SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 4, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-15023
FRED MEYER, INC.
(Exact name of registrant as specified in its charter)
Delaware 93-0798201
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3800 S.E. 22nd Avenue
Portland, Oregon 97202
(Address of principal executive offices) (Zip Code)
(503) 232-8844
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports); and (2)
has been subject to such filing requirements for the past 90 days.
Yes XX No
---- ----
Shares of Common Stock Outstanding at November 4, 1995: 26,704,480
<PAGE>2
Part I - Financial Information
<TABLE>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
<CAPTION>
November 4, January 28,
1995 1995
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents....................... $ 41,735 $ 34,868
Receivables-net................................. 24,928 20,025
Inventories..................................... 620,441 514,473
Prepaid expenses and other...................... 36,553 42,092
Income taxes receivable......................... 2,924 15,021
Current portion of deferred taxes............... 15,586 15,116
---------- ----------
Total current assets......................... 742,167 641,595
---------- ----------
PROPERTY AND EQUIPMENT-NET......................... 1,007,856 896,439
---------- ----------
OTHER ASSETS....................................... 22,262 24,638
---------- ----------
TOTAL.................................... $1,772,285 $1,562,672
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and outstanding checks......... $ 381,914 $ 312,044
Current portion of long-term debt
and lease obligations........................ 1,623 1,623
Accrued expenses and other...................... 78,378 78,414
---------- ----------
Total current liabilities.................... 461,915 392,081
---------- ----------
LONG-TERM DEBT AND MORTGAGES....................... 674,014 540,166
---------- ----------
CAPITAL LEASE OBLIGATIONS.......................... 13,741 13,823
---------- ----------
DEFERRED LEASE TRANSACTIONS........................ 42,915 45,655
---------- ----------
DEFERRED INCOME TAXES.............................. 20,466 22,258
---------- ----------
OTHER LONG-TERM LIABILITIES........................ 8,097 10,069
---------- ----------
STOCKHOLDERS' EQUITY
Common stock.................................... 270 268
Additional paid-in capital...................... 199,361 197,087
Retained earnings............................... 356,738 345,291
Treasury stock and other........................ (5,232) (4,026)
---------- ----------
Total stockholders' equity................... 551,137 538,620
---------- ----------
TOTAL..................................... $1,772,285 $1,562,672
========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>3
<TABLE>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
12 Weeks Ended
--------------------------
November 4, November 5,
1995 1994
----------- -----------
<S> <C> <C>
NET SALES.......................................... $750,042 $626,804
-------- --------
COST OF MERCHANDISE SOLD:
General........................................ 539,939 472,876
Related party lease............................ 1,285 1,285
-------- --------
Total cost of merchandise sold................. 541,224 474,161
-------- --------
GROSS MARGIN....................................... 208,818 152,643
-------- --------
OPERATING AND ADMINISTRATIVE EXPENSES:
General........................................ 191,017 175,724
Related party leases........................... 12,408 13,138
-------- --------
Total operating and administrative expenses.... 203,425 188,862
-------- --------
WRITEDOWN OF CALIFORNIA ASSETS..................... --- 15,978
-------- --------
INCOME (LOSS) FROM OPERATIONS...................... 5,393 (52,197)
INTEREST EXPENSE-NET............................... 9,117 6,802
-------- --------
LOSS BEFORE INCOME TAXES........................... (3,724) (58,999)
BENEFIT FOR INCOME TAXES........................... (1,415) (22,420)
-------- --------
NET LOSS........................................... $ (2,309) $(36,579)
======== ========
LOSS PER COMMON SHARE.............................. $(.08) $(1.28)
===== ======
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING....................... 28,254 28,556
====== ======
See notes to consolidated financial statements.
</TABLE>
<PAGE>4
<TABLE>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
40 Weeks Ended
---------------------------
November 4, November 5,
1995 1994
----------- -----------
<S> <C> <C>
NET SALES........................................ $ 2,462,530 $ 2,296,435
----------- -----------
COST OF MERCHANDISE SOLD:
General...................................... 1,761,500 1,645,829
Related party lease.......................... 4,282 4,282
---------- ----------
Total cost of merchandise sold............... 1,765,782 1,650,111
---------- ----------
GROSS MARGIN..................................... 696,748 646,324
---------- ----------
OPERATING AND ADMINISTRATIVE EXPENSES:
General...................................... 607,749 569,965
Related party leases......................... 42,248 44,000
---------- ----------
Total operating and administrative expenses.. 649,997 613,965
---------- ----------
WRITEDOWN OF CALIFORNIA ASSETS................... --- 15,978
---------- ----------
INCOME FROM OPERATIONS........................... 46,751 16,381
INTEREST EXPENSE-NET............................. 28,288 18,639
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES................ 18,463 (2,258)
PROVISION (BENEFIT) FOR INCOME TAXES............. 7,016 (858)
---------- ----------
NET INCOME (LOSS) ............................... $ 11,447 $ (1,400)
========== ==========
EARNINGS (LOSS) PER COMMON SHARE................. $.40 $(.05)
==== =====
WEIGHTED AVERAGE NUMBER OF
COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING............................ 28,373 28,660
====== ======
See notes to consolidated financial statements.
</TABLE>
<PAGE>5
<TABLE>
FRED MEYER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<CAPTION>
40 Weeks Ended
------------------------
November 4, November 5,
1995 1994
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) .............................. $ 11,447 $ (1,400)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization of
property and equipment.................... 80,851 67,528
Deferred lease transactions.................. (2,740) (1,999)
Other liabilities............................ (1,972) 174
Income taxes................................. 9,835 (42,396)
Inventories.................................. (105,968) (113,608)
Other current assets......................... 636 (3,157)
Accounts payable and accrued expenses........ 82,252 84,709
Writedown of California assets............... --- 15,978
Other........................................ 862 1,477
-------- --------
Net cash provided by operating activities....... 75,203 7,306
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock-net.................... 1,031 3,004
Decrease in outstanding checks.................. (12,420) (24,202)
(Increase) decrease in notes receivable......... (114) 86
Long-term financing:
Borrowings................................... 134,461 234,462
Repayments................................... (695) (76)
-------- --------
Net cash provided by financing activities....... 122,263 213,274
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net maturities (purchases)
of investment securities..................... 1,510 (920)
Purchases of property and equipment............. (198,641) (219,440)
Net proceeds from sale of real property......... 6,532 3,429
-------- --------
Net cash used for investing activities.......... (190,599) (216,931)
-------- --------
CASH AND CASH EQUIVALENTS:
Net increase for the period..................... 6,867 3,649
Beginning of period............................. 34,868 34,054
-------- --------
End of period................................... $ 41,735 $ 37,703
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (refunded) during the period for:
Interest..................................... $31,309 $21,274
Income taxes................................. (3,120) 40,759
See notes to consolidated financial statements.
</TABLE>
<PAGE>6
FRED MEYER, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Reporting Periods
-------------------------
The Company's interim reporting periods for reports to stockholders
are the 16th, 28th, and 40th weeks of its fiscal year.
2. Reclassifications
-----------------
Certain prior year balances have been reclassified to conform to
current year presentation.
3. Inventories
-----------
Inventories consist mainly of merchandise held for sale.
Substantially all the inventories are valued at the lower of last-in,
first-out (LIFO) cost or market. Estimated gross margins have been
used for determining the cost of merchandise sold for those operating
departments not taking physical inventories at the end of the interim
periods.
4. Income Taxes
------------
Income taxes have been provided for based upon the current estimate
of the Company's annual effective tax rate.
5. Stockholders' Equity
--------------------
Changes in stockholders' equity for the forty weeks ended November 4,
1995 were:
(In thousands)
--------------
Stockholders' equity, January 28, 1995 $538,620
Issuance of common stock-net 1,031
Amortization of unearned compensation 39
Net income 11,447
--------
Stockholders' equity, November 4, 1995 $551,137
========
6. Writedown of California Assets
------------------------------
The Company recorded a pretax write-off of approximately $16 million
($.35 per share) as a result of its decision to exit the Northern
California market in the third quarter of 1994. The charge to income
covers the adjustment of the Company's book value on its Northern
California properties to an estimated net realizable value. The
properties included one store in Chico, California and three land
parcels, one in Redding and two in Sacramento, California.
7. Earnings Per Common Share
-------------------------
Fully diluted earnings per common share are computed by dividing net
income by the weighted average number of common and common equivalent
shares outstanding. Weighted average shares reflect the dilutive
effect of outstanding stock options (ranging in exercise price from
$3.24 to $41.25 per share) which was determined by using the "treasury
stock" method.
8. Commitments and Contingencies
-----------------------------
The Company and its subsidiaries are parties to various legal claims,
actions, and complaints, certain of which involve material amounts.
Although the Company is unable to predict with certainty whether or
not it will ultimately be successful in these legal proceedings or,
if not, what the impact might be, management presently believes that
disposition of these matters will not have a material adverse effect
on the Company's consolidated financial position or consolidated
results of operations.
---------------
<PAGE>7
The financial information furnished in this Form 10-Q reflects all
adjustments of a normal recurring nature, which, in the opinion of
management, are necessary for a fair presentation of the results for the
12 and 40 weeks ended November 4, 1995 and November 5, 1994.
The consolidated results of operations presented herein are not
necessarily indicative of the results to be expected for the year due to
the seasonality of the Company's business. These consolidated financial
statements should be read in conjunction with the financial statements
and related notes incorporated by reference in the Company's latest
annual report filed on Form 10-K.
FRED MEYER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company funded its working capital and capital expenditure needs in
1995 and 1994 through internally generated cash flow, supplemented by
borrowings under committed and uncommitted bank lines of credit and
unrated commercial paper.
On June 29, 1993 and August 2, 1993, the Company issued an aggregate of
$70,000,000 of five-year floating rate notes to a group of five banks. At
the Company's option, the notes bear interest at a spread above LIBOR or
certificate of deposit rates. On June 1, 1994, the Company issued an
aggregate of $57,500,000 of senior notes to a group of life insurance
companies. The notes mature on July 15 of 1999, 2001, 2004, and 2007; and
bear interest rates of between 7.25 percent and 7.98 percent. On April 25,
1995, the Company issued $50,000,000 of seven year senior 7.77 percent
notes to a major insurance company. On May 30, 1995, the Company borrowed
from a major international bank $20,000,000 with a maturity of five years
and bearing interest at 6.775 percent. In May 1995 the Company also put
into place a lease line of credit for land and building for up to
$100,000,000. The Company anticipates closing a similar lease line of
credit for $60,000,000 prior to January 1, 1996.
On October 30, 1995 the Company increased its existing $400,000,000
unsecured committed line of credit, which expires June 30, 2000, to
$500,000,000. The Company cancelled the existing $100,000,000 364-day line
of credit. In addition to these committed credit facilities, the Company
had $70,000,000 of uncommitted money market lines of credit with several
foreign banks and had $107,000,000 of uncommitted money market lines of
credit with banks who are in the committed credit facility. The bank lines
of credit and unrated commercial paper are used primarily for seasonal
inventory requirements, new store construction and financing, existing
store remodeling, acquisition of land, and major projects such as MIS
development. At November 4, 1995, the Company had unrated commercial paper
outstanding in the amount of approximately $334,306,000, borrowings under
money market lines with committed line banks of $59,000,000, borrowings
under uncommitted borrowing facilities of $30,000,000, and a total of
approximately $76,694,000 available for borrowings under its committed
credit facilities.
The Company has entered into interest rate swap and cap agreements to
reduce the impact of changes in interest rates on its floating rate
long-term debt. At November 4, 1995, the Company had outstanding six
interest rate contracts with commercial banks, having a total notional
principal amount of $100,000,000. Three of these agreements effectively fix
the Company's interest rate on unrated commercial paper, floating rate
facilities, and uncommitted lines of credit at rates between 4.625 percent
and 7.595 percent on a notional principal amount of $50,000,000. These
contracts expire in 1996, 1997, and 1998. The remaining three agreements
effectively limit the maximum interest rate the Company will pay at rates
between 5.00 percent and 9.00 percent on notional principal amounts
totaling $50,000,000. These three agreements mature in 1996, 1998, and
1999. The Company is exposed to credit loss in the event of nonperformance
by the other
<PAGE>8
parties to the interest rate swap agreements. However, the Company does not
anticipate nonperformance by the counter-parties.
The Company believes that a combination of cash flow from operations and
borrowings under its expanded credit facilities will permit it to finance
its capital expenditure requirements for 1995, currently budgeted to be
approximately $240,000,000, net of sale/leaseback activity. If the Company
determines that it is preferable, it may fund its capital expenditure
requirements by mortgaging facilities, entering into sale and leaseback
transactions, or by issuing additional debt or equity.
RESULTS OF OPERATIONS
COMPARISON OF THE 12 WEEKS ENDED NOVEMBER 4, 1995 WITH THE 12 WEEKS ENDED
NOVEMBER 5, 1994.
Net sales for the third quarter of 1995 increased $123,238,000 or 19.7
percent over the corresponding quarter in 1994. The 1995 increase reflects
the negative effect on 1994 sales of strikes in the Company's Portland area
stores and other facilities. Food sales were strong in the third quarter of
1995; but nonfood sales were soft as a result of increased competition, a
more promotional sales environment, sluggish consumer demand, a difficult
retail climate in the Puget Sound area, and deflation in certain product
categories. Comparable store sales increased 13.8 percent for the third
quarter of 1995. Food comparable store sales increased 23.7 percent, and
nonfood comparable store sales increased 7.4 percent. Excluding the stores
affected by the strikes, total comparable store sales increased 2.2
percent, with comparable store food sales increasing 9.0 percent and
comparable store nonfood sales decreasing 2.2 percent. The Company's food
operations accounted for 42.4 percent of the overall sales in 1995 and 38.2
percent in 1994.
Gross margin as a percent of net sales was 27.8 percent for the third
quarter of 1995, compared with 24.4 percent for 1994's third quarter. Gross
margins increased in the third quarter of 1995, primarily due to 1994's
results being negatively affected by strikes. 1995's gross margins were
reduced by slow nonfood sales, and startup costs associated with opening of
the perishable portion of the Company's new food distribution center near
Seattle, Washington.
Operating and administrative expenses as a percent of net sales were 27.1
percent for the third quarter of 1995, compared with 30.1 percent for
1994's third quarter. Expenses as a percent of sales decreased in 1995's
third quarter, due primarily to strikes in the prior year's third quarter.
The third quarter expenses were up mainly as a result of higher labor costs
and fixed costs due to slower than planned sales growth; and as a result of
opening five new stores, closing four stores, and completing three major
remodels.
The Company recorded a pretax write-off of $15,978,000 in 1994's third
quarter as a result of its decision to exit the Northern California market.
The charge to income covers the adjustment of the Company's book value on
its Northern California properties to an estimated net realizable value.
Net interest expense in the third quarter of 1995 was $9,117,000, an
increase of 34.0 percent from the $6,802,000 reported for 1994. The
increase primarily reflects higher borrowings due to an acceleration in new
store construction and remodels.
The effective tax rate for the third quarters of 1995 and 1994 was 38.0
percent.
The Company had a net loss of $2,309,000 in the third quarter of 1995
compared with a net loss of $36,579,000 in the third quarter of 1994. The
loss per share was $.08 for the third quarter of 1995 based on 28,254,000
shares outstanding, compared with a loss per share of $1.28 for the prior
year's third quarter based on 28,556,000 shares outstanding. The 1994 net
loss was affected by the above-mentioned strikes plus the California
after-tax write-off of $9,906,000, or $.35 per share. Excluding this
write-off, the Company's 1994 third quarter net loss and loss per share
were $26,673,000 and $.93, respectively.
<PAGE>9
COMPARISON OF THE 40 WEEKS ENDED NOVEMBER 4, 1995 WITH THE 40 WEEKS ENDED
NOVEMBER 5, 1994.
Net sales for the first 40 weeks of 1995 increased $166,095,000 or 7.2
percent to $2,462,530,000. The 1995 increase reflects the negative effect
on 1994 sales of strikes in the Company's Portland area stores and other
facilities. Food sales have been stronger than nonfood sales for the first
forty weeks of 1995. Nonfood sales were soft as a result of increased
competition, a more promotional sales environment, sluggish consumer
demand, a difficult retail climate in the Puget Sound area, and deflation
in certain product categories. Comparable store sales increased 1.4 percent
for this 40 week period. Food comparable store sales increased 5.9 percent,
and nonfood comparable store sales decreased 1.7 percent. Excluding the
stores affected by the strikes, total comparable store sales decreased 2.0
percent for the first 40 weeks of 1995, with comparable store food sales
increasing 1.6 percent and comparable store nonfood sales decreasing 4.5
percent. The Company's food operations accounted for 42.0 percent of the
overall sales for the first 40 weeks of 1995 compared with 39.2 percent for
the first 40 weeks of 1994.
Gross margin as a percent of net sales was 28.3 percent for the first 40
weeks of 1995 compared with 28.1 percent for 1994. Gross margins increased
in the first 40 weeks of 1995 primarily due to 1994's results being
negatively affected by strikes. 1995's gross margins were reduced by slow
nonfood sales, and startup costs associated with opening of the Company's
new food distribution center near Seattle, Washington.
Operating and administrative expenses as a percent of net sales were 26.4
percent for the first 40 weeks of 1995 compared with 26.7 percent for the
first 40 weeks of 1994. Expenses as a percent of sales decreased in 1995's
first 40 weeks, due primarily to strikes in the prior year.
The Company recorded a pretax write-off of $15,978,000 in 1994's third
quarter as a result of its decision to exit the Northern California market.
The charge to income covers the adjustment of the Company's book value on
its Northern California properties to an estimated net realizable value.
Net interest expense in the first 40 weeks of 1995 was $28,288,000, an
increase of 51.8 percent from the $18,639,000 for 1994. The increase
primarily reflects higher borrowings due to an acceleration in new store
construction and remodels, and to a lesser extent the impact on debt of
1994's strikes.
The effective tax rate for the first 40 weeks of 1995 and 1994 was 38.0
percent.
Net income was $11,447,000 in the first 40 weeks of 1995 compared with a
loss of $1,400,000 in the first 40 weeks of 1994. Earnings per share were
$.40 for the first 40 weeks of 1995 based on 28,373,000 shares outstanding,
compared with a loss per share of $.05 for the prior year's period based on
28,660,000 shares outstanding. The net loss in 1994 was affected by the
above-mentioned strikes plus the California after-tax write-off of
$9,906,000, or $.35 per share. Excluding the California write-off, net
income and earnings per share for the first 40 weeks of 1994 were
$8,506,000 and $.30, respectively.
EFFECT OF LIFO
The Company estimates annual LIFO expense based on estimates of three
factors: inflation rates (calculated by reference to the Department Stores
Inventory Price Index published by the Bureau of Labor Statistics for
softgoods and jewelry, and to internally generated indices based on Company
purchases during the year for all other departments), expected inventory
levels, and expected markup levels (after reflecting permanent markdowns and
cash discounts). The Company reviewed these year-to-date indices at the end
of the third quarter and adjusted its LIFO reserve on a year-to-date basis
to reflect the Company's overall product mix, anticipated year-end
inventory levels, and the Company's expectations of the indices for the
remainder of the year.
<PAGE>10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit
-------
4F. Amended and Restated Credit Agreement dated as of October 30,
1995 among Fred Meyer, Inc., Various Financial Institutions,
Bank of America National Trust & Savings Association, as Agent,
and the Bank of Nova Scotia as co-Agent; arranged by BA
Securities, Inc.
10T. Fred Meyer Excess Deferral and Benefit Equalization Plan. 1994
Restatement dated as of January 1, 1994.
10U. Lease Agreement Tax Retention Operating Lease dated May 5, 1995
between First Security Bank of Utah, N.A. not individually but
solely as Owner Trustee under SM Trust 1995-1, as Lessor and
Fred Meyer, Inc., as Lessee, Appendix A to Participation
Agreement and Lease Supplements nos. 1, 2, and 3 dated as of
May 3, 1995 between First Security Bank of Utah, N.A. lessor,
and Fred Meyer, Inc., lessee.
11. Computation of Earnings (Loss) per Common Share.
27. Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the period for which
this report is filed.
<PAGE>11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FRED MEYER, INC.
(Registrant)
Dated: December 6, 1995 KENNETH THRASHER
---------------- -------------------------------
Kenneth Thrasher
Senior Vice President - Finance
Chief Financial Officer
<PAGE>12
EXHIBIT INDEX
Exhibit Sequential
Number Document Description Page Number
- ------- -------------------- -----------
4F Amended and Restated Credit Agreement dated as
of October 30, 1995 among Fred Meyer, Inc.,
Various Financial Institutions, Bank of
America National Trust & Savings Association,
as Agent, and the Bank of Nova Scotia as co-
Agent; arranged by BA Securities, Inc.
10T. Fred Meyer Excess Deferral and Benefit
Equalization Plan. 1994 Restatement dated as
of January 1, 1994.
10U. Lease Agreement Tax Retention Operating Lease
dated May 5, 1995 between First Security Bank
of Utah, N.A. not individually but solely as
Owner Trustee under SM Trust 1995-1, as Lessor
and Fred Meyer, Inc., as Lessee, Appendix A to
Participation Agreement and Lease Supplements
nos. 1, 2, and 3 dated as of May 3, 1995
between First Security Bank of Utah, N.A.
lessor, and Fred Meyer, Inc., lessee.
11. Computation of Earnings (Loss) per Common Share.
27. Financial Data Schedule.
EXHIBIT 4F
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of October 30, 1995
among
FRED MEYER, INC.,
VARIOUS FINANCIAL INSTITUTIONS,
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
and
THE BANK OF NOVA SCOTIA
as Co-Agent;
Arranged by
BA SECURITIES, INC.
<PAGE>i
TABLE OF CONTENTS
PAGE
SECTION 1 DEFINITIONS AND INTERPRETATION.................................. 1
1.1 Definitions............................................... 1
1.2 Computations; Changes in GAAP............................. 11
1.3 Cross-References; Section Captions........................ 11
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS;
BORROWING AND CONVERSION PROCEDURES............................. 11
2.1 Commitments............................................... 11
2.2 Various Types of Loans.................................... 12
2.3 Borrowing Procedures...................................... 12
2.4 Continuation and Conversion Procedures.................... 13
2.5 Conditions................................................ 13
2.6 Pro Rata Treatment........................................ 13
2.7 Commitments Several....................................... 13
2.8 Extension of Termination Date............................. 13
SECTION 3 NOTES EVIDENCING LOANS.......................................... 14
3.1 Notes..................................................... 14
3.2 Recordkeeping............................................. 14
SECTION 4 INTEREST........................................................ 15
4.1 Interest Rates............................................ 15
4.2 Interest Payment Dates.................................... 15
4.3 Setting and Notice of Eurodollar Rates.................... 15
4.4 Computation of Interest................................... 16
SECTION 5 FEES............................................................ 16
5.1 Facility Fee.............................................. 16
5.2 Agent's Fee............................................... 16
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS; REPAYMENT.......................................... 16
6.1 Reduction or Termination of the
Commitments............................................... 16
6.2 Prepayments............................................... 16
6.3 Repayment................................................. 17
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES................. 17
7.1 Making of Payments........................................ 17
7.2 Application of Certain Payments........................... 17
7.3 Due Date Extension........................................ 17
7.4 Setoff.................................................... 18
7.5 Proration of Payments..................................... 18
7.6 Taxes..................................................... 18
7.7 Funding Reliance.......................................... 19
<PAGE>ii
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR
EURODOLLAR LOANS................................................ 20
8.1 Increased Costs........................................... 20
8.2 Basis for Determining Interest Rate
Inadequate or Unfair...................................... 22
8.3 Changes in Law Rendering Eurodollar Loans
Unlawful.................................................. 22
8.4 Funding Losses............................................ 23
8.5 Right of Lenders to Fund through Other
Offices................................................... 23
8.6 Discretion of Lenders as to Manner of
Funding................................................... 23
8.7 Mitigation of Circumstances; Replacement
of Affected Lender or Objecting Lender.................... 23
8.8 Conclusiveness of Statements; Survival of
Provisions................................................ 24
SECTION 9 WARRANTIES...................................................... 24
9.1 Organization, etc......................................... 25
9.2 Authorization; No Conflict................................ 25
9.3 Validity and Binding Nature............................... 25
9.4 Financial Information..................................... 25
9.5 No Material Adverse Change................................ 25
9.6 Litigation and Contingent Liabilities..................... 25
9.7 Ownership of Properties; Liens............................ 26
9.8 Subsidiaries.............................................. 26
9.9 Pension Plans............................................. 26
9.10 Regulated Industry........................................ 27
9.11 Regulations G, U and X.................................... 27
9.12 Taxes..................................................... 27
9.13 Environmental and Safety and Health
Matters................................................... 27
9.14 Compliance with Law....................................... 27
9.15 Information............................................... 28
SECTION 10 COVENANTS....................................................... 28
10.1 Reports, Certificates and Other
Information............................................... 28
10.1.1 Audit Report...................................... 28
10.1.2 Interim Reports................................... 28
10.1.3 Compliance Certificate............................ 29
10.1.4 Reports to SEC.................................... 29
10.1.5 Notice of Default, Litigation
and ERISA Matters................................. 29
10.1.6 Subsidiaries...................................... 29
10.1.7 Other Information................................. 30
10.2 Books, Records and Inspections.............................. 30
10.3 Insurance................................................... 30
10.4 Compliance with Law; Payment of Taxes
and Liabilities........................................... 30
10.5 Maintenance of Existence, etc............................... 30
<PAGE>iii
10.6 Financial Ratios and Restrictions........................... 30
10.6.1 Minimum Consolidated Tangible
Net Worth......................................... 30
10.6.2 Long-Term Liabilities to Net
Worth Ratio....................................... 31
10.6.3 Fixed Charge Coverage Ratio....................... 31
10.7 Limitation on Liens......................................... 31
10.8 Debt........................................................ 33
10.9 Guaranties, Loans and Advances.............................. 33
10.10 Mergers, Consolidations, Sales............................. 34
10.11 Company's and Subsidiaries' Stock.......................... 34
10.12 Unconditional Purchase Obligations......................... 35
10.13 ERISA...................................................... 35
10.14 Purchase or Redemption of Company's
Securities; Dividend Restriction......................... 35
10.15 Use of Proceeds............................................ 36
SECTION 11 CONDITIONS OF LENDING........................................... 36
11.1 Initial Loan................................................ 36
11.1.1 Notes............................................. 36
11.1.2 Resolutions....................................... 36
11.1.3 Consents, etc..................................... 37
11.1.4 Incumbency and Signature
Certificates...................................... 37
11.1.5 Opinion of Counsel for the
Company........................................... 37
11.1.6 Existing Credit Agreement
Amount............................................ 37
11.1.7 Termination of BNS Agreement...................... 37
11.1.8 Other............................................. 37
11.2 All Loans................................................... 37
11.2.1 Notice of Borrowing or
Conversion/Continuation........................... 37
11.2.2 Continuation of Representations
and Warranties.................................... 37
11.2.3 No Existing Default............................... 38
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.............................. 38
12.1 Events of Default........................................... 38
12.1.1 Non-Payment of the Loans, etc..................... 38
12.1.2 Non-Payment of Other Debt......................... 38
12.1.3 Other Material Obligations........................ 38
12.1.4 Bankruptcy, Insolvency etc........................ 38
12.1.5 Non-Compliance with Provisions
of This Agreement................................. 39
12.1.6 Warranties........................................ 39
12.1.7 ERISA............................................. 39
12.1.8 Judgments and Attachments......................... 39
12.1.9 Change in Control................................. 40
12.2 Effect of Event of Default.................................. 40
SECTION 13 THE AGENT....................................................... 40
13.1 Appointment and Authorization; "Agent"...................... 40
13.2 Delegation of Duties........................................ 40
<PAGE>iv
13.3 Liability of Agent.......................................... 41
13.4 Reliance by Agent........................................... 41
13.5 Notice of Default........................................... 42
13.6 Credit Decision............................................. 42
13.7 Indemnification of Agent.................................... 42
13.8 Agent in Individual Capacity................................ 43
13.9 Successor Agent............................................. 44
13.10 Withholding Tax............................................ 44
13.11 Co-Agent. ................................................ 45
SECTION 14 GENERAL......................................................... 46
14.1 Waiver; Amendments.......................................... 46
14.2 Confirmations............................................... 46
14.3 Notices..................................................... 46
14.4 Subsidiary References....................................... 47
14.5 Regulation U................................................ 47
14.6 Costs, Expenses and Taxes................................... 47
14.7 Indemnification by the Company.............................. 48
14.8 Successors and Assigns...................................... 48
14.9 Assignments; Participations................................. 49
14.9.1 Assignments....................................... 49
14.9.2 Participations.................................... 50
14.10 Governing Law.............................................. 51
14.11 Counterparts............................................... 51
14.12 Effect of Amendment and Restatement........................ 51
14.13 Forum Selection and Consent to
Jurisdiction............................................. 52
14.14 Waiver of Jury Trial....................................... 52
14.15 OREGON LEGAL NOTICE........................................ 52
SCHEDULE I Commitments and Percentages
SCHEDULE II Schedule of Subsidiaries
SCHEDULE 14.3 Lending Offices; Addresses for Notices
EXHIBIT A Form of Note (Section 3.1)
EXHIBIT B Form of Extension Request (Section 2.8)
EXHIBIT C Form of Opinion of Counsel for the
Company (Section 11.1.5)
EXHIBIT D Form of Assignment Agreement (Section 14.9)
EXHIBIT E Form of Notice of Borrowing
EXHIBIT F Form of Notice of Conversion/Continuation
<PAGE>1
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
This AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 30,
1995 (as amended or otherwise modified from time to time, this
"Agreement"), is entered into among FRED MEYER, INC., a Delaware
corporation (the "Company"), the several financial institutions from
time to time party to this Agreement (collectively, the "Lenders";
individually, a "Lender"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as agent for the Lenders, and THE BANK OF NOVA SCOTIA, as
co-agent.
