16, 1998, The Kroger Co. ("Registrant")
filed Registration Statement No. 333-50269 on Form
S-3 with the Securities and Exchange Commission
pursuant to Rule 415, (hereinafter referred to as
the "Registration Statement". The Registration
Statement provides for the issuance of Securities in
an aggregate amount of $800,000,000, and was
declared effective on April 29, 1998. Pursuant to a
Prospectus Supplement dated June 23, 1998,
Registrant is issuing $200,000,000 of Debt
Securities designated Puttable Reset Securities
PURSSM due July 1, 2010.
Filed as Exhibit 1.1 to the Registration Statement
was a form of Underwriting Agreement for the
issuance of the Debt Securities. In connection with
the issuance of the Puttable Reset Securities PURSSM
due July 1, 2010, the Registrant has executed a
Pricing Agreement dated June 23, 1998, among
Registrant, Goldman, Sachs & Co., Citicorp
Securities, Inc. and J.P. Morgan Securities Inc.,
the form of which is incorporated herein by
reference as Exhibit 1.1 hereof.
The form of indenture for the Puttable Reset
Securities PURSSM due July 1, 2010 was filed as
Exhibit 4.3 of the Registration Statement. The
Second Supplemental Indenture dated as of June 26,
1998, between the Registrant and Star Bank, National
Association, as Trustee, supplements the Indenture
dated as of May 1, 1998, between the Registrant and
Star Bank, National Association, as Trustee, which
originally was qualified as filed with the
Registration Statement. The Second Supplemental
Indenture is attached hereto as Exhibit 4.3.
In connection with the issuance of the Puttable
Reset Securities PURSSM due July 1, 2010, the
Registrant has executed a Calculation Agency
Agreement dated as of June 26, 1998 with J.P.
Morgan Securities Inc., which is attached hereto as
Exhibit 99.1.
Item 7. Financial Statements, Pro Forma Financial
- ------- -----------------------------------------
Information and Exhibits
------------------------
(c) Exhibits
1.1 Pricing Agreement dated June 23, 1998,
among Registrant, Goldman, Sachs & Co.,
Citicorp Securities, Inc. and J.P. Morgan
Securities Inc.
4.3 Second Supplemental Indenture dated as of
June 26, 1998, between the Registrant and
Star Bank, National Association, as
Trustee, relating to the Registrant's
Puttable Reset Securities PURSSM due July
1, 2010.
99.1 Calculation Agency Agreement dated as of
June 26, 1998, between Registrant and J.P.
Morgan Securities Inc.<PAGE>
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereto duly authorized.
THE KROGER CO.
June 26, 1998 By(Paul W. Heldman)
Paul W. Heldman
Senior Vice President,
Secretary and General
Counsel
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
1.1 Pricing Agreement dated June 23, 1998, among Registrant,
Goldman, Sachs & Co., Citicorp Securities, Inc. and J.P.
Morgan Securities Inc.
4.3 Second Supplemental Indenture dated as of June 26, 1998,
between the Registrant and Star Bank, National
Association, as Trustee, relating to the Registrant's
Puttable Reset Securities PURSSM due July 1, 2010.
99.1 Calculation Agency Agreement dated as of June 26, 1998,
between Registrant and J.P. Morgan Securities Inc.
<PAGE>
Pricing Agreement
-------------------------
Goldman, Sachs & Co.
Citicorp Securities, Inc.
J.P. Morgan Securities Inc.
As Representatives of the several
Underwriters named in Schedule I hereto,
June 23, 1998
Dear Sirs:
The Kroger Co., an Ohio corporation (the "Company"), proposed, subject to the
terms and conditions stated herein and in the Underwriting Agreement, dated May
6, 1998 (the "Underwriting Agreement"), to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Securities specified in
Schedule II hereto (the "Designated Securities"). Each of the provisions of
the Underwriting Agreement is incorporated herein by reference in its entirety,
and shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein; and each of the representations
and warranties set forth therein shall be deemed to have been made at and as of
the date of this Pricing Agreement, except that each representation and warranty
which refers to the Prospectus in Section 2 of the Underwriting Agreement shall
be deemed to be a representation or warranty as of the date of the Underwriting
Agreement in relation to the Prospectus (as therein defined), and also a
representation and warranty as of the date of this Pricing Agreement in relation
to the Prospectus as amended or supplemented relating to the Designated
Securities which are the subject of this Pricing Agreement. Each reference to
the Representatives herein and in the provisions of the Underwriting Agreement
so incorporated by reference shall be deemed to refer to you. Unless
otherwise defined herein, terms defined in the Underwriting Agreement are
used herein as therein defined. The Representatives designated to act on
behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the
Representatives referred to in such Section 12 are set forth at the end of
Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the Prospectus,
as the case may be, relating to the Designated Securities, in the form
heretofore delivered to you is now proposed to be filed with the Commission.
Subject to the terms and conditions set forth herein and in the Underwriting
Agreement incorporated herein by reference, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at the time and place and at the
purchase price to the Underwriters set forth in Schedule II hereto, the
principal amount of Designated Securities set forth opposite the name of such
Underwriter in Schedule I hereto.
If the foregoing is in accordance with your understanding, please sign and
return to us six counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of which
shall be submitted to the Company for examination upon request, but without
warranty on the part of the Representatives as to the authority of the
signers thereof.
Very truly yours,
The Kroger Co.
By_______________________________
Name:
Title:
Accepted as of the date hereof:
Goldman, Sachs & Co.
Citicorp Securities, Inc.
J.P. Morgan Securities Inc.
By: _______________________
Goldman, Sachs & Co.
On behalf of each of the Underwriters
<PAGE>
Schedule I
Principal
Amount of
Designated
Securities to be
Underwriter Purchased
Goldman, Sachs & Co. $ 66,700,000
Citicorp Securities, Inc. 66,650,000
J.P. Morgan Securities Inc. 66,650,000
Total $200,000,000
<PAGE>
Schedule II
Title of Designated Securities:
Puttable Reset Securities PURSSM due July 1, 2010
Aggregate principal amount:
$200,000,000
Price to Public:
99.868% of the principal amount of the Designated Securities, plus accrued
interest from June 26, 1998
Purchase Price by Underwriters:
99.618% of the principal amount of the Designated Securities, plus accrued
interest from June 26, 1998
In addition, in consideration of the Call Option they will have with
respect to the Designated Securities, J.P. Morgan Securities Inc. will
pay the Company an amount equal to 2.691% of the principal amount of the
Designated Securities.
Specified funds for payment purchase price:
Immediately available funds
Indenture:
Indenture dated as of May 1, 1998, between the Company and Star Bank,
National Association, as Trustee, as amended by the First Supplemental
Indenture, dated May 11, 1998 and the Second Supplemental Indenture,
dated June 26, 1998
Maturity:
July 1, 2010
Interest Rate:
6.00% from and including the original issue date to but excluding July 1,
2000 and upon such date reset so as to equal a fixed rate as described
under "Reset of Interest Rate," described in the Prospectus Supplement
dated June 23, 1998.
Interest Payment Dates:
July 1 and January 1, commencing January 1, 1999
Redemption Provisions:
As described in the Prospectus Supplement dated June 23, 1998
Sinking Fund Provisions:
No sinking fund provisions
Call Option:
As described in the Prospectus Supplement under the caption "Description
of Bonds--Call Option".
Put Option:
As described in the Prospectus Supplement under the caption "Description of
Bonds--Put Option".
Defeasance Provisions:
As described in the Prospectus Supplement dated June 23, 1998
Time of Delivery:
June 26, 1998
Closing Location:
The Offices of Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza, New York, New York 10004
Names and addresses of Representatives:
Designated Representative: Goldman, Sachs & Co.
Address for Notices, etc.: 85 Broad Street
New York, New York
<PAGE>
==============================================================
THE KROGER CO.
TO
STAR BANK, NATIONAL ASSOCIATION
Trustee
SECOND SUPPLEMENTAL INDENTURE
Dated as of June 26, 1998
TO
INDENTURE
Dated as of May 1, 1998
PUTTABLE RESET SECURITIES PURSSM
DUE JULY 1, 2010
==============================================================
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of June 26, 1998,
between The Kroger Co., a corporation duly organized and
existing under the laws of the State of Ohio (herein called
the "Company"), having its principal office at 1014 Vine
Street, Cincinnati, Ohio 45202, and Star Bank, National
Association, a banking corporation duly organized and existing
under the laws of the State of Ohio, as Trustee (herein called
the "Trustee").
RECITALS OF THE COMPANY
The Company has heretofore executed and delivered to the
Trustee an Indenture dated as of May 1, 1998 (the
"Indenture"), providing for the issuance from time to time of
the Company's unsecured debentures, notes or other evidences
of indebtedness (herein and therein called the "Securities"),
to be issued in one or more series as in the Indenture
provided.
Section 201 of the Indenture permits the form of the
Securities of any series to be established pursuant to an
indenture supplemental to the Indenture.
Section 301 of the Indenture permits the terms of the
Securities of any series to be established in an indenture
supplemental to the Indenture.
Section 901(7) of the Indenture provides that, without
the consent of any Holders, the Company, when authorized by a
Board Resolution, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental to
the Indenture for the purpose of establishing the form or
terms of Securities of any series as permitted by Sections 201
and 301 of the Indenture.
The Company, pursuant to the foregoing authority,
proposes in and by this Second Supplemental Indenture to
establish the terms and form of the Securities of a new series
and to amend and supplement the Indenture in certain respects
with respect to the Securities of such series.
All things necessary to make this Second Supplemental
Indenture a valid agreement of the Company, and a valid
amendment of and supplement to the Indenture, have been done.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE
WITNESSETH:
For and in consideration of the premises and the purchase
of the Securities by the Holders thereof, it is mutually
agreed, for the equal and proportionate benefit of all Holders
of the Securities of the series to be created hereby, as
follows:
<PAGE>
ARTICLE ONE
DEFINITIONS
Section 101. Definitions.
-----------
(a) For all purposes of this Second Supplemental
Indenture:
(1) Capitalized terms used herein without
definition shall have the meanings specified in the Indenture;
(2) All references herein to Articles and Sections,
unless otherwise specified, refer to the corresponding
Articles and Sections of this Second Supplemental Indenture
and, where so specified, to the Articles and Sections of the
Indenture as supplemented by this Second Supplemental
Indenture; and
(3) The terms "hereof", "herein", "hereby",
"hereto", "hereunder" and "herewith" refer to this Second
Supplemental Indenture.
(b) For all purposes of the Indenture and this Second
Supplemental Indenture, with respect to the Securities of the
series created hereby, except as otherwise expressly provided
or unless the context otherwise requires:
"Adjusted Treasury Rate" means, with respect to any
Redemption Date, the rate per annum equal to the semi-annual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed
as a percentage of its principal amount) equal to the
Comparable Treasury Price for such Redemption Date.
"Attributable Debt" means, in connection with a Sale and
Lease-Back Transaction, as of any particular time, the
aggregate of present values (discounted at a rate per annum
equal to the interest rate borne by the Securities of the
series created by this Second Supplemental Indenture) of the
obligations of the Company or any Restricted Subsidiary for
net rental payments during the remaining primary term of the
applicable lease, calculated in accordance with generally
accepted accounting principles. The term "net rental
payments" under any lease for any period shall mean the sum of
the rental and other payments required to be paid in such
period by the lessee thereunder, not including, however, any
amounts required to be paid by such lessee (whether or not
designated as rental or additional rental) on account of
maintenance and repairs, reconstruction, insurance, taxes,
assessments, water rates, operating and labor costs or similar
charges required to be paid by such lessee thereunder or any
amounts required to be paid by such lessee thereunder
contingent upon the amount of sales, maintenance and repairs,
reconstruction, insurance, taxes, assessments, water rates or
similar charges.
"Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in New York
City or Cincinnati, Ohio are authorized or obligated by law to
close.
"Capital Lease" means any lease of property which, in
accordance with generally accepted accounting principles,
should be capitalized on the lessee's balance sheet or for
which the amount of the asset and liability thereunder as if
so capitalized should be disclosed in a note to such balance
sheet; and "Capitalized Lease Obligation" means the amount of
the liability which should be so capitalized or disclosed.
"Comparable Treasury Issue" means the United States
Treasury security selected by a Quotation Agent as having a
maturity comparable to the remaining term of the Securities to
be redeemed that would be utilized, at the time of selection
and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the Reference Treasury
Dealer Quotations, after excluding the highest and lowest such
Reference Treasury Dealer Quotations for such Redemption Date,
or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such
Quotations.
"Consolidated Net Tangible Assets" means, for the Company
and its Subsidiaries on a consolidated basis determined in
accordance with generally accepted accounting principles, the
aggregate amounts of assets (less depreciation and valuation
reserves and other reserves and items deductible from gross
book value of specific asset accounts under generally accepted
accounting principles) which under generally accepted
accounting principles would be included on a balance sheet
after deducting therefrom (a) all liability items except
deferred income taxes, commercial paper, short-term bank
Indebtedness, Funded Indebtedness, other long-term liabilities
and shareholders' equity and (b) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and
other like intangibles.