RECITALS
--------
WHEREAS, the Company, certain of the Lenders and Bank of America
Illinois (formerly known as Continental Bank) ("BAI"), as agent for
those Lenders, entered into a Credit Agreement dated as of June 30,
1994, as amended (the "Existing Credit Agreement"), which provides for
the making of loans in the maximum principal amount of $400,000,000;
WHEREAS, pursuant to an Assignment and Assumption Agreement dated
as of October 30, 1995 between BAI and BofA, to be effective on the date
hereof, BAI has assigned and delegated, and BofA has assumed all the
rights and obligations of BAI in its capacity as Agent under the
Existing Credit Agreement, and the Lenders and the Company desire to
confirm their agreement with such assignment and appoint BofA as Agent
hereunder, subject to the terms and conditions hereof;
WHEREAS, in order to provide for an increase in the maximum
principal amount of loans under the Existing Credit Agreement, as well
as the clarification and modification of certain other terms and
provisions of the Existing Credit Agreement, the Company, the Agent and
the Lenders have agreed to amend and restate the representations,
warranties, covenants, agreements and obligations of the Company in this
Amended and Restated Credit Agreement, which completely amends, restates
and replaces the Existing Agreement, all upon the terms and provisions
and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained herein, the parties agree as follows:
SECTION 1 DEFINITIONS AND INTERPRETATION.
1.1 Definitions. When used herein the following terms shall have
the following meanings (such definitions to be applicable to both the
singular and plural forms of such terms:
Affected Lender means any Lender that has given notice to the
Company (which has not been rescinded) of (i) any obligation
<PAGE>2
by the Company to pay any amount pursuant to Section 7.6 or 8.1 or (ii)
the occurrence of any circumstances of the nature described in Section
8.2 or 8.3.
Affected Loan - see Section 8.3.
Agent means BofA in its capacity as agent for the Lenders
hereunder, and any successor agent arising under Section 13.9.
Agent-Related Persons means the Agent and any successor agent
arising under Section 13.9, together with their respective affiliates
(including, in the case of BofA, the Arranger), and the officers,
directors, employees, agents and attorneys-in-fact of such Persons and
affiliates.
Agent's Payment Office means the address for payments set forth on
Schedule 14.3 or such other address as the Agent may from time to time
specify.
Agreement - see the Preamble.
Alternate Reference Rate means at any time the greater of (a) the
Federal Funds Rate plus 0.25% and (b) the Reference Rate.
Arranger means BA Securities, Inc., a Delaware corporation.
Assets Purchase Agreement means the Asset Purchase Agreement dated
as of September 25, 1981, among the Company, FMI Acquisition Corporation
and Fred Meyer Real Estate Properties, Ltd., as it may be amended from
time to time.
Assignee - see Section 14.9.1.
Assignment Agreement - see Section 14.9.1.
BAI - see the Recitals.
BofA means Bank of America National Trust and Savings Association,
a national banking association.
Business Day means any day (other than a Saturday or Sunday) on
which banks are open for commercial banking business in San Francisco,
California and Portland, Oregon and, in the case of a Business Day which
relates to a Eurodollar Loan, on which dealings are carried on in the
interbank eurodollar market.
Capital Lease means any lease of property (whether real, personal
or mixed) which would, in accordance with GAAP, be required to be
classified and accounted for on the books of the lessee as a capital
lease.
Change in Control means the acquisition by any Person, or two or
more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC under the Securities
<PAGE>3
Exchange Act of 1934, as amended) of outstanding shares of voting stock
of the Company representing in excess of 50% of voting control of
Company, which Person or Persons have beneficial ownership of less than
5% of the outstanding shares of voting stock of the Company as of the
date of this Agreement.
Code means the Internal Revenue Code of 1986, as amended, and
regulations promulgated thereunder. References to sections of the Code
also refer to any successor sections.
Commitment as to any Lender means the commitment of such Lender to
make loans hereunder, as adjusted from time to time pursuant to Section
6.1 or Section 14.9. The amount of the initial Commitment of each
Lender is set forth on Schedule I.
Company - see the Preamble.
Consolidated Long-Term Liabilities means, as of the date of any
determination thereof, consolidated Debt for Borrowed Money of the
Company and its Subsidiaries, secured or unsecured, (i) payable more
than one year from such date, plus (ii) the Loans and Capital Leases to
the extent maturing in a year or less, plus (iii) all other Debt for
Borrowed Money not classified as current liabilities in the Company's
financial reporting.
Consolidated Net Tangible Net Worth means Consolidated Tangible Net
Worth less (unless otherwise taken into account in determining
consolidated net worth) the amounts of payments (whether in cash or
issuance of Debt) made to employees in redemption of stock under
Management Stock Agreements.
Consolidated Tangible Net Worth means the consolidated net worth of
the Company and its Subsidiaries less (unless otherwise deducted in
determining consolidated net worth) the aggregate amount of any
intangible assets of the Company and its Subsidiaries, including,
without limitation, deferred financing and organizational costs (net of
amortization), goodwill, franchises, licenses, patents, trademarks,
trade names, copyrights, service marks and brand names, but not
subtracting from consolidated net worth of the Company and its
Subsidiaries the unamortized amount of such intangible assets arising
out of the Assets Purchase Agreement and the purchase of Grand Central,
Inc. in 1984, as shown on Company's audited consolidated financial
statement as at January 29, 1994 previously delivered to the Lenders
(such amount with respect to future calculations thereof to be
determined in the same manner as the unamortized amount ($5,523,000)
shown on such financial statement dated January 29, 1994).
Consolidated Total Assets means the total consolidated assets of
the Company and its Subsidiaries as shown on the most recent
consolidated balance sheet of the Company and its Subsidiaries referred
to in Section 9.4 or delivered to the Lenders pursuant to Section 10.1.
<PAGE>4
Debt of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, whether or not evidenced by bonds,
debentures, notes or similar instruments, (b) all obligations of such
Person as lessee under Capital Leases which have been recorded as
liabilities on a balance sheet of such Person, (c) all obligations of
such Person to pay the deferred purchase price of property or services
(other than current accounts payable in the ordinary course of
business), (d) all indebtedness secured by a Lien on the property of
such Person, whether or not such indebtedness shall have been assumed by
such Person (it being understood that if such Person has not assumed or
otherwise become personally liable for any such indebtedness, the amount
of the Debt of such Person in connection therewith shall be limited to
the lesser of the face amount of such indebtedness or the fair market
value of all property of such Person securing such indebtedness), (e)
all obligations, contingent or otherwise, with respect to the face
amount of all letters of credit (whether or not drawn) and banker's
acceptances issued for the account of such Person, (f) all obligations
of such Person in respect of Hedging Arrangements, (g) all Suretyship
Liabilities of such Person and (h) all Debt (as defined above) of any
partnership in which such Person is a general partner. The amount of
the Debt of any Person in respect of Hedging Arrangements shall be
deemed to be the unrealized net loss position of such Person thereunder
(determined for each counterparty individually, but netted for all
Hedging Arrangements maintained with such counterparty).
Debt for Borrowed Money of any Person means all Debt of such Person
described in (without duplication) clauses (a), (b), (c), (d) and, to
the extent constituting a Suretyship Liability in respect of Debt for
Borrowed Money of another Person, (g) of the definition of Debt. A
Suretyship Liability arising under a TROL shall be deemed to be Debt for
Borrowed Money.
Default means any event which if it continues uncured will, with
lapse of time or notice or lapse of time and notice, constitute an Event
of Default.
Dollar and the sign "$" mean lawful money of the United States of
America.
Effective Date - see Section 11.1.
Environmental Laws means the Resource Conservation and Recovery Act
of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, and any other federal, state or local statute,
law, ordinance, code, rule, regulation order or decree regulating or
relating to, or imposing liability or standards of conduct concerning,
any hazardous materials or other hazardous or toxic substance, as now or
at any time hereafter in effect.
<PAGE>5
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
ERISA Affiliate means any trade or business (whether or not
incorporated) under common control with the Company within the meaning
of Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the
Code for purposes of provisions relating to Section 412 of the Code).
ERISA Event means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Company or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in
which it was a substantial employer (as defined in Section 4001(a)(2) of
ERISA) or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d)
the filing of a notice of intent to terminate, the treatment of a Plan
amendment as a termination under Section 4041 or 4041A of ERISA, or the
commencement of proceedings by the PBGC to terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any
liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Company or any ERISA
Affiliate.
Eurocurrency Reserve Percentage means, for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward, if necessary, to the next 1/100th of 1%) in effect on such day
(whether or not applicable to any Lender) under regulations issued from
time to time by the Board of Governors of the Federal Reserve System, or
any governmental authority succeeding to its principal functions, for
determining the maximum reserve requirement (including any emergency,
supplemental or other marginal reserve requirement) with respect to
Eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
Eurodollar Loan means any Loan which bears interest at a rate
determined by reference to the Eurodollar Rate (Reserve Adjusted).
Eurodollar Office means with respect to any Lender the office or
offices of such Lender which shall be making or maintaining the
Eurodollar Loans of such Lender hereunder or such other office or
offices through which such Lender determines its
<PAGE>6
Eurodollar Rate. A Eurodollar Office of any Lender may be, at the
option of such Lender, either a domestic or foreign office.
Eurodollar Rate means, with respect to any Eurodollar Loan for any
Interest Period, the average (rounded upward, if necessary, to the next
higher 1/16th of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Eurodollar Office of each
Reference Lender two Business Days prior to the beginning of such
Interest Period by major banks in the interbank eurodollar market as at
or about 11:00 a.m., New York City time, for delivery on the first day
of such Interest Period, for the number of days comprised therein and in
an amount equal or comparable to the amount of the Eurodollar Loan of
such Reference Lender for such Interest Period.
Eurodollar Rate (Reserve Adjusted) means, with respect to any
Eurodollar Loan for any Interest Period, a rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) determined pursuant
to the following formula:
Eurodollar Rate = Eurodollar Rate
(Reserve Adjusted) 1-Eurocurrency
Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as to all
Eurodollar Rate Loans then outstanding as of the effective date of any
change in the Eurocurrency Reserve Percentage.
Event of Default means any of the events described in Section 12.1.
Exemption Agreement - see Section 13.10.
Existing Credit Agreement - see the Recitals.
Extension Request - see Section 2.8.
Federal Funds Rate means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York
(including any such successor, "H.15(519)") on the preceding Business
Day opposite the caption "Federal Funds (Effective)"; or, if for any
relevant day such rate is not so published on any such preceding
Business Day, the rate for such day will be the arithmetic mean as
determined by the Agent of the rates for the last transaction in
overnight Federal funds arranged prior to 9:00 a.m. (New York City time)
on that day by each of three leading brokers of Federal funds
transactions in New York City selected by the Agent.
Fee Letter - see Section 5.2.
Fiscal Quarter means any fiscal quarter of a Fiscal Year.
<PAGE>7
Fiscal Year means the fiscal year of the Company and its
Subsidiaries, which period shall be the period of approximately 12
months ending on the Saturday closest to January 31 in each year.
Fixed Charge Coverage Ratio means, as of the last day of any Fiscal
Quarter, the ratio (calculated without duplication) of (a) the sum of
the Company's consolidated net earnings before interest expense, taxes,
depreciation and amortization for the period of four Fiscal Quarters
ending on such day plus the Company's consolidated rental expense on
operating leases (including rent paid pursuant to a TROL) for such
period to (b) the sum of (i) the Company's consolidated interest expense
for such period plus (ii) the Company's consolidated rental expense on
operating leases (including rent paid pursuant to a TROL) for such
period plus (iii) the amount classified as the current portion of all
long-term debt (excluding, if applicable, the Loans) and lease
obligations of the Company and its Subsidiaries on a consolidated
balance sheet prepared on such day.
Floating Rate Loan means any Loan which bears interest at or by
reference to the Alternate Reference Rate.
GAAP means those generally accepted accounting principles as in
effect from time to time.
Group - see Section 2.2.
Hedging Arrangement means any interest rate swap, cap or collar
agreement, currency swap agreement, commodity swap agreement or other
arrangement designed to hedge interest rate an/or currency risk or
changes in commodity prices.
Interest Period means, with respect to any Eurodollar Loan, the
period commencing on and including the date such Loan is made or is
converted from a Floating Rate Loan, or on the last day of the
immediately preceding Interest Period for such Loan, and ending on but
excluding the day which is one, two, three or six months thereafter, as
the Company shall specify in the related Notice of Borrowing or Notice
of Conversion/Continuation pursuant to Section 2.3 or 2.4; provided,
however, that
(a) if an Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the
immediately succeeding Business Day (unless such succeeding
Business Day would be the first Business Day of a calendar
month, in which case such Interest Period shall end on the
immediately preceding Business Day);
(b) if there exists no day in the appropriate subsequent calendar
month numerically corresponding to the first
<PAGE>8
day of such Interest Period, such Interest Period shall end on
the last Business Day of such month; and
(c) the Company may not select any Interest Period which extends
beyond the scheduled Termination Date.
Lender - see the Preamble.
Lien means, when used with respect to any Person, any interest of
any other Person in any real or personal property asset or other right
owned or being purchased or acquired by such Person which secures
payment or performance of any obligation and shall include any mortgage,
lien, encumbrance, charge or other security interest of any kind,
whether arising by contract, as a matter of law, by judicial process or
otherwise.
Loan - see Section 2.1.
Loan Documents means this Agreement, the Notes, the Fee Letter and
all other documents delivered to the Agent or any Lender in connection
herewith.
Management Stock Agreement means any agreement between the Company
and key employees which provides for the sale of stock to employees with
repurchase rights of, and obligations in, the Company.
Margin Stock means any "margin stock" as defined in Regulation U of
the Board of Governors of the Federal Reserve System.
Material Adverse Effect means a material adverse effect on the
ability of the Company to timely and fully perform any of its payment or
other material obligations under this Agreement or any Note.
Material Subsidiary means any Subsidiary which either (a) has
assets which constitute 5% or more of the consolidated assets of the
Company and its Subsidiaries or (b) has revenues during its most
recently-ended fiscal year which constitute more than 5% of the
consolidated revenues of the Company and its Subsidiaries during the
most recently-ended Fiscal Year.
Multiemployer Plan means a "multiemployer plan", within the meaning
of Section 4001(a)(3) of ERISA, to which the Company or any ERISA
Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated
to make, contributions.
Note - see Section 3.1.
<PAGE>9
Notice of Borrowing means a notice in substantially the form of
Exhibit E.
Notice of Conversion/Continuation means a notice in substantially
the form of Exhibit F.
Objecting Lender - see Section 2.8.
Occupational Safety and Health Law means the Occupational Safety
and Health Act of 1970 and any other federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating or
relating to, or imposing liability or standards of conduct concerning,
employee health and/or safety, as now or at any time hereafter in
effect.
Participant - see Section 14.9.2.
PBGC means the Pension Benefit Guaranty Corporation, or any
governmental authority succeeding to any of its principal functions
under ERISA.
Pension Plan means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Company sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a multiple employer plan (as described
in Section 4064(a) of ERISA) has made contributions at any time during
the immediately preceding five plan years.
Percentage means as to any Lender the percentage which the amount
of such Lender's Commitment is of the aggregate amount of Commitments
(or, if the Commitments have terminated, which the principal amount of
such Lender's outstanding Loans is of the principle amount of all
outstanding Loans). The Percentages of Lenders as of the Effective Date
are set forth in Schedule I.
Person means any natural person, corporation, partnership, trust,
association, governmental authority or unit, or any other entity,
whether acting in an individual, fiduciary or other capacity.
Plan means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company sponsors or maintains or to which the Company
makes, is making, or is obligated to make contributions and includes any
Pension Plan.
Reference Lender means each of NationsBank, The Bank of New York,
The Bank of Nova Scotia and BofA.
Reference Rate means at any time the rate of interest in effect for
such day as publicly announced from time to time by BofA in San
Francisco, California, as its "reference rate." (The "reference rate"
is a rate set by BofA based upon various factors including BofA's costs
and desired return, general economic
<PAGE>10
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the reference rate announced by BofA
shall take effect at the opening of business on the day specified in the
public announcement of such change.
Release means a "release", as such term is defined in CERCLA.
Reportable Event means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been
waived in regulations issued by the PBGC.
Required Lenders means Lenders having an aggregate Percentage of
66-2/3% or more.
SEC means the Securities and Exchange Commission.
Subsidiary means, with respect to any Person, any corporation of
which such Person and/or its other Subsidiaries own, directly or
indirectly, such number of outstanding shares as have more than 50% of
the ordinary voting power for the election of directors. Unless the
context otherwise requires, each reference to Subsidiaries herein shall
be a reference to Subsidiaries of the Company.
Suretyship Liability means any agreement, undertaking or other
contractual arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to
supply funds to or otherwise to invest in a debtor, or otherwise to
assure a creditor against loss) any indebtedness, obligation or other
liability (including accounts payable) of any other Person (other than
by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the
shares of any other Person. Suretyship Liability shall include any
liability or contingent liability of a Person under or in connection
with a TROL. The amount of any Person's obligation under any Suretyship
Liability shall (subject to any limitation set forth therein) be deemed
to be the principal amount of the indebtedness, obligation or other
liability guaranteed thereby. As of any date, the amount of any
Person's obligation under any TROL shall be equal to the amount which
such Person would be obligated to pay if the TROL was accelerated on
such date (disregarding accrued scheduled lease payments which would be
characterized as interest if such TROL were treated as a Capital Lease
under GAAP).
Termination Date means June 30, 2000, as such date is extended from
time to time pursuant to Section 2.8 or such other date on which the
Commitments shall terminate pursuant to Section 6.1 or 12.2.
<PAGE>11
TROL means any tax retention operating lease, off balance sheet
lease, synthetic lease or similar lease transaction where the lessee is
treated as owner of the leased property for U.S. federal income tax
purposes while the lease is accounted for on the financial statements of
the lessee, prepared in accordance with GAAP, as an operating lease,
including without limitation that certain Lease Agreement (Tax Retention
Operating Lease) dated as of May 5, 1995 between First Security Bank of
Utah, N.A., as lessor, and the Company, as lessee.
Type of Loan or Borrowing - see Section 2.2. The types of Loans or
borrowings under this Agreement are as follows: Floating Rate Loans or
borrowings and Eurodollar Loans or borrowings.
Unfunded Pension Liability means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions
used for funding the Pension Plan pursuant to Section 412 of the Code
for the applicable plan year.
1.2 Computations; Changes in GAAP. Where the character or amount
of any asset or liability or any item of income or expense is required
to be determined, or any consolidation or other accounting computation
is required to be made, for purposes of this Agreement, such
determination or calculation shall, to the extent applicable and except
as otherwise specified in this Agreement, be made in accordance with
GAAP. If any change in accounting principles from those used in the
preparation of the audited financial statements referred to in Section
9.4 hereafter occasioned by the promulgation of any rule, regulation,
pronouncement or opinion by or required by the Financial Accounting
Standards Board of the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions)
results in a change in the method of calculation of financial covenants,
standards or terms found in Section 1 or 10, the parties hereto agree to
enter into negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that the criteria
for evaluating the Company's financial condition shall be the same after
such change as if such change had not been made.
1.3 Cross-References; Section Captions. A Section, an Exhibit or
a Schedule is, unless otherwise stated, a reference to a section hereof
or an exhibit or schedule hereto, as the case may be. Section captions
are for convenience only and shall not affect the interpretation of this
Agreement.
SECTION 2 COMMITMENTS OF THE LENDERS; TYPES OF LOANS; BORROWING
AND CONVERSION PROCEDURES.
2.1 Commitments. Subject to the terms and conditions of this
Agreement, each of the Lenders, severally and for itself alone, agrees
to make loans to the Company on a revolving basis
<PAGE>12
(collectively the "Loans" and individually each a "Loan") from time to
time before the Termination Date in such Lender's Percentage of such
aggregate amounts as the Company may from time to time request from all
Lenders; provided, however, that (i) the aggregate principal amount of
all Loans which any Lender shall be committed to have outstanding
hereunder shall not at any time exceed the amount of such Lender's
Commitment; and (ii) the aggregate principal amount of all Loans which
all Lenders shall be committed to have outstanding hereunder shall not
at any time exceed $500,000,000 (as such amount is reduced from time to
time pursuant to Section 6.1).
2.2 Various Types of Loans. Each Loan shall be either a Floating
Rate Loan or a Eurodollar Loan (each a "type" of Loan), as the Company
shall specify in the related Notice of Borrowing or Notice of
Conversion/Continuation pursuant to Section 2.3 or 2.4. Eurodollar
Loans having the same Interest Period are sometimes alled a "Group" or
collectively "Groups". Floating Rate Loans and Eurodollar Loans may be
outstanding at the same time provided that (i) not more than eight
different Groups of Loans shall be outstanding at any one time and (ii)
the aggregate principal amount of each Group of Loans shall at all times
(including after giving effect to any conversion or continuation of any
Loans) be at least $10,000,000 (in the case of a Eurodollar Loan) and an
integral multiple of $1,000,000.
2.3 Borrowing Procedures. The Company shall give written or
telephonic notice (in the case of telephonic notice, followed promptly
by written notice by facsimile) to the Agent of each proposed borrowing
in the form of a Notice of Borrowing not later than (a) in the case of a
Floating Rate borrowing, 9:00 a.m., San Francisco time, on the proposed
date of such borrowing, and (b) in the case of a Eurodollar borrowing,
9:00 a.m., San Francisco time, at least three Business Days prior to the
proposed date of such borrowing. Each such Notice of Borrowing shall be
effective upon receipt by the Agent and shall specify the date, amount
and type of borrowing and, in the case of a Eurodollar borrowing, the
initial Interest Period therefor. Promptly upon receipt of such Notice
of Borrowing, the Agent shall advise each Lender thereof. Not later
than 11:00 a.m., San Francisco time, on the date of a proposed
borrowing, each Lender shall provide the Agent at the Agent's Payment
Office with immediately available funds covering such Lender's
Percentage of such borrowing and, subject to the satisfaction of the
conditions precedent set forth in Section 11 with respect to such
borrowing, the Agent will then make such funds available to the Company
at such office by crediting the account of the Company on the books of
BofA with the aggregate of the amounts made available to the Agent by
the Lenders or by wire transfer in accordance with written instructions
provided to the Agent by the Company with the applicable Notice of
Borrowing, in each case in like funds as received by the Agent. Each
borrowing shall be on a Business Day. Each borrowing shall be in
aggregate amount of at least $1,000,000, in the case of Floating Rate
Loans, or $10,000,000,
<PAGE>13
in the case of Eurodollar Loans, and shall be in an integral multiple of
$1,000,000.
2.4 Continuation and Conversion Procedures. Subject to the
provisions of the last sentence of Section 2.2, the Company may convert
all or any part of any outstanding Loan into a Loan of a different type,
or continue all or any part of any outstanding Eurodollar Loan for a
succeeding Interest Period beginning on the last day of the current
Interest Period for such Loan, by giving written or telephonic notice
(in the case of telephonic notice, followed promptly by written notice
by facsimile) to the Agent in the form of a Notice of
Conversion/Continuation not later than (a) in the case of conversion
into a Floating Rate Loan, 9:00 a.m., San Francisco time, on the
proposed date of such conversion, and (b) in the case of a conversion
into or continuation of a Eurodollar Loan, 9:00 a.m., San Francisco
time, at least three Business Days prior to the proposed date of such
conversion or continuation. Each Notice of Conversion/Continuation
shall be effective upon receipt by the Agent and shall specify the date
and amount of such conversion or continuation, the amount of the Loan to
be so converted or continued and, in the case of a conversion into or
continuation of a Eurodollar Loan, the initial or subsequent Interest
Period therefor, as applicable. Promptly upon receipt of such Notice of
Conversion/Continuation, the Agent shall advise each Lender thereof.
Subject to Section 2.5, such Loan shall be so converted or continued on
the requested date of conversion or continuation. Each conversion and
continuation shall be on a Business Day. If the Company fails to give a
timely Notice of Conversion/Continuation with respect to a Eurodollar
Loan, such Loan shall automatically convert to a Floating Rate Loan on
the last day of the Interest Period therefor.