"Funded Indebtedness" means any Indebtedness maturing by
its terms more than one year from the date as of which the
determination is made, including (i) any Indebtedness having a
maturity of 12 months or less but by its terms renewable or
extendible at the option of the borrower beyond 12 months from
such date of determination and (ii) rental obligations payable
more than 12 months from such date under Capital Leases (such
rental obligations to be included as Funded Indebtedness at
the amount so capitalized at the date of such computation and
to be included for the purposes of the definition of
Consolidated Net Tangible Assets both as an asset and as
Funded Indebtedness at the amount so capitalized).
"Non-Restricted Subsidiary" means any Subsidiary that the
Company's Board of Directors has in good faith declared
pursuant to a written resolution not to be of material
importance, either singly or together with all other
Non-Restricted Subsidiaries, to the business of the Company
and its consolidated Subsidiaries taken as a whole.
"Operating Assets" means all merchandise inventories,
furniture, fixtures and equipment (including all
transportation and warehousing equipment but excluding office
equipment and data processing equipment) owned or leased
pursuant to Capital Leases by the Company or a Restricted
Subsidiary.
"Operating Property" means all real property and
improvements thereon owned or leased pursuant to Capital
Leases by the Company or a Restricted Subsidiary and
constituting, without limitation, any store, warehouse,
service center or distribution center wherever located,
provided that such term shall not include any store,
warehouse, service center or distribution center which the
Company's Board of Directors declares by written resolution
not to be of material importance to the business of the
Company and its Restricted Subsidiaries.
"Quotation Agent" means the Reference Treasury Dealer
appointed by the Company.
"Reference Treasury Dealer" means (i) Goldman, Sachs &
Co. and its successors; provided, however, that if the
foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury
Dealer"), the Company shall substitute therefor another
Primary Treasury Dealer, and (ii) any other Primary Treasury
Dealer selected by the Company.
"Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any Redemption
Date, the average, as determined by the Company, of the bid
and asked prices for the Comparable Treasury Issue (expressed
in each case as a percentage of its principal amount) quoted
in writing to the Trustee by such Reference Treasury Dealer at
5:00 p.m. on the third Business Day preceding such Redemption
Date.
"Restricted Subsidiaries" means all Subsidiaries other
than Non-Restricted Subsidiaries.
"Sale and Lease-Back Transaction" has the meaning
specified in Section 1010.
"Subsidiary" means (i) any corporation or other entity of
which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time
directly or indirectly owned by the Company and/or one or more
Subsidiaries or (ii) any partnership of which more than 50% of
the partnership interest is owned by the Company or any
Subsidiary.
ARTICLE TWO
SECURITY FORMS
Section 201. Form of Securities of this Series.
---------------------------------
The Securities of this series shall be in the form set
forth in this Article.
Section 202. Form of Face of Security.
------------------------
[FACE OF BOND]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO.
OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
No. ___ CUSIP: 501044BL4
$
THE KROGER CO.
Puttable Reset Securities PURSSM due July 1, 2010.
The Kroger Co., a corporation organized and existing
under the laws of the State of Ohio (hereinafter called the
"Company", which term shall include any successor entity), for
value received, hereby promises to pay to CEDE & CO. or
registered assigns, the principal sum of _________Dollars on
July 1, 2010 (the "Final Maturity") at any office or agency
maintained for the purpose in the Borough of Manhattan, The
City of New York, New York or Cincinnati, Ohio, which shall
initially be the corporate trust office of Star Bank, National
Association, the Trustee under the Indenture referred to on
the reverse hereof, located on the date hereof at 425 Walnut
Street, P.O. Box 1118, Cincinnati, Ohio 45201-1118, in such
coin or currency of the United States of America as at the
time of payment is legal tender for the payment of public and
private debts, and to pay to the registered holder hereof, as
hereinafter provided, interest (computed on the basis of a
360-day year of twelve 30-day months) on said principal sum at
the rate described below, in like coin or currency, from and
including June 26, 1998, or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, on January 1 and July 1 of each year, commencing January
1, 1999, to but excluding the date on which the principal
amount is paid or made available for payment in full. The
interest so payable on any January 1 or July 1 shall, subject
to certain exceptions provided in the Indenture, be paid to
the person in whose name this Bond is registered at the close
of business on the next preceding December 15 or June 15, as
the case may be (each, an "Interest Payment Record Date").
Payments of interest shall be made at any office or agency
referred to above, provided that, at the option of the
Company, payments of interest may be made by check mailed to
the registered address of the persons entitled thereto.
From and including June 26, 1998 to but excluding July 1,
2000, interest shall accrue on the principal sum of this Bond
at an annual rate equal to 6%. On July 1, 2000 (the "Reset
Date"), the interest rate on this Bond shall be reset so as to
equal a fixed rate determined as described on the reverse
hereof, unless the Company is obligated to repurchase this
Bond on such date pursuant to the Put Option referred to on
the reverse hereof. Notwithstanding the foregoing, the reset
shall be subject to the occurrence of a Market Disruption
Event or a Failed Remarketing as described on the reverse
hereof.
This Bond has initially been issued in the form of a
Global Security (as defined on the reverse hereof), and the
Company has initially designated The Depository Trust Company
("DTC", which term shall include any successor) as the
Depositary (the "Depositary") for this Bond. For as long as
this Bond or any portion hereof is issued in such form, and
notwithstanding the foregoing, all payments of interest,
principal and other amounts in respect of this Bond or such
portion (including payments pursuant to the Call Option and
Put Option referred to on the reverse hereof) shall be made to
the Depositary or its nominee in accordance with its
Applicable Procedures (as defined on the reverse hereof), in
the coin or currency specified above and as further provided
on the reverse hereof.
Notwithstanding the foregoing, if any payment of
interest, principal or other amount to be made in respect of
this Bond (including any payment pursuant to an exercise of
the Call Option or Put Option) would otherwise be due on a day
that is not a Business Day, such payment may be made on the
next succeeding day that is a Business Day, with the same
effect as if such payment were made on the due date.
This Bond is continued on the reverse hereof and the
additional provisions there set forth shall for all purposes
have the same effect as if set forth at this place. Such
provisions include, inter alia, the Call Option and Put
Option, interest rate reset mechanism and the definitions of
certain terms used on the face hereof.
This Bond shall not be valid or become obligatory for any
purpose until the certificate of authentication hereon shall
have been signed by the Trustee under the Indenture.
IN WITNESS WHEREOF, THE KROGER CO. has caused this
instrument to be duly executed under its corporate seal.
Dated:
[CORPORATE SEAL] THE KROGER CO..
By:____________________________
Name:
Title:
ATTEST:
By:________________________
Name:
Title:
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
STAR BANK, NATIONAL ASSOCIATION
as Trustee
By:__________________________________
Authorized Signatory
<PAGE>
Section 203. Form of Reverse of Security.
---------------------------
THE KROGER CO.
Puttable Reset Securities PURSSM due July 1, 2010
1. Indenture.
---------
(a) This bond is one of a duly authorized issue of
debentures, notes or other evidence of indebtedness of the
Company (hereinafter called the "Securities") of the series
hereinafter specified, all issued or to be issued under and
pursuant to an indenture dated as of May 1, 1998, as amended
by the First Supplemental Indenture, dated as of May 11, 1998
and the Second Supplemental Indenture, dated as of June 26,
1998 (the "Indenture"), duly executed and delivered by the
Company to Star Bank, National Association, as Trustee (the
"Trustee", which term includes any successor trustee under the
Indenture), to which Indenture reference is hereby made for a
description of the rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the
Securities.
(b) The Securities may be issued in one or more series,
which different series may be issued in various aggregate
principal amounts, may mature at different times, may bear
interest (if any) at different rates, may be subject to
different redemption provisions (if any), may be subject to
different sinking, purchase or analogous funds (if any) and
may otherwise vary as provided in the Indenture. This bond is
one of a series of the Securities designated as the Puttable
Reset Securities PURSSM due July 1, 2010 of the Company,
limited in aggregate principal amount to $200,000,000 (the
"Bonds"). The Bonds constitute a separate series of Securities
under the Indenture.
(c) The provisions of this Bond (including those
relating to the Call Option and Put Option), together with the
provisions of the Indenture, shall govern the rights,
obligations, duties and immunities of the holders hereof, the
Company and the Trustee with respect to this Bond, provided
that, if any provision of this Bond necessarily conflicts with
any provision of the Indenture, the provision of this Bond
shall be controlling to the fullest extent permitted under the
Indenture.
(d) Terms used and not defined herein that are defined
in the Indenture shall have the respective meanings assigned
thereto in the Indenture. Unless the context requires
otherwise, terms defined herein include the plural as well as
the singular and vice-versa, and the words "herein" and
"hereof", and words of similar import, refer to this Bond as a
whole and not to any particular paragraph or other
subdivision.
2. Call Option.
-----------
(a) J.P. Morgan Securities Inc., which term shall
include any successor (the "Call Option Holder"), shall have
the right to purchase, on the Reset Date, all of the Bonds
outstanding on the Reset Date (in whole and not in part),
including this Bond, from the registered holders thereof on
the Reset Date (such right, the "Call Option"), at a price
equal to 100% of the principal amount of the Bonds purchased
(the "Face Value") and subject to the Call Option Holder
giving notice of its intention to purchase the outstanding
Bonds as described below (a "Call Notice"). Whether or not the
Call Option is exercised with respect to the Reset Date, the
Company shall remain obligated to pay all accrued and unpaid
interest on this Bond, and interest that becomes payable on
this Bond on the Reset Date shall be payable to the registered
holder of this Bond on the corresponding Interest Payment
Record Date, as provided herein and in the Indenture.
(b) To exercise the Call Option, the Call Option Holder
must give a Call Notice to the registered holder of this Bond
no later than the tenth Market Day prior to the Reset Date, in
the manner described in paragraph 9 below. Subject to
paragraph 5(a) below, in the event a Call Notice is duly
given, the registered holder of this Bond on the Reset Date
shall be obligated to sell this Bond to the Call Option
Holder, and the Call Option Holder shall be obligated to
purchase this Bond from such holder, at the Face Value on the
Reset Date. Each such sale and purchase shall be effected
through the facilities of the Depositary, with the registered
holder being deemed to have automatically tendered this Bond
for sale to the Call Option Holder on the Reset Date in
accordance with the Depositary's Applicable Procedures as
provided in paragraph 5 below. The registered holder's
automatic tender of this Bond on the Reset Date shall be
subject to receipt of payment of the Face Value of this Bond
as provided in paragraph 5(a) below. Notwithstanding any
exercise of the Call Option with respect to this Bond, this
Bond will remain outstanding until it otherwise ceases to be
outstanding pursuant to the Indenture. As used herein, "Market
Day" means a Business Day other than a day on which dealings
in the U.S. Treasury bond market are generally not being
conducted.
(c) If the Call Option is exercised, this Bond shall be
subject to purchase by the Call Option Holder on the Reset
Date as provided herein and subject to paragraph 5(a) below.
This will be the case for every holder (and every beneficial
holder) of the Bonds outstanding on the Reset Date, including
any holder that acquires an interest in this Bond after the
Call Notice is given or who is otherwise unaware that the Call
Notice has been given.
3. Put Option.
----------
(a) If the Call Option Holder does not exercise the Call
Option, the registered holder of this Bond on the Reset Date
shall have the right to require the Company to repurchase this
Bond (in whole and not in part) from such holder on the Reset
Date (such right, the holder's "Put Option") at a price equal
to 100% of the principal amount of this Bond repurchased (the
"Put Price"), in the circumstances described in the next
paragraph. In the event the Put Option is exercised, the Put
Price shall be payable by the Company to the registered holder
of this Bond on the Reset Date, whereas the accrued and unpaid
interest on this Bond that becomes payable on the Reset Date
shall be payable by the Company to the registered holder of
this Bond on the corresponding Interest Payment Record Date,
as provided herein and in the Indenture. If for any reason
payment of the Put Price is not made when due on this Bond,
the accrued interest from the Reset Date to the date such
payment is made would be payable by the Company as part of the
Put Price for this Bond, to the person entitled to receive the
Put Price.