2.5 Conditions. Notwithstanding any other provision of this
Agreement, no Lender shall be obligated to make any Loan, or to convert
into or permit the continuation at the end of the applicable Interest
Period of any Eurodollar Loan, if an Event of Default or Default exists.
2.6 Pro Rata Treatment. All borrowings, conversions and
repayments shall be effected so that after giving effect thereto, each
Lender will have a pro rata share (according to its Percentage) of all
types and Groups of Loans.
2.7 Commitments Several. The failure of any Lender to make a
requested Loan on any date shall not relieve any other Lender of its
obligation (if any) to make a Loan on such date, but a Lender shall be
responsible for the failure of any other Lender to make any Loan to be
made by such other Lender.
2.8 Extension of Termination Date. On or before May 1 of each
year, commencing on May 1, 1996, the Company may, at its option, deliver
to the Agent (which shall promptly notify each Lender) a signed copy of
an extension request (an "Extension
<PAGE>14
Request") in the form of Exhibit B, requesting an extension of the
Termination Date for a period of one year. On or before June 1 of each
year that the Company has delivered an Extension Request, each Lender
shall have the right, in its sole and absolute discretion, to deliver a
written notice to the Agent consenting to or rejecting the requested
extension. If a Lender has not given such notice to the Agent by June 1
of such year, such Lender shall be deemed not to have consented to such
extension. If all Lenders consent to an Extension Request, the
Termination Date shall be extended for an additional year effective on
June 1 of the applicable year. If any Lender (an "Objecting Lender")
rejects, or is deemed not to have consented to, an Extension Request by
June 1 of the applicable year, the Termination Date shall not be so
extended; provided that if Lenders with an aggregate Percentage of 20%
or less are Objecting Lenders, then the Termination Date shall be so
extended if, on or before June 30 of the applicable year, the Company
(a) replaces each Objecting Lender pursuant to Section 8.7 with Lenders
(which may be existing or new Lenders) which consent to the applicable
Extension Request or (b) to the extent all Objecting Lenders have not
been so replaced, by notice to the Agent and each Objecting Lender,
terminates the Commitments of all Objecting Lenders (and concurrently
pays to the Agent for the account of each Objecting Lender all amounts
owed to such Objecting Lender hereunder) and reduces the aggregate
amount of all of the Commitments by a corresponding amount.
SECTION 3 NOTES EVIDENCING LOANS
3.1 Notes. The Loans of each Lender shall be evidenced by a
promissory note (as amended, supplemented, replaced or otherwise
modified from time to time, individually each a "Note" and collectively
for all Lenders the "Notes") substantially in the form set forth in
Exhibit A, with appropriate insertions, dated the Effective Date (or
such other date as shall be satisfactory to the Agent), payable to the
order of such Lender in the principal amount of the Commitment of such
Lender (or, if less, in the aggregate unpaid principal amount of such
Lender's Loans) on the Termination Date.
3.2 Recordkeeping. Each Lender shall record in its records, or at
its option on the schedule attached to its Note, the date and amount of
each Loan made by such Lender, each repayment or conversion thereof and,
in the case of each Eurodollar Loan, the dates on which each Interest
Period for such Loan shall begin and end. The aggregate unpaid
principal amount so recorded shall be rebuttable presumptive evidence of
the principal amount owing and unpaid on such Note. The failure to so
record any such amount or any error in so recording any such amount
shall not, however, limit or otherwise affect the obligations of the
Company hereunder or under any Note to repay the principal amount of the
Loans evidenced by such Note together with all interest accruing
thereon.
<PAGE>15
SECTION 4 INTEREST.
4.1 Interest Rates. The Company promises to pay interest on the
unpaid principal amount of each Loan for the period commencing on and
including the date of such Loan to but excluding the date such Loan is
paid in full, as follows:
(a) at all times while such Loan is a Floating Rate Loan, at
a rate per annum equal to the Alternate Reference Rate from time to
time in effect; and
(b) at all times while such Loan is a Eurodollar Loan, at a
rate per annum equal to the Eurodollar Rate (Reserve Adjusted)
applicable to each Interest Period for such Loan plus 0.275%;
provided, however, that if any principal of any Loan is not paid when
due (by acceleration or otherwise), such principal shall thereafter bear
interest at a rate per annum equal to the sum of the Alternate Reference
Rate from time to time in effect plus 1%.
4.2 Interest Payment Dates. Accrued interest on each Floating
Rate Loan shall be payable on the last day of each January, April, July
and October and on the Termination Date. Accrued interest on each
Eurodollar Loan shall be payable on the last day of each Interest Period
relating to such Loan (and, in the case of any Eurodollar Loan with an
Interest Period exceeding three months, on each three-month anniversary
of the first day of such Interest Period) and on the Termination Date.
During the existence of any Event of Default, interest shall be paid on
demand of the Agent at the request or with the consent of the Required
Lenders.
4.3 Setting and Notice of Eurodollar Rates. The applicable
Eurodollar Rate for each Interest Period shall be determined by the
Agent, and notice thereof shall be given by the Agent promptly to the
Company and each Lender. Each determination of the applicable
Eurodollar Rate by the Agent shall be conclusive and binding upon the
parties hereto, in the absence of demonstrable error. The Agent shall,
upon written request of the Company or any Lender, deliver to the
Company or such Lender a statement showing the computations used by the
Agent in determining any applicable Eurodollar Rate hereunder.
Each Reference Lender agrees to use reasonable efforts to timely
notify the Agent of its applicable rate for each Interest Period (as
contemplated in the definition of Eurodollar Rate). If, as to any
Interest Period, any Reference Lender is unable or fails to notify the
Agent of its applicable rate by 9:00 a.m., San Francisco time, two
Business Days before such Interest Period, then the Eurodollar Rate
shall be determined on the basis of the rates of the other Reference
Lenders.
<PAGE>16
4.4 Computation of Interest. Interest shall be computed for the
actual number of days elapsed on the basis of a year of 360 days (or, in
the case of Floating Rate Loans bearing interest at the Reference Rate,
365 or 366 days, as appropriate). The applicable interest rate for each
Floating Rate Loan shall change simultaneously with each change in the
Reference Rate.
SECTION 5 FEES.
5.1 Facility Fee. The Company agrees to pay to the Agent for the
account of each Lender a facility fee for the period from and including
the Effective Date to but excluding the Termination Date in an amount
equal to 0.15% per annum of the daily average of the amount of such
Lender's Commitment (whether used or unused). Such facility fee shall
be payable in arrears on the last day of each calendar quarter and on
the Termination Date for any period then ending for which such facility
fee shall not have been theretofore paid. The facility fee shall be
computed for the actual number of days elapsed on the basis of a year of
360 days.
5.2 Agent's Fee. The Company shall pay an agency fee to the Agent
for the Agent's own account, as required by the letter agreement ("Fee
Letter") between the Company and Agent (as successor-by-assignment to
BAI, as Agent) dated July 7, 1994, or as otherwise agreed to from time
to time by the Company and the Agent.
SECTION 6 REDUCTION OR TERMINATION OF THE COMMITMENTS;
PREPAYMENTS; REPAYMENT
6.1 Reduction or Termination of the Commitments. The Company may
from time to time on at least five Business Days' prior written notice
received by the Agent (which shall promptly advise each Lender thereof)
permanently reduce the amount of the Commitments to an amount not less
than the aggregate unpaid principal amount of the Loans. Any such
reduction shall be in an amount that is an integral multiple of
$10,000,000 and shall be pro rata among the Lenders according to their
respective Percentages. The Company may at any time on like notice
terminate the Commitments upon payment in full of all Loans and all
other obligations of the Company hereunder. Once reduced in accordance
with this Section, the Commitments may not be increased.
6.2 Prepayments. The Company may from time to time prepay the
Loans in whole or in part, provided that (a) the Company shall give the
Agent (which shall promptly advise each Lender) written notice thereof
not later than 9:00 a.m., San Francisco time, on the date of such
prepayment, in the case of Floating Rate Loans, and not less than three
Business Days prior to the date of such prepayment, in the case of
Eurodollar Loans, in each case specifying the Loans to be prepaid and
the date (which shall be a Business Day) and amount of prepayment, (b)
each partial
<PAGE>17
prepayment of Loans shall be in an aggregate principal amount of at
least $10,000,000 and an integral multiple of $1,000,000 and (c) any
prepayment of Eurodollar Loans on a day other than the last day of an
Interest Period therefor shall be subject to Section 8.4. If such
notice is given by the Company, the Company shall make such prepayment
and the payment amount specified in such notice shall be due and payable
on the date specified therein, together with accrued interest to each
such date on the amount prepaid and any amounts required pursuant to
Section 8.4. After giving effect to any prepayment of Eurodollar Loans,
each Group of Eurodollar Loans shall be at least $10,000,000 and an
integral multiple of $1,000,000.
6.3 Repayment. The Company shall repay to the Lenders on the
Termination Date the aggregate principal amount of Loans outstanding on
such date.
SECTION 7 MAKING AND PRORATION OF PAYMENTS; SETOFF; TAXES.
7.1 Making of Payments. All payments to be made by the Company
shall be made without set-off, recoupment or counterclaim. All payments
of principal of or interest on the Notes, and of all fees, shall be made
by the Company to the Agent in immediately available funds at the
Agent's Payment Office not later than 10:00 a.m., San Francisco time, on
the date due; and funds received after that hour shall be deemed to have
been received by the Agent on the immediately following Business Day.
The Agent shall promptly remit to each Lender its share of all such
payments received in collected funds by the Agent for the account of
such Lender.
All payments under Sections 8.1 and 8.4 shall be made by the
Company directly to the Lender entitled thereto.
7.2 Application of Certain Payments. Each payment of principal
shall be applied to such Loans as the Company shall direct by notice to
be received by the Agent on or before the date of such payment or, in
the absence of such notice, as the Agent shall determine in its
discretion. Concurrently with each remittance to any Lender of its
share of any such payment, the Agent shall advise such Lender as to the
application of such payment.
7.3 Due Date Extension. If any payment of principal or interest
with respect to any of the Notes, or of any fee, falls due on a day
which is not a Business Day, then such due date shall be extended to the
immediately following Business Day (unless, in the case of a Eurodollar
Loan, such immediately following Business Day is the first Business Day
of a calendar month, in which case such due date shall be the
immediately preceding Business Day), and, in the case of principal,
additional interest shall accrue and be payable for the period of any
such extension.
<PAGE>18
7.4 Setoff. The Company agrees that the Agent and each Lender
have all rights of set-off and bankers' lien provided by applicable law,
and in addition thereto, the Company agrees that at any time any Default
under Section 12.1.4 or any Event of Default exists, the Agent and each
Lender may apply to the payment of any obligations of the Company
hereunder, whether or not then due), any and all balances, credits,
deposits, accounts or moneys of the Company (excluding amounts held in
trust accounts for the benefit of Persons other than the Company) then
or thereafter with the Agent or such Lender.
7.5 Proration of Payments. If any Lender shall obtain by payment
or other recovery (whether voluntary, involuntary, by application of
offset or otherwise) on account of principal of or interest on any Note
in excess of its pro rata share of payments and other recoveries
obtained by all Lenders on account of principal of and interest on all
Notes (other than any non-pro rata interest payment resulting from a
Loan being an Affected Loan or as a result of replacement of a Lender
pursuant to Section 8.7), such Lender shall purchase from the other
Lenders such participation in the Notes held by them as shall be
necessary to cause such purchasing Lender to share the excess payment or
other recovery ratably with each of them; provided, however, that if all
or any portion of the excess payment or other recovery is thereafter
recovered from such purchasing Lender, the purchase shall be rescinded
and the purchase price restored to the extent of such recovery.
7.6 Taxes.
(a) All payments by the Company of principal, interest, fees,
indemnities and other amounts payable hereunder and under the Notes
shall be made to the recipient thereof without setoff counterclaim and
free and clear of, and without withholding or deduction for or on
account of, any present or future Taxes (other than Excluded Taxes) now
or hereafter imposed on such recipient or its income, property, assets
or franchises (such recipient's "Recipient Taxes"), except to the extent
that such withholding or deduction (i) is required by applicable law,
(ii) results from the breach by such recipient of its Exemption
Agreement, or (iii) would not be required if such recipient's Exemption
Representation (as defined below) were true. If any such withholding or
deduction is required by applicable law, the Company will:
(A) pay to the relevant authorities the full amount if
required to be withheld or deducted;
(B) promptly forward to the Agent an official receipt or
other documentation satisfactory to the Agent evidencing such
payment to such authorities; and
(C) except to the extent that such withholding or deduction
results from the breach, by the recipient of a
<PAGE>19
payment, of its Exemption Agreement or would not be required if
such recipient's Exemption Representation were true, pay to the
Agent for the account of the relevant recipient such additional
amount as is necessary to ensure that the net amount actually
received by such recipient will equal the full amount such
recipient would have received had no such withholding or deduction
been required.
For the purposes of this Section 7.6, (a) "Taxes" means, with respect to
any Person, taxes, assessments or other governmental charges or levies
imposed upon such Person, such Person's income or any of such Person's
properties, franchises or assets; and (b) "Excluded Taxes" means, in the
case of payments made to any Lender or the Agent, all of the following:
taxes imposed upon the overall gross or net income or receipts of such
Lender or the Agent, franchise taxes imposed upon such Lender or the
Agent with respect to its gross or net income or receipts by the
jurisdiction under the laws of which such Lender or the Agent, as the
case may be, is organized or any political subdivision thereof, and
franchise taxes imposed upon such Lender or the Agent with respect to
its gross or net income or receipts by the jurisdiction in which such
Lender's or the Agent's applicable lending office is located or any
political subdivision thereof.
(b) Each Lender hereby represents and warrants (such Lender's
"Exemption Representation") to the Company that on the Effective Date
(or, if later, the date such Lender becomes a party to this Agreement)
it is entitled to receive payments of principal of, and interest on,
Loans made by such Lender without withholding or deduction for or on
account of such Lender's Recipient Taxes imposed by the United States of
America or any political subdivision thereof.
The provisions of this Section shall survive repayment of the
Loans, cancellation of the Notes and any termination of the Commitments
or this Agreement.
7.7 Funding Reliance.
(a) Unless the Agent receives notice from the Company prior to the
date on which any payment is due to the Lenders that the Company will
not make such payment in full as and when required, the Agent may assume
that the Company has made such payment in full to the Agent on such date
in immediately available funds and the Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender
on such due date an amount equal to the amount then due such Lender. If
and to the extent the Company has not made such payment in full to the
Agent, each Lender shall repay to the Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Federal Funds Rate for each day from the date such amount is distributed
to such Lender until the date repaid.
<PAGE>20
(b) Unless the Agent receives notice from a Lender at least one
Business Day prior to the date of a requested borrowing that such Lender
will not make available as and when required hereunder to the Agent for
the account of the Company the amount of that Lender's Percentage of the
borrowing, the Agent may assume that each Lender has made such amount
available to the Agent in immediately available funds on the borrowing
date and the Agent may (but shall not be so required), in reliance upon
such assumption, make available to the Company on such date a
corresponding amount. If and to the extent any Lender shall not have
made its full amount available to the Agent in immediately available
funds and the Agent in such circumstances has made available to the
Company such amount, that Lender shall on the Business Day following
such borrowing date make such amount available to the Agent, together
with interest at the Federal Funds Rate for each day during such period.
A notice of the Agent submitted to any Lender with respect to amounts
owing under this subsection (b) shall be conclusive, absent manifest
error. If such amount is so made available, such payment to the Agent
shall constitute such Lender's Loan on the date of borrowing for all
purposes of this Agreement. If such amount is not made available to the
Agent on the Business Day following the borrowing date, the Agent will
notify the Company of such failure to fund and, upon demand by the
Agent, the Company shall pay such amount to the Agent for the Agent's
account, together with interest thereon for each day elapsed since the
date of such borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such borrowing.
SECTION 8 INCREASED COSTS; SPECIAL PROVISIONS FOR EURODOLLAR
LOANS.
8.1 Increased Costs. (a) If, after the date hereof, the adoption
of any applicable law, rule or regulation, or any change in any
applicable law, rule or regulation (including, without limitation,
Regulation D of the Board of Governors of the Federal Reserve System),
or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or compliance by any
Lender (or any Eurodollar Office of such Lender) with any request or
directive (whether or not having the force of law) of any such
authority, central bank or comparable agency
(A) shall subject any Lender (or any Eurodollar Office of
such Lender) to any tax, duty or other charge with respect to its
Eurodollar Loans, its Note or its obligation to make Eurodollar
Loans, or shall change the basis of taxation of payments to any
Lender of the principal of or interest on its Eurodollar Loans or
any other amounts due under this Agreement in respect of its
Eurodollar Loans or its obligation to make Eurodollar Loans (except
for taxes imposed on or measured by the overall gross or net income
or receipts of such Lender or its Eurodollar Office imposed
by
<PAGE>21
the jurisdiction, or any political subdivision thereof or taxing
authority therein, in which such Lender's principal executive
office or Eurodollar Office is located or in which such Lender is
incorporated); or
(B) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Board of
Governors of the Federal Reserve System, but excluding any reserve
included in the determination of interest rates pursuant to Section
4), special deposit or similar requirement against assets of,
deposits with or for the account of, or credit extended by any
Lender (or any Eurodollar Office of such Lender); or
(C) shall impose on any Lender (or its Eurodollar Office) any
other condition affecting its Eurodollar Loans, its Note or its
obligation to make Eurodollar Loans;
and the result of any of the foregoing is to increase the cost to (or in
the case of Regulation D referred to above, to impose a cost on) such
Lender (or any Eurodollar Office of such Lender) of making or
maintaining any Eurodollar Loan, or to reduce the amount of any sum
received or receivable by such Lender (or its Eurodollar Office) under
this Agreement or under its Note with respect thereto, then within 15
days after demand by such Lender (which demand shall be accompanied by a
statement setting forth the basis of such demand, a copy of which shall
be furnished to the Agent), the Company shall pay directly to such
Lender such additional amount or amounts as will compensate such Lender
for such increased cost or such reduction.
(b) If, after the Effective Date, any Lender shall reasonably
determine that the adoption or phase-in of any applicable law, rule or
regulation regarding capital adequacy, or any change in any applicable
law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its Eurodollar Office) or any
Person controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or such
controlling Person's capital as a consequence of such Lender's
obligations hereunder (including, without limitation, such Lender's
Commitment) to a level below that which such Lender or such controlling
Person could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such controlling Person's
policies with respect to capital adequacy) by an amount deemed by such
Lender or such controlling Person to be material, then from time to
time, within 15 days after demand by such Lender (which demand shall be
accompanied by a statement setting forth the basis of such demand, a
copy of which shall be furnished to the Agent), the
<PAGE>22
Company shall pay to such Lender such additional amount or amounts as
will compensate such Lender or such controlling Person for such
reduction.
8.2 Basis for Determining Interest Rate Inadequate or Unfair. If
with respect to any Interest Period:
(a) the Agent is advised by two or more Reference Lenders that
deposits in Dollars (in the applicable amounts) are not being offered to
such Reference Lenders in the relevant market for such Interest Period,
or the Agent otherwise reasonably determines (which determination shall
be binding and conclusive on the Company) that by reason of
circumstances affecting the interbank eurodollar market adequate and
reasonable means do not exist for ascertaining the applicable Eurodollar
Rate; or
(b) Lenders having an aggregate Percentage of 33% or more advise
the Agent that the Eurodollar Rate (Reserve Adjusted) as determined by
the Agent will not adequately and fairly reflect the cost to such
Lenders of maintaining or funding such Loans for such Interest Period,
or that the making or funding of Eurodollar Loans has become
impracticable as a result of an event occurring after the date of this
Agreement which in the reasonable opinion of such Lenders materially
affects such Loans,
then, the Agent shall promptly notify the other parties thereof and, so
long as such circumstances shall continue, (i) no Lender shall be under
any obligation to make or convert into Eurodollar Loans and (ii) on the
last day of the current Interest Period for each Eurodollar Loan, such
Loan shall, unless then repaid in full, automatically convert to a
Floating Rate Loan.
8.3 Changes in Law Rendering Eurodollar Loans Unlawful. In the
event that any change in (including the adoption of any new) applicable
laws or regulations, or any change in the interpretation of applicable
laws or regulations by any governmental or other regulatory body charged
with the administration thereof, should make it (or in the good faith
judgment of any Lender cause a substantial question as to whether it is)
unlawful for any Lender to make, maintain or fund Eurodollar Loans, then
such Lender shall promptly notify each of the other parties hereto and,
so long as such circumstances shall continue, (a) such Lender shall have
no obligation to make or convert into Eurodollar Loans (but shall make
Floating Rate Loans concurrently with the making of or conversion into
Eurodollar Loans by the Lenders which are not so affected, in each case
in an amount equal to such Lender's Percentage of all Eurodollar Loans
which would be made or converted into at such time in the absence of
such circumstances) and (b) on the last day of the current Interest
Period for each Eurodollar Loan of such Lender (or, in any event, if
such Lender so requests, on such earlier date as may be required by the
relevant law, regulation or interpretation), such Eurodollar Loan shall,
unless then repaid in full, automatically convert to a Floating Rate
Loan. Each
<PAGE>23
Floating Rate Loan made by a Lender which, but for the circumstances
described in the foregoing sentence, would be a Eurodollar Loan (an
"Affected Loan") shall, notwithstanding any other provision of this
Agreement, remain outstanding for the same period as the Group of
Eurodollar Loans of which such Affected Loan would be a part absent such
circumstances.
8.4 Funding Losses. The Company hereby agrees that upon demand by
any Lender (which demand shall be accompanied by a statement setting
forth the basis for the calculations of the amount being claimed, a copy
of which shall be furnished to the Agent) the Company will indemnify
such Lender against any net loss or expense which such Lender may
sustain or incur (including, without limitation, any net loss or expense
incurred by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain any Eurodollar
Loan, but excluding any loss of margin), as reasonably determined by
such Lender, as a result of (a) any payment (including, without
limitation, after acceleration thereof) or prepayment or conversion of
any Eurodollar Loan of such Lender on a date other than the last day of
an Interest Period for such Loan (including, without limitation, any
conversion pursuant to Section 8.3) or (b) any failure of the Company to
borrow or convert any Loans on a date specified therefor in a Notice of
Borrowing or Notice of Conversion/Continuation pursuant to this
Agreement (other than as a result of a default by such Lender or the
Agent). For this purpose, all notices to the Agent pursuant to this
Agreement shall be deemed to be irrevocable.
8.5 Right of Lenders to Fund through Other Offices. Each Lender
may, if it so elects, fulfill its commitment as to any Eurodollar Loan
by causing a foreign branch or affiliate of such Lender to make such
Loan, provided that in such event for the purposes of this Agreement
such Loan shall be deemed to have been made by such Lender and the
obligation of the Company to repay such Loan shall nevertheless be to
such Lender and shall be deemed held by it, to the extent of such Loan,
for the account of such branch or affiliate.
8.6 Discretion of Lenders as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each
Lender shall be entitled to fund and maintain its funding of all or any
part of its Loans in any manner it sees fit, it being understood,
however, that for the purposes of this Agreement all determinations
hereunder shall be made as if such Lender had actually funded and
maintained each Eurodollar Loan during each Interest Period for such
Loan through the purchase of deposits having a maturity corresponding to
such Interest Period and bearing an interest rate equal to the
Eurodollar Rate for such Interest Period.
8.7 Mitigation of Circumstances; Replacement of Affected Lender or
Objecting Lender. (a) Each Lender shall promptly notify the Company and
the Agent of any event of which it has
<PAGE>24
knowledge which will result in, and will use reasonable commercial
efforts available to it (and not, in such Lender's sole judgment,
otherwise disadvantageous to such Lender) to mitigate or avoid, (i) any
obligation by the Company to pay any amount pursuant to Section 7.6 or
8.1 (ii) the occurrence of any circumstance of the nature described in
Section 8.2 or 8.3 (and if any Lender has given notice of any such event
described in clause (i) or (ii) above and thereafter such event ceases
to exist, such Lender shall promptly so notify the Company and the
Agent). Without limiting the foregoing, each Lender will designate a
different funding office if such designation will avoid (or reduce the
cost to the Company of) any event described in clause (i) or (ii) of the
preceding sentence and such designation will not, in such Lender's
reasonable judgment, be otherwise disadvantageous to such Lender.
(b) At any time any Lender is an Affected Lender or an Objecting
Lender, the Company may replace such Lender as a party to this Agreement
with one or more other bank(s) or financial institution(s) reasonably
satisfactory to the Agent, such bank(s) or financial institution(s) to
have a Commitment or Commitments, as the case may be, in such amounts as
shall be reasonably satisfactory to the Agent (and upon notice from the
Company such Affected Lender or Objecting Lender shall assign, without
recourse or warranty, its Commitment, its Loans, its Note and all of its
other rights and obligations hereunder to such replacement bank(s) or
other financial institution(s) for a purchase price equal to the sum of
the principal amount of the Loans so assigned, all accrued and unpaid
interest thereon, its ratable share of all accrued and unpaid non-use
fees, any amounts payable under Section 8.4 as a result of such Lender
receiving payment of any Eurodollar Loan prior to the end of an Interest
Period therefor and all other obligations owed to such Affected Lender
or Objecting Lender hereunder).
8.8 Conclusiveness of Statements; Survival of Provisions.
Determinations and statements of any Lender pursuant to Section 8.1,
8.2, 8.3 or 8.4 shall be conclusive absent demonstrable error. Lenders
may use reasonable averaging and attribution methods in determining
compensation under Sections 8.1 and 8.4, and the provisions of such
Sections shall survive repayment of the Loans, cancellation of the Notes
and any termination of the Commitments or this Agreement (provided that
any claim for compensation by a Lender under such Sections shall be made
to the Company not later than 45 days after the later to occur of
repayment in full of the Loans and termination of the Commitments).
SECTION 9 WARRANTIES.
To induce the Agent and the Lenders to enter into this Agreement
and to induce the Lenders to make Loans hereunder, the Company warrants
to the Agent and the Lenders that:
<PAGE>25
9.1 Organization, etc. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; each Subsidiary is duly organized and validly
existing under the laws of the jurisdiction of its organization; and the
Company and each Subsidiary is duly qualified to do business in each
other jurisdiction where the nature of its business makes such
qualification necessary, except where such failure to so qualify would
not have a Material Adverse Effect.
9.2 Authorization; No Conflict. The execution and delivery by the
Company of this Agreement and each Note, the borrowings hereunder, and
the performance by the Company of its obligations under this Agreement
and each Note are within the corporate powers of the Company, have been
duly authorized by all necessary corporate action on the part of the
Company (including any necessary shareholder action), have received all
necessary governmental approval, and do not and will not (a) violate any
provision of law, rule or regulation or any order, decree, judgment or
award which is binding on the Company or any Subsidiary, (b) contravene
or conflict with, or result in a breach of, any provision of the
Certificate of Incorporation, By-Laws or other organizational documents
of the Company or any Subsidiary or of any agreement, indenture,
instrument or other document which is binding on the Company or any
Subsidiary or (c) result in, or require, the creation or imposition of
any Lien on any asset of the Company or any Subsidiary.