(b) On the Reset Date, the registered holder of this
Bond on the Reset Date shall be deemed to have exercised its
Put Option automatically, without any action on its part, for
the full principal amount of this Bond held of record by such
holder on the Reset Date unless either (x) the Call Option
Holder has duly given a Call Notice or (y) if the Call Option
Holder does not exercise the Call Option, (i) no later than
10:00 A.M. (New York City time) on the seventh Market Day
prior to the Reset Date, the registered holder of this Bond at
the time gives notice to the Trustee that such holder elects
not to sell this Bond to the Company on the Reset Date (a
"Hold Notice") and (ii) such notice is effective (an
"Effective Hold Notice") under the 10% Requirement (as defined
below). A Hold Notice must be given in the manner described in
paragraph 11 below. Consequently, with respect to this Bond on
the Reset Date, if a Call Notice is not duly given by the Call
Option Holder and an Effective Hold Notice is not duly given
by the applicable holder as provided above, the Company shall
be obligated to repurchase this Bond from the registered
holder on the Reset Date, and the registered holder of this
Bond on the Reset Date shall be obligated to sell this Bond to
the Company, at the Put Price on the Reset Date. Any such sale
and purchase shall be effected through the facilities of the
Depositary, with the registered holder of this Bond on the
Reset Date being deemed (in the absence of an Effective Hold
Notice) to have automatically tendered this Bond in whole for
sale to the Company on the Reset Date, all in accordance with
the Depositary's Applicable Procedures as provided in
paragraph 5 below. Notwithstanding any exercise of the Put
Option with respect to this Bond, this Bond shall remain
outstanding until it otherwise ceases to be outstanding
pursuant to the Indenture.
(c) Notwithstanding the foregoing, no Hold Notice for
this Bond shall be effective unless Hold Notices are duly
given with respect to at least 10% of the principal amount of
the Bonds outstanding. The provision described in this
paragraph is called the "10% Requirement". If a Hold Notice is
duly given for this Bond but the 10% Requirement is not
satisfied, the Trustee shall give written notice of that fact
(a "10% Requirement Notice") to the registered holder of this
Bond and the Company not later than the close of business
on the seventh Market Day before the Reset Date, in the manner
described in paragraph 11 below.
(d) Notwithstanding the foregoing, the Put Option shall
be deemed to be automatically exercised if the Call Option
Holder exercises the Call Option but either (i) a Market
Disruption Event or Failed Remarketing occurs, as provided in
paragraph 4 below, or (ii) the Call Option Holder fails to pay
the Face Value on the Reset Date, as provided in paragraph
5(a) below.
4. Reset of Interest Rate.
----------------------
The interest rate on this Bond shall be reset on the
Reset Date, unless the Company is obligated to purchase this
Bond on such date pursuant to the Put Option. Notwithstanding
the foregoing, reset of the interest rate shall be subject to
the occurrence of a Market Disruption Event or a Failed
Remarketing as described below.
Subject to its right to terminate the appointment of any
such agent, the Company shall take such action as is necessary
to ensure that there shall at all relevant times be a
qualified financial institution appointed and acting as its
agent for the purpose of performing the actions contemplated
hereby to be performed by the Calculation Agent (such agent,
including any successor agent, the "Calculation Agent"). The
Company has initially appointed the Call Option Holder as
Calculation Agent. If the interest rate is to be reset on the
Reset Date, the Calculation Agent shall effect the reset as
set forth below.
Between the tenth Market Day prior to the Reset Date and
11:00 A.M., New York City time, on the Calculation Date (as
defined below), the Calculation Agent shall request each of
the following financial institutions to participate as a
reference dealer in accordance with the terms described below:
Goldman, Sachs & Co., Citicorp Securities, Inc., and J.P.
Morgan Securities Inc., or their respective successors;
provided, however, that if any of the foregoing ceases to be a
leading dealer of publicly-traded debt securities of the
Company in New York City (a "Primary Dealer") or are unwilling
to act as a reference dealer, the Calculation Agent shall
substitute therefor another Primary Dealer (the "Reference
Dealers"). If the Call Option Holder has exercised the Call
Option and so requests, each Reference Dealer must include in
its participation agreement a written commitment (satisfactory
to the Call Option Holder) that, if it is selected as the
Final Dealer (as defined below), it shall purchase from the
Call Option Holder on the Calculation Date for settlement on
the Reset Date and at the Final Offer Price (as defined
below), its Pro Rata (as defined below) portion of the Bonds
that the Call Option Holder purchases pursuant to the Call
Option and tenders for resale to the Final Dealer on the Reset
Date. For each Reference Dealer, the Calculation Agent shall
request the name of and telephone and facsimile numbers for
one individual to represent such Reference Dealer.
On the sixth Market Day prior to the Reset Date (the
"Calculation Date"), the Calculation Agent shall undertake the
following actions to calculate a fixed rate at which interest
will accrue on the Bonds from and including the Reset Date to
but excluding the Final Maturity (the "Reset Period"). In
paragraphs (a) and (b) below, all references to specific hours
are references to prevailing New York City time, and each
notice shall be given telephonically and shall be confirmed as
soon as possible by facsimile to each of the Calculation Agent
and the Company. The times set forth below are guidelines for
action, and the Calculation Agent shall use reasonable efforts
to adhere to these times.
(a) At 12:00 P.M., the Calculation Agent shall:
(i) determine (or obtain from the Call Option
Holder, if the Call Option Holder has exercised the Call
Option) the approximate ten-year U.S. Treasury bond yield
at or about such time, which shall be expressed as a
percentage (the "Designated Treasury Yield") and shall be
based on the then-current, ten-year U.S. Treasury bond
(the "Designated Treasury Bond");
(ii) calculate and provide to the Reference Dealers,
on a preliminary basis, a hypothetical price at which the
Bonds might be offered for sale to a Reference Dealer on
the Reset Date (the "Offer Price"). The Offer Price shall
be expressed as a percentage of the principal amount of
the Bonds and will equal 100% plus the Margin (as defined
below), if the Treasury Rate Difference (as defined
below) is positive, or 100% minus the Margin, if the
Treasury Rate Difference is negative. The "Margin" means
the present value, expressed as a percentage of the
principal amount of the Bonds, of the absolute value of
the Treasury Rate Difference applied to twenty
semi-annual periods (i.e., ten years), discounted at the
Designated Treasury Yield divided by two. The "Treasury
Rate Difference" means the percentage (which may be
positive or negative) equal to (x) 5.50% (the "Initial
Treasury Yield") minus (y) the Designated Treasury Yield;
and
(iii) request each Reference Dealer to provide
to the Calculation Agent, when notified of the Final
Offer Price as described in paragraph (b) below, a firm
bid, expressed as a percentage representing an interest
rate spread over the Designated Treasury Yield (the
"Spread"), at which such Reference Dealer would be
willing to purchase on the Calculation Date for
settlement on the Reset Date, at the Final Offer Price,
all of the Bonds. Each such firm bid must be given on an
"all-in" basis and must remain open for at least 30
minutes after it is given.
(b) At 12:30 P.M., the Calculation Agent shall determine
(or obtain from the Call Option Holder, if the Call Option
Holder has exercised the Call Option) the Designated Treasury
Yield on a final basis, and calculate and provide to the
Reference Dealers the Offer Price on a final basis (the "Final
Offer Price") and request each Reference Dealer to submit its
bid immediately as described in clause (a)(iii) above. If the
Calculation Agent receives at least two bids, the following
shall occur:
(i) the Reference Dealer providing the bid
presenting the lowest all-in Spread (the "Final Spread")
shall be the "Final Dealer"; provided that if more than
one Reference Dealer has provided a bid representing the
lowest all-in Spread (a "Qualifying Reference Dealer"),
the Calculation Agent will so notify each Qualifying
Reference Dealer and each Qualifying Reference Dealer
will have the opportunity immediately thereafter to
submit a second firm bid in the manner and on the terms
specified in clause (a)(iii) above, and the Qualifying
Reference Dealer providing the bid representing the
lowest all-in Spread will be the Final Dealer and if more
than one Qualifying Reference Dealer has provided a bid
representing the lowest all-in Spread, each of such
Qualifying Reference Dealers will be a Final Dealer
(also, each referred to herein as the Final Dealer);
(ii) if the Call Option Holder has exercised the
Call Option, the Final Dealer shall purchase from the
Call Option Holder at the Final Offer Price, for
settlement on the Reset Date, its Pro Rata portion of the
Bonds that the Call Option Holder purchases pursuant to
the Call Option and tenders for resale to the Final
Dealer on the Reset Date (assuming that the interest rate
on the Bonds will be reset so as to equal the Adjusted
Rate (as defined below) during the Reset Period) (as used
herein "Pro Rata" shall mean the amount equal to the
aggregate outstanding principal amount of the Bonds that
the Call Option Holder purchases pursuant to the Call
Option divided by the number of Final Dealers); the Final
Dealer shall not be obligated to purchase any Bonds if
the Call Option Holder has not exercised the Call Option;
(iii) the Calculation Agent shall calculate and
provide to the Company the "Adjusted Rate", which shall
be the semi-annual, bond-equivalent, fixed interest rate
on the Bonds required to produce, during the Reset
Period, a semi-annual, bond-equivalent yield on the Bonds
that equals the sum of the Final Spread plus the final
Designated Treasury Yield, assuming that the Bonds are
purchased on the Reset Date at the Final Offer Price; and
(iv) the interest rate on the Bonds shall be
adjusted so as to equal the Adjusted Rate, effective from
and including the Reset Date to but excluding the Final
Maturity. If the Call Option Holder has not exercised
the Call Option and an Effective Hold Notice is given for
this Bond, the Company shall promptly give written notice
of the Adjusted Rate to the registered holder.
All determinations regarding the Designated Treasury
Yield and the Designated Treasury Bond as described in clause
(a)(i) and the first sentence of paragraph (b) above shall be
made by the Call Option Holder if another party is acting as
the Calculation Agent, unless the Call Option Holder has
elected not to exercise the Call Option, in which case such
determinations will be made as necessary by the Calculation
Agent.
If the Calculation Agent determines that, on the
Calculation Date, (x) a Market Disruption Event (as defined
below) has occurred or is continuing or (y) fewer than two
Reference Dealers have provided firm bids in a timely manner
pursuant to participation agreements satisfactory to the Call
Option Holder substantially as described above (a "Failed
Remarketing"), the steps contemplated above shall be taken on
the next Market Day on which the Calculation Agent determines
that no Market Disruption Event has occurred or is continuing
and at least two Reference Dealers have provided bids pursuant
to participation agreements satisfactory to the Call Option
Holder substantially as described above. If the Calculation
Agent determines that a Market Disruption Event and/or a
Failed Remarketing has occurred or is continuing for at least
four consecutive Market Days starting on the Calculation Date,
then the Call Option Holder shall be deemed not to have
exercised the Call Option and the Company shall repurchase
this Bond on the Reset Date at the Put Price from the
registered holder hereof on the Reset Date, all as if the Put
Option on this Bond had been exercised. In these
circumstances, the registered holder may not continue to hold
this Bond by giving an Effective Hold Notice. The Calculation
Agent shall notify the Company of such determination promptly
after the close of business on such fourth Market Day. The
Company shall give notice to the registered holder that this
Bond will be repurchased by the Company at the Put Price, from
the registered holder on the Reset Date, such notice to be
given no later than such second Market Day prior to the Reset
Date in the manner described below.
Notwithstanding the foregoing, if at any time the Call
Option Holder is not acting as Calculation Agent, then the
determinations and notice to the Company described in the
preceding paragraph shall be made and given by the Call Option
Holder, unless the Call Option Holder does not exercise the
Call Option, in which case such determinations and notice will
be made and given by the Calculation Agent.
"Market Disruption Event" means any of the following: (i)
a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or the establishment
of minimum prices on such exchange; (ii) a general moratorium
on commercial banking activities declared by either federal or
New York State authorities; (iii) any material adverse change
in the existing financial, political or economic conditions in
the United States of America; (iv) an outbreak or escalation
of hostilities involving the United States of America or the
declaration of a national emergency or war by the United
States of America; or (v) any material disruption of the U.S.
government securities market, U.S. corporate bond market
and/or U.S. federal wire system.
All determinations regarding Market Disruption Events and
Failed Remarketings, including whether or not any such event
has occurred or is continuing, shall be made by the
Calculation Agent (or the Call Option Holder, if applicable as
provided above) in its sole discretion.
All percentages resulting from any calculation with
respect to the Bonds will be rounded to the nearest one
hundred-thousandth of a percentage point, and all U.S. dollar
amounts will be rounded to the nearest cent (with one-half
cent being rounded upwards).
All determinations made by the Calculation Agent (or the
Call Option Holder) regarding the matters described herein
shall be final, conclusive and binding on all concerned absent
manifest error. To the extent permitted by law, no
determination made by the Calculation Agent (or the Call
Option Holder) regarding the matters described herein shall
give rise to any liability on the part of the Calculation
Agent, the Call Option Holder, the Trustee or the Company.
5. Settlement on Exercises of Call Option or Put Option.
----------------------------------------------------
For as long (but only for as long) as this Bond or any
portion hereof is issued in the form of a Global Security, the
provisions of paragraphs 5(a) through 5(d) below, inclusive,
shall apply with respect to this Bond or such portion, as the
case may be.