9.3 Validity and Binding Nature. This Agreement is, and upon the
execution and delivery thereof each Note will be, the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with its terms.
9.4 Financial Information. The Company's audited consolidated
financial statements as at January 28, 1995 and unaudited consolidated
financial statements as at August 12, 1995, copies of which have been
furnished to the Lenders, have been prepared in accordance with
generally accepted accounting principles (subject, in the case of such
unaudited statements, to the absence of footnotes and to normal year-end
adjustments) and fairly present the financial condition of the Company
and its Subsidiaries on a consolidated basis as of such dates and their
consolidated results of operations for the Fiscal Year and fiscal period
then ended.
9.5 No Material Adverse Change. Since the date of the audited
financial statements described in Section 9.4, there has been no event
or occurrence which has had or is reasonably likely to have a Material
Adverse Effect.
9.6 Litigation and Contingent Liabilities. Except as set forth in
the Company's Annual Report on Form 10-K for the Fiscal Year ended
January 28, 1995 and the Company's Quarterly Report on Form 10-Q for the
Fiscal Quarter ended August 12, 1995, no
<PAGE>26
litigation (including, without limitation, derivative actions),
arbitration proceeding or governmental proceeding is pending or, to the
Company's knowledge, threatened against the Company or any Subsidiary
which, if adversely decided, is reasonably likely to result, either
individually or collectively, in a Material Adverse Effect. Other than
any liability incident to such litigation or proceedings, neither the
Company nor any Subsidiary has any material contingent liabilities not
provided for or disclosed in the financial statements referred to in
Section 9.4.
9.7 Ownership of Properties; Liens. Each of the Company and each
Subsidiary owns good and sufficient title to, or a subsisting leasehold
interest in, all of its properties and assets, real and personal,
tangible and intangible, of any nature whatsoever, free and clear of all
Liens, except as permitted pursuant to Section 10.7.
9.8 Subsidiaries. Set forth on Schedule II is a complete and
accurate list of name and jurisdiction of organization of each
Subsidiary of the Company and the percentage ownership interest of the
Company and its other Subsidiaries in each such Subsidiary.
9.9 Pension Plans.
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state
law. Each Plan which is intended to qualify under Section 401(a) of the
Code has received a favorable determination letter from the IRS and to
the best knowledge of the Company, nothing has occurred which would
cause the loss of such qualification, in each case except as the same
could not result in the incurrence by the Company or any ERISA Affiliate
of any material liability, fine or penalty. The Company and each ERISA
Affiliate has made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Plan, in each case except as the same
could not result in the incurrence by the Company or any ERISA Affiliate
of any material liability, fine or penalty.
(b) There are no pending or, to the best knowledge of
Company, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably be expected to result in a Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably
expected to occur which could result in the incurrence by the Company or
any ERISA Affiliate of any material liability, fine or
<PAGE>27
penalty; (ii) no Pension Plan has any material Unfunded Pension
Liability; (iii) neither the Company nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any material liability under
Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the
Company nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any material liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither the Company nor any ERISA Affiliate
has engaged in a transaction that could be subject to Section 4069 or
4212(c) of ERISA.
9.10 Regulated Industry. Neither the Company nor any Subsidiary is
(a) an "investment company" or a company "controlled" by an "investment
company", within the meaning of the Investment Company Act of 1940, as
amended, or (b) a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
9.11 Regulations G, U and X. Neither the Company nor any
Subsidiary is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock, and no proceeds of any Loan will be
used for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any Margin Stock or maintaining or extending
credit to others for such purpose.
9.12 Taxes. Each of the Company and each Subsidiary has filed all
material tax returns and reports required by law to have been filed by
it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on its books.
9.13 Environmental and Safety and Health Matters. To the best of
the knowledge of the Company, after inquiry it has deemed appropriate,
the Company and each Subsidiary is in compliance with all Environmental
Laws and Occupational Safety and Health Laws where failure to comply
could have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received notice of any claims that any of them is not in
compliance in all material respects with any Environmental Law where
failure to comply could have a Material Adverse Effect.
9.14 Compliance with Law. Each of the Company and each Subsidiary
is in compliance with all statutes, judicial and administrative orders,
permits and governmental rules and regulations which are material to its
business or the non-
<PAGE>28
compliance with which could result in any material fine, penalty or
liability.
9.15 Information. All information heretofore or contemporaneously
herewith furnished by the Company or any Subsidiary to any Lender for
purposes of or in connection with this Agreement and the transactions
contemplated hereby is, and all information hereafter furnished by or on
behalf of the Company or any Subsidiary to any Lender pursuant hereto or
in connection herewith will be, true and accurate in every material
respect on the date as of which such information is dated or certified,
and such information, taken as a whole, does not and will not omit to
state any material fact necessary to make such information, taken as a
whole, not misleading.
SECTION 10 COVENANTS.
Until the expiration or termination of the Commitments and
thereafter until all obligations hereunder and under the Notes are paid
in full, the Company agrees that, unless at any time the Required
Lenders shall otherwise expressly consent in writing, it will:
10.1 Reports, Certificates and Other Information. Furnish to each
Lender through the Agent:
10.1.1 Audit Report. Promptly when available and in any event
within 100 days after the close of each Fiscal Year, a copy of the
annual audit report of the Company and its Subsidiaries for such Fiscal
Year, including therein a consolidated balance sheet of the Company and
its Subsidiaries as of the end of such Fiscal Year and consolidated
statements of earnings and cash flow of the Company and its Subsidiaries
for such Fiscal Year certified, without disclaimer of opinion and
without qualification as to going concern, by Deloitte & Touche or other
independent auditors of recognized national standing selected by the
Company, together with a certificate from such accountants to the effect
that, in making the examination necessary for the signing of such annual
report by such auditors, they have not become aware of any Event of
Default or Default that has occurred and is continuing or, if they have
become aware of any such event, describing it in reasonable detail.
10.1.2 Interim Reports. Promptly when available and in any event
within 60 days after the end of each Fiscal Quarter (except the last
Fiscal Quarter of each Fiscal Year), a consolidated balance sheet of the
Company and its Subsidiaries as of the end of such quarter, and
consolidated statements of earnings and cash flow for such quarter and
for the period beginning with the first day of such Fiscal Year and
ending on the last day of such quarter, together with a certificate of
the President, the Chief Financial Officer, the Controller or the
Treasurer of the Company to the effect that such financial statements
fairly present the financial condition and results of operations of the
Company and
<PAGE>29
its Subsidiaries as of the date and periods indicated (subject to normal
year-end adjustments).
10.1.3 Compliance Certificate. Concurrently with each set of
financial statements delivered pursuant to Section 10.1.1 and 10.1.2, a
certificate of the President, the Chief Financial Officer, the
Controller or the Treasurer of the Company, in form and substance
reasonably satisfactory to the Agent and the Required Lenders, (a) to
the effect that such officer is not aware of any Event of Default or
Default that has occurred and is continuing or, if there is any such
event, describing it in reasonable detail, and (b) containing a
computation of each of the financial ratios and restrictions set forth
in Section 10.6.
10.1.4 Reports to SEC. Promptly upon the filing or sending
thereof, a copy of any annual, period or special report or registration
statement (inclusive of exhibits thereto) filed by the Company or any
Subsidiary with the SEC or any securities exchange and of each
communication from the Company or any Subsidiary to shareholders
generally.
10.1.5 Notice of Default, Litigation and ERISA Matters.
Immediately upon becoming aware of any of the following, written notice
describing the same and the steps being taken by the Company or the
Subsidiary affected thereby with respect thereto: (a) the occurrence of
an Event of Default or a Default; (b) any litigation, arbitration or
governmental investigation or proceeding not previously disclosed by the
Company to the Lenders which has been instituted or, to the knowledge of
the Company, is threatened against the Company or any Subsidiary or to
which any of the assets of any thereof is subject which, if adversely
determined, is reasonably likely to have a Material Adverse Effect; (c)
the occurrence of any of the following events affecting the Company or
any ERISA Affiliate, along with a copy of any notice with respect to
such event that is filed with a governmental authority and any notice
delivered by a governmental authority to the Company or any ERISA
Affiliate with respect to such event: (i) an ERISA Event which could
result in the incurrence by the Company or any ERISA Affiliate of any
material liability, fine or penalty, (ii) a material increase in the
Unfunded Pension Liability of any Pension Plan, (iii) the adoption of,
or the commencement of any material contributions to, any Plan subject
to Section 412 of the Code by the Company or any ERISA Affiliate, or
(iv) the adoption of any amendment to a Plan subject to Section 412 of
the Code, if such amendment results in a material increase in
contributions or Unfunded Pension Liability; and (d) any other event or
occurrence which has had or is reasonably likely to have a Material
Adverse Effect.
10.1.6 Subsidiaries. Promptly from time to time a written report
of any change in the list of its Subsidiaries.
<PAGE>30
10.1.7 Other Information. From time to time such other
information concerning the Company and its Subsidiaries as any Lender or
the Agent may reasonably request.
10.2 Books, Records and Inspections. Keep, and cause each
Subsidiary to keep, its books and records reflecting all of its business
affairs and transactions in accordance with sound business practices
sufficient to allow the preparation of the Company's consolidated
financial statements in accordance with GAAP; and permit, and cause each
Subsidiary to permit, any Lender or the Agent or any representative
thereof, at such Lender's or the Agent's expense unless an Event of
Default exists, during reasonable business hours and on reasonable
notice, to visit any or all of its offices, to discuss its financial
matters with its officers and its independent auditors (and the Company
hereby authorizes such independent auditors to discuss such financial
matters with any Lender or the Agent or any representative thereof), and
to examine (and make copies of) any of its books or other corporate
records.
10.3 Insurance. Maintain, and cause each Subsidiary to maintain,
with responsible and financially-sound insurance companies or
associations, insurance in such amounts and covering such risks (and
having such deductibles and self-insurance) as is usually maintained by
companies engaged in similar businesses and owning similar properties
similarly situated.
10.4 Compliance with Law; Payment of Taxes and Liabilities. (a)
Comply, and cause each Subsidiary to comply, in all material respects
with all applicable laws, rules, regulations and orders the non-
compliance with which, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect; and (b) pay,
and cause each Subsidiary to pay, prior to delinquency, all taxes and
other governmental charges against it or any of its assets, provided,
however, that the foregoing shall not require the Company or any
Subsidiary to pay any such tax or charge so long as it shall contest the
validity thereof in good faith by appropriate proceedings and shall set
aside on its books adequate reserves with respect thereto.
10.5 Maintenance of Existence, etc. Maintain and preserve, and
(subject to Section 10.10) cause each Subsidiary to maintain and
preserve, (a) its existence and good standing in the jurisdiction of its
organization and (b) its foreign qualification in each other
jurisdiction where the nature of its business makes such qualification
necessary (except in those instances in which the failure to be
qualified or in good standing will not have a Material Adverse Effect).
10.6 Financial Ratios and Restrictions.
10.6.1 Minimum Consolidated Tangible Net Worth. Not at any time
permit Consolidated Tangible Net Worth to be less than the sum of (a)
$425,000,000 plus (b) 50% of the Company's cumulative
<PAGE>31
consolidated net earnings for all Fiscal Quarters ending after January
30, 1994 (but disregarding any Fiscal Quarter in which there is a loss)
plus (c) 50% of the amount by which the shareholders' equity of the
Company is increased by the issuance of capital stock (or the exercise
of warrants or options in respect thereof) after January 30, 1994.
10.6.2 Long-Term Liabilities to Net Worth Ratio. Not at any time
permit the ratio of Consolidated Long-Term Liabilities to Consolidated
Tangible Net Worth to exceed 1.5 to 1.
10.6.3 Fixed Charge Coverage Ratio. Not permit the Fixed Charge
Coverage Ratio as of the last day of any Fiscal Quarter to be less than
1.4 to 1.
10.7 Limitation on Liens. Not, and not permit any Material
Subsidiary to, create or permit to exist any Lien with respect to any
assets now owned or hereafter acquired, except:
(a) Liens existing on the date of this Agreement;
(b) Liens created by or resulting from any litigation or legal
proceeding which is currently being contested in good faith by
appropriate proceedings unless the judgment secured thereby
shall not have been stayed, bonded or discharged within 60
days;
(c) Liens incidental to the normal conduct of business of the
Company or any Material Subsidiary or the ownership of their
respective assets and Liens to secure the performance of bids,
tenders or trade contracts, materialmens' and mechanics'
liens, and Liens to secure statutory obligations, surety or
appeal bonds or other Liens of like general nature, in each
case which are not incurred in connection with the incurrence
of Debt and which do not in the aggregate impair the use of
any such asset in the operation of the business of the Company
or any Material Subsidiary or the value of any such asset for
the purposes of any such business;
(d) pledges or deposits (other than any Lien imposed by ERISA and
not permitted under clause (g) of this Section) to secure
obligations under workers' compensation and unemployment
compensation laws or similar legislation to secure public or
statutory obligations of the Company or any Material
Subsidiary;
(e) any Lien (i) on assets (including Liens arising under Capital
Leases) imposed in connection with the financing of all or
part of the purchase price therefor on the cost of the
construction, extension or improvement of any new or existing
asset created contemporaneously with, or within 270 days
after, such acquisition, completion of such construction,
such
<PAGE>32
extension or such improvement, (ii) existing on assets at the
time of the acquisition thereof by the Company or any Material
Subsidiary, (iii) existing on assets or the outstanding shares
or Debt of a corporation at the time such corporation is
merged into or consolidated with the Company or any Material
Subsidiary or at the time of a sale, lease or other
disposition of the assets or outstanding shares of Debt of a
corporation or firm as an entirety to the Company or any
Material Subsidiary, or (iv) arising in connection with the
purchase of inventory, supplies or services from trade
creditors on customary business terms; provided that the
amount secured by any Lien described in this clause (e) shall
not exceed the lesser of the fair market value or cost of the
related asset at the time of the imposition of such Lien;
(f) Liens associated with any tenant's leasehold interest in any
asset of the Company or a Material Subsidiary incurred solely
in conjunction with leasing such asset;
(g) Liens for taxes or assessments or other governmental charges
or levies which either are not yet due and payable or are
currently being contested in good faith by appropriate
proceedings;
(h) Liens securing Debt of a Material Subsidiary owing to the
Company or another Material Subsidiary;
(i) the extension, renewal or replacement of any Lien permitted by
the foregoing clauses of this Section 10.7 in respect of the
same asset subject to such Lien (but without increase in the
principal amount of the Debt secured thereby);
(j) minor survey exceptions or minor encumbrances, easements or
reservations, or rights of others for rights-of-way, utilities
and other similar purposes, or zoning or other restrictions as
to the use of real properties, which are necessary for the
conduct of the activities of the Company and its Material
Subsidiaries or which customarily exist on properties of
Persons engaged in similar activities and similarly situated
and which do not in any event materially impair their use in
the operation of the business of the Company and its Material
Subsidiaries; and
(k) Liens not otherwise permitted by the foregoing clauses of this
Section 10.7 so long as the sum, without duplication, of (x)
all obligations secured by such Liens and (y) Debt of Material
Subsidiaries permitted solely by clause (f) of Section 10.8
does not exceed 15% of Consolidated Total Assets.
<PAGE>33
10.8 Debt. Not permit any Material Subsidiary to incur or permit
to exist any Debt, except:
(a) Debt owed to the Company or to another Material Subsidiary;
(b) Debt outstanding on the date hereof;
(c) Debt secured by Liens permitted by clause (e) of Section 10.7;
(d) Debt outstanding when such entity becomes a Material
Subsidiary or is merged or consolidated with another Material
Subsidiary;
(e) Debt in respect of commercial letters of credit issued to
support the purchase of goods by the applicable Material
Subsidiary in the ordinary course of business; and
(f) Debt not otherwise permitted by the foregoing clauses of this
Section 10.8 so long as the sum, without duplication, of (x)
all such Debt and (y) all obligations secured by Liens
permitted solely by clause (k) of Section 10.7 does not exceed
15% of consolidated Total Assets.
10.9 Guaranties, Loans and Advances. Not, and not permit any
Material Subsidiary to, become or be a guarantor or surety of, or
otherwise become or be responsible in any manner (whether by agreement
to purchase any obligations, stock, assets, goods or services, or to
supply or advance any funds, assets, goods or services, or otherwise)
with respect to, any undertaking of any other Person or make or permit
to exist any loans or advances to any other Person, except for (i) the
endorsement, in the ordinary course of collection, of instruments
payable to it or to its order, (ii) loans or advances constituting
indebtedness of Subsidiaries to the Company or to other Subsidiaries or
of the Company to Subsidiaries, guaranties by the Company of the
obligations of Subsidiaries and guaranties by Subsidiaries of
obligations of the Company and of other Subsidiaries, (iii) advances not
to exceed, in the aggregate for Company and all Material Subsidiaries at
any one time outstanding, $100,000 to officers, employees,
subcontractors or suppliers, (iv) loans or advances to employees in
connection with the purchase of the Company's stock under Management
Stock Agreements, (v) advances to employees for moving and travel
expenses, drawing accounts and similar expenditures in the ordinary
course of business, (vi) notes to the Company from Frontier Associates
in the amount of $5,000,000, (vii) guaranties provided for in Section
1.9 of the Assets Purchase Agreement, (viii) continuing obligations of
the Company or any Subsidiary, not exceeding $9,000,000 in the aggregate
for the Company and all Subsidiaries payable during any Fiscal Year, as
assignor of any lease or other agreement which
<PAGE>34
has been assigned to any other Person, (ix) guaranties by Company or any
Subsidiary of the performance of obligations of Subsidiaries (other than
obligations constituting Debt for Borrowed Money except for obligations
under Capital Leases) entered into in the ordinary course of business,
and (x) letters of credit issued to Multiemployer Plans. Any
obligations of the Company or any Material Subsidiary under any TROL to
which it is a party (whether matured or unmatured or contingent) shall
not be deemed to be prohibited by this Section 10.9.
10.10 Mergers, Consolidations, Sales. Not, and not permit any
Material Subsidiary (or Subsidiary that would become a Material
Subsidiary as a result of such transaction) to, be a party to any merger
or consolidation, or, except in the ordinary course of its business,
sell, transfer, convey or lease all or any substantial part of its
assets or sell or assign with or without recourse any receivables,
except that (a) the Company may be a party to a merger or consolidation
if the Company is the surviving corporation and no Event of Default or
Default exists or would result from such merger or consolidation, and
(b) any Subsidiary may be a party to a merger or consolidation, or sell
all or substantially all of its assets if the Company (directly or
indirectly through its Subsidiaries) maintains a percentage of ownership
of the surviving or acquiring corporation similar to its percentage of
ownership of the prior or selling Subsidiary and no Event of Default or
Default, exists or would result from such merger, consolidation or sale.
Notwithstanding the foregoing, the Company or any Material Subsidiary
may contribute all of the stock of, or all or substantially all of the
assets of, a Material Subsidiary to a joint venture which is at least
50% owned by the Company or a Material Subsidiary so long as (i) no
Event of Default or Default exists or would result therefrom and (ii)
the aggregate amount so contributed by the Company or any Material
Subsidiary in any Fiscal Year will not exceed 5% of the assets of the
Company and its Subsidiaries as of the end of the preceding Fiscal Year.
10.11 Company's and Subsidiaries' Stock. Not permit any
Subsidiary to purchase or otherwise acquire any shares of capital stock
of the Company; and not take any action, or permit any Subsidiary to
take any action, which will, so long as any shares of capital stock or
Debt of any corporation which is a Subsidiary at the date of this
Agreement are owned by the Company or any Subsidiary, result in a
decrease in the percentage of the outstanding shares of capital stock of
such corporation owned at the date of this Agreement by the Company and
its other Subsidiaries, except that the Company or any Subsidiary may
sell or otherwise dispose of stock or ownership interests in any
Subsidiary that is not a Material Subsidiary for arms-length
consideration. Notwithstanding the foregoing, the Company or any
Material Subsidiary may contribute all of the stock of, or all or
substantially all of the assets of, a Material Subsidiary to a joint
venture which is at least 50% owned by the Company or a Material
Subsidiary so long as (i) no Event of Default or Default
<PAGE>35
exists or would result therefrom and (ii) the aggregate amount so
contributed by the Company or any Material Subsidiary in any Fiscal Year
will not exceed 5% of the assets of the Company and its Subsidiaries as
of the end of the preceding Fiscal Year.
10.12 Unconditional Purchase Obligations. Not, and not permit any
Material Subsidiary to, enter into or be a party to any contract for the
purchase of materials, supplies or other property or services, if such
contract requires that payment be made by it regardless of whether or
not delivery is ever made of such materials, supplies or other property
or services.
10.13 ERISA. (a) Maintain, and cause each of its ERISA Affiliates
to maintain, each Plan in compliance in all material respects with the
applicable provisions of ERISA, the Code and other federal or state law;
and (b) make, and cause each of its ERISA Affiliates to make, all
required contributions to any Plan subject to Section 412 of the Code,
and not, and not suffer or permit any of its ERISA Affiliates to: (x)
engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or
could reasonably expected to result in liability of the Company in an
aggregate amount in excess of $5,000,000; or (y) engage in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.
10.14 Purchase or Redemption of Company's Securities; Dividend
Restriction. Not purchase or redeem any shares of capital stock of the
Company, declare or pay any dividends thereon (other than stock
dividends or cash dividends as provided for below), make any
distribution to stockholders or set aside any funds for any such
purpose, and not prepay, purchase, defease or redeem, and not permit any
Subsidiary to purchase, any subordinated Debt of the Company; provided
that, so long as no Event of Default or Default exists or could result
therefrom, the Company may (a) redeem shares from employees upon
termination of employment or thereafter as provided in the Management
Stock Agreements in amounts paid in cash (including amounts paid on
account of principal of Debt issued in redemption of such stock) not
exceeding in any Fiscal Year the greater of $10,000,000 or 5% of
Consolidated Net Tangible Net Worth as of the end of the preceding
Fiscal Year; (b) repurchase or redeem shares from persons upon the
exercise of stock options in amounts (including amounts paid on account
of principal of Debt issued in redemption of such stock) not exceeding,
in any Fiscal Quarter, the sum of $500,000 plus the additional amount,
if any, that, when added to the $500,000 amount, would cause the
shareholders' equity of the Company (measured at the end of the Fiscal
Quarter in which such redemption or repurchase takes place) to be not
lower than at the end of the immediately preceding quarter; and (c) (i)
for the Fiscal Years ending on or about January 31, 1996, January 31,
1997 and January 31, 1998, (A) pay cash dividends to its shareholders in
an aggregate amount, in any Fiscal Year, not exceeding 40% of its
consolidated net earnings for the prior
<PAGE>36
Fiscal Year, and (B) repurchase its stock, in an aggregate amount not
exceeding the greater of (x) 40% of its consolidated net earnings for
the prior Fiscal Year or (y) the cumulative amount of $70,000,000 for
stock repurchases made during the two year period from June 15, 1995
through and including June 14, 1997, less, in each case of clause (x)
and (y), the amount of cash dividends paid to its shareholders in such
Fiscal Years, and (ii) thereafter, pay cash dividends to its
shareholders or repurchase its stock in an aggregate amount, in any
Fiscal Year, not exceeding 40% of its consolidated net earnings for the
prior Fiscal Year.
10.15 Use of Proceeds. Use the proceeds of the Loans for working
capital and for other general corporate purposes; and not use or permit
any proceeds of any Loan to be used, either directly or indirectly, for
the purpose, whether immediate, incidental or ultimate, of (a)
"purchasing or carrying" any Margin Stock within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, as
amended from time to time, or (b) purchasing or otherwise acquiring any
stock of any Person if such Person (or its board of directors) has (i)
announced that it will oppose such purchase or other acquisition or (ii)
commenced any litigation which alleges that such purchase or other
acquisition violates, or will violate, any applicable law.
SECTION 11 CONDITIONS OF LENDING.
The obligation of each Lender to make its Loans is subject to the
following conditions precedent:
11.1 Initial Loan. The obligation of each Lender to make its
initial Loan is, in addition to the conditions precedent specified in
Section 11.2, subject to the conditions precedent (and the date on which
all such conditions precedent have been satisfied or waived in writing
by the Lenders is herein called the "Effective Date") that the Agent
shall have received (a) evidence, reasonably satisfactory to the Agent,
that all obligations of the Company under the Existing Credit Agreement
have been paid in full and (b) all of the following documents, each duly
executed and dated the Effective Date (or such other date as shall be
satisfactory to the Agent), in form and substance satisfactory to the
Agent and each Lender, and each (except for the Notes, of which only the
originals shall be signed) in sufficient number of signed counterparts
to provide one for each Lender:
11.1.1 Notes. The Notes of the Company payable to the order of
the Lenders.
11.1.2 Resolutions. Certified copies of resolutions of the Board
of Directors of the Company authorizing or ratifying the execution,
delivery and performance by the Company of this
<PAGE>37
Agreement, the Notes and the other documents to be executed by the
Company pursuant hereto.
11.1.3 Consents, etc. Certified copies of all documents
evidencing any consents and governmental approvals (if any) required for
the execution, delivery and performance by the Company of this Agreement
and the Notes.
11.1.4 Incumbency and Signature Certificates. An incumbency and
signature certificate of the Company certifying the names of the officer
or officers of the Company authorized to sign this Agreement, the Notes
and the other documents required to be delivered by the Company in
connection with this Agreement, together with a sample of the true
signature of each such officer (it being understood that the Agent and
each Lender may conclusively rely on such certificate until formally
advised by a like certificate of any changes therein).
11.1.5 Opinion of Counsel for the Company. The opinion of Stoel
Rives, counsel to the Company, substantially in the form of Exhibit C.
11.1.6 Existing Credit Agreement Amount. Evidence of payment or
repayment by the Company of (i) all facility fees accrued to the
Effective Date under Section 5.1 of the Existing Credit Agreement and
(ii) all principal, accrued interest and any amounts payable under
Section 8.4 of the Existing Credit Agreement.
11.1.7 Termination of BNS Agreement. A certificate of the
President, Chief Financial Officer or Treasurer of the Company dated as
of the Effective Date, certifying that all commitments to extend credit
under the Credit Agreement, dated as of March 6, 1995, among the
Company, various financial institutions and The Bank of Nova Scotia, as
agent, as amended, have been irrevocably terminated and that all
principal, interest and fees due thereunder have been paid in full.
11.1.8 Other. Such other documents as the Agent or any Lender may
reasonably request.
11.2 All Loans. The obligation of each Lender to make any Loan to
be made by it or to continue or convert any Loan as or into a Eurodollar
Loan under Section 2.4 is subject to the satisfaction of the following
conditions precedent on the relevant borrowing date or date of
conversion or continuation:
11.2.1 Notice of Borrowing or Conversion/Continuation. The
Agent shall have received a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable;
11.2.2 Continuation of Representations and Warranties. The
representations and warranties in Section 9 (excluding Sections 9.6 and
9.8) shall be true and correct in all material
<PAGE>38
respects on and as of such borrowing date or date of such conversion or
continuation with the same effect as if made on and as of such date; and
11.2.3 No Existing Default. No Default or Event of Default
shall exist or shall result from such borrowing or a continuation or
conversion.