(a) If the Call Option is exercised, then, on the Reset
Date, all beneficial interests in this Bond held by or through
Agent Members (as defined below) shall be transferred to a
Depositary account designated by the Call Option Holder. The
transfers shall be made automatically, without any action on
the part of any holder or beneficial owner, by book entry
through the facilities of the Depositary. The Call Option
Holder shall be obligated to make payment of the Face Value of
this Bond to the Depositary or its nominee, for credit to the
accounts of the Agent Members by or through which beneficial
interests in this Bond are held, by the close of business on
the Reset Date. Each such transfer shall be made against the
corresponding payment, and each such payment shall be made
against the corresponding transfer, in accordance with the
Depositary s Applicable Procedures. In all cases, the Company
shall remain obligated to make payment of accrued and unpaid
interest on this Bond, with interest payable on the Reset Date
being payable to the registered holder on the corresponding
Interest Payment Record Date.
If the Call Option Holder fails to pay the Face Value of
this Bond on the Reset Date, the Call Option shall be deemed
not to have been exercised and the Put Option shall be deemed
to have been exercised on this Bond. In these circumstances,
the registered holder on the Reset Date may not continue to
hold this Bond by giving an Effective Hold Notice, and the
Company will be obligated to pay, not later than two Business
Days following the Reset Date, the Put Price for this Bond
(including accrued interest from the Reset Date to but
excluding the date payment is made), with settlement otherwise
occurring as described in paragraph 5(b).
As used herein, (i) "Agent Member" means, at any time,
any person who is a member of, or participant in, the
Depositary at such time and (ii) "Applicable Procedures"
means, with respect to any payment, transfer or other
transaction to be effected with respect to a Global Security,
through the facilities of the Depositary at any time, the
policies and procedures of the Depositary applicable to such
transaction, as in effect at such time.
(b) If the Put Option is exercised as to this Bond,
then, on the Reset Date, all beneficial interests in this Bond
held by or through Agent Members shall be transferred to a
Depositary account designated by the Company. The transfers
shall be made automatically, without any action on the part of
any holder or beneficial owner, by book entry through the
facilities of the Depositary. The Company shall be obligated
to make payment of the Put Price of this Bond to the
Depositary or its nominee, for credit to the accounts of the
Agent Members by or through which beneficial interests in this
Bond are held, by the close of business on the Reset Date.
Each such transfer shall be made against the corresponding
payment, and each such payment shall be made against the
corresponding transfer, in accordance with the Depositary's
Applicable Procedures. If the Company fails to pay the Put
Price for this Bond on the Reset Date, accrued interest at the
then applicable rate from the Reset Date to the date the
payment is made shall be payable as part of such Put Price, in
the same manner and for credit to the same accounts as such
Put Price. Whether or not purchased pursuant to the Put
Option, the Company shall remain obligated to make payment of
accrued and unpaid interest on this Bond, with interest
payable on the Reset Date being payable to the registered
holder on the corresponding Interest Payment Record Date as
provided herein and in the Indenture.
(c) The transactions described in paragraphs 5(a) and
5(b) above shall be executed on the Reset Date through the
facilities of the Depositary in accordance with its Applicable
Procedures, and the accounts of the respective Agent Members
shall be debited and credited and beneficial interests in this
Bond shall be delivered by book entry as necessary to effect
the purchases and sales provided for above. Unless the
Depositary's Applicable Procedures require otherwise, such
transactions shall settle, and all other payments in respect
of the Bonds shall be made, in immediately available funds
through DTC's Same-Day Funds Settlement System.
Notwithstanding any provision hereof or of the Indenture,
neither the Company, the Trustee, the Call Option Holder, nor
any agent of any such person, shall have any responsibility
with respect to the Applicable Procedures or for any payments,
transfers or other transactions, or any notices or other
communications, among the Depositary, its Agent Members, any
other direct or indirect participants therein and any
beneficial owners of a Global Security. For all purposes of
this Bond and the Indenture, any payment or notice to be made
or given with respect to this Bond by the Company or the Call
Option Holder shall be deemed made or given when made or given
to the Depositary or its nominee, in accordance with its
Applicable Procedures.
(d) The settlement procedures described in paragraphs
5(a), 5(b) and 5(c) above may be modified, notwithstanding any
contrary terms of the Bonds or the Indenture, to the extent
required by the Depositary. In addition, notwithstanding any
contrary terms of the Bonds or the Indenture, the Company may
modify the settlement procedures described in paragraphs 5(a),
5(b) and 5(c) above in order to facilitate the settlement
process.
(e) If any Bonds are issued in non-book-entry form, the
Company shall modify the provisions of paragraphs 5(a) through
5(d) above, inclusive, so as to ensure that the Reset Date
settlements of transactions in such Bonds are effected in as
comparable a manner as practical, provided that such modified
procedures shall not adversely affect the interests of the
holders of the outstanding Bonds in any material respect.
6. Optional Redemption.
-------------------
The Bonds will be redeemable, in whole or in part, at the
option of the Company at any time after the Reset Date at a
redemption price equal to the greater of (i) 100% of the
principal amount of the Bonds or (ii) as determined by a
Quotation Agent, the sum of the present values of the
remaining scheduled payments of principal and interest thereon
(not including any portion of such payments of interest
accrued as of the date of redemption) discounted to the date
of redemption on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury
Rate plus 12.5 basis points, plus, in each case, accrued
interest thereon to the date of redemption.
Notice of any redemption will be mailed at least 30 days
but not more than 60 days before the Redemption Date to each
holder of the Securities to be redeemed. Unless the Company
defaults in payment of the redemption price, on and after the
Redemption Date, interest will cease to accrue on the Bonds or
portions thereof called for redemption.
7. Covenant Defeasance.
-------------------
The Indenture contains provisions for defeasance at any
time of certain restrictive covenants and Events of Default
with respect to this Bond upon compliance with certain
conditions set forth therein.
8. Default, Waiver, Amendment and Enforcement.
------------------------------------------
(a) In case an Event of Default, as defined in the
Indenture, with respect to the Bonds shall have occurred and
be continuing, the principal of all outstanding Bonds may be
declared, and upon such declaration shall become, due and
payable, in the manner, with the effect and subject to the
conditions provided in the Indenture. The Indenture provides
that in the event of such a declaration, its consequences may
be rescinded and annulled (and the related default and its
consequences may be waived) with respect to all the Bonds by
the holders of not less than a majority in aggregate principal
amount of all the Bonds then outstanding, voting as a separate
class, in accordance with the provisions of, and in the
circumstances provided by and the conditions set forth in the
Indenture. It is also provided in the Indenture that the
holders of a majority in aggregate principal amount of the
Bonds at the time outstanding may, on behalf of the holders of
all of the Bonds, waive any past default under the Indenture
with respect to the Bonds and its consequences, except a
default in (i) the payment of interest on or principal of any
Bond or (ii) in respect of certain covenants or provisions
which cannot be modified or amended without the consent of the
holders of not less than a majority in principal amount of the
outstanding Bonds.
For all purposes of this Bond and the Indenture, any
amount payable by the Company in respect of the Put Price of
this or any other Bond (including any such amount payable by
the Company because the Call Option Holder fails to pay the
Face Value of any Bond after its exercise of the Call Option
as to this Bond) shall be deemed to be an amount payable by
the Company in respect of the principal of such Bond at its
maturity, and any default by the Company in paying such amount
shall be deemed to be a default in the payment of such
principal at maturity. No failure by the Call Option Holder to
purchase any Bond pursuant to the Call Option shall be deemed
to be a default under this Bond or the Indenture for any
purpose.
(b) The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of
not less than 50% in aggregate principal amount of the
Securities of all series to be affected at the time
outstanding, evidenced as provided in the Indenture, to
execute supplemental indentures for the purpose of adding any
provisions to, or changing in any manner or eliminating any of
the provisions of, the Indenture with respect to each such
series of Securities or modifying in any manner the rights of
the holders of each such series of Securities; provided,
however, that no such supplemental indenture, without the
consent of the holder of each outstanding security affected
thereby, shall (i) change the stated maturity of the principal
of, or any installment of principal of or interest on, any
Security or reduce the principal amount thereof, or (subject
to stated exceptions) reduce the rate of interest thereon or
any premium payable upon redemption, or reduce the amount of
the principal of an Original Issue Discount Security (as
defined) due and payable upon an acceleration thereof, or
change the place of payment of amounts due, or change the
currency in which any Security or any premium or interest
thereon is payable, or impair the right to institute suit for
the enforcement of any such payment on or after the Stated
Maturity thereof (or, in the case of redemption, on or after
the Redemption Date), (ii) reduce the percentage in principal
amount of securities of any series or of all series, the
consent of the holders of which is required for any such
supplemental indenture affecting this Bond or the consent of
which holders is required for waivers of certain conditions of
or a default under the Indenture; or (iii) modify any of the
provisions of the section discussed in this subsection (b) or
certain other sections, except to increase the percentages
discussed therein or to provide that other provisions of the
Indenture cannot be modified or waived without the consent of
the holders of each security affected thereby, subject to
certain exceptions enumerated in the Indenture.
(c) As provided in and subject to the provisions of the
Indenture, no holder of this Bond shall have the right to
institute any suit, action or proceeding with respect to the
Indenture, or for appointment of any receiver or trustee or
for any other remedy thereunder, unless an Event of Default
with respect to the Bonds shall have occurred and be
continuing and such holder previously shall have given the
Trustee written notice of default and the continuance thereof,
the holders of not less than 25% in aggregate principal amount
of the Bonds then outstanding shall have made written request
to the Trustee to institute such suit, action or proceeding
and shall have offered to the Trustee reasonable indemnity and
the Trustee, for 60 days after the receipt of such notice,
request and offer of indemnity, shall have neglected or
refused to institute the same and shall not have received any
direction inconsistent therewith from the holders of a
majority in aggregate principal amount of all affected
Securities then outstanding.
(d) No reference herein to the Indenture and no
provision of this Bond or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and
unconditional, to pay the principal or Put Price of and
interest on this Bond at the place, at the respective times,
at the rate and in the coin or currency herein prescribed.
(e) Any consent, waiver or other action by the
registered holder of this Bond provided pursuant to this Bond
or the Indenture (unless effectively revoked as provided in
the Indenture) shall be conclusive and binding upon such
holder and upon all future holders of this Bond and of any
Bond issued in exchange or substitution herefor, irrespective
of whether or not any notation of such consent or waiver is
made upon this Bond or such other Bond.
9. Form and Denomination; Global Securities.
----------------------------------------
(a) The Bonds are issuable as fully registered Bonds
without coupons in the denominations of $1,000 and any whole
multiple of $1,000. At the corporate trust office of the
Trustee referred to on the face hereof, and in the manner and
subject to the limitations provided herein and in the
Indenture, Bonds may be exchanged for a like aggregate
principal amount of Bonds of other authorized denominations,
without payment of any charge other than a sum sufficient to
reimburse the Company for any tax or other governmental charge
incident thereto.
(b) The transfer of this Bond is registrable by the
registered holder hereof in person or by his attorney, duly
authorized in writing, on the books of the Company at the
office or agency of the Company referred to on the face
hereof, subject to the terms of this Bond and the Indenture
but without payment of any charge other than a sum sufficient
to reimburse the Company for any tax or other governmental
charge incident thereto, and upon surrender and cancellation
of this Bond upon any such transfer, a new Bond or Bonds of
authorized denomination or denominations, for the same
aggregate principal amount, shall be issued to the transferee
in exchange herefor.
(c) The Bond evidenced by this certificate has been
issued in the form of a Global Security and, for as long as
this Bond shall be issued in such form, the provisions of
paragraphs (c)(i) through (c)(iv), inclusive, below shall
apply to this Bond.
(i) Notwithstanding any other provision of this
Bond or the Indenture, this Global Security may not be
exchanged in whole or in part for Bonds registered, and
no transfer of this Global Security in whole or in part
may be registered, in the name of any person other than
the Depositary or a nominee thereof unless (A) the
Depositary has notified the Company that (1) it is
unwilling or unable to continue as Depositary or (2) has
ceased to be a clearing agency registered under the
Exchange Act or (B) there shall have occurred and be
continuing an Event of Default with respect to the Bonds,
or except as the Company may request in order to
facilitate the purchase of this Bond or any portion
hereof by the Call Option Holder pursuant to the Call
Option or by the Company pursuant to the Put Option
(provided that, after consummation of any such purchase
pursuant to the Call Option, the Bond or portion so
purchased may be reissued in the form of a Global
Security in accordance with the Applicable Procedures).
(ii) Subject to paragraph (c)(i) above, any exchange
of this Global Security for other Bonds may be made in
whole or in part, and all Bonds issued in exchange for
this Global Security or any portion hereof shall be
registered in such names and delivered to such persons
as the Depositary shall direct.
(iii) Every Bond authenticated and delivered
upon registration of transfer of, or in exchange for or
in lieu of, this Global Security or any portion hereof
shall be issued and authenticated in the form of, and
shall be, a Global Security, shall bear such legend as
the Depositary may require and shall be delivered to the
Depositary or a nominee thereof or custodian therefor,
unless such Bond is registered in the name of a person
other than the Depositary or a nominee thereof.