Each Notice of Borrowing and Notice of Conversion/Continuation and each
telephonic notice of a requested borrowing, conversion or continuation
submitted by the Company hereunder shall constitute a representation and
warranty by the Company hereunder, as of the date of each such notice
and as of each requested borrowing date or date of such conversion or
continuation, as applicable, that the conditions in this Section 11.2
are satisfied.
SECTION 12 EVENTS OF DEFAULT AND THEIR EFFECT.
12.1 Events of Default. Each of the following shall constitute an
Event of Default under this Agreement:
12.1.1 Non-Payment of the Loans, etc. Default in the payment when
due of any principal of any Loan; or default, and continuance thereof
for five days, in the payment when due of any interest on any Loan or
any fee or other amount payable by the Company hereunder.
12.1.2 Non-Payment of Other Debt. Any default shall occur under
the terms applicable to any Debt of the Company or any Subsidiary in an
aggregate amount (for all Debt so affected) exceeding $5,000,000 and
such default shall (a) consist of the failure to pay such Debt when due
(subject to any applicable grace period, whether by acceleration or
otherwise, or (b) accelerate the maturity of such Debt or permit the
holder or holders thereof, or any trustee or agent for such holder or
holders, to cause such Debt to become due and payable prior to its
expressed maturity.
12.1.3 Other Material Obligations. Default in the payment when
due of any obligation of $5,000,000 or more of the Company or any
Subsidiary with respect to any material purchase or lease of goods or
services (except only to the extent that the existence of any such
default is being contested by the Company or such Subsidiary in good
faith and by appropriate proceedings and appropriate reserves have been
made in respect of such default), and continuance of such default for 30
days after notice thereof from the Agent or any Lender.
12.1.4 Bankruptcy, Insolvency etc. The Company or any Material
Subsidiary becomes insolvent or generally fails to pay, or admits in
writing its inability or refusal to pay, debts as they become due; or
the Company or any Material Subsidiary applies for, consents to, or
acquiesces in the appointment of a
<PAGE>39
trustee, receiver or other custodian for the Company or such Material
Subsidiary or any property thereof, or makes a general assignment for
the benefit of creditors; or, in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian is
appointed for the Company or any Material Subsidiary or for a
substantial part of the property of any thereof and is not discharged
within 60 days; or any bankruptcy, reorganization, debt arrangement, or
other case or proceeding under any bankruptcy or insolvency law, or any
dissolution or liquidation proceeding, is commenced in respect of the
Company or any Material Subsidiary, and if such case or proceeding is
not commenced by the Company or such Material Subsidiary, it is
consented to or acquiesced in by the Company or such Material
Subsidiary, or remains for 60 days undismissed; or the Company or any
Material Subsidiary takes any corporate action to authorize, or in
furtherance of, any of the foregoing.
12.1.5 Non-Compliance with Provisions of This Agreement. Failure
by the Company to comply with or to perform any provision of this
Agreement (and not constituting an Event of Default under any of the
other provisions of this Section 12) and continuance of such failure for
30 days after notice thereof to the Company from the Agent or any
Lender.
12.1.6 Warranties. Any warranty made by the Company herein is
breached or is false or misleading in any material respect, or any
schedule, certificate, financial statement, report, notice or other
writing furnished by the Company to the Agent or any Lender is false or
misleading in any material respect on the date as of which the facts
therein set forth are stated or certified.
12.1.7 ERISA. (i) An ERISA Event shall occur with respect to a
Pension Plan or Multiemployer Plan which has resulted or could
reasonably be expected to result in liability of the Company under Title
IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an
aggregate amount in excess of $5,000,000; (ii) the aggregate amount of
Unfunded Pension Liability among all Pension Plans at any time exceeds
$5,000,000; or (iii) the Company or any ERISA Affiliate shall fail to
pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of $5,000,000.
12.1.8 Judgments and Attachments. Any money judgment, writ or
warrant of attachment or similar process involving in any case a final
judgment in an amount in excess of $5,000,000 shall be entered or filed
against the Company or any Material Subsidiary or any of their
respective assets and shall remain unsatisfied, undischarged, unvacated,
unbonded or unstayed for a period of 60 days or in any event later than
five days prior to the date of any proposed sale thereunder.
<PAGE>40
12.1.9 Change in Control. Any Change in Control shall occur.
12.2 Effect of Event of Default. If any Event of Default
described in Section 12.1.4 shall occur, the Commitments (if they have
not theretofore terminated) shall immediately terminate and the Notes
and all other obligations hereunder shall become immediately due and
payable, all without presentment, demand, protest or notice of any kind;
and if any other Event of Default occurs and is continuing, the Agent
may, and upon written request of the Required Lenders shall, by written
notice to the Company declare the Commitments (if they have not
theretofore terminated) to be terminated and/or declare all Notes and
all other obligations hereunder to be due and payable, whereupon the
Commitments (if they have not theretofore terminated) shall immediately
terminate and/or all Notes and all other obligations hereunder shall
become immediately due and payable, all without presentment, demand,
protest or other notice of any kind. Notwithstanding the foregoing, the
effect as an Event of Default of any event described in Section 12.1.1
or Section 12.1.4 may be waived by the written concurrence of all of the
Lenders, and the effect as an Event of Default of any other event
described in this Section 12 may be waived by the written concurrence of
the Required Lenders.
SECTION 13 THE AGENT.
13.1 Appointment and Authorization; "Agent". Each Lender hereby
irrevocably (subject to Section 13.9) appoints, designates and
authorizes the Agent to take such action on its behalf under the
provisions of this Agreement and the Loan Documents and to exercise such
powers and perform such duties as are expressly delegated to it by the
terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary contained elsewhere in this Agreement or in
any other Loan Document, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Agent have or be deemed to have any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any
other Loan Document or otherwise exist against the Agent. Without
limiting the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising
under agency doctrine of any applicable law. Instead, such term is used
merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent
contracting parties.
13.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining
<PAGE>41
to such duties. The Agent shall not be responsible for the negligence
or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
13.3 Liability of Agent. None of the Agent-Related Persons shall
(i) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Loan Document or
the transactions contemplated hereby (except for its own gross
negligence or willful misconduct), or (ii) be responsible in any manner
to any of the Lenders for any recital, statement, representation or
warranty made by the Company or any Subsidiary or affiliate of the
Company, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent under
or in connection with, this Agreement or any other Loan Document, or the
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Loan Document, or for any failure of the
Company or any other party to any Loan Document to perform its
obligations hereunder or thereunder. No Agent-Related Person shall be
under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect
the properties, books or records of the Company or any of the Company's
Subsidiaries or affiliates.
13.4 Reliance by Agent. (a) The Agent shall be entitled to rely,
and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or conversation
believed by it to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons, and upon advice and statements
of legal counsel (including counsel to the Company), independent
accountants and other experts selected by the Agent. The Agent shall be
fully justified in failing or refusing to take any action under this
Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Required Lenders as it deems appropriate
and, if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement or any other
Loan Document in accordance with a request or consent of the Required
Lenders and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 11.1, each Lender that has executed this
Agreement shall be deemed to have consented to, approved or accepted or
to be satisfied with, each document or other matter either sent by the
Agent to such Lender for consent, approval, acceptance or satisfaction,
or required thereunder to
<PAGE>42
be consented to or approved by or acceptable or satisfactory to the
Lender.
13.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Agent for the account of
the Lenders, unless the Agent shall have received written notice from a
Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". The Agent will notify the Lenders of its receipt of any such
notice. The Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Required Lenders in
accordance with Section 12; provided, however, that unless and until the
Agent has received any such request, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable
or in the best interest of the Lenders.
13.6 Credit Decision. Each Lender acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and
that no act by the Agent hereinafter taken, including any review of the
affairs of the Company and its Subsidiaries, shall be deemed to
constitute any representation or warranty by any Agent-Related Person to
any Lender. Each Lender represents to the Agent that it has,
independently and without reliance upon any Agent-Related Person and
based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business,
prospects, operations, property, financial and other condition and
credit worthiness of the Company and its Subsidiaries, and all
applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to the Company hereunder. Each Lender
also represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition
and credit worthiness of the Company. Except for notices, reports and
other documents expressly herein required to be furnished to the Lenders
by the Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information concerning the
business, prospects, operations, property, financial and other condition
or credit worthiness of the Company which may come into the possession
of any of the Agent-Related Persons.
13.7 Indemnification of Agent. Whether or not the transactions
contemplated hereby are consummated, the Lenders
<PAGE>43
shall indemnify upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Company and without limiting the
obligation of the Company to do so), pro rata, from and against any and
all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including
all fees and disbursements of any law firm or other external counsel,
the allocated cost of internal legal services and disbursements of
internal counsel) of any kind or nature whatsoever which may at any time
(including at any time following repayment of the Loans or the
termination of the Commitments and the termination, resignation or
replacement of the Agent or replacement of any Lender) be imposed on,
incurred by or asserted against any such Agent-Related Person in any way
relating to or arising out of this Agreement or any document
contemplated by or referred to herein, or the transactions contemplated
hereby, or any action taken or omitted by any such Agent-Related Person
under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any insolvency
proceeding or appellate proceeding) related to or arising out of this
Agreement or the Loans or the use of the proceeds thereof, whether or
not any such indemnified Agent-Related Person is a party thereto (all
the foregoing, collectively, the "Indemnified Liabilities"); provided,
however, that no Lender shall be liable for the payment to the Agent-
Related Persons of any portion of such Indemnified Liabilities resulting
solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or out-of-pocket
expenses (including attorneys' fees and disbursements and the allocated
costs of staff counsel) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any
document contemplated by or referred to herein, to the extent that the
Agent is not reimbursed for such expenses by or on behalf of the
Company. The undertaking in this Section shall survive the payment of
the Loans, cancellation of the Notes and any termination of the
Commitments or this Agreement and the resignation or replacement of the
Agent.
13.8 Agent in Individual Capacity. BofA and its affiliates may
make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any
kind of banking, trust, financial advisory, underwriting or other
business with the Company and its Subsidiaries and affiliates as though
BofA were not the Agent hereunder and without notice to or consent of
the Lenders. The Lenders acknowledge that, pursuant to such activities,
BofA or its affiliates may receive information regarding the Company or
its affiliates (including information that may be subject to
confidentiality obligations in favor of the Company or such Subsidiary)
and acknowledge that the Agent shall be under no obligation to provide
such information to them. With respect to
<PAGE>44
its Loans, BofA shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though it
were not the Agent, and the terms "Lender" and "Lenders" include BofA in
its individual capacity.
13.9 Successor Agent. The Agent may, and at the request of the
Required Lenders shall, resign as Agent upon 30 days' notice to the
Lenders. If the Agent resigns under this Agreement, the Required
Lenders shall appoint from among the Lenders a successor agent for the
Lenders. If no successor agent is appointed prior to the effective date
of the resignation of the Agent, the Agent may appoint, after consulting
with the Lenders and the Company, a successor agent from among the
Lenders. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers
and duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and duties
as Agent shall be terminated. After any retiring Agent's resignation
hereunder as Agent, the provisions of this Section 13 and Sections 14.6
and 14.7 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date which is
30 days following a retiring Agent's notice of resignation, the retiring
Agent's resignation shall nevertheless thereupon become effective and
the Lenders shall perform all of the duties of the Agent hereunder until
such time, if any, as the Required Lenders appoint a successor agent as
provided for above.
13.10 Withholding Tax. (a) If any Lender is a "foreign
corporation, partnership or trust" within the meaning of the Code, such
Lender agrees with and in favor of the Agent and the Company (such
Lender's "Exemption Agreement"), to deliver to the Agent and the
Company:
(i) if such Lender claims an exemption from withholding
tax under a United States tax treaty, two properly completed and
executed copies of IRS Form 1001 before the payment of any interest
in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be
paid under this Agreement;
(ii) if such Lender claims that interest paid under this
Agreement is exempt from United States withholding tax because it
is effectively connected with a United States trade or business of
such Lender, two properly completed and executed copies of IRS Form
4224 before the payment of any interest is due in the first taxable
year of such Lender and in each succeeding taxable year of such
Lender during which interest may be paid under this Agreement; and
(iii) such other form or forms as may be required under
the Code or other laws of the United States
<PAGE>45
as a condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees to promptly notify the Agent and the Company of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.
(b) If any Lender claims exemption from withholding tax under
a United States tax treaty by providing IRS Form 1001 and such Lender
sells, assigns, grants a participation in, or otherwise transfers all or
part of the obligations of the Company hereunder to such Lender, such
Lender agrees to notify the Agent and the Company of the percentage
amount in which it is no longer the beneficial owner of obligations of
the Company hereunder to such Lender. To the extent of such percentage
amount, the Agent and the Company will treat such Lender's IRS Form 1001
as no longer valid.
(c) If any Lender claiming exemption from United States
withholding tax by filing IRS Form 4224 with the Agent sells, assigns,
grants a participation in, or otherwise transfers all or part of the
obligations of the Company hereunder to such Lender, such Lender agrees
to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent, then the
Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent to the
applicable withholding tax imposed by Sections 1441 and 1442 of the
Code, without reduction.
(e) If the Internal Revenue Service or any other
governmental authority of the United States or other jurisdiction
asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or was not properly executed, or
because such Lender failed to notify the Agent of a change in
circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable
to the Agent under this Section, together with all costs and expenses
(including attorneys' fees and disbursements and the allocated costs of
staff counsel). The obligation of the Lenders under this subsection
shall survive the payment of the Loans, cancellation of the Notes and
any termination of the Commitments or this Agreement and the resignation
or replacement of the Agent.
13.11 Co-Agent. The Lender identified on the facing page and
signature pages of, and in the preamble to, this Agreement as a "co-
agent" shall not have any right, power, obligation,
<PAGE>46
liability, responsibility or duty under this Agreement or any other Loan
Document other than those applicable to all Lenders as such. Without
limiting the foregoing, the Lender so identified as a "co-agent" shall
not have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not
rely, on the Lender so identified in deciding to enter into this
Agreement or in taking or not taking action hereunder.
SECTION 14 GENERAL.
14.1 Waiver; Amendments. No delay on the part of the Agent or any
Lender in the exercise of any right, power or remedy shall operate as a
waiver thereof, nor shall any single or partial exercise by any of them
of any right, power or remedy preclude other or further exercise
thereof, or the exercise of any other right, power or remedy. No
amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement or the Notes shall in any event be effective
unless the same shall be in writing and signed and delivered by the
Agent and signed and delivered by Lenders having an aggregate Percentage
of not less than the aggregate Percentage expressly designated herein
with respect thereto or, in the absence of such designation as to any
provision of this Agreement or the Notes, by the Required Lenders, and
then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which given. No amendment, modification, waiver or consent shall (i)
extend or increase the amount of the Commitments, (ii) extend the date
for payment of any principal of or interest on the Loans or any fees
payable hereunder, (iii) reduce the principal amount of any Loan, the
rate of interest thereon or any fees payable hereunder, (iv) change the
definition of Required Lenders or otherwise reduce the aggregate
Percentage required to effect an amendment, modification, waiver or
consent or (v) amend this sentence without, in each case, the consent of
all Lenders. No provisions of Section 13 shall be amended, modified or
waived without the written consent of the Agent.
14.2 Confirmations. The Company and each holder of a Note agree
from time to time, upon written request received by it from the other,
to confirm to the other in writing (with a copy of each such
confirmation to the Agent) the aggregate unpaid principal amount of the
Loans then outstanding under such Note.
14.3 Notices. (a) All notices, requests, consents, approvals,
waivers and other communications shall be in writing (including, unless
the context expressly otherwise provides, by facsimile transmission,
provided that any matter transmitted by the Company by facsimile (i)
shall be immediately confirmed by a telephone call to the recipient at
the number specified on Schedule 14.3, and (ii) shall be followed
promptly by delivery of a hard copy original thereof) and mailed, faxed
or delivered, to the address or facsimile number specified for notices
on Schedule 14.3; or, as directed to the Company or the Agent, to such
other address as shall be designated by such party in a written notice
to the other parties, and as directed to any other party, at such other
<PAGE>47
address as shall be designated by such party in a written notice to the
Company and the Agent.
(b) All such notices, requests and communications shall,
when transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next-day) delivery, or transmitted in legible
form by facsimile machine (and, in the case of notices to or from the
Company by facsimile transmission, when receipt is confirmed by
confirming transmission equipment or acknowledged by the addressee),
respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except
that notices pursuant to Section 2 or Section 13 to the Agent shall not
be effective until actually received by the Agent.
(c) Any agreement of the Agent and the Lenders herein to
receive certain notices by telephone or facsimile is solely for the
convenience and at the request of the Company. The Agent and the
Lenders shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Company to give such notice
and the Agent and the Lenders shall not have any liability to the
Company or other Person on account of any action taken or not taken by
the Agent or the Lenders in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be
affected in any way or to any extent by any failure by the Agent and the
Lenders to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Agent and the Lenders of a confirmation
which is at variance with the terms understood by the Agent and the
Lenders to be contained in the telephonic or facsimile notice.
14.4 Subsidiary References. The provisions of this Agreement
relating to Subsidiaries shall apply only during such times as the
Company has one or more Subsidiaries.
14.5 Regulation U. Each Lender represents that it in good faith
is not relying, either directly or indirectly, upon any Margin Stock as
collateral security for the extension or maintenance by it of any credit
provided for in this Agreement.
14.6 Costs, Expenses and Taxes. The Company agrees to pay on
demand all reasonable out-of-pocket costs and expenses of the Agent
(including the fees and charges of counsel for the Agent and of local
counsel, if any, who may be retained by said counsel, and the allocated
costs of staff counsel for the Agent) in connection with the
preparation, execution and delivery of this Agreement and all other
documents provided for herein or delivered or to be delivered hereunder
or in connection herewith (including, without limitation, any amendment,
supplement or waiver to this Agreement or any such other document). The
Company further agrees to pay all reasonable out-of-pocket costs and
expenses (including reasonable attorneys' fees, court costs and other
legal expenses and allocated costs of staff counsel)
<PAGE>48
incurred by the Agent and each Lender after the occurrence of an Event
of Default in enforcing any right hereunder or in connection with the
negotiation of any restructuring or "work-out" (whether or not
consummated) of the obligations of the Company hereunder. In addition,
the Company agrees to pay, and to save the Agent and the Lenders
harmless from all liability for, any stamp, transfer or other similar
taxes which may be payable in connection with the execution and delivery
of this Agreement, the borrowings hereunder, the issuance of the Notes
or the execution and delivery of any other document provided for herein
or delivered or to be delivered hereunder or in connection herewith.
All obligations provided for in this Section 14.6 shall survive
repayment of the Loans, cancellation of the Notes and any termination of
the Commitments or this Agreement.
14.7 Indemnification by the Company. In consideration of the
execution and delivery of this Agreement by the Agent and the Lenders
and the agreement to extend the Commitments provided hereunder, the
Company hereby agrees to indemnify, exonerate and hold the Agent, each
Lender and each of the officers, directors, employees and agents of the
Agent and each Lender (collectively the "Lender Parties" and
individually each a "Lender Party") free and harmless from and against
any and all actions, causes of action, suits, losses, liabilities,
damages and expenses, including, without limitation, reasonable
attorneys' fees and charges and allocated costs of staff counsel
(collectively called the "Indemnified Liabilities"), incurred by the
Lender Parties or any of them as a result of, or arising out of, or
relating to, (i) any tender offer, merger, purchase of stock, purchase
of assets or other similar transaction financed or proposed to be
financed in whole or in part, directly or indirectly, with the proceeds
of any of the Loans, (ii) the use, handling, release, discharge,
transportation, storage, treatment or disposal of any "hazardous waste"
or "hazardous material" (each as defined in any applicable Environmental
Law) at any real property owned or leased by the Company or any
Subsidiary or used by the Company or any Subsidiary in its business or
operations or (iii) the enforcement of this Agreement or any Note by any
of the Lender Parties, except for any such Indemnified Liabilities
arising on account of any such Lender Party's bad faith, gross
negligence or willful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, the Company
hereby agrees to make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law. All obligations provided for in this Section 14.7
shall survive repayment of the Loans, cancellation of the Notes and any
termination of the Commitments or this Agreement.
14.8 Successors and Assigns. This Agreement shall be binding upon
the Company, the Lenders and the Agent and their respective successors
and assigns, and shall inure to the benefit of the Company, the Lenders
and the Agent and the successors and assigns of the Lenders and the
Agent. The Company may not assign
<PAGE>49
its rights or obligations hereunder without the prior written consent of
all Lenders.
14.9 Assignments; Participations.
14.9.1 Assignments. Any Lender may, with the prior written
consents of the Company and the Agent (which consents shall not be
unreasonably delayed or withheld), at any time assign and delegate to
one or more commercial banks or other financial institutions (any Person
to whom such an assignment and delegation is to be made being herein
called an "Assignee"), all or any fraction of such Lender's Loans and
Commitment (which assignment and delegation shall be of a constant, and
not a varying, percentage of all the assigning Lender's Loans) in a
minimum aggregate amount equal to the lesser of (i) the assigning
Lender's remaining Commitment and (ii) $10,000,000; provided, however,
that (a) no assignment and delegation may be made to any Person if, at
the time of such assignment and delegation, the Company would be
obligated to pay any greater amount under Section 7.6 or Section 8 to
the Assignee than the Company is then obligated to pay to the assigning
Lender under such Section and (b) the Company and the Agent shall be
entitled to continue to deal solely and directly with such Lender in
connection with the interests so assigned and delegated to an Assignee
until the date when all of the following conditions shall have been met:
(x) five Business Days (or such lesser period of time as the
Agent and the assigning Lender shall agree) shall have passed after
written notice of such assignment and delegation, together with
payment instructions, addresses and related information with
respect to such Assignee, shall have been given to the Company and
the Agent by such assigning Lender and the Assignee,
(y) the assigning Lender and the Assignee shall have
executed and delivered to the Company and the Agent an assignment
agreement substantially in the form of Exhibit D (an "Assignment
Agreement"), together with any documents required to be delivered
thereunder, which Assignment Agreement shall have been accepted by
the Agent and the Company, and
(z) the assigning Lender or the Assignee shall have paid the
Agent a processing fee of $2,500.
From and after the date on which the conditions described above have
been met, (x) such Assignee shall be deemed automatically to have become
a party hereto and, to the extent that rights and obligations hereunder
have been assigned and delegated to such Assignee pursuant to such
Assignment Agreement, shall have the rights and obligations of a Lender
hereunder, and (y) the assigning Lender, to the extent that rights and
obligations hereunder have been assigned and delegated by it pursuant to
such Assignment Agreement, shall be released from its obligations
hereunder. Within five Business Days after effectiveness of any
<PAGE>50
assignment and delegation, the Company shall execute and deliver to the
Agent (for delivery to the Assignee and the Assignor, as applicable) a
new Note in the principal amount of the Assignee's Commitment and, if
the assigning Lender has retained a Commitment hereunder, a replacement
Note in the principal amount of the Commitment retained by the assigning
Lender (such Note to be in exchange for, but not in payment of, the
predecessor Note held by such assigning Lender). Each such Note shall
be dated the effective date of such assignment. The assigning Lender
shall mark the predecessor Note "exchanged" and deliver it to the
Company. Accrued interest on that part of the predecessor Note being
assigned shall be paid as provided in the Assignment Agreement. Accrued
interest and fees on that part of the predecessor Note not being
assigned shall be paid to the assigning Lender. Accrued interest and
accrued fees shall be paid at the same time or times provided in the
predecessor Note and in this Agreement. Any attempted assignment and
delegation not made in accordance with this Section 14.9.1 shall be null
and void.
Notwithstanding the foregoing provisions of this Section 14.9.1 or
any other provision of this Agreement, any Lender may at any time assign
all or any portion of its Loans and its Note to a Federal Reserve Bank
(but no such assignment shall release any Lender from any of its
obligations hereunder).
14.9.2 Participations. Any Lender may at any time sell to one or
more commercial banks or other Persons participating interests in any
Loan owing to such Lender, the Note held by such Lender, the Commitment
of such Lender or any other interest of such Lender hereunder (any
Person purchasing any such participating interest being herein called a
"Participant"). In the event of a sale by a Lender of a participating
interest to a Participant, (x) such Lender shall remain the holder of
its Note for all purposes of this Agreement and (y) the Company and the
Agent shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations hereunder. No
Participant shall have any direct or indirect voting rights hereunder
(except that a Lender may grant a Participant rights with respect to any
of the events described in the penultimate sentence of Section 14.1).
The Company agrees that if amounts outstanding under this Agreement and
the Notes are due and payable (as a result of acceleration or
otherwise), each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this
Agreement and any Note to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement or such Note; provided that such right of setoff shall be
subject to the obligation of each Participant to share with the Lenders,
and the Lenders agree to share with each Participant, as provided in
Section 7.5. The Company also agrees that each Participant shall be
entitled to the benefits of Section 7.6 and Section 8 as if it were a
Lender (provided that no Participant shall receive any greater
compensation pursuant to
<PAGE>51
such Sections than would have been paid to the participating Lender if
no participation had been sold).
14.10 Governing Law. This Agreement and each Note shall be a
contract made under and governed by the laws of the State of California
applicable to contracts made and to be performed entirely within the
State of California; provided that the Agent and the Lenders shall
retain all rights arising under federal law. Whenever possible each
provision of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement. All obligations of the Company
and rights of the Agent and the Lenders expressed herein or in the Notes
shall be in addition to and not in limitation of those provided by
applicable law.
14.11 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an
original, but all such counterparts shall together constitute but one
and the same Agreement. When counterparts executed by all of the
parties hereto shall have been lodged with the Agent (or, in the case of
any Lender as to which an executed counterpart shall not have been so
lodged, the Agent shall have received confirmation from such Lender of
execution of a counterpart hereof by such Lender), this Agreement shall
become effective as of the date hereof, and at such time the Agent shall
notify the Company and each Lender.
14.12 Effect of Amendment and Restatement. (a) This Agreement is
intended to completely amend, restate and replace the Existing Credit
Agreement, without novation. The Company and the Lenders party to the
Existing Credit Agreement agree that from and after the Effective Date,
BAI in its capacity as agent under the Existing Credit Agreement shall
relinquish its rights and be released from its duties and obligations as
agent thereunder and under any documents or instruments given in
connection therewith; provided, however, that the provisions of Section
13 of the Existing Credit Agreement and Sections 14.6 and 14.7 of the
Existing Credit Agreement shall inure to the benefit of BAI as to any
actions taken or omitted to be taken by it while it was agent
thereunder.
(b) Concurrently with the Effective Date, BAI shall cease to
be a "Lender" under and for all purposes of this Agreement and shall no
longer have any rights or obligations hereunder, except for (i) rights
to receive payment of indemnities, reimbursements and other similar
obligations and (ii) obligations to indemnify, reimburse or make payment
to the Agent, any Lender or the Company with respect to actions,
failures to act, conditions, circumstances or events, in either
<PAGE>52
case arising under the Existing Credit Agreement on or prior to the
Restatement Effective Date.