(iv) As used herein, (A) "Global Security" means a
Bond that evidences all or any portion of the Bonds and
is registered in the name of the Depositary (or its
nominee), (B) "Depositary" means a clearing agency
registered under the Exchange Act and designated by the
Company to act as Depositary for the Bonds issued in
book-entry form, and (C) "Exchange Act" means the
Securities Exchange Act of 1934 (or any successor
provision) as amended from time to time.
10. Holder.
------
The Company, the Trustee and the Call Option Holder (and
any agent of any such person) may treat the person in whose
name this Bond shall be registered as of the date of
determination upon the books of the Company kept for such
purpose pursuant to the Indenture as the sole and absolute
owner and holder of this Bond (whether or not this Bond shall
be overdue and notwithstanding any notation of ownership or
other writing hereon) for all purposes, including the making
of any payment in respect hereof, any exercise of the Call
Option or the Put Option and consummation of any sale and
purchase hereof pursuant thereto, the giving of any Call
Notice, Hold Notice or other notice with respect hereto, and
the giving of any consent or taking of any other action with
respect hereto, and neither the Company nor the Trustee or the
Call Option Holder or any such agent shall be affected by any
notice to the contrary.
11. Notices.
-------
For as long as this Bond (or any portion hereof) is
issued in the form of a Global Security, each Call Notice, 10%
Requirement Notice and any other notice to be given to the
holder of this Bond (or any such portion) shall be deemed to
have been duly given to such holder when given to the
Depositary, or its nominee, in accordance with its Applicable
Procedures.
If at any time this Bond (or any portion hereof) is not
issued in the form of a Global Security, each Call Notice, 10%
Requirement Notice and any other notice to be given to the
holder of this Bond (or any such portion) shall be deemed to
have been duly given to such holder upon the mailing of such
notice to the registered holder at such holder's address as it
appears on the books of the Company maintained for such
purpose pursuant to the Indenture as of the close of business
preceding the day such notice is given.
Neither the failure to give any notice nor any defect in
any notice given to the holder of this Bond or any other Bond
shall affect the sufficiency of any notice given to another
holder of any Bonds.
With respect to this Bond, whether or not issued in the
form of a Global Security, Hold Notices may be given by the
registered holder hereof to the Trustee only by facsimile
transmission or by mail and must actually be received by the
Trustee at the following address no later than 10:00 A.M., New
York City time, on the seventh Market Day prior to the Reset
Date:
Star Bank, National Association
425 Walnut Street, P.O. Box 1118
Cincinnati, Ohio 45201-1118
Attention: Corporate Trust Administration
Facsimile no.: (513) 632-5511
Hold Notices may be given with respect to this Bond only by
the registered holder hereof.
12. No Recourse.
-----------
No recourse shall be had for the payment of the principal
of, or the interest on, this Bond or of the Face Value upon
any exercise of the Call Option or of the Put Price upon any
exercise of the Put Option, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the
Indenture or any indenture supplemental thereto, against any
incorporator, stockholder, officer or director, as such, past,
present or future, of the Company or of any successor
corporation or entity, whether by virtue of any constitution,
statute or rule of law or by the enforcement of any assessment
or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the
issue hereof, expressly waived and released.
13. Provisions Relating to the Call Option Holder.
---------------------------------------------
Insofar as the provisions of this Bond purport to provide
rights to the Call Option Holder against any holder of this
Bond, such rights (including such rights to purchase this Bond
pursuant to the Call Option) shall be rights of the Company
and shall be enforceable by the Company against such holder.
Each holder of this Bond shall hold this Bond (and by holding
the same shall be deemed to have agreed to do so) subject to
the foregoing. Without limiting the foregoing, the Call Option
Holder may take any action under this Bond (including giving
any notice, making any determination and effecting any
settlement pursuant to paragraphs 2, 4 and 5 hereof) that the
provisions of this Bond contemplate may be taken by the Call
Option Holder.
Pursuant to section 6 of the Calculation Agency
Agreement, dated as of June 26, 1998, the Call Option Holder
has agreed with the Company, for the benefit of the applicable
holder of this Bond from time to time, that, if the Call
Option Holder exercises the Call Option, the Call Option
Holder will purchase this Bond from the registered holder
hereof on the Reset Date, upon the terms and subject to the
conditions set forth herein. Except as may be expressly
provided in section 6 of such agreement, no holder of this
Bond shall have any right, remedy or claim against the Call
Option Holder under this Bond, the Indenture or such
agreement.
No provision of this Bond shall be invalid or
unenforceable by reason of any reference herein to the Call
Option Holder. In addition, no provision of this paragraph
shall be construed to impair or otherwise affect any rights
that the Call Option Holder may have at any time as a holder
of any Securities.
14. Governing Law.
-------------
As provided in the Indenture, this Bond shall for all
purposes be governed by and construed in accordance with the
laws of the State of New York.
ARTICLE THREE
THE SERIES OF SECURITIES
Section 301. Title and Terms.
---------------
There shall be a series of Securities designated as the
"Puttable Reset Securities PURSSM due July 1, 2010" of the
Company. Their Stated Maturity shall be July 1, 2010, and
they shall bear interest as set forth on the reverse side of
the Security.
Certain terms of the Securities are set forth on the face
and the reverse of the Security.
The Securities of this series are not subject to a
sinking fund and the provisions of Section 501(3) and Article
Twelve of the Indenture shall not be applicable to the
Securities of this series.
ARTICLE FOUR
MODIFICATIONS AND ADDITIONS TO THE INDENTURE
Section 401. Modifications to the Consolidation, Merger,
Conveyance, Transfer or Lease Provisions.
-------------------------------------------
With respect to the Securities of this series, each of
Sections 801 and 802 of the Indenture shall be deleted in its
entirety and the following shall be substituted therefor:
"Section 801. Covenant Not to Merge, Consolidate, Sell
or Convey Property Except Under Certain
Conditions.
-----------------------------------------
The Company covenants that it will not merge with or into
or consolidate with any corporation, partnership, or
other entity or sell, lease or convey all or
substantially all of its assets to any other Person,
unless (i) either the Company shall be the continuing
corporation, or the successor entity or the Person which
acquires by sale, lease or conveyance all or
substantially all the assets of the Company (if other
than the Company) shall be a corporation or partnership
organized under the laws of the United States of America or
any State thereof or the District of Columbia and
shall expressly assume all obligations of the Company
under this Indenture and the Securities of the series
created by the Second Supplemental Indenture, including
the due and punctual payment of the principal of and
interest on all the Securities of the series created by
the Second Supplemental Indenture according to their
tenor, and the due and punctual performance and
observance of all of the covenants and conditions of the
Indenture to be performed or observed by the Company, by
supplemental indenture in form satisfactory to the
Trustee, executed and delivered to the Trustee by such
entity, and (ii) the Company, such person or such
successor entity, as the case may be, shall not,
immediately after such merger or consolidation, or such
sale, lease or conveyance, be in default in the
performance of any such covenant or condition and,
immediately after giving effect to such transaction, no
Event of Default, and no event which, after notice or
lapse of time or both, would become an Event of Default,
shall have happened and be continuing.
Section 802. Successor Substituted
---------------------
Upon any consolidation of the Company with, or merger of
the Company into, any other Person or any sale, lease or
conveyance of all or substantially all of the assets of
the Company in accordance with Section 801, the successor
Person formed by such consolidation or into which the
Company is merged or to which such sale, lease or
conveyance is made shall succeed to, and be substituted
for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if
such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease,
the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the
Securities."
Section 402. Other Modifications.
-------------------
With respect to the Securities of this series, the
Indenture shall be modified as follows:
(a) The eighth paragraph of Section 305 of the Indenture
shall be deleted in its entirety and the following shall be
substituted therefor:
"As long as the Depositary, or its nominee, is the
registered holder of a Global Security, the Depositary or
such nominee, as the case may be, will be considered the
sole owner and holder of such Global Security and the
Securities represented thereby for all purposes under the
Securities and the Indenture. Except in the limited
circumstances referred to above, owners of beneficial
interests in a Global Security will not be entitled to
have such Global Security or any Securities represented
thereby registered in their names, will not receive or be
entitled to receive physical delivery of certificated
Securities in exchange therefor and will not be
considered to be the owners or holders of such Global
Security or any Securities represented thereby for any
purpose under the Securities or the Indenture. All
payments of principal of and interest on a Global
Security will be made to the Depositary or its nominee, as
the case may be, as the holder thereof. The laws of some
jurisdictions require that certain purchasers of
securities take physical delivery of such securities in
definitive form. These laws may impair the ability to
transfer beneficial interests in a Global Security."
(b) Section 401 of the Indenture shall be modified by
adding to the end of such Section the following paragraph:
"For the purpose of this Section 401, trust funds may
consist of (A) money in an amount, or (B) U.S. Government
Obligations (as defined in Section 1304) which through
the scheduled payment of principal and interest in
respect thereof in accordance with their terms will
provide, not later than one day before the due date of
any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered to
the Trustee, to pay and discharge, the principal of,
premium, if any, and each installment of interest on the
Securities of this series on the Stated Maturity of such
principal or installment of interest on the day on which
such payments are due and payable in accordance with the
terms of this Indenture and of such Securities of this
series."
Section 403. Additional Covenants; Covenant Defeasance.
-----------------------------------------
(a) With respect to the Securities of this series, the
following provisions shall be added as Sections 1009 and 1010
and as Article Thirteen (Section references contained in these
additional provisions are to the Indenture as supplemented by
this Second Supplemental Indenture):
"Section 1009. Limitations on Liens.
--------------------
After the date hereof and so long as any Securities of
the series created by the Second Supplemental Indenture
are Outstanding, the Company will not issue, assume or
guarantee, and will not permit any Restricted Subsidiary
to issue, assume or guarantee, any Indebtedness which is
secured by a mortgage, pledge, security interest, lien or
encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in the
nature thereof, and any agreement to give any of the
foregoing) (each being hereinafter referred to as a
"lien" or "liens") of or upon any Operating Property or
Operating Asset, whether now owned or hereafter acquired,
of the Company or any Restricted Subsidiary without
effectively providing that the Securities of the series
created by the Second Supplemental Indenture (together
with, if the Company shall so determine, any other
Indebtedness of the Company ranking equally with the
Securities) shall be equally and ratably secured by a
lien on such assets ranking ratably with and equal to (or
at the Company's option prior to) such secured
Indebtedness; provided that the foregoing restriction
shall not apply to:
(a) liens on any property or assets of any corporation
existing at the time such corporation becomes a
Restricted Subsidiary provided that such lien does not
extend to any other property of the Company or any of its
Restricted Subsidiaries;
(b) liens on any property or assets (including stock)
existing at the time of acquisition of such property or
assets by the Company or a Restricted Subsidiary, or
liens to secure the payment of all or any part of the
purchase price of such property or assets (including
stock) upon the acquisition of such property or assets
by the Company or a Restricted Subsidiary or to secure
any indebtedness incurred, assumed or guaranteed by the
Company or a Restricted Subsidiary for the purpose of
financing all or any part of the purchase price of such
property or, in the case of real property, construction
or improvements thereon or attaching to property
substituted by the Company to obtain the release of a
lien on other property of the Company on which a lien
then exists, which indebtedness is incurred, assumed or
guaranteed prior to, at the time of, or within 18 months
after such acquisition (or in the case of real property,
the completion of construction (including any
improvements on an existing asset) or commencement of
full operation at such property, whichever is later
(which in the case of a retail store is the opening of
the store for business to the public)); provided that in
the case of any such acquisition, construction or
improvement, the lien shall not apply to any other
property or assets theretofore owned by the Company or a
Restricted Subsidiary;
(c) liens on any property or assets to secure
Indebtedness of a Restricted Subsidiary to the Company
or to another Restricted Subsidiary;
(d) liens on any property or assets of a corporation
existing at the time such corporation is merged into or
consolidated with the Company or a Restricted Subsidiary
or at the time of a purchase, lease or other acquisition
of the assets of a corporation or firm as an entirety or
substantially as an entirety by the Company or a
Restricted Subsidiary provided that such lien does not
extend to any other property of the Company or any of its
Restricted Subsidiaries;
(e) liens on any property or assets of the Company or a
Restricted Subsidiary in favor of the United States of
America or any State thereof, or any department, agency
or instrumentality or political subdivision of the United
States of America or any State thereof, or in favor of
any other country, or any political subdivision thereof,
to secure partial, progress, advance or other payments
pursuant to any contract or statute or to secure any
Indebtedness incurred or guaranteed for the purpose of
financing all or any part of the purchase price (or, in
the case of real property, the cost of construction) of
the property or assets subject to such liens (including,
but not limited to, liens incurred in connection with
pollution control, industrial revenue or similar
financings);
(f) liens existing on properties or assets of the
Company or any Restricted Subsidiary existing on the date
hereof; provided that such liens secure only those
obligations which they secure on the date hereof or any
extension, renewal or replacement thereof;
(g) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in
part, of any lien referred to in the foregoing clauses
(a) through (f), inclusive; provided that such extension,
renewal or replacement shall be limited to all or a part
of the property or assets which secured the lien so
extended, renewed or replaced (plus improvements and
construction on real property);
(h) liens imposed by law, such as mechanics',
workmen's, repairmen's, materialmen's, carriers',
warehouseman's, vendors', or other similar liens arising
in the ordinary course of business of the Company or a
Restricted Subsidiary, or governmental (federal, state or
municipal) liens arising out of contracts for the sale
of products or services by the Company or any Restricted
Subsidiary, or deposits or pledges to obtain the release
of any of the foregoing liens;
(i) pledges, liens or deposits under worker's
compensation laws or similar legislation and liens or
judgments thereunder which are not currently
dischargeable, or in connection with bids, tenders,
contracts (other than for the payment of money) or leases
to which the Company or any Restricted Subsidiary is a
party, or to secure the public or statutory obligations
of the Company or any Restricted Subsidiary, or in
connection with obtaining or maintaining self-insurance
or to obtain the benefits of any law, regulation or
arrangement pertaining to unemployment insurance, old age
pensions, social security or similar matters, or to
secure surety, appeal or customs bonds to which the
Company or any Restricted Subsidiary is a party, or in
litigation or other proceedings such as, but not limited
to, interpleader proceedings, and other similar pledges,
liens or deposits made or incurred in the ordinary course
of business;
(j) liens created by or resulting from any litigation or
other proceeding which is being contested in good faith
by appropriate proceedings, including liens arising out
of judgments or awards against the Company or any
Restricted Subsidiary with respect to which the Company
or such Restricted Subsidiary is in good faith
prosecuting an appeal or proceedings for review or for
which the time to make an appeal has not yet expired; or
final unappealable judgment liens which are satisfied
within 30 days of the date of judgment; or liens incurred
by the Company or any Restricted Subsidiary for the
purpose of obtaining a stay or discharge in the course
of any litigation or other proceeding to which the
Company or such Restricted Subsidiary is a party;
(k) liens for taxes or assessments or governmental
charges or levies not yet due or delinquent, or which can
thereafter be paid without penalty, or which are being
contested in good faith by appropriate proceedings;
landlord's liens on property held under lease; and any
other liens or charges incidental to the conduct of the
business of the Company or any Restricted Subsidiary or
the ownership of the property or assets of any of them
which were not incurred in connection with the borrowing
of money or the obtaining of advances or credit and which
do not, in the opinion of the Company, materially impair
the use of such property or assets in the operation of
the business of the Company or such Restricted Subsidiary
or the value of such property or assets for the purposes
of such business; or
(l) liens not permitted by clauses (a) through (k) above
if at the time of, and after giving effect to, the
creation or assumption of any such lien, the aggregate
amount of all Indebtedness of the Company and its
Restricted Subsidiaries secured by all such liens not so
permitted by clauses (a) through (k) above together with
the Attributable Debt in respect of Sale and Lease-Back
Transactions permitted by paragraph (a) of Section 1010
does not exceed 10% of Consolidated Net Tangible Assets.
Section 1010. Limitations on Sale and Lease-Back
Transactions.
----------------------------------
After the date hereof and so long as any Securities of
the series created by the Second Supplemental Indenture
are Outstanding, the Company agrees that it will not,
and will not permit any Restricted Subsidiary to, enter
into any arrangement with any Person providing for the
leasing by the Company or a Restricted Subsidiary of any
Operating Property or Operating Asset (other than any
such arrangement involving a lease for a term, including
renewal rights, for not more than 3 years and leases
between the Company and a Restricted Subsidiary or
between Restricted Subsidiaries), whereby such Operating
Property or Operating Asset has been or is to be sold or
transferred by the Company or any Restricted Subsidiary
to such Person (herein referred to as a "Sale and
Lease-Back Transaction"), unless:
(a) the Company or such Restricted Subsidiary would, at
the time of entering into a Sale and Lease-Back
transaction, be entitled to incur Indebtedness secured
by a lien on the Operating Property or Operating Asset to
be leased in an amount at least equal to the Attributable
Debt in respect of such Sale and Lease-Back Transaction
without equally and ratably securing the Securities of
the series created by the Second Supplemental Indenture
pursuant to Section 1009; or
(b) the proceeds of the sale of the Operating Property
or Operating Asset to be leased are at least equal to the
fair market value of such Operating Property or Operating
Asset (as determined by the chief financial officer or
chief accounting officer of the Company) and an amount in
cash equal to the net proceeds from the sale of the
Operating Property or Operating Asset so leased is
applied, within 180 days of the effective date of any
such Sale and Lease-Back Transaction, to the purchase or
acquisition (or, in the case of Operating Property, the
construction) of Operating Property or Operating Assets
or to the retirement, repurchase, redemption or repayment
(other than at maturity or pursuant to a mandatory
sinking fund or redemption provision and other than
Indebtedness owned by the Company or any Restricted
Subsidiary) of Securities of the series created by the
Second Supplemental Indenture or of Funded Indebtedness
of the Company ranking on a parity with or senior to the
Securities of the series created by the Second
Supplemental Indenture, or in the case of a Sale and
Lease-Back Transaction by a Restricted Subsidiary, of
Funded Indebtedness of such Restricted Subsidiary;
provided that in connection with any such retirement, any
related loan commitment or the like shall be reduced in
an amount equal to the principal amount so retired.
The foregoing restriction shall not apply to, in the case
of any Operating Property or Operating Asset acquired or
constructed subsequent to the date eighteen months prior
to the date of this Indenture, any Sale and Lease-Back
Transaction with respect to such Operating Asset or
Operating Property (including presently owned real
property upon which such Operating Property is to be
constructed) if a binding commitment is entered into with
respect to such Sale and Lease-Back Transaction within 18
months after the later of the acquisition of the
Operating Property or Operating Asset or the completion
of improvements or construction thereon or commencement
of full operations at such Operating Property (which in
the case of a retail store is the opening of the store
for business to the public).
ARTICLE THIRTEEN
COVENANT DEFEASANCE
Section 1301. Company's Option to Effect Covenant
Defeasance.
-----------------------------------
The Company may at its option by Board Resolution, at any
time, elect to have Section 1302 applied to the
Outstanding Securities of this series upon compliance
with the conditions set forth below in this Article
Thirteen.
Section 1302. Covenant Defeasance.
-------------------
Upon the Company's exercise of the option provided in
Section 1301 applicable to this Section, the Company
shall be released from its obligations under Section
501(4) (in respect of the covenants in Sections 1008
through 1010), Section 801 and Sections 1008 through
1010, on and after the date the conditions set forth
below are satisfied (hereinafter, "covenant Defeasance").
For this purpose, such covenant Defeasance means that the
Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation
set forth in any such Section, whether directly or
indirectly, by reason of any reference elsewhere herein
to any such Section or by reason of any reference in any
such Section to any other provision herein or in any
other document, but the remainder of this Indenture and
such Securities of this series shall be unaffected
thereby.
Section 1303. Conditions to Covenant Defeasance.
---------------------------------
The following shall be the conditions to application of
Section 1302 to the Outstanding Securities of this
series:
(1) The Company shall irrevocably have deposited or
caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 609 who
shall agree to comply with the provisions of this Article
Thirteen applicable to it) as trust funds in trust for
the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such Securities
of this series, (A) money in an amount, or (B) U.S.
Government Obligations which through the scheduled
payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than
one day before the due date of any payment, money in an
amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal
of, premium, if any, and each installment of interest on
the Securities of this series on the Stated Maturity of
such principal or installment of interest on the day on
which such payments are due and payable in accordance
with the terms of this Indenture and of such Securities
of this series. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct
obligations of the United States of America for the
payment of which its full faith and credit is pledged or
(y) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United
States of America the payment of which is unconditionally
guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not
callable or redeemable at the option of the Company
thereof, and shall also include a depository receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act of 1933, as amended) as custodian with
respect to any such U.S. Government Obligation or a
specific payment of principal of or interest on any such
U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt,
provided that (except as required by law) such custodian
--------
is not authorized to make any deduction from the amount
payable to the holder of such depositary receipt from any
amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of
principal of or interest on the U.S. Government
Obligation evidenced by such depositary receipt.
(2) No Event of Default or event which with notice or
lapse of time or both would become an Event of Default
shall have occurred and be continuing on the date of such
deposit or, insofar as subsections 501(6) and (7) are
concerned, at any time during the period ending on the
121st day after the date of such deposit (it being
understood that this condition shall not be deemed
satisfied until the expiration of such period).
(3) Such covenant Defeasance shall not cause the Trustee
to have a conflicting interest as defined in Section 608
and for purposes of the Trust Indenture Act with respect
to any securities of the Company.
(4) Such covenant Defeasance shall not result in a
breach or violation of, or constitute a default under,
this Indenture or any other agreement or instrument to
which the Company is a party or by which it is bound.
(5) The Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each
stating that all conditions precedent provided for
relating to covenant Defeasance under Section 1302 have
been complied with.
Section 1304. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other
Miscellaneous Provisions.
---------------------------------------
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee collectively, for
purposes of this Section 1304, the "Trustee") pursuant to
Section 1303 in respect of the Securities of this series
shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities of this
series and this Indenture, to the payment, either
directly or through any Paying Agent (including the
Company acting as its own Paying Agent) as the Trustee
may determine, to the Holders of such Securities of this
series, of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest,
but such money need not be segregated from other funds
except to the extent required by law.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed
against the U.S. Government Obligations deposited
pursuant to Section 1303 or the principal and interest
received in respect thereof other than any such tax, fee
or other charge which by law is for the account of the
Holders of the Outstanding Securities of this series.
Anything in this Article Thirteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the
Company from time to time upon Company Request any money
or U.S. Government Obligations held by it as provided in
Section 1303 which, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered to
the Trustee, are in excess of the amount thereof which
would then be required to be deposited to effect an
equivalent covenant Defeasance.
Section 1305. Reinstatement.
-------------
If the Trustee or the Paying Agent is unable to apply any
money in accordance with Section 1302 by reason of any
order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this
Indenture and the Securities of this series shall be
revived and reinstated as though no deposit had occurred
pursuant to this Article Thirteen until such time as the
Trustee or Paying Agent is permitted to apply all such
money in accordance with Section 1302; provided, however,
-------- -------
that if the Company makes any payment of principal of
(and premium, if any) or interest on any Security of this
series following the reinstatement of its obligations,
the Company shall be subrogated to the rights of the
Holders of such Securities of this series to receive such
payment from the money held by the Trustee or the Paying
Agent."
Section 404. Redemption of Securities.
------------------------
With respect to Securities of this series, Section 1101
of the Indenture shall be deleted in its entirety and the
following shall be substituted therefor:
"Section 1101. Optional Redemption.
-------------------
The Securities will be redeemable, in whole or in part,
at the option of the Company at any time after the Reset
Date at a redemption price equal to the greater of (i)
100% of the principal amount of such Securities or (ii)
as determined by a Quotation Agent, the sum of the
present values of the remaining scheduled payments of
principal and interest thereon (not including any portion
of such payments of interest accrued as of the date of
redemption) discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate plus
12.5 basis points plus, in each case, accrued interest
thereon to the date of redemption."
ARTICLE FIVE
MISCELLANEOUS
Section 501. Miscellaneous.
(a) The Trustee accepts the trusts created by the
Indenture, as supplemented by this Second Supplemental
Indenture, and agrees to perform the same upon the terms and
conditions of the Indenture, as supplemented by this Second
Supplemental Indenture.
(b) The recitals contained herein shall be taken as
statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Second Supplemental Indenture.
(c) All capitalized terms used and not defined herein
shall have the respective meanings assigned to them in the
Indenture.
(d) Each of the Company and the Trustee makes and
reaffirms as of the date of execution of this Second
Supplemental Indenture all of its respective representations,
covenants and agreements set forth in the Indenture.
(e) All covenants and agreements in this Second
Supplemental Indenture by the Company or the Trustee shall
bind its respective successors and assigns, whether so
expressed or not.
(f) In case any provisions in this Second Supplemental
Indenture shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired
thereby.
(g) Nothing in this Second Supplemental Indenture,
express or implied, shall give to any Person, other than the
parties hereto and their successors under the Indenture and
the Holders of the series of Securities created hereby, any
benefit or any legal or equitable right, remedy or claim under
the Indenture.
(h) If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act of 1939,
as may be amended from time to time, that is required under
such Act to be a part of and govern this Second Supplemental
Indenture, the latter provision shall control. If any
provision hereof modifies or excludes any provision of such
Act that may be so modified or excluded, the latter provision
shall be deemed to apply to this Second Supplemental Indenture
as so modified or excluded, as the case may be.