14.13 Forum Selection and Consent to Jurisdiction. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS
AGREEMENT OR NOTE, MAY BE BROUGHT AND MAINTAINED IN THE COURTS OF THE
STATE OF CALIFORNIA OR IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA. THE COMPANY HEREBY EXPRESSLY AND
IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA AND OF THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF CALIFORNIA FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET
FORTH ABOVE. THE COMPANY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE
WITHIN OR WITHOUT THE STATE OF CALIFORNIA. THE COMPANY HEREBY EXPRESSLY
AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF
ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
14.14 Waiver of Jury Trial. THE COMPANY, THE LENDERS AND THE
AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-
RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE LENDERS
AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY
IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR
OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS
OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
14.15 OREGON LEGAL NOTICE. WITHOUT LIMITING THE VALIDITY OF THE
CHOICE OF CALIFORNIA LAW PROVIDED HEREIN, UNDER OREGON LAW, MOST
AGREEMENTS, PROMISES AND COMMITMENTS MADE BY THE LENDERS AFTER THE
EFFECTIVE DATE OF THE ACT SPECIFIED HEREIN CONCERNING LOANS AND OTHER
CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD
PURPOSES OR SECURED SOLELY BY THE BORROWER'S RESIDENCE MUST BE IN
WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY THE LENDERS TO BE
ENFORCEABLE. THE ACT SPECIFIED HEREIN MEANS CHAPTER 967 OREGON LAWS
1989, THE EFFECTIVE DATE OF WHICH WAS OCTOBER 3, 1989.
<PAGE>53
Delivered at San Francisco, California, as of the day and year first
above written.
FRED MEYER, INC.
By /s/
-------------------------------
Vice President and Corporate
Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent
By /s/
-------------------------------
Vice President
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as a
Lender
By /s/ STEVEN F. STERLING
-------------------------------
Title Vice President
THE BANK OF NOVA SCOTIA, as co-agent and
as a Lender
By /s/
-------------------------------
Title Relationship Manager
BANQUE NATIONALE DE PARIS
By /s/ JUDITH A. DOWLING
-------------------------------
Title Vice President
By /s/ KATHERINE WOLFE
-------------------------------
Title Vice President
<PAGE>54
CIBC Inc.
By /s/
-------------------------------
Title Assistant Vice President
COOPERATIVE CENTRALE RAIFFEISEN-
BOERENLEENBANK B.A., "RABOBANK NEDERLAND"
NEW YORK BRANCH
By /s/ JESSALYN PETERS
-------------------------------
Title Vice President
By /s/ JAN REECE
-------------------------------
Title Vice President and Manager
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/
-------------------------------
Title Authorized Signatory
CREDIT LYONNAIS LOS ANGELES BRANCH
By /s/
-------------------------------
Title Vice President
CREDIT SUISSE
By /s/ STEPHEN M. FLYNN
-------------------------------
Title Member of Senior Management
By /s/ MARILOU PALENZUELA
-------------------------------
Title Member of Senior Management
<PAGE>55
FIRST INTERSTATE BANK OF OREGON, N.A.
By /s/ MARCIA BENNER
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
FIRST SECURITY BANK OF UTAH, N.A.
By /s/ JUDY CALLISTER
-------------------------------
Title VICE PRESIDENT
By
-------------------------------
Title
----------------------------
KEY BANK OF WASHINGTON
By /s/
-------------------------------
Title VICE PRESIDENT
NATIONSBANK OF TEXAS, N.A.
By /s/ WILLIAM B. GUFFEY
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
SEATTLE FIRST NATIONAL BANK
By /s/
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
<PAGE>56
THE BANK OF CALIFORNIA, N.A.
By /s/
-------------------------------
Title Assistant Vice President
By
-------------------------------
Title
----------------------------
THE BANK OF NEW YORK
By /s/ CHARLOTTE SOH
-------------------------------
Title Assistant Vice President
By
-------------------------------
Title
----------------------------
THE BANK OF TOKYO, LTD. PORTLAND
BRANCH
By /s/
-------------------------------
Title Vice President
THE FUJI BANK, LTD.
By /s/
-------------------------------
Title Joint General Manager
By
-------------------------------
Title
----------------------------
THE HONGKONG AND SHANGHAI BANKING
CORPORATION LIMITED
By /s/
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
<PAGE>57
THE INDUSTRIAL BANK OF JAPAN, LTD.,
SAN FRANCISCO AGENCY
By /s/
-------------------------------
Title General Manager
UNION BANK
By /s/
-------------------------------
Title Vice President
UNITED STATES NATIONAL BANK OF OREGON
By /s/
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
WEST ONE BANK, IDAHO
By /s/
-------------------------------
Title Vice President
By
-------------------------------
Title
----------------------------
Acknowledged:
BANK OF AMERICA ILLINOIS
By /s/
- -------------------------------
Title Vice President
<PAGE>S-I
SCHEDULE I
COMMITMENTS AND PERCENTAGES
Lender Commitment Percentage
- ------ ---------- ----------
[BankAmerica Corporation-
affiliated Lenders]
Bank of America National Trust
and Savings Association $45,000,000 9.00%
Seattle First National Bank 20,000,000 4.00
---------- -----
[65,000,000] [13.00]
The Bank of Nova Scotia 60,000,000 12.00
Banque Nationale de Paris 15,000,000 3.00
CIBC Inc. 10,000,000 2.00
Cooperative Centrale Raiffeisen-
Boerenleenbank B.A., "Rabobank
Nederland" New York Branch 25,000,000 5.00
Credit Lyonnais
Cayman Island Branch and
Credit Lyonnais
Los Angeles Branch 15,000,000 3.00
Credit Suisse 15,000,000 3.00
First Interstate Bank of Oregon,
N.A. 50,000,000 10.00
First Security Bank of Utah, N.A. 15,000,000 3.00
Key Bank of Washington 15,000,000 3.00
NationsBank of Texas, N.A. 50,000,000 10.00
The Bank of California, N.A. 15,000,000 3.00
The Bank of New York 20,000,000 4.00
The Bank of Tokyo, Ltd.
Portland Branch 30,000,000 6.00
The Fuji Bank, Ltd. 15,000,000 3.00
The HongKong and Shanghai Banking
Corporation Limited 15,000,000 3.00
The Industrial Bank of Japan, Ltd.,
San Francisco Agency 15,000,000 3.00
Union Bank 5,000,000 1.00
United States National Bank of
Oregon 30,000,000 6.00
West One Bank, Idaho 20,000,000 4.00
----------- ------
TOTAL $500,000,000 100.00%
=========== ======
EXHIBIT 10T
CONFORMED COPY
FRED MEYER
EXCESS DEFERRAL AND BENEFIT
EQUALIZATION PLAN
1994 RESTATEMENT
January 1, 1994
Fred Meyer, Inc.
an Oregon corporation
PO Box 42121
Portland, Oregon 97242 Fred Meyer
<PAGE>i
TABLE OF CONTENTS
Section Page
- ------- ----
1. Purposes; Administration; Plan Year.................................. 1
2. Eligibility.......................................................... 1
3. Compensation Deferral................................................ 2
4. Basic and Matching Contribution Credits.............................. 3
5. Deferred Compensation Account; Vesting............................... 5
6. Irrevocable Trust.................................................... 6
7. Time and Manner of Payment........................................... 7
8. Withdrawals.......................................................... 8
9. Death or Disability.................................................. 9
10. Termination; Amendment...............................................11
11. Claims Procedure.....................................................11
12. General Provisions...................................................12
13. Effective Date.......................................................13
<PAGE>
FRED MEYER
EXCESS DEFERRAL AND BENEFIT
EQUALIZATION PLAN
1994 Restatement
January 1, 1994
Fred Meyer, Inc.
an Oregon corporation
PO Box 42121
Portland, Oregon 97242 Fred Meyer
1. Purposes; Administration; Plan Year
1.1 This plan is adopted to permit eligible employees of
Employers to defer a portion of what would otherwise be current
compensation in amounts exceeding the elective deferrals allowed
under the Fred Meyer Profit Sharing Plan (the Profit Sharing Plan).
The plan will also allow Employers to provide deferred compensation
credits for cut-backs in eligible employees' basic and matching
contributions under the Profit Sharing Plan because of legal
limits. The plan shall apply to Fred Meyer and affiliates of Fred
Meyer designated by the Committee (see below). The term "Employer"
refers to Fred Meyer and all designated affiliates.
1.2 This plan shall be administered by a Compensation
Committee appointed by the Chair of the Board of Directors of Fred
Meyer. The Committee shall interpret the plan and make
determinations about participation and benefits. Any decision by
the Committee within its authority shall be final and binding on
all parties. The Committee may delegate all or part of its authority.
1.3 The plan year shall be a calendar year.
2. Eligibility
2.1 An employee of an Employer shall be eligible to
participate for a plan year if the employee is designated by the
Committee to participate in the plan.
2.2 An employee eligible under 2.1 shall automatically
participate in Basic Contribution Credits starting with the first
plan year of eligibility for Basic Contributions under the Profit
Sharing Plan.
<PAGE>2
2.3 An employee eligible under 2.1 may participate in
elective deferrals and related matching credits by filing a
deferral election as follows:
(a) An employee who is eligible on the
effective date of the plan or who later becomes
eligible during a year may participate with respect
to future compensation by filing an election within 30
days after being notified of eligibility by the
Committee.
(b) Except as provided in (a), an election for
a year must be filed before the start of the year.
2.4 A person having an Account under the plan shall be
known as a participant.
3. Compensation Deferral
3.1 An eligible employee may elect for each plan year (or
part plan year under 2.3(a)) to defer a portion of regular
compensation paid for the year or part year as follows:
(a) The amount deferred may be expressed as a
dollar amount, a percentage of regular salary or
bonus or a percentage of bonus over a certain dollar
amount. The minimum deferral shall be $100 per month.
(b) An expressed percentage shall apply to any
pay changes in the year. A stated dollar amount
shall not be affected by pay changes. Separate
percentages or dollar amounts may be stated for salary and
bonuses.
(c) A bonus deferral shall be governed by the
election for the year for which the bonus is payable,
not the year in which the bonus is paid.
(d) The maximum deferral for any year will be
50 percent of regular salary and 100 percent of bonus
pay before reductions for contributions under this
plan or the Profit Sharing Plan. The amount deferred
shall be offset by the maximum elective deferral the
employee could make under the Profit Sharing Plan,
after reduction to comply with the annual dollar
limit on elective deferrals, the actual deferral
percentage test, the limit on annual additions and adjustments
to avoid top-heavy status.
<PAGE>3
3.2 Deferral elections under the plan shall be made in
writing to the Committee on a form provided for that purpose.
Elections shall be effective as follows:
(a) An election by a person first becoming
eligible for participation shall be effective for the
year the participant becomes eligible if made within
30 days after notice of eligibility.
(b) Except as provided in (a), an election
shall be effective for the plan year starting after
the plan year in which the election is received by
the Committee. An election shall be irrevocable for the
first plan year for which it is effective.
(c) An election may be effective indefinitely
or for one or more years as specified in the
election. A new election is required to continue
deferrals after an election expires. A continuing
election may be revoked or changed by a new election
under (b).
4. Basic and Matching Contribution Credits
4.1 Under the Profit Sharing Plan, Employer makes a Basic
Contribution and a Matching Contribution for participants each year
as follows:
(a) The amounts are fixed by the Board of
Directors of Fred Meyer each year.
(b) The Basic Contribution is allocated among
participants in proportion to covered compensation
under the Profit Sharing Plan.
(c) The Matching Contribution is allocated
among participants in proportion to their elective
deferrals up to 5 percent of compensation.
4.2 Basic or Matching Contributions for a participant
under the Profit Sharing Plan may be reduced in any year as follows:
(a) Basic Contributions may be reduced because
of one or more of the following reasons:
(1) The limit under Code section
401(a)(17) on compensation considered for
allocations.
<PAGE>4
(2) The limit under Code section 415
on annual additions.
(3) An adjustment to avoid top-heavy
status.
(4) Deferral of compensation under
this plan.
(b) Matching Contributions may be reduced
because the participant may be prevented from making
elective deferrals under the Profit Sharing Plan of
5 percent of compensation due to ineligibility or due
to the annual dollar limit on elective deferrals, the
actual deferral percentage test, the limit on annual
additions or an adjustment to avoid top-heavy status.
4.3 If Basic or Matching Contributions, or both, are
reduced under 4.2 in any year for an employee eligible to participate
under 2.1, the participant shall receive a corresponding credit or
credits to the participant's Account in this plan as follows:
(a) The Matching Contribution credit shall
equal the additional Matching Contribution, if any,
the participant would have been allocated under the
Profit Sharing Plan if the amounts deferred under
this plan had been allowed as elective deferrals under
the Profit Sharing Plan. The amount credited shall be
controlled by the deferral election under 3.2 in
effect for the year to which the Matching
Contribution relates.
(b) The Basic Contribution Credit shall equal
the amount of Basic Contribution reduction for the
participant for the year under 4.2(a).
(c) The Basic or Matching Contribution credit
shall be reserved by Employer or paid to the trust
under 6 below at a time fixed by the Committee.
Amounts shall be credited for accounting and
guideline investment purposes when paid or reserved.
(d) For a year of participation because of
ineligibility for the Profit Sharing Plan, Basic and
Matching Contribution credits shall not be made for
anyone below the level of senior vice president.
4.4 Basic and Matching Contribution credits under 4.2
shall be recorded, adjusted for investment guideline credits and paid
out in accordance with this plan.
<PAGE>5
5. Deferred Compensation Account; Vesting
5.1 As of the first of each four-week accounting period,
Employer shall credit the amount deferred for that four-week
accounting period pursuant to the participants' election.
5.2 Employer shall credit to a participant's Account any
Basic or Matching Contribution credit at the time specified in
4.3(c).
5.3 Employer shall make guideline investment credits to
each participant's Account, until the entire Account has been paid
out, as follows:
(a) The Committee shall establish guideline
investment funds with investment objectives fixed by
the Committee. The guideline funds may parallel the
investment funds created under the Profit Sharing
Plan, available under any insurance policy or
policies purchased by the Company in connection with this
plan or available under any irrevocable trust established
under Section 6, below.
(b) Each participant shall, under procedures
established by the Committee, elect the guideline
fund or funds for the participant's Accounts under this
plan, including amounts attributable to Basic and
Matching Contribution Credits. In the absence of a
proper election, a balanced guideline fund will be
used. Participant elections may be changed at such
times and subject to such limits as may be fixed by
the Committee.
(c) The Committee shall adjust all Accounts in
accordance with the elected guidelines at a time as
close as reasonably practicable to the time that
participant accounts are adjusted under the Profit
Sharing Plan. For this purpose, Accounts shall be
treated as though Basic and Matching Contribution
Credits had been made at the times as of which such
contributions would have been credited to
participant's accounts if made under the Profit
Sharing Plan.
(d) When an Account is in pay status, the
Committee may require use of a cash equivalent
guideline fund to the extent necessary to allow more
frequent adjustments to coincide with the timing of
pay distributions.
<PAGE>6
5.4 Each participant's Account shall be maintained on the
books of the Employer until full payment has been made to the
participant or beneficiaries under Sections 7 and 8 and the
following shall apply subject to 6.3:
(a) Employer shall not be obligated to set
aside or earmark any funds for the Account, which
shall be purely a bookkeeping device.
(b) All amounts of deferred compensation under
this plan shall remain at all times the unrestricted
assets of the Employer, and the promise to pay the
deferred amounts shall at all times remain unfunded
as to the participants.
5.5 A participant's Account, including Basic and Matching
Contribution credits, shall be 100 percent vested at all times
whether or not the participant is fully vested in all accounts
under the Profit Sharing Plan.
5.6 Amounts deferred or credited as Basic or Matching
Contribution credits are treated as wages for FICA and FUTA taxes
and withholding as follows:
(a) Subject to (b) and (c), required
withholding shall be imposed on other current pay of
the participant, not on the amount deferred or
otherwise credited.
(b) A participant may, under rules of the
Committee, elect to have any required withholding
satisfied by reducing the credits under this plan or
by direct payment by the participant.
(c) If the participant's other current pay is
insufficient to cover the required withholding, the
difference shall be satisfied from the amount
otherwise credited unless timely paid by the
participant under Committee rules.
(d) Guideline investment credits are not
subject to FICA or FUTA tax or withholding.
6. Irrevocable Trust
6.1 Employer may but shall not be required to establish an
irrevocable trust to assume the liabilities to participants in
certain circumstances, and may transfer cash to such a trust.
6.2 If Employer creates a trust under 6.1 above, assets
transferred to the trust shall be invested as follows:
<PAGE>7
(a) Investment of such assets shall be at the
absolute discretion of the Committee, the trustee, or
both on a shared basis, as provided in the trust.
(b) The guideline investment funds under 5.3
shall be purely for measuring the amount of
time-value credits.
(c) Neither employer nor the trustee shall be
required to invest in such funds in accordance with
participants' elections. Employer and the trustee
may, however, choose, in their discretion, to invest
in the elected guideline funds in accordance with the
elections, and shall incur no liability for doing so.
6.3 The trust under 6.1 shall be a grantor's trust and all
assets held in trust shall be assets of Employer subject to the
trust terms. All assets of the trust shall at all times be subject
to the claims of creditors of Employer in circumstances described
in the trust. Participants will not receive a vested priority
interest in the trust assets ahead of such creditors. Participants'
interests in the trust will be governed by the trust terms at all
times.
7. Time and Manner of Payment
7.1 Subject to 7.3 and 8.1 a participant's Payment Date
shall be one of the following as selected under 7.3:
(a) The date the participant terminates
employment under 7.5 for any reason.
(b) The date the participant has terminated
employment under 7.5 and has reached an age up to 70
specified in the deferral election.
7.2 A participant's Account shall be paid in one of the
following ways as selected under 7.3 and 7.4:
(a) In a lump sum within 30 days after the
Payment Date.
(b) In a lump sum within 30 days after the
January 1 following the Payment Date.
(c) In installments under 7.4 over a period up
to 10 years starting the first of the month after the
Payment Date.
<PAGE>8
(d) In installments under 7.4 over a period up
to 10 years, starting the January 1 following the
Payment Date.
7.3 In the deferral election a participant shall select
the Payment Date under 7.1 and the form of payment under 7.2. The
selection shall be irrevocable for the portion of the Account
attributable to amounts deferred under the election. If different
selections are made in deferral elections applicable to different
years, the Account shall be appropriately divided for distribution.
7.4 If installments are selected, the payout period shall
be specified in the deferral election. The installment size shall
be fixed on the benefit starting date and each later January 1 as
though equal installments were to be paid for the balance of the
payment period including investment guideline credits at a rate
estimated as of the date of calculation. Installments may be
monthly, quarterly or annually, as elected by the participant at
termination. If participant fails to make an election within 30
days after notification that an election must be made, installment
payments shall automatically be made on an annual basis.
7.5 A participant terminates employment when no longer
employed by an Employer or an affiliate of an Employer. An
affiliate is a corporation or other entity that has been designated
an affiliate for this purpose by the Committee.
7.6 The Employer may withhold from any payments any income
tax or other amounts as required by law. Payments are generally
not subject to FICA or FUTA tax or related withholding.
8. Withdrawals
8.1 A participant may withdraw amounts from the Account
before the Payment Date as follows:
(a) Upon approval of the Committee, up to
100 percent of the amount reasonably necessary to meet an
unforeseeable emergency under 8.2, as determined by
the Committee.
(b) At the participant's option, 100 percent of
the Account balance less a forfeiture of 10 percent
of the amount withdrawn. The participant shall be
permanently ineligible to participate after a
forfeiture withdrawal.
8.2 "Unforseen emergency" means a participant's severe
financial hardship that cannot be met from other reasonably
available resources and is caused by one or more of the following:
<PAGE>9
(a) Illness or accident of the participant or a
dependent under Internal Revenue Code section 152(a).
(b) Loss of the participant's property due to
casualty.
(c) Other similar extraordinary and
unforeseeable circumstances arising as a result of
events beyond the control of the participant.
8.3 Other resources are reasonably available if assets can
be liquidated without that itself creating severe financial
hardship, if insurance or other reimbursement is available, or if
deferrals under this plan can be stopped.
8.4 The Committee shall establish guidelines and procedure
for implementing withdrawals. An application for withdrawal shall
be written, shall be signed by the participant and shall include
the following:
(a) For hardship withdrawal, a statement of the
facts causing the financial hardship and any other
facts as may be required by the Committee.
(b) For forfeiture withdrawal, an
acknowledgement of the forfeiture and future
ineligibility.
8.5 The withdrawal date shall be fixed by the Committee.
The Committee may require a minimum advance notice and may limit
the amount, time and frequency of withdrawals.
8.6 Amounts forfeited under 8.1(b) shall be applied at the
first opportunity to offset contributions by Employer that may
otherwise be payable to a trust created under 6.1.
9. Death or Disability
9.1 A Participant's Account shall be payable under this
Section on the participant's death or disability regardless of the
provisions of Section 7.
9.2 On death the Account shall be paid under 9.3 within 30
days as follows:
(a) If the recipient is the surviving spouse
and the participant had selected installment pay out,
by installments in accordance with the selection.
(b) In all other cases, by a lump sum.
<PAGE>10
9.3 An amount payable on death of a participant shall be
paid to the participant's beneficiary in the following order of
priority:
(a) To the surviving beneficiaries designated
by the participant in writing to the Committee.
(b) To the surviving beneficiaries designated
by the participant to receive death benefits under
the Profit Sharing Plan.
(c) To the participant's surviving spouse.
(d) To the participant's surviving children in
equal shares.
(e) To the participant's estate.
9.4 If a surviving spouse is receiving installments and
dies when a balance remains, the balance shall be paid in a lump
sum to the spouse's estate.
9.5 If a participant is temporarily disabled while
employed or is receiving long-term disability benefits under a plan
described in 9.6 the following shall apply:
(a) The participant shall be treated as
employed until age 65, and no payments will be made
from the Account before age 65 except as provided
below.
(b) If disability benefits stop and disability
continues, the Account shall be paid in accordance
with the election under Section 7.
(c) If the participant dies, the provisions
applicable to death shall be followed.
(d) If the participant ceases to be disabled
and does not resume employment, the provisions
applicable to termination shall be followed.
9.6 A participant is disabled if the Committee determines
that either of the following applies:
<PAGE>11
(a) The participant is eligible to receive
long-term disability benefits under a plan maintained
by the Employer or an affiliate or would have been
eligible if covered by the plan.
(b) In the absence of a plan under (a), the
participant is permanently and totally disabled on
the basis of criteria established by the Committee.
10. Termination; Amendment
10.1 The Committee may terminate this plan effective the
first day of any month after notice to the participants or earlier
as provided in 12.4. On termination the following shall apply
except as provided in 10.3:
(a) Amounts deferred through the last month
before the effective date of termination shall remain
deferred and be credited to the Accounts in
accordance with the plan.
(b) Deferral elections shall terminate as of
the effective date of termination, and no further
deferrals shall be allowed.
(c) Amounts in an Account shall remain to the
credit of the Account, shall continue to receive
investment guideline credits and shall be paid out in
accordance with Sections 7, 8 and 9.
10.2 The Committee may amend this plan effective the first
day of any month by notice to the participants. An amendment may
be retroactive within the plan year in which notice is given except
that the right of participants to defer compensation may not be
reduced for the portion of the plan year through the month in which
the notice is given.
10.3 If the Internal Revenue Service issues a final ruling
that any amounts deferred under this plan will be subject to
current income tax, all amounts to which the ruling is applicable shall be
paid to the participants within 30 days.
11. Claims Procedure
11.1 Any person claiming a benefit, requesting an
interpretation or ruling under the plan, or requesting information
under the plan shall present the request in writing to the
Committee, which shall respond in writing as soon as practicable.
11.2 If the claim or request is denied, the written notice
of denial shall state:
<PAGE>12
(a) The reasons for denial, with specific
reference to the plan provisions on which the denial
is based.
(b) A description of any additional materials
or information required and an explanation of why it
is necessary.
11.3 The initial notice of denial shall normally be given
within 90 days after receipt of the claim. If special circumstances
require an extension of time, the claimant shall be so notified
and the time limit shall be 180 days.
11.4 Any person whose claim or request is denied or who has
not received a response within 30 days may request review by notice
in writing to the Committee. The original decision shall be
reviewed by the Committee which may, but shall not be required to,
grant the claimant a hearing. On review, whether or not there is a
hearing, the claimant may have representation, examine pertinent
documents and submit issues and comments in writing.
11.5 The decision on review shall ordinarily be made within
60 days. If an extension of time is required for a hearing or
other special circumstances, the claimant shall be notified and the time
limit shall be 120 days. The decision shall be in writing and
shall state the reasons and the relevant plan provisions. Subject to
11.6, all decisions on review shall be final and bind all parties
concerned.
11.6 If Employer creates a trust under 6.1, a decision of
the Committee shall be subject to review by the Trustee to the
extent provided for under the trust.
12. General Provisions
12.1 If suit or action is instituted to enforce any rights
under this plan, the prevailing party may recover from the other
party reasonable attorneys' fees at trial and on any appeal.
12.2 Any notice or directions under this plan shall be in
writing and shall be effective when actually delivered or, if
mailed, when deposited postage prepaid as first class. Mail shall
be directed to Fred Meyer at the address stated in this plan, to
the participant at the address stated in the deferral election or to
such other address as a party may specify by notice to the other
parties. Notices to an Employer or the Committee shall be sent to
Fred Meyer's address.
12.3 The rights of a participant under this plan are
personal. Except for the limited provisions of 9.3 and 12.5, no
interest of a participant or any beneficiary or representative of a
participant may be directly or indirectly transferred, encumbered,
seized by legal process or in any other way subjected to the claims
of any creditor.
<PAGE>13
12.4 If an Employer merges, consolidates, or otherwise
reorganizes or if its assets or business are acquired by another
company, this plan shall continue with respect to those eligible
employees who continue in the employ of the successor company. The
transition of Employers shall not be considered a termination of
employment for purposes of this plan. In such an event, however, a
successor corporation may terminate this plan as to its employees
on the effective date of the succession by notice to eligible
employees within 30 days after the succession.
12.5 The Committee may decide that because of the mental or
physical condition of a person entitled to payments, or because of
other relevant factors, it is in the person's best interest to make
payments to others for the benefit of the person entitled to
payment. In that event the Committee may in its discretion direct
that payments be made to one or more of the following:
(a) To a parent or spouse or a child of legal
age.
(b) To a legal guardian.
(c) To one furnishing maintenance, support, or
hospitalization.
13. Effective Date
This Restatement shall be effective as follows:
(a) The general effective date shall be
January 1, 1994.
(b) The change in maximum deferral under 3.1(d)
shall apply to deferrals after December 31, 1995.
Adopted July 20, 1995.
Fred Meyer, Inc.