(i) This Second Supplemental Indenture shall be governed
by and construed in accordance with the laws of the State of
New York.
(j) All amendments to the Indenture made hereby shall
have effect only with respect to the series of Securities
created hereby.
(k) All provisions of this Second Supplemental Indenture
shall be deemed to be incorporated in, and made a part of, the
Indenture; and the Indenture, as supplemented by this Second
Supplemental Indenture, shall be read, taken and construed as
one and the same instrument.
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together
constitute but one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day
and year first above written.
THE KROGER CO.
By____________________________
Name:
Title:
Attest:
____________________________
Assistant Secretary
STAR BANK, NATIONAL ASSOCIATION,
as Trustee
By____________________________
Name:
Title:
Attest:
____________________________
Assistant Secretary
<PAGE>
STATE OF _________ )
) ss.:
COUNTY OF _______ )
On the th day of ___, 1998, before me personally came
___________________, to me known, who, being by me duly sworn,
did depose and say that he is _____________ of The Kroger Co.,
one of the corporations described in and which executed the
foregoing instrument; that he knows the seal of said
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his
name thereto by like authority.
______________________________
Notary Public
STATE OF __________ )
) ss.:
COUNTY OF ________ )
On the th day of _____, 1998, before me personally came
_________________, to me known, who, being by me duly sworn,
did depose and say that he is a _____________ of Star Bank,
National Association one of the corporations described in and
which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation, and
that he signed his name thereto by like authority.
______________________________
Notary Public
<PAGE>
CALCULATION AGENCY AGREEMENT
BETWEEN
THE KROGER CO.
AND
J.P. MORGAN SECURITIES INC.
June 26, 1998
The Kroger Co., an Ohio corporation (the "Company"), proposes to issue and sell
$200,000,000 aggregate principal amount of its Puttable Reset Securities (PURS)
due July 1, 2010 (the "Bonds") in accordance with the terms of the Indenture,
dated as of May 1, 1998, as amended by the First Supplemental Indenture, dated
as of May 11, 1998 and the Second Supplemental Indenture, dated as of June 26,
1998 (collectively, the "Indenture"), in each case between the Company and Star
Bank, N.A., as trustee (the "Trustee"). Terms used but not defined herein shall
have the meanings assigned to them in the Bonds.
For the purpose of appointing an agent to perform the functions of Calculation
Agent as described in the Bonds, and for other reasons related thereto, the
Company and J.P. Morgan Securities Inc. hereby agree as follows (it being
understood that the references to J.P. Morgan Securities Inc. in subsection 1
through 4 below mean such firm in its capacity as Calculation Agent, in sections
5 and 6 below mean such firm in its individual capacity and not as Calculation
Agent, and in sections 7 through 12 below mean such firm in either capacity, as
the context may require):
1. Upon the terms and subject to the conditions contained herein, the Company
hereby appoints J.P. Morgan Securities Inc. as agent (solely in such capacity,
the "Calculation Agent") for the purpose of performing the functions of
Calculation Agent as described in the Bonds.
2. (a) Subject to sections 3 and 4 below, the Calculation Agent agrees to
perform the functions of the Calculation Agent described in the Bonds. The
Calculation Agent shall require each financial institution that is to act as a
Reference Dealer to execute a Reference Dealer agreement substantially in the
form attached hereto as Annex A, with such changes as J.P. Morgan Securities
Inc., in its individual capacity, reasonably may request with the approval of
the Company.
(b) Upon the request of a registered holder of Bonds, the Trustee or the
Company, the Calculation Agent shall inform such holder, the Trustee or the
Company of the results of any calculation or determination.
3. The Calculation Agent accepts and agrees to perform its obligations set
forth herein, upon the terms and subject to the conditions hereof, including the
following, to all of which the Company and the Trustee agree:
(a) The Company promises to reimburse the Calculation Agent for the
reasonable out-of-pocket expenses (including counsel fees and expenses) incurred
by it in connection with the services rendered hereunder by it as Calculation
Agent upon receipt of such invoices as the Company shall reasonably require.
The Company also agrees to indemnify the Calculation Agent for, and to hold it
harmless against, any and all loss, liability, damage, claims or expense
(including the costs and expenses, including reasonable legal fees and expenses,
of defending against any claim of liability) incurred by the Calculation Agent
that arises out of or in connection with its acting as Calculation Agent
hereunder, except such as may result from the gross negligence or bad faith of
the Calculation Agent. The Calculation Agent shall incur no liability to and
shall be indemnified and held harmless by the Company for, or in respect of, any
actions taken, omitted to be taken or suffered to be taken in good faith by the
Calculation Agent in reasonable reliance upon (i) the written opinion of counsel
satisfactory to it or (ii) instructions from the Trustee or the Company. The
Calculation Agent shall not be liable for any error resulting from the use of or
reliance on a source of information used in good faith and with due care to make
any determination, calculation or declaration hereunder. In no event shall the
Calculation Agent be liable for special, indirect or consequential loss or
damage of any kind whatsoever (including but not limited to lost profits),
even if the Calculation Agent has been advised of the likelihood of such
loss or damage and regardless of the form of action. The provisions of this
paragraph shall survive the termination of this Agreement.
(b) In acting under this Agreement and in connection with the Bonds, the
Calculation Agent is acting solely as agent of the Company and does not assume
any obligations to, or relationship of agency or trust for or with, any of
the owners or holders of the Bonds.
(c) Notwithstanding any other provision to the contrary set forth in this
Agreement, the Calculation Agent shall be protected against and shall incur no
liability for or in respect of any action taken or omitted to be taken or
anything suffered by it in reliance upon the terms of the Bonds or any notice,
direction, certificate, affidavit, statement or other paper, document or
communication reasonably believed by it to be genuine and to have been approved
or signed by the proper party or parties.
(d) The Calculation Agent shall be obligated to perform such duties and
only such duties as are specifically set forth for the Calculation Agent herein
or in the Bonds, and no implied duties or obligations shall be read into this
Agreement against the Calculation Agent.
(e) The Calculation Agent may, upon obtaining the prior written consent of
the Company, perform any duties hereunder through agents or attorneys, and the
Calculation Agent shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it hereunder.
(f) The Company will not, without first obtaining the prior written
consent of the Calculation Agent, make any change to the terms of the Bonds
if such change would materially and adversely affect the Calculation Agent's
rights, duties and obligations under this Agreement.
(g) The Calculation Agent shall be protected and shall incur no liability
for or in respect of any action taken or omitted to be taken in good faith or
anything suffered in good faith by it in reliance upon anything contained in the
Bonds, the Indenture, the Prospectus Supplement dated June 23, 1998 or the
Prospectus dated April 29, 1998 relating to the Bonds (together, the
Prospectus ) or any information supplied to the Calculation Agent by the Company
pursuant to this Agreement excluding any information supplied by the Calculation
Agent in any capacity.
(h) The Calculation Agent, whether acting for itself or in any other
capacity, its partners, officers, directors, employees and shareholders or any
affiliate of the Calculation Agent may become the owner, holder or pledgee of
Bonds (or the owner, holder, pledgee or obligor with respect to any option, swap
or other contract related thereto) with the same rights as it would have had if
it were not acting hereunder as Calculation Agent and may engage or be
interested in any financial or other transaction with the Company as fully as if
it were not the Calculation Agent.
(i) The Calculation Agent shall promptly provide to the Trustee a written
report of all determinations and calculations required to be made by the
Calculation Agent pursuant to the terms of this Agreement and the Bonds. The
Trustee may conclusively rely on all of the information provided to it pursuant
to the preceding sentence without further investigation on its behalf.
Any determination or calculation made by the Calculation Agent in
accordance with the terms of this Agreement and the Bonds shall be final and
binding on the Company, the Trustee and the Holders and owners of the Bonds,
absent manifest error.
4. (a) The Calculation Agent may at any time resign as Calculation Agent by
giving written notice to the Company (with a copy to the Trustee) of such
intention on its part, specifying the date on which its desired resignation
shall become effective; provided, however, that such date shall not be earlier
-------- --------
than 30 days after the receipt of such notice by the Company, unless the Company
agrees in writing to accept less notice. The Company may remove the Calculation
Agent at any time, but only for cause, by filing with the Calculation Agent
(with a copy to the Trustee) any instrument in writing signed on behalf of the
Company and specifying such removal, the reasons for such removal and the date
when such removal is intended to become effective. Such resignation or removal
shall take effect upon the date of the appointment by the Company, as
hereinafter provided, of a successor Calculation Agent. If at least 30 days
prior to the next succeeding Calculation Date after notice of resignation or
removal has been given, a successor Calculation Agent has not been appointed,
the Calculation Agent may petition a court of competent jurisdiction to appoint
a successor Calculation Agent. A successor Calculation Agent shall be appointed
by the Company by an instrument in writing signed on behalf of the Company and
the successor Calculation Agent. Upon the appointment of a successor
Calculation Agent and acceptance by it of such appointment, the Calculation
Agent so superseded shall cease to be such Calculation Agent
hereunder. Upon its resignation or removal, the Calculation Agent shall be
entitled to the reimbursement of all reasonable out-of-pocket expenses
incurred in connection with the services rendered hereunder by it as Calculation
Agent.
(b) Any successor Calculation Agent appointed hereunder shall execute
and deliver to its predecessor, the Company and the Trustee an instrument
accepting such appointment hereunder and agreeing to perform the functions of
the Calculation Agent under the Bonds and the obligations of the Calculation
Agent under this Agreement and to be bound by this Agreement, and thereupon such
successor Calculation Agent, without any further act, deed or conveyance, shall
become vested with all the authority, rights, powers, trusts, immunities,
duties and obligations of such predecessor with like effect as if originally
named as such Calculation Agent hereunder, and such predecessor Calculation
Agent, upon payment of its charges and disbursements then unpaid, shall
thereupon become obliged to transfer and deliver, and such successor Calculation
Agent shall be entitled to receive and the predecessor Calculation Agent shall
provide, copies of any relevant records maintained by such predecessor
Calculation Agent.
(c) Any corporation, partnership, limited liability company or other
entity into which the Calculation Agent may be merged or converted or with which
the Calculation Agent may be consolidated, or any corporation, partnership,
limited liability company or other entity resulting from any merger, conversion
or consolidation to which the Calculation Agent shall be a party, shall, to the
extent permitted by applicable law, be the successor Calculation Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto provided that such successor
--------
Calculation Agent shall assume, or be deemed to have assumed, all of the
obligations and liabilities of its predecessor under this Agreement. Notice of
any such merger, conversion, consolidation or sale shall forthwith be given to
the Company and the Trustee.
(d) The foregoing indemnity, reimbursement and other provisions of this
Agreement will survive any resignation or removal of the Calculation Agent. The
agreements of the parties set forth above will be binding upon and inure to the
benefit of their respective successors.
5. For good and valuable consideration, the sufficiency of which is hereby
acknowledged, the Company hereby agrees with J.P. Morgan Securities Inc., in its
individual capacity and not as Calculation Agent, as follows:
(a) If at any time J.P. Morgan Securities Inc., with the advice of its
counsel and after consultation with the Company and its counsel, determines that
registration of the Bonds under the Securities Act of 1933 (or any successor
law), as it may be amended from time to time, is required in order for J.P.
Morgan Securities Inc. to resell the Bonds on any Reset Date as contemplated in
the Prospectus, the Company will, at its own expense, cause the Bonds to be so
registered in time to permit such resale of the Bonds on the relevant Reset
Date.
(b) Notwithstanding any provision to the contrary set forth in the
Indenture, the Company will not purchase any Bonds in the open market, by tender
offer, in a private transaction or otherwise, except pursuant to any purchase
obligation it may have under the Bonds or with the prior written consent of J.P.
Morgan Securities Inc., as holder of the Call Option.
(c) Notwithstanding any provision to the contrary set forth in the
Indenture, the Company will not cause or permit the provisions of any Bond (or
the Indenture, as it relates to any Bond) to be modified in any way without the
prior written consent of J.P. Morgan Securities Inc. (including with respect to
the payment and settlement provisions of paragraph 5 of the Bonds).
(d) The Bonds and the Indenture, insofar as they relate to the Call Option
or may affect the interests of J.P. Morgan Securities Inc. as holder of such
option (including the provisions relating to the interest rate reset and resale
to a Final Dealer, but excluding the provisions referred to in the next
sentence), constitute obligations of the Company that are made for the benefit
of, and are enforceable by, J.P. Morgan Securities Inc., in its individual
capacity and not as Calculation Agent. In addition, insofar as the
provisions of any Bond purport to provide rights to J.P. Morgan Securities
Inc. against any holder of such Bond (including the right to purchase such
Bond from any holder on any Reset Date pursuant to the Call Option), the
Company shall take all action reasonably necessary or desirable to enforce
such rights in its own name, but for the benefit of J.P. Morgan Securities
Inc. so as to ensure that J.P. Morgan Securities Inc. receives the full
benefit of such rights as if they were enforceable directly by J.P. Morgan
Securities Inc., in each case if, to the extent and in the manner, but only
if, to the extent and in the manner, requested by J.P. Morgan Securities
Inc. Among other things, if requested by J.P. Morgan Securities Inc., such
action by the Company shall include effecting transfers of Bonds or beneficial
interests therein as contemplated in paragraph 9 of the reverse of the Bonds,
exchanging Bonds in book-entry form for Bonds that are not in such form and
vice-versa as contemplated in paragraph 9 of the reverse of the Bonds and
instituting suit to enforce specific performance of such rights or to obtain
money damages or other relief in respect of such rights, whether against the
holders or their respective successors, assigns, estates, heirs or
representatives. Without limiting the foregoing, J.P. Morgan Securities Inc.
may take any action under the Bonds (including giving any notice, making any
determination and effecting any settlement pursuant to paragraphs 11, 2 and 5
thereof) that the provisions of the Bonds contemplate may be taken by J.P.
Morgan Securities Inc., and the Company will not take any action unless J.P.
Morgan Securities Inc. requests it to do so. J.P. Morgan Securities Inc.
shall reimburse the Company for any reasonable, out-of-pocket expenses the
Company incurs, including reasonable counsel fees and expenses, in connection
with any action it may take in this regard at the request of J.P. Morgan
Securities Inc. The Company s agreements set forth in this paragraph
shall not be invalid or unenforceable by reason of any provision of the Bonds
not being unenforceable by J.P. Morgan Securities Inc. This paragraph is not
intended to limit any rights that J.P. Morgan Securities Inc. may have under
the Indenture or the Bonds as a holder or owner of Securities from time to
time.
(e) Notwithstanding any provision to the contrary set forth in the Bonds
or the Indenture (but subject to section 5(d) above), the Company (i) will use
its best efforts to maintain the Bonds in book-entry form with The Depository
Trust Company (DTC) or any successor thereto and to appoint a successor
depository to the extent necessary to maintain the Bonds in book-entry form and
(ii) will waive any discretionary right it otherwise has under the Indenture to
cause the Bonds to be issued in certificated form. The Company will perform its
obligations, and pursue its rights against DTC, under the DTC Letter of
Representations dated June 26, 1998 among the Company, the Trustee and DTC.
(f) If J.P. Morgan Securities Inc. resigns or is removed as Calculation
Agent, the Company will take such steps as are necessary to ensure that there is
at all times thereafter a qualified financial institution appointed and serving
as Calculation Agent pursuant to an agreement with the Company that is
substantially similar to this Agreement (excluding this section 5) or that is
not materially adverse to the interests of J.P. Morgan Securities Inc. as holder
of the Call Option. The Company will promptly provide J.P. Morgan Securities
Inc. with a copy of each such agreement.
The agreements made in this section 5 will remain in effect regardless of
whether or not J.P. Morgan Securities Inc. ceases to act as Calculation Agent or
to perform its duties as Calculation Agent hereunder, and regardless of any
change in the Trustee. The agreements of the Company in this section 5 are not
contingent in any way upon the agreements of the parties set forth in the other
sections of this Agreement, will be binding upon the Company and its successors
and will inure to the benefit of J.P. Morgan Securities Inc. and its successors.
6. (a) J.P. Morgan Securities Inc., in its individual capacity and not as
Calculation Agent, hereby agrees with the Company and the Trustee, for the
benefit of the Company and the applicable holders of the Bonds from time to
time, that, if J.P. Morgan Securities Inc. exercises the Call Option with
respect to any Reset Date when the Bonds are outstanding, it will purchase the
outstanding Bonds from the registered holders thereof on such Reset Date upon
the terms and subject to the conditions (including the absence of a Market
Disruption Event or Failed Remarketing) set forth in such Bonds, all as provided
in such Bonds. If J.P. Morgan Securities Inc. exercises the Call Option and
becomes obligated under this Agreement to purchase outstanding Bonds on any
Reset Date but fails to do so, and the Company becomes obligated to purchase
such Bonds on the Reset Date as provided in the Bonds, such purchase by the
Company will not relieve J.P. Morgan Securities Inc. from any liability it may
have on its obligation under this Agreement to purchase such Bonds. The
holders of the Bonds shall have no right, claim or remedy under this
Agreement except as provided in this section 6.
(b) If any of the following events (each a "Call Option Termination
Event") shall occur on or prior to the Reset Date, then (i) the Company shall
notify J.P. Morgan Securities Inc. promptly of the occurrence of such event
(including, in the case of clause (B) below, any modification of any kind to the
Indenture or the Bonds) and (ii) J.P. Morgan Securities Inc., as holder of the
Call Option, shall upon the occurrence of such event be entitled to demand that
the Company pay them the Call Option Termination Amount (as defined below), and
the Company shall pay such amount to J.P. Morgan Securities Inc. within three
Business Days (as defined in the Indenture) of the date of such demand: (A) an
Event of Default (as defined in the Indenture) with respect to the Bonds, or any
event which, with the giving of notice or passage of time or both, would
constitute such an Event of Default, shall have occurred and be continuing, or
(B) the Indenture or the Bonds shall have been amended in any manner, or
otherwise contain any provision not contained therein as of the date hereof,
that in the reasonable judgment of J.P. Morgan Securities Inc. materially
changes the nature of the Bonds or the coupon reset procedures, unless
consented to in writing by J.P. Morgan Securities Inc. The Call Option shall
terminate upon payment of the Call Option Termination Amount.
(c) The "Call Option Termination Amount" shall mean, on any date, the
amount determined by J.P. Morgan Securities Inc. equal to the "Fair Market
Value" of the embedded interest rate option implicit in the option to purchase
the Bonds on the Reset Date at 100% of the aggregate principal amount thereof.
"Fair Market Value shall be determined by J.P. Morgan Securities Inc., as
follows: J.P. Morgan Securities Inc. shall request five primary U.S. Government
securities dealers (each a "Reference Treasury Dealer") in the City of New York
to provide its quotation of the amount required to enter into an agreement
with J.P. Morgan Securities Inc. that would have the effect of preserving for
J.P. Morgan Securities Inc. the economic equivalent of the Call Option,
assuming the Call Option Termination Event had not occurred. J.P. Morgan
Securities Inc. shall request each Reference Treasury Dealer to provide its
quotation to the extent reasonably practicable as of the same day and time
(without regard to different time zones) on or as soon as reasonably
practicable after the notice provided for in paragraph (b) above. The day and
time as of which these quotations are to be obtained will be selected in good
faith by J.P. Morgan Securities Inc. If more than three quotations are
provided, the Fair Market Value shall be the arithmetic mean of the quotations,
without regard to the quotations having the highest and lowest values. (For
this purpose, if more than one quotation has the same highest value or lowest
value, then one of such quotations shall be disregarded.) If three or fewer
such quotations are provided, the Fair Market Value shall be the arithmetic
mean of the quotations. The determination of the Call Option Termination Amount
by J.P. Morgan Securities Inc. shall, absent manifest error, be binding on the
Company.
7. Any notice required to be given hereunder shall be delivered in person,
sent by overnight courier, registered mail, return receipt requested, or
facsimile or communicated by telephone (subject, in the case of communication by
telephone, to confirmation dispatched within twenty-four hours by letter or by
facsimile),
in the case of the Company, to:
The Kroger Co.
1014 Vine Street
Cincinnati, Ohio 45202
Attention: ______________
Facsimile: _____________
in the case of the Calculation Agent, to:
J.P. Morgan Securities Inc.
60 Wall Street
Attention: Registration Department
Facsimile: (212) [ ];
in the case of J.P. Morgan Securities Inc. (in its individual capacity, and not
as Calculation Agent), to:
J.P. Morgan Securities Inc.
60 Wall Street
New York, N.Y. 10260
Attention: Registration Department
Facsimile: (212) [ ];
and in the case of the Trustee, to:
Star Bank, N.A.
425 Walnut Street, P.O. Box 1118
Cincinnati, Ohio 45201-1118
Attention: Corporate Trust Administration
Facsimile: (513) 632-5511
or to any other address of which any party shall have notified the others in
writing as herein provided. Any notice hereunder given by facsimile or letter,
first class mail, shall be deemed to be received upon actual receipt thereof.
8. This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York.
9. The rights and obligations of the Company hereunder may not be assigned or
delegated to any other person without the prior written consent of J.P. Morgan
Securities Inc. The rights and obligations of J.P. Morgan Securities Inc.
hereunder may not be assigned or delegated to any other person without the prior
written consent of the Company. This Agreement shall inure to the benefit of
and be binding upon the Company and J.P. Morgan Securities Inc. and their
respective successors and assigns, and will not confer any benefit upon any
other person (other than as provided in section 6 above). The terms
"successors" and "assigns" shall not include any purchaser of Bonds merely
because of such purchase.
10. If any provision of this Agreement shall be held invalid or unenforceable
as applied in any particular case in any or all jurisdictions, such
circumstances shall not have the effect of rendering the provision invalid or
unenforceable in any other case or jurisdiction, or of rendering any other
provision of this Agreement invalid or unenforceable.
11. This Agreement may be amended by any instrument in writing signed by
each of the parties hereto.
12. This Agreement may be executed by each of the parties hereto in any
number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all such counterparts shall
together constitute one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
The Kroger Co.
By: ______________________________
Name:
Title:
__________________________________
(J.P. Morgan Securities Inc. )
in its individual capacity and as Calculation Agent
<PAGE>
ANNEX A
FORM OF REFERENCE
DEALER AGREEMENT
__________, 200_
_____________________
_____________________
_____________________
_____________________
Dear Sirs:
The Kroger Co., an Ohio corporation (the "Company"), has issued $200,000,000 in
outstanding principal amount of its Puttable Reset Securities (PURS) due July 1,
2010 (the "Bonds") pursuant to an Indenture, dated as of May 1, 1998, as amended
by the First Supplemental Indenture, dated as of May 11, 1998 and the Second
Supplemental Indenture, dated as of June 26, 1998 (collectively, the
"Indenture"), in each case between the Company and Star Bank, N.A., as trustee
(the "Trustee"). The Bonds provide for the reset of the rate at which
interest will accrue thereon and for their resale on the Reset Date. Pursuant to
a Calculation Agency Agreement, dated June 23, 1998, between the Company and
J.P. Morgan Securities Inc. (the "Calculation Agency Agreement"), we have been
appointed as the calculation agent (the "Calculation Agent") for purposes of
determining the new interest rate for the Bonds on the Reset Date. As
Calculation Agent, we would like to extend to you an invitation to participate
in the interest reset and resale process as a Reference Dealer, as described
more fully in the Bonds.
Capitalized terms used in this Agreement and not defined herein will have the
meanings ascribed to them in the Bonds.
The Calculation Date to which this agreement relates is June 23, 2000, and the
Reset Date is July 1, 2000.
Please note that by executing this agreement, you agree that, if you are
selected as the Final Dealer, you will purchase from J.P. Morgan Securities Inc.
on the Calculation Date for settlement on the Reset Date and at the Final Offer
Price your Pro Rata portion of the Bonds that J.P. Morgan Securities Inc. may
purchase pursuant to the Call Option and tender for sale to you on the Reset
Date. We will inform you whether you have been selected as the Final Dealer on
or shortly after the Calculation Date. If you are selected as the Final Dealer,
(i) the aggregate principal amount of Bonds which you may be required to
purchase will not exceed your Pro Rata portion of the Bonds that J.P. Morgan
Securities Inc. purchases pursuant to the Call Option (we will inform you of the
actual amount on the Reset Date), (ii) the price for such Bonds will be the
Final Offer Price, which we will provide to you when requesting your bid on the
Calculation Date, and (iii) the Adjusted Rate for the Bonds for the Reset Period
beginning on such Reset Date will be calculated by us based on the bid submitted
(and confirmed in writing) by you on the Calculation Date.
Notwithstanding anything to the contrary set forth in this Agreement, you will
have no obligation or right to purchase any Bonds on any Reset Date if you are
not selected as the Final Dealer or if J.P. Morgan Securities Inc. does not
purchase such Bonds on the Reset Date. Neither the Calculation Agent nor the
Company has any obligation hereunder to sell any Bonds to you.
If you are willing to participate as a Reference Dealer under the terms
described above, please fill in the information requested below and have an
appropriate person sign and return this agreement to us by .
-------,------
Upon acceptance hereof by you, this letter shall constitute a binding agreement
between you and us, and for the benefit of the Company and J.P. Morgan
Securities Inc. (in its individual capacity and not as Calculation Agent).
<PAGE>
This agreement shall be governed by, and construed in accordance with, the laws
of the State of New York.
Very truly yours,
J.P. Morgan Securities Inc.,
as Calculation Agent
By: ___________________________
Name:
Title:
Accepted as of the date hereof:
By: ___________________________
Name:
Title:
Contact: _______________________
Telephone No.: _________________
Facsimile No.: __________________
<PAGE>