By KENNETH THRASHER, SR VP
------------------------------
Executed November 22, 1995
EXHIBIT 10U
- -------------------------------------------------------------------------------
LEASE AGREEMENT
(Tax Retention Operating Lease)
Dated as of May 5, 1995
between
FIRST SECURITY BANK OF UTAH, N.A.,
not individually,
but solely as Owner Trustee
under the FM Trust 1995-1,
as Lessor
and
FRED MEYER, INC.,
as Lessee
- -------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of
NationsBank of Texas, N.A., as Administrative Agent (the "Agent") under a
Credit Agreement dated as of May 5, 1995, among First Security Bank of
Utah, N.A., not individually except as expressly stated therein, but solely
as Owner Trustee under the FM Trust 1995-1, the Lenders and the Agent, as
amended, modified, supplemented, restated and/or replaced from time to
time. This Lease Agreement has been executed in several counterparts. To
the extent, if any, that this Lease Agreement constitutes chattel paper (as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), the counterpart of this Lease Agreement
containing the receipt therefore executed by the Agent on the signature
page hereof shall be deemed the only original counterpart hereof.
<PAGE>i
TABLE OF CONTEXTS
ARTICLE I ......................................................... 1
1.1 Definitions.............................................. 1
1.2 Interpretation........................................... 1
ARTICLE II ......................................................... 2
2.1 Property................................................. 2
2.2 Lease Term............................................... 2
2.3 Title.................................................... 2
2.4 Lease Supplements........................................ 2
ARTICLE III ......................................................... 2
3.1 Rent..................................................... 2
3.2 Payment of Basic Rent.................................... 3
3.3 Supplemental Rent........................................ 3
3.4 Performance on a Non-Business Day........................ 3
3.5 Rent Payment Provisions.................................. 4
ARTICLE IV ......................................................... 4
4.1 Utility Charges.......................................... 4
ARTICLE V ......................................................... 4
5.1 Quiet Enjoyment.......................................... 4
5.2 Transfers by Lessor; Lessor Liens........................ 4
ARTICLE VI ......................................................... 5
6.1 Net Lease................................................ 5
6.2 No Termination or Abatement.............................. 5
ARTICLE VII ......................................................... 6
7.1 Ownership of the Property................................ 6
ARTICLE VII ......................................................... 7
8.1 Condition of the Property................................ 7
8.2 Possession and Use of the Property....................... 7
ARTICLE IX ......................................................... 8
9.1 Compliance With Legal Requirements and
Insurance Requirements................................... 8
ARTICLE X ......................................................... 9
10.1 Maintenance and Repair; Return........................... 9
10.2 Environmental Inspection................................. 10
ARTICLE XI ......................................................... 10
11.1 Modifications, Substitutions and Replacements............ 10
ARTICLE XII ......................................................... 11
12.1 Warranty of Title........................................ 11
ARTICLE XIII ......................................................... 12
13.1 Permitted Contests Other Than in Respect
of Indemnities........................................... 12
<PAGE>ii
ARTICLE XIV ......................................................... 13
14.1 Public Liability and Workers' Compensation
Insurance................................................ 13
14.2 Hazard and Other Insurance............................... 13
14 3 Coverage................................................. 14
ARTICLE XV ......................................................... 15
15.1 Casualty and Condemnation................................ 15
15.2 Environmental Matter..................................... 17
15.3 Notice of Environmental Matters.......................... 17
ARTICLE XVI ......................................................... 18
16.1 Termination Upon Certain Events.......................... 18
16.2 Procedures............................................... 18
ARTICLE XVI ......................................................... 18
17.1 Lease Events of Default.................................. 18
17.2 Surrender of Possession.................................. 22
17.3 Reletting................................................ 22
17.4 Damages.................................................. 22
17.5 Power of Sale............................................ 23
17.6 Final Liquidated Damages................................. 23
17.7 Lessee's Purchase Option During Default.................. 24
17.8 Waiver of Certain Rights................................. 24
17.9 Assignment of Rights Under Contracts..................... 24
17.10 Remedies Cumulative...................................... 24
ARTICLE XVIII ......................................................... 25
18.1 Lessor's Right to Cure Lessee's Lease Defaults........... 25
ARTICLE XIX ......................................................... 25
19.1 Provisions Relating to Lessee's Exercise of
its Purchase Option...................................... 25
19.2 No Termination With Respect to Less than All
of a Property............................................ 25
ARTICLE XX ......................................................... 26
20.1 Purchase Options......................................... 26
20.2 Expiration Date Purchase or Sale Option.................. 27
20.3 Lessor's Transfer Option................................. 27
ARTICLE XXI ......................................................... 28
21.1 Renewal.................................................. 28
ARTICLE XXII ......................................................... 28
22.1 Sale Procedure........................................... 28
22.2 Application of Proceeds of Sale.......................... 30
22.3 (intentionally omitted).................................. 30
22.4 (intentionally omitted).................................. 30
22.5 Certain Obligations Continue............................. 31
22.6 Sale of Undeveloped Pads................................. 31
ARTICLE XXIII ......................................................... 31
23.1 Holding Over............................................. 31
<PAGE>iii
ARTICLE XXIV ......................................................... 32
24.1 Risk of Loss............................................. 32
ARTICLE XXV ......................................................... 32
25.1 Assignment............................................... 32
25.2 Subleases................................................ 32
ARTICLE XXVI ......................................................... 33
26.1 No Waiver................................................ 33
ARTICLE XXVII ......................................................... 33
27.1 Acceptance of Surrender.................................. 33
27.2 No Merger of Title....................................... 33
ARTICLE XXVIII......................................................... 34
28.1 Incorporation of Covenants............................... 34
ARTICLE XXIX ......................................................... 34
29.1 Notices.................................................. 34
ARTICLE XXX ......................................................... 35
30.1 Miscellaneous............................................ 35
30.2 Amendments and Modifications............................. 36
30.3 Successors and Assigns................................... 36
30.4 Headings and Table of Contents........................... 36
30.5 Counterparts............................................. 36
30.6 GOVERNING LAW............................................ 36
30.7 Calculation of Rent...................................... 36
30.8 Memoranda of Lease and Lease Supplements................. 36
30.9 Allocations between the Lenders and the Holder........... 36
30.10 Limitations on Recourse.................................. 37
30.11 Estoppel Certificates.................................... 37
30.12 Decision Making by Parties............................... 37
30.13 Limited Power of Attorney................................ 37
30.14 Submission To Jurisdiction; Waivers...................... 38
30.15 WAIVERS OF JURY TRIAL.................................... 39
EXHIBITS
- --------
EXHIBIT A - Lease Supplement No. ___
EXHIBIT B-1 - Memorandum of Lease and Lease Supplement
EXHIBIT B-2 - Memorandum of Lease
<PAGE>
LEASE AGREEMENT
---------------
(Tax Retention Operating Lease Agreement)
THIS LEASE AGREEMENT (Tax Retention Operating Lease) (this
"Lease"), dated as of May 5, 1995, is between FIRST SECURITY BANK
OF UTAH, N.A., a national banking association, having its principal
office at 79 South Main Street, Salt Lake City, Utah 84111, not
individually, but solely as Owner Trustee under the FM Trust
1995-1, as lessor (the "Lessor"), and FRED MEYER, INC., a Delaware
corporation, having its principal place of business at 3800 S.E.
22nd Avenue, Portland, Oregon 97202, as lessee (the "Lessee")
W I T N E S S E T H:
- - - - - - - - - -
A. WHEREAS, subject to the terms and conditions of the
Agency Agreement, Lessor will (i) purchase or ground lease various
parcels of real property, some of which will have existing Improvements
thereon, from one or more third parties designated by Lessee and
(ii) fund the development, refurbishment and construction by the
Construction Agent of Improvements on such real property; and
B. WHEREAS, the Basic Term shall commence with respect to
each Property on the Basic Term Commencement Date described in
Section 2.2 hereof; and
C. WHEREAS, Lessor desires to lease to Lessee, and Lessee
desires to lease from Lessor, each Property;
NOW, THEREFORE, in consideration of the foregoing, and of
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
1.1 Definitions. Capitalized terms used but not otherwise
defined in this Lease have the respective meanings specified in
Appendix A to the Participation Agreement of even date herewith (as
such may be amended, modified, supplemented, restated and/or
replaced from time to time, the "Participation Agreement") among
the Lessee, the Construction Agent, First Security Bank of Utah, N.A.,
not individually, except as expressly stated therein, as Owner
Trustee under the FM Trust 1995-1, the Holder, the Lenders and the
Agent.
1.2 Interpretation. The rules of usage set forth in Appendix
A to the Participation Agreement shall apply to this Lease.
<PAGE>2
ARTICLE II
2.1 Property. Subject to the terms and conditions
hereinafter set forth and contained in the respective Lease Supplement
relating to each Property, Lessor hereby leases to Lessee and Lessee hereby
leases from Lessor, each Property.
2.2 Lease Term. The term of this Lease with respect to
each Property (the "Basic Term") shall begin upon the earliest to
occur of (i) the Completion Date for such Property, (ii) with
respect to Improved Property, the Property Closing Date with
respect to such Improved Property or (iii) if such Property is a
Construction Period Property as of the date of any Agency Agreement
Event of Default, the date of such Agency Agreement Event of
Default (in each case the "Basic Term Commencement Date") and shall end on
May 5, 2000 (the "Basic Term Expiration Date"), unless the Term is
extended or earlier terminated in accordance with the provisions of
this Lease.
2.3 Title. Each Property is leased to Lessee without any
representation or warranty, express or implied, by Lessor and
subject to the rights of parties in possession, the existing state
of title (including, without limitation, the Permitted Exceptions)
and all applicable Legal Requirements. Lessee shall in no event
have any recourse against Lessor for any defect in title to any
Property.
2.4 Lease Supplements. On or prior to the Completion Date
with respect to the Improvements to be constructed on Unimproved
Property and on or prior to the Property Closing Date with respect
to each acquisition of Improved Property, Lessee covenants and
agrees with Lessor that it will execute and deliver to Lessor a
Lease Supplement for the Property to be leased effective as of the
Basic Term Commencement Date for such Property (such Lease
Supplement to be in substantially the form of Exhibit A hereto),
and thereafter such Property shall be subject to the terms of this
Lease.
ARTICLE III
3.1 Rent.
(a) Lessee shall pay Basic Rent in arrears, on each
Payment Date, and on any date on which this Lease shall
terminate with respect to any or all Properties during the
Term; provided, however, with respect to each individual
Property Lessee shall have no obligation to pay Basic Rent
with respect to such Property until the Basic Term has commenced
with respect to such Property.
(b) Basic Rent shall be due and payable in lawful money
of the United States and shall be paid by wire transfer
(including Automated Clearing House transfer) of immediately
available funds on the due-date therefor to such
<PAGE>3
account or accounts at such bank or banks as Lessor shall from
time to time direct.
(c) Lessee's inability or failure to take possession of
all or any portion of any Property when delivered by Lessor,
whether or not attributable to any act or omission of Lessee
or any act or omission of Lessor (other than an act or omission
that constitutes gross negligence or wilful misconduct of
Lessor), or for any other reason whatsoever, shall not delay
or otherwise affect Lessee's obligation to pay Rent for such
Property in accordance with the terms of this Lease.
3.2 Payment of Basic Rent. Basic Rent shall be paid
absolutely net to Lessor or its designee, so that this Lease shall
yield to Lessor the full amount thereof, without setoff, deduction
or reduction.
3.3 Supplemental Rent. Lessee shall pay to Lessor or its
designee or to the Person entitled thereto any and all Supplemental
Rent promptly as the same shall become due and payable, and if
Lessee fails to pay any Supplemental Rent, Lessor shall have all
rights, powers and remedies provided for herein or by law or equity
or otherwise in the case of nonpayment of Basic Rent. Lessee shall
pay to Lessor, as Supplemental Rent, among other things, on demand,
to the extent permitted by applicable Legal Requirements, (a) any
and all unpaid fees, charges, payments and other obligations (other
than the obligations of Lessor to pay the principal amount of the
Loans and the Holder Amount) due and owing by Lessor under the
Credit Agreement, under the Trust Agreement and/or under any other
Operative Agreement (including specifically without limitation any
amounts owing to the Lenders under Section 2.10 or Section 2.11 of
the Credit Agreement and any amounts owing to the Holder under
Section 3.8 or Section 3.9 of the Trust Agreement) and (b) interest
at the applicable Overdue Rate on any installment of Basic Rent not
paid when due for the period for which the same shall be overdue
and on any payment of Supplemental Rent not paid when due or demanded
by Lessor for the period from the due date or the date of any such
demand, as the case may be, until the same shall be paid. The
expiration or other termination of Lessee's obligations to pay
Basic Rent hereunder shall not limit or modify the obligations of Lessee
with respect to Supplemental Rent. Unless expressly provided
otherwise in this Lease, in the event of any failure on the part of
Lessee to pay and discharge any Supplemental Rent as and when due,
Lessee shall also promptly pay and discharge any fine, penalty,
interest or cost which may be assessed or added for nonpayment or
late payment of such Supplemental Rent, all of which shall also
constitute Supplemental Rent.
3.4 Performance on a Non-Business Day. If any payment is
required hereunder on a day that is not a Business Day, then such
payment shall be due on the next succeeding Business Day.
<PAGE>4
3.5 Rent Payment Provisions. Lessee shall make payment of
all Basic Rent and Supplemental Rent when due regardless of whether
any of the Operative Agreements pursuant to which same is calculated
and is owing shall have been rejected, avoided or disavowed in any
bankruptcy or insolvency proceeding involving any of the parties to
any of the Operative Agreements. Such provisions of such Operative
Agreements and their related definitions are incorporated herein by
reference and shall survive any termination, amendment or rejection
of any such Operative Agreements.
ARTICLE IV
4.1 Utility Charges. Lessee shall pay or cause to be paid
all charges for electricity, power, gas, oil, water, telephone,
sanitary sewer service and all other rents and utilities used in or
on a Property and related real property during the Term. Lessee
shall be entitled to receive any credit or refund with respect to
any utility charge paid by Lessee. The amount of any credit or
refund received by Lessor on account of any utility charges paid by
Lessee, net of the reasonable costs and expenses incurred by Lessor
in obtaining such credit or refund, if any, shall be promptly paid
over to Lessee. All charges for utilities imposed with respect to
a Property for a billing period during which this Lease expires or
terminates shall be adjusted and prorated on a daily basis between
Lessor and Lessee, and each party shall pay or reimburse the other
for such party's pro rata share thereof.
ARTICLE V
5.1 Quiet Enjoyment. Subject to the rights of Lessor
contained in Sections 17.2, 17.3 and 20.3 and the other terms of
this Lease and so long as no Lease Event of Default shall have
occurred and be continuing, Lessee shall peaceably and quietly
have, hold and enjoy each Property for the applicable Term, free of any
claim or other action by Lessor or anyone rightfully claiming by,
through or under Lessor (other than Lessee) with respect to any
matters arising from and after the applicable Basic Term
Commencement Date.
5.2 Transfers by Lessor; Lessor Liens. So long as no Lease
Event of Default shall have occurred and be continuing, Lessor
shall not assign or convey any of its right, title or interest in and to
this Lease or the Properties, except for the Liens specifically
contemplated under the Operative Agreements or as otherwise
required by Law. In addition to the foregoing, Lessor agrees that it will,
in its individual capacity and at its own cost and expense (and
without any right of indemnity under the Operative Agreements)
promptly take such action as may be necessary to duly discharge and
satisfy in full any Lessor Liens in a manner consistent with the
requirements of Section 10.2(a) of the Participation Agreement.
<PAGE>5
ARTICLE VI
6.1 Net Lease. This Lease shall constitute a net lease. Any
present or future law to the contrary notwithstanding, this Lease
shall not terminate, nor shall Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counter- claim, or defense
with respect to the Rent, nor shall the obligations of Lessee
hereunder be affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) by reason of:
(i) any damage to or destruction of any Property or any part thereof;
(ii) any taking of any Property or any part thereof or interest
therein by Condemnation or otherwise; (iii) any prohibition,
limitation, restriction or prevention of Lessee's use, occupancy or
enjoyment of any Property or any part thereof, or any interference
with such use, occupancy or enjoyment by any Person or for any other
reason; (iv) any title defect, Lien or any matter affecting title to
any Property; (v) any eviction by paramount title or otherwise; (vi)
any default by Lessor hereunder; (vii) any action for bankruptcy,
insolvency, reorganization, liquidation, dissolution or other
proceeding relating to or affecting Lessor or any Governmental
Authority; (viii) the impossibility or illegality of performance by
Lessor, Lessee or both; (ix) any action of any Governmental Authority;
(x) Lessee's acquisition of ownership of all or part of any Property;
(xi) breach of any warranty or representation with respect to any
Property or any Operative Agreement; (xii) any defect in the
condition, quality or fitness for use of any Property or any part
thereof; or (xiii) any other cause or circumstance whether similar or
dissimilar to the foregoing and whether or not Lessee shall have
notice or knowledge of any of the foregoing. The parties intend that
the obligations of Lessee hereunder shall be covenants, agreements and
obligations that are separate and independent from any obligations of
Lessor hereunder and shall continue unaffected unless such covenants,
agreements and obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Lessor and Lessee
acknowledge and agree that the provisions of this Section 6.1 have
been specifically reviewed and subject to negotiation.
6.2 No Termination or Abatement. Lessee shall remain
obligated under this Lease in accordance with its terms and shall
not take any action to terminate, rescind or avoid this Lease,
notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding
affecting Lessor or any Governmental Authority, or any action with
respect to this Lease or any Operative Agreement which may be taken
by any trustee, receiver or liquidator of Lessor or any
Governmental Authority or by any court with respect to Lessor or any
Governmental Authority. Lessee hereby waives all right (i) to
terminate or surrender this Lease or (ii) to avail itself of any
abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. Lessee shall remain obligated
under this Lease in accordance with its terms and Lessee hereby
waives any and all rights now or hereafter
<PAGE>6
conferred by statute or otherwise to modify or to avoid strict
compliance with its obligations under this Lease. Notwithstanding
any such statute or otherwise, Lessee shall be bound by all of the
terms and conditions contained in this Lease.
ARTICLE VII
7.1 Ownership of the Property.
(a) Lessor and Lessee intend that (i) for financial
accounting purposes with respect to Lessee (A) this Lease will
be treated as an "operating lease" pursuant to Statement of
Financial Accounting Standards No. 13, as amended, (B) Lessor
will be treated as the owner and lessor of each Property and
(C) Lessee will be treated as the lessee of each Property, but
(ii) for federal and all state and local income tax purposes,
bankruptcy and commercial law and real estate purposes and all
other purposes (A) this Lease will be treated as a financing
arrangement, and (B) Lessee will be treated as the owner of
the Properties and will be entitled to all tax benefits
ordinarily available to owners of property similar to the
Properties for such tax purposes.
(b) To the extent this Lease is hereafter deemed to
constitute a finance lease and not a true lease, then and only
in such event, Lessor and Lessee intend and agree that, for
the purpose of securing Lessee's obligations hereunder, (i) this
Lease shall be deemed to be a security agreement and financing
statement within the meaning of Article 9 of the Uniform
Commercial Code respecting each of the Properties to the
extent such is personal property and an irrevocable grant and
conveyance of a lien and mortgage on each of the Properties to
the extent such is real property; (ii) the conveyance provided
for in Article II shall be deemed to be a grant by Lessee to
Lessor of, and Lessee hereby grants to Lessor, a lien on and
security interest, mortgage and deed of trust in all of
Lessee's right, title and interest in and to the Property and
all proceeds (including without limitation insurance proceeds)
of the conversion, voluntary or involuntary, of the foregoing
into cash, investments, securities or other property, whether
in the form of cash, investments, securities or other
property, and an assignment of all rents, profits and income produced
by the Property; and (iii) notifications to Persons holding such
property, and acknowledgements, receipts or confirmations from
financial intermediaries, bankers or agents (as applicable) of
Lessee shall be deemed to have been given for the purpose of
perfecting such security interest, mortgage, deed of trust or
lien under applicable law. Lessor and Lessee shall, to the
extent consistent with this Lease, take such actions as may be
necessary (including without limitation the filing of Uniform
Commercial Code Financing Statements, Uniform Commercial Code
Fixture
<PAGE>7
Filings and memoranda of this Lease and the various Lease
Supplements) to ensure that, if this Lease were deemed to
create a lien, mortgage, deed of trust or security interest in
the Property in accordance with this Section, such lien,
mortgage, deed of trust or security interest would be deemed
to be perfected and to have a first priority position under
applicable law and will be maintained as such throughout the
Term.
ARTICLE VIII
8.1 Condition of the Property. EXCEPT FOR THE COVENANTS OF
LESSOR SET FORTH IN ARTICLE V HEREOF, LESSEE ACKNOWLEDGES AND
AGREES THAT IT IS LEASING EACH PROPERTY "AS IS" WITHOUT REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY LESSOR AND IN EACH
CASE SUBJECT TO (A) THE EXISTING STATE OF TITLE, (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH AN
ACCURATE SURVEY OR PHYSICAL INSPECTION MIGHT SHOW, (D) ALL
APPLICABLE LEGAL REQUIREMENTS AND (D) VIOLATIONS OF LEGAL
REQUIREMENTS WHICH MAY EXIST ON THE DATE HEREOF. NEITHER LESSOR
NOR THE AGENT NOR ANY LENDER NOR THE HOLDER HAS MADE OR SHALL BE
DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR
IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO
THE TITLE, VALUE, HABITABILITY, USE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE OF ANY PROPERTY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO ANY PROPERTY (OR
ANY PART THEREOF), AND NEITHER LESSOR NOR THE AGENT NOR ANY LENDER NOR
THE HOLDER SHALL BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF ANY PROPERTY, OR ANY PART THEREOF, TO
COMPLY WITH ANY LEGAL REQUIREMENT. THE LESSEE HAS OR WILL HAVE
BEEN AFFORDED FULL OPPORTUNITY TO INSPECT THE PROPERTY AND THE
IMPROVEMENTS THEREIN, IS OR WILL BE (INSOFAR AS THE LESSOR, THE
AGENT, EACH LENDER AND EACH HOLDER ARE CONCERNED) SATISFIED WITH
THE RESULTS OF ITS INSPECTIONS AND IS ENTERING INTO THIS LEASE SOLELY
ON THE BASIS OF THE RESULTS OF ITS OWN INSPECTIONS, AND ALL RISKS
INCIDENT TO THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, AS
BETWEEN THE LESSOR, THE AGENT, THE LENDERS AND THE HOLDER, ON THE
ONE HAND, AND THE LESSEE, ON THE OTHER HAND, ARE TO BE BORNE BY
LESSEE.
8.2 Possession and Use of the Property.
(a) At all times during the Term with respect to each
Property, such Property shall not be used by Lessee for any
unlawful purpose. Lessee shall pay, or cause to be paid, all
charges and costs required in connection with the use of the
Properties as contemplated by this Lease. During the Term,
Lessee may cease operations at Properties having a Maximum
Property Cost not to exceed fifty percent (50%) of the Maximum
Property Cost of all Properties as of the Construction Period
Termination Date; provided, during such
<PAGE>8
period of ceased operations Lessee shall comply with its
obligations under the Operative Agreements.
(b) The address of Lessee set forth in Section 29.1
herein or otherwise disclosed to Lessor by Lessee pursuant to
written notice hereunder no less than 30 days prior to the
effective date of such changed location is the chief place of
business and chief executive office of Lessee (as such terms
are used in Section 9-103(3) of the Uniform Commercial Code of
any applicable jurisdiction). Regarding a particular
Property, each Lease Supplement correctly identifies the initial
location of the related Equipment and Improvements and
contains an accurate legal description for the related parcel
of Land. Lessee has no other places of business where the
Equipment or Improvements will be located other than those
identified on the applicable Lease Supplement.
(c) Lessee will not attach or incorporate any item of
Equipment to or in any other item of equipment or personal
property or to or in any real property (except the Land
identified in the Lease Supplement in which such Equipment is
also described) in a manner that could give rise to the
assertion of any Lien on such item of Equipment by reason of
such attachment or the assertion of a claim that such item of
Equipment has become a fixture and is subject to a Lien in
favor of a third party that is prior to the Liens thereon
created by the Operative Agreements.
(d) With respect to each Property, subject to the terms
and conditions of this Lease and the Participation Agreement,
on each Basic Term Commencement Date Lessor and Lessee shall
execute and deliver a Lease Supplement containing, in regard
to such Property, an Equipment Schedule that has a complete
description of each item of Equipment, an Improvement Schedule
that has a complete description of each Improvement and a
legal description of the Land, to be leased hereunder as of such
date. Simultaneously therewith, such Equipment, Improvements
and Land shall be deemed to have been accepted by Lessee for
all purposes of this Lease and to be subject to this Lease.
ARTICLE IX
9.1 Compliance With Legal Requirements and Insurance
Requirements. Subject to the terms of Article XIII relating to
permitted contests, Lessee, at its sole cost and expense, shall (i)
comply with all material Legal Requirements (including without
limitation all Environmental Laws) relating to the Properties, and
all Insurance Requirements relating to the Properties, including
the use, development, construction, operation, maintenance, repair,
refurbishment and restoration thereof, whether or not compliance
therewith shall require structural or extraordinary changes in the
Improvements or
<PAGE>9
interfere with the use and enjoyment of the Properties, and (ii)
procure, maintain and comply with all material licenses, permits,
orders, approvals, consents and other authorizations required for
the construction, use, maintenance and operation of the Properties
and for the use, development, construction, operation, maintenance,
repair and restoration of the Improvements.
ARTICLE X
10.1 Maintenance and Repair; Return.
(a) Lessee, at its sole cost and expense, shall maintain
each Property in good condition, repair and working order
(ordinary wear and tear excepted) and make all necessary
repairs thereto, of every kind and nature whatsoever, whether
interior or exterior, ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as
required by all Legal Requirements, Insurance Requirement and
manufacturer's specifications and standards and on a basis
consistent with the operation and maintenance of other similar
properties or equipment of Lessee as of the date hereof
subject, however, to the provisions of Article XV with respect
to Condemnation and Casualty.
(b) Lessee shall not use or locate any component of any
Property outside of any Approved State. Lessee shall not move
or relocate any component of any Property beyond the
boundaries of the Land (comprising part of the Property) described in
the applicable Lease Supplement.
(c) (Intentionally Omitted).
(d) Upon reasonable advance notice, Lessor and its
agents shall have the right to inspect each Property and all
maintenance records with respect thereto at any reasonable
time during normal business hours but shall not, in the absence of
a Lease Event of Default, materially disrupt the business of
Lessee.
(e) If, at any time, the aggregate appraised value of
Properties then subject to this Lease and with respect to
which operations have not ceased as described in Section 8.2(a) for
which the Lessor has received an Appraisal pursuant to the
terms of Section 5.6 of the Participation Agreement is less
than the lesser of $14,000,000 or the aggregate Property Cost
of all Properties then subject to this Lease and with respect
to which operations have not ceased as described in Section
8.2(a) (such lesser amount being hereafter referred to as the
"Base Amount"), then the Lessee will cause an additional
Appraisal or Appraisals to be immediately delivered to the
Lessor in an amount sufficient to cause such aggregate
appraised value to equal or exceed the Base Amount. In
addition, Lessee shall cause
<PAGE>10
to be delivered to Lessor (at Lessee's sole expense) any
additional Appraisals (or reappraisals) as Lessor may request
if any one of Lessor, the Agent, any Lender or the Holder is
required pursuant to any applicable Legal Requirement to
obtain such an Appraisal (or reappraisal). Any such request by
Lessor will identify the Person and the applicable Legal Requirement
that necessitates the additional Appraisal (or reappraisal).
Lessee may cause the additional Appraisal (or reappraisal) to
be performed in a manner that satisfies the minimum
requirements of such Legal Requirement, including, without
limitation, if permitted by the Legal Requirement, providing a
supplement or date-down to a previously provided Appraisal.
The parties will cooperate on efforts to minimize the
frequency and costs of such additional Appraisals (or reappraisals).
(f) Lessor shall under no circumstances be required to
build any improvements on any Property, make any repairs,
replacements, alterations or renewals of any nature or
description to any Property, make any expenditure whatsoever
in connection with this Lease or maintain any Property in any
way. Lessor shall not be required to maintain, repair or
rebuild all or any part of any Property, and Lessee waives the
right to (i) require Lessor to maintain, repair, or rebuild
all or any part of any Property, or (ii) make repairs at the
expense of Lessor pursuant to any Legal Requirement, Insurance
Requirement, contract, agreement, covenants, condition or
restriction at any time in effect.
(g) Lessee shall, upon the expiration or earlier
termination of this Lease with respect to a Property, if
Lessee shall not have exercised its Purchase Option or Expiration
Date Purchase Option with respect to such Property, surrender
such Property to Lessor, or the third party purchaser, as the
case may be, subject to Lessee's obligations under this Lease
(including without limitation Sections 9.1, 10.1(a)-(f) ,
10.2, 11.1, 12.1, 22.1 and 23.1)
10.2 Environmental Inspection. If Lessee has not given notice
of exercise of its Expiration Date Purchase Option pursuant to
Section 20.2, then not more than 120 days nor less than 60 days
prior to the Expiration Date, Lessee shall, at its sole cost and
expense, provide to Lessor a report by a reputable environmental
consultant selected by Lessee, which report shall be in form and
substance satisfactory to Lessor.
ARTICLE XI
11.1 Modifications, Substitutions and Replacements.
(a) Lessee may, either at its sole cost and expense or
with the proceeds of Modification Advances made pursuant to
the terms of the Participation Agreement during the Construction
Period, at any time and from time to time
<PAGE>11
without the consent of Lessor make alterations, renovations,
improvements and additions to the Property or any part thereof
and substitutions and replacements there for (collectively,
"Modifications"); provided, that: (i) except for any
Modification required to be made pursuant to a Legal
Requirement, no Modification shall materially impair the
value, utility or useful life of the Property from that which
existed immediately prior to such Modification; (ii) the Modification
shall be done expeditiously and in a good and workmanlike
manner; (iii) Lessee shall comply with all Legal Requirements
(including all Environmental Laws) and Insurance Requirements
applicable to the Modification, including the obtaining of all
permits and certificates of occupancy, and the structural
integrity of the Property shall not be adversely affected;
(iv) to the extent required by Section 14.2(a), Lessee shall
maintain builders' risk insurance at all times when a
Modification is in progress; (v) subject to the terms of
Article XIII relating to permitted contests, Lessee shall pay
all costs and expenses and discharge any liens arising with
respect to the Modification; and (vi) such Modification shall
comply with the requirements of this Lease (including without
limitation Sections 8.2 and 10.1). All Modifications financed
by Lessor shall become the property of, and title thereto
shall immediately and without further action vest in, the Lessor,
when installed (and the Ground Lease shall expressly provide).
All other Modifications shall become the property of, and
title thereto shall immediately and without further action
vest in, Lessor, on surrender of the Property, the earlier
termination of this Lease or the occurrence of a Lease Default
or Lease Event of Default under Section 17.1(j) of this Lease.
(b) The construction process provided for in the Agency
Agreement is acknowledged by Lessor and the Agent to be
consistent with and in compliance with the terms and
provisions of this Article XI.
ARTICLE XII
12.1 Warranty of Title.
(a) Lessee agrees that, except as otherwise provided
herein and subject to the terms of Article XIII relating to
permitted contests, Lessee shall not directly or indirectly
create or allow to remain, and shall promptly discharge at its
sole cost and expense, any Lien, defect, attachment, levy,
title retention agreement or claim upon any Property or any
Modifications or any Lien, attachment, levy or claim with
respect to the Rent or with respect to any amounts held by the
Agent pursuant to the Credit Agreement, other than Permitted
Liens and Lessor Liens. Lessee shall promptly notify Lessor
in the event it receives actual knowledge that a Lien other than
a Permitted Lien or Lessor Lien has
<PAGE>12
occurred with respect to a Property, and Lessee represents and
warrants to, and covenants with, Lessor that the Liens in
favor of the Lessor created by the Operative Agreements are first
priority perfected liens subject only to Permitted Liens.
(b) Nothing contained in this Lease shall be construed
as constituting the consent or request of Lessor, expressed or
implied, to or for the performance by any contractor,
mechanic, laborer, materialman, supplier or vendor of any labor or
services or for the furnishing of any materials for any
construction, alteration, addition, repair or demolition of or
to any Property or any part thereof. NOTICE IS HEREBY GIVEN
THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE,
OR TO ANYONE HOLDING A PROPERTY OR ANY PART THEREOF THROUGH OR
UNDER LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY
SUCH LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT
THE INTEREST OF LESSOR IN AND TO ANY PROPERTY.
ARTICLE XIII
13.1 Permitted Contests Other Than in Respect of Indemnities.
Except to the extent otherwise provided for in Section 13 of the
Participation Agreement, Lessee, on its own or on Lessor's behalf
but at Lessee's sole cost and expense, may contest, by appropriate
administrative or judicial proceedings conducted in good faith and
with due diligence, the amount, validity or application, in whole
or in part, of any Legal Requirement, or utility charges payable
pursuant to Section 4.1 or any Lien, attachment, levy, encumbrance
or encroachment, and Lessor agrees not to pay, settle or otherwise
compromise any such item, provided that (a) Lessee provides to
Lessor such security or other assurances reasonably acceptable to
Lessor that Lessee can and will satisfy the Lien and comply with
the Legal Requirements in sufficient time to prevent any sale,
forfeiture or loss by reason of such non-payment or noncompliance,
(b) at no time during the permitted contest shall there be a risk
of the imposition of criminal liability or material civil liability
(in the case of a civil liability, unless Lessee provides to Lessor
such security or other assurances reasonably acceptable to Lessor
that Lessee can and will satisfy such liability) on Lessor, the
Holder, the Agent or any Lender for failure to comply therewith;
and (c) in the event that, at any time, there shall be a material
risk of extending the application of such item beyond the end of
the Term, then Lessee shall deliver to Lessor an Officer's
Certificate certifying as to the matters set forth in clauses (a)
and (b) of this Section 13.1. Lessor, at Lessee's sole cost and
expense, shall execute and deliver to Lessee such authorizations
and other documents as may reasonably be required in connection
with any such contest and, if reasonably requested by Lessee, shall
join as a party therein at Lessee's sole cost and expense.
<PAGE>13
ARTICLE XIV
14.1 Public Liability and Workers' Compensation Insurance.
During the Term of each Property, Lessee shall procure and carry,
at Lessee's sole cost and expense, commercial general liability
insurance for claims for injuries or death sustained by persons or
damage to property while on the Properties or the premises where
the Equipment is located and such other public liability coverages as
are ordinarily procured by Persons who own or operate similar
properties or equipment in similar businesses. Such insurance shall
be on terms and in amounts that are no less favorable than
insurance maintained by Lessee with respect to similar properties and
equipment that it owns and that are in accordance with normal
industry practice. The policies shall be endorsed to name Lessor,
the Holder, the Agent and the Lenders as additional insureds. The
policies shall also specifically provide that such policies shall
be considered primary insurance which shall apply to any loss or
claim before any contribution by any insurance which Lessor, the Holder,
the Agent or the Lenders may have in force. Lessee shall, in the
operation of the Properties, comply with the applicable workers'
compensation laws and protect Lessor, the Holder, the Agent and the
Lenders against any liability under such laws.
14.2 Hazard and Other Insurance.
(a) During the Term for each Property, Lessee shall
keep, or cause to be kept, such Property insured against loss or
damage by fire and other risks and shall maintain builders'
risk insurance during construction of any Improvements or
Modifications on terms and in amounts that are no less
favorable than insurance covering other similar properties
owned by Lessee and that are in accordance with normal
industry practice. The policies shall be endorsed to name Lessor, the
Holder, the Agent and the Lenders, to the extent of their
respective interests, as additional loss payees; provided, so
long as no Lease Event of Default exists, any loss payable
under the insurance policies required by this Section will be
paid to Lessee and Lessee will have the sole authority to
settle any such insurance claim without the need for prior
approval by any such additional loss payee.
(b) During the Term with respect to a Property the area
in which such Property is located is designated a "flood-prone"
area pursuant to the Flood Disaster Protection Act or 1973,
or any amendments or supplements thereto, then Lessee shall
comply with the National Flood Insurance Program as set forth
in the Flood Disaster Protection Act of 1973. In addition,
Lessee will fully comply with the requirements of the National
Flood Insurance Act of 1968 and the Flood Disaster Protection
Act of 1973, as each may be amended from time to time, and
with any other Legal Requirement, concerning flood insurance
to the extent that it apply to any such Property.
<PAGE>14
14.3 Coverage.
(a) As of the date of this Lease and annually
thereafter, Lessee shall furnish Lessor and the Agent with certificates
showing the insurance required under Sections 14.1 and 14.2 to
be in effect, naming Lessor, the Holder, the Agent and the
Lenders as additional insureds and loss payees and evidencing
the other requirements of this Article XIV. All such
insurance shall be at the cost and expense of Lessee. Such
certificates shall include a provision for thirty (30) days' advance
written notice by the insurer to Lessor and the Agent in the
event of cancellation or material alteration of such
insurance. If a Lease Event of Default has occurred and is
continuing and Lessor so requests, Lessee shall deliver to
Lessor copies of all insurance policies required by Sections
14.1 and 14.2.
(b) Lessee agrees that the insurance policy or policies
required by Sections 14.1, 14.2(a) and 14.2(b) shall include
an appropriate clause pursuant to which any such policy shall
provide that it will not be invalidated by any act or omission
of Lessee or to the extent Lessee waives, at any time, any or
all rights of recovery against any party for losses covered by
such policy. Lessee hereby waives any and all such rights
against the Lessor, the Holder, the Agent and the Lenders to
the extent of payments made to any such Person under any such
policy.
(c) Neither Lessor nor Lessee shall carry separate
insurance concurrent in kind or form or contributing in the
event of loss with any insurance required under this Article
XIV, except that Lessor may carry separate liability insurance
at Lessor's sole cost so long as (i) Lessee's insurance is
designated as primary and in no event excess or contributory
to any insurance Lessor may have in force which would apply to a
loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this
Article XIV to be subject to a coinsurance exception of any
kind.
(d) Lessee shall pay as they become due all premiums for
the insurance required by Section 14.1 and Section 14.2, shall
renew or replace each policy prior to the expiration date
thereof or otherwise maintain the coverage required by such
Sections without any lapse in coverage.
(e) Any insurance required to be carried hereunder may
contain such deductibles and/or self insurance consistent with
industry standards and the then current practice of Lessee
with respect to its other properties similar to the Properties.
Any liability insurance required under Section 14.1 may be met
through "blanket" policies of insurance.
<PAGE>15
ARTICLE XV
15.1 Casualty and Condemnation.
(a) Subject to the provisions of this Article XV and
Article XVI (in the event Lessee delivers, or is obligated to
deliver, a Termination Notice), and prior to the occurrence
and continuation of a Lease Default or Lease Event of Default,
Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and
interest in) any award, compensation or insurance proceeds
under Sections 14.2(a) or (b) hereof to which Lessee or Lessor
may become entitled by reason of their respective interests in
a Property (i) if all or a portion of such Property is damaged
or destroyed in whole or in part by a Casualty or (ii) if the
use, access, occupancy, easement rights or title to such
Property or any part thereof is the subject of a Condemnation;
provided, however, if a Lease Default or Lease Event of
Default shall have occurred and be continuing such award,
compensation or insurance proceeds shall be paid directly to
Lessor or, if received by Lessee, shall be held in trust for Lessor,
and shall be paid over by Lessee to Lessor and held in accordance
with the terms of this paragraph (a). All amounts held by
Lessor hereunder on account of any award, compensation or
insurance proceeds either paid directly to Lessor or turned
over to Lessor shall be held as security for the performance
of Lessee's obligations hereunder for the duration of any
applicable cure period.
(b) Lessee may appear in any proceeding or action to
negotiate, prosecute, adjust or appeal any claim for any
award, compensation or insurance payment on account of any such
Casualty or Condemnation and shall pay all expenses thereof.
At Lessee's reasonable request, and at Lessee's sole cost and
expense, Lessor and the Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment.
Lessor and Lessee agree that this Lease shall control the
rights of Lessor and Lessee in and to any such award,
compensation or insurance payment.
(c) If Lessee shall receive notice of a Casualty or a
possible Condemnation of a Property or any interest therein
where damage to the affected Property is estimated to equal or
exceed ten percent (10%) of the Property Cost of such
Property, Lessee shall give notice thereof to the Lessor and to the
Agent promptly after the receipt of such notice.
(d) In the event of a Casualty or a Condemnation
(regardless of whether notice thereof must be given pursuant
to paragraph (c)), this Lease shall terminate with respect to
the applicable Property in accordance with Section 16.1 if
Lessee, within sixty (60) days after such occurrence, delivers to
Lessor and the Agent a notice to such effect.
<PAGE>16
(e) If pursuant to this Section 15.1 this Lease shall
continue in full force and effect following a Casualty or
Condemnation with respect to the affected Property, Lessee
shall, at its sole cost and expense and using, if available,
the proceeds of any award, compensation or insurance with
respect to such Casualty or Condemnation (including, without
limitation, any such award, compensation or insurance which
has been received by the Agent and which should be turned over to
Lessee pursuant to the terms of the Operative Agreements),
promptly and diligently repair any damage to the applicable
Property caused by such Casualty or Condemnation in conformity
with the requirements of Sections 10.1 and 11.1, so as to
restore the applicable Property to substantially the same
condition, operation, function and value as existed immediately
prior to such Casualty or Condemnation. In such event, title
to the applicable Property shall remain with Lessor.
(f) In no event shall a Casualty or Condemnation with
respect to which this Lease remains in full force and effect
under this Section 15.1 affect Lessee's obligations to pay
Rent pursuant to Section 3.1.
(g) Notwithstanding anything to the contrary set forth
in Section 15.1(a) or Section 15.1(e), if during the Term with
respect to a Property a Casualty occurs with respect to such
Property or Lessee receives notice of a Condemnation with
respect to such Property, and following such Casualty or
Condemnation, Lessee is unable to use the remaining applicable
Property in substantially the same manner as the Property was
used prior to such Casualty or Condemnation and the applicable
Property cannot reasonably be restored, repaired or replaced
in a manner consistent with the requirements of this Lease by
the earlier to occur of the Expiration Date or the date nine (9)
months after the occurrence of such Casualty or Condemnation
(if such Casualty or Condemnation occurs during the Term), to
permit such use, then Lessee shall be required to exercise its
Purchase Option with respect to the applicable Property on the
next Payment Date (notwithstanding the limits on such exercise
contained in Section 20.1), and pay Lessor the Purchase Option
Price and any and all Rent then due and owing and all other
amounts then due and owing (including without limitation
amounts described in clause FIRST of Section 22.2); provided,
if any Lease Default or Lease Event of Default has occurred
and is continuing, Lessee shall also promptly (and in any event
within three (3) Business Days) pay Lessor any award,
compensation or insurance proceeds received on account of any
Casualty or Condemnation with respect to any Property.
Provided that no Lease Default or Lease Event of Default has
occurred and is continuing, any Excess Proceeds shall be paid
to Lessee. If a Lease Default has occurred and is continuing
and any Loans, Holder Advance or other amounts are owing with
respect thereto, then any Excess Proceeds (to the extent of
any such Loans, Holder
<PAGE>17
Advance or other amounts owing with respect thereto) shall be
paid to the Lessor.
15.2 Environmental Matters. Promptly upon Lessee's actual
knowledge of the presence of Hazardous Substances in any portion of
any Property or Properties in concentrations and conditions that
constitute an Environmental Violation and which, in the reasonable
opinion of Lessee, the cost to undertake any legally required
response, clean up, remedial or other action will or might result
in a cost to Lessee of more than $100,000, Lessee shall notify Lessor
in writing of such condition. In the event of any Environmental
Violation (regardless of whether notice thereof must be given),
Lessee shall, not later than thirty (30) days after Lessee has
actual knowledge of such Environmental Violation, either deliver to
Lessor a Termination Notice with respect to the applicable Property
or Properties pursuant to Section 16.1, if applicable, or, at
Lessee's sole cost and expense, promptly and diligently commence
any response, clean up, remedial or other action (including the
pursuit by Lessee of appropriate action against any off-site or third
party source for contamination, as appropriate) necessary to remove,
cleanup or remediate the Environmental Violation in accordance with
all Environmental Laws. If Lessee does not deliver a Termination
Notice with respect to such Property pursuant to Section 16.1,
Lessee shall, upon completion of remedial action by Lessee, cause
to be prepared by a reputable environmental consultant acceptable to
Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such
Environmental Violation, and a statement by the consultant that the
Environmental Violation has been remedied in full compliance with
applicable Environmental Law. Not less than sixty (60) days prior
to any time that Lessee elects to cease operations with respect to
any Property in excess of that permitted by Section 8.2(a) hereof
or to remarket any Property pursuant to Section 20.2 hereof or any
other provision of any Operative Agreement, Lessee shall deliver a
Phase I environmental survey respecting such Property satisfactory
in form and substance to the Lessor.
15.3 Notice of Environmental Matters. Promptly, but in any
event within five (5) Business Days from the date Lessee has actual
knowledge thereof, Lessee shall provide to Lessor written notice of
any material pending or threatened claim, action or proceeding
involving any Environmental Law or any Release on or in connection
with any Property or Properties. All such notices shall describe
in reasonable detail the nature of the claim, action or proceeding
and Lessee's proposed response thereto. In addition, Lessee shall
provide to Lessor, within ten (10) Business Days of receipt, copies
of all material written communications with any Governmental
Authority relating to any Environmental Law in connection with any
Property. Lessee shall also promptly provide such detailed reports
of any such material environmental claims as may reasonably be
requested by Lessor.
<PAGE>18
ARTICLE XVI
16.1 Termination Upon Certain Events. If any of the following
occur: (i) Lessee has delivered a notice pursuant to Section
15.1(d) that following the applicable Casualty or Condemnation this
Lease shall terminate with respect to the affected Property, or
(ii) Lessee has delivered notice pursuant to the second sentence of
Section 15.2 that, due to the occurrence of an Environmental
Violation, this Lease shall terminate with respect to the affected
Property, then Lessee shall be obligated to deliver, within thirty
(30) days of its receipt of notice of the applicable Condemnation
or the occurrence of the applicable Casualty or Environmental
Violation, a written notice to the Lessor in the form described in
Section 16.2(a) (a "Termination Notice") of the termination of this
Lease with respect to the applicable Property.
16.2 Procedures.
(a) A Termination Notice shall contain: (i) notice of
termination of this Lease with respect to the affected
Property on a Payment Date not more than sixty (60) days after
Lessor's receipt of such Termination Notice (the "Termination Date");
and (ii) a binding and irrevocable agreement of Lessee to pay
the Termination Value for the applicable Property, any and all
Rent then due and owing and all other amounts then due and
owing (including without limitation amounts described in
clause FIRST of Section 22.2) and purchase such Property on such
Termination Date.
(b) On each Termination Date, Lessee shall pay to Lessor
the Termination Value for the applicable Property, any and all
Rent then due and owing and all other amounts then due and
owing (including without limitation amounts described in
clause FIRST of Section 22.2) theretofore accruing, and Lessor shall
convey such Property or the remaining portion thereof, if any,
to Lessee (or Lessee's designee), all in accordance with
Section 19.1, as well as any Net Proceeds with respect to the
Casualty or Condemnation giving rise to the termination of
this Lease with respect to such Property theretofore received by
Lessor; provided, that if a Lease Event of Default shall have
occurred and be continuing and any Loans or Holder Advance are
owing with respect thereto or under this Lease, then any
Excess Proceeds shall be paid to Lessor.
ARTICLE XVII
17.1 Lease Events of Default. If any one or more of the
following events (each a "Lease Event of Default") shall occur:
(a) Lessee shall fail to make payment of (i) any Basic
Rent (except as set forth in clause (ii)) within five (5) days
after the same has become due and payable or (ii) any
<PAGE>19
Purchase Option Price or Termination Value, on the date any
such payment is due, or any payment of Basic Rent or
Supplemental Rent due on the due date of any such payment of
Purchase Option Price or Termination Value, or any amount due
on the Expiration Date;
(b) Lessee shall fail to make payment of any
Supplemental Rent (other than Supplemental Rent referred to in Section
17.1(a) (ii)) due and payable within ten (10) Business Days
after receipt of notice thereof;
(c) Lessee shall fail to maintain insurance as required
by Article XIV of this Lease and such failure shall remain
uncured for a period of thirty (30) days after receipt of
written notice thereof;
(d) Lessee shall fail to observe or perform any term,
covenant or condition of Lessee under this Lease or any other
Operative Agreement to which Lessee is a party other than
those set forth in Sections 17.1(a), (b), (c) or (g) hereof, or any
representation or warranty made by Lessee set forth in this
Lease or in any other Operative Agreement or in any document
entered into in connection herewith or therewith or in any
document, certificate or financial or other statement
delivered in connection herewith or therewith shall be false or
inaccurate in any material way, and if such failure or
misrepresentation or breach of warranty is capable of being
cured, it shall remain uncured for a period of thirty (30)
days after receipt of written notice from Lessor thereof;
provided, if such failure or misrepresentation or breach of warranty is
capable of being cured but cannot be cured within such
thirty-day period, so long as Lessee is diligently pursuing
such cure, Lessee shall have an additional period, not
exceeding 60 days, within which to effect such cure;
(e) an Agency Agreement Event of Default shall have
occurred and be continuing;
(f) a failure by Lessee to pay any Imposition, in whole
or in part, or to observe any Legal Requirement, regarding any
Property imposed by any governmental entity or agency
thereunder, subject to Lessee's rights relating to permitted
contests under Section 13.1 and if such failure is capable of
being cured, it remains uncured for a period of thirty (30)
days after receipt of written notice from Lessor thereof;
provided, if such a failure is capable of being cured but
cannot be cured within such thirty-day period, so long as
Lessee is diligently pursuing such cure, Lessee shall have an
additional period, not exceeding 60 days, within which to
effect such cure;
(g) Lessee shall fail to observe or perform any term,
covenant or condition incorporated by reference herein
pursuant to Article XXVIII hereof and such failure shall
<PAGE>20
remain uncured for a period of thirty (30) days (or such
shorter or longer cure period subsequently available under the
1994 Credit Agreement with respect to an event of default
thereunder regarding the Incorporated Covenants) after receipt
of written notice from Lessor thereof;
(h) Any default shall occur under the terms applicable
to any Debt of Lessee or any Subsidiary of Lessee in an
aggregate amount (for all Debt so affected) exceeding $5,000,000 and
such default shall (a) consist of the failure to pay such Debt
when due (subject to any applicable grace period), whether by
acceleration or otherwise, or (b) accelerate the maturity of
such Debt or permit the holder or holders thereof, or any
trustee or agent for such holder or holders, to cause such
Debt to become due and payable prior to its expressed maturity;
(i) Any default shall occur in the payment when due of
any obligation of $5,000,000 or more of Lessee or any
Subsidiary of Lessee with respect to any material purchase or
lease of goods or services (except only to the extent that the
existence of any such default is being contested by Lessee or
such Subsidiary in good faith and by appropriate proceedings
and appropriate reserves have been made in respect of such
default), and continuance of such default for 30 days after
notice thereof from the Lessor;
(j) Lessee or any Material Subsidiary becomes insolvent
or generally fails to pay, or admits in writing its inability
or refusal to pay, debts as they become due; or Lessee or any
Material Subsidiary applies for, consents to, or acquiesces in
the appointment of a trustee, receiver or other custodian for
Lessee or such Material Subsidiary or any property thereof, or
makes a general assignment for the benefit of creditors; or,
in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for Lessee
or any Material Subsidiary or for a substantial part of any
property of Lessee or any Material Subsidiary and is not
discharged within 60 days; or any bankruptcy, reorganization,
debt arrangement, or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution or
liquidation proceeding, is commenced in respect of Lessee or any Material
Subsidiary, and if such case or proceeding is not commenced by
Lessee or such Material Subsidiary, it is consented to or
acquiesced in by Lessee or such Material Subsidiary, or
remains for 60 days undismissed; or Lessee or any Material Subsidiary
takes any corporate action to authorize, or in furtherance of,
any of the foregoing;
(k) (i) Institution of any steps by Lessee or any other
Person to terminate a Pension Plan if as a result of such
termination Lessee could be required to make a contribution to
such Pension Plan, or could incur a liability or obligation to
such Pension Plan, in excess of
<PAGE>21
$5,000,000, or (ii) a contribution failure occurs with respect
to any Pension Plan sufficient to give rise to a Lien under
Section 302(f) of ERISA;
(l) Lessee or any ERISA Affiliate shall make a complete
or partial withdrawal from a Multiemployer Plan and the plan
sponsor or such Multiemployer Plan shall notify such
withdrawing employer that such employer has incurred a
withdrawal liability in an annual amount exceeding $5,000,000,
unless and only for as long as such liability shall be
contested in good faith and such reserve or other appropriate
provision, if any, as shall be required by GAAP shall have
been made therefor;
(m) Any money judgment, writ or warrant or attachment or
similar process involving in any case a final judgment in an
amount in excess of $5,000,000 shall be entered or filed
against Lessee or any Material Subsidiary or any of their
respective assets and shall remain unsatisfied, undischarged,
unvacated, unbonded or unstayed for a period of 60 days or in
any event later than five days prior to the date of any
proposed sale thereunder;
(n) Any Change in Control shall occur; or
(o) Any Operative Agreement to which Lessee or the
Construction Agent is a party shall cease to be enforceable
(other than in accordance with its terms) against such party
or such party shall claim in writing that such is the case.
then, in any such event, (i) all Construction Period Properties
shall automatically become Properties that are subject to the terms
of this Lease as more specifically provided in Section 2.2 and
thereafter all references hereunder to "Property" or "Properties"
and all obligations of the Lessee with respect to the Properties
(including specifically without limitation the obligations of the
Lessee contained in this Article XVII) shall be deemed to include
such Construction Period Properties, and (ii) Lessor may, in
addition to the other rights and remedies provided for in this
Article XVII and in Section 18.1, terminate this Lease by giving
Lessee five (5) days notice of such termination (provided that such
Event of Default is continuing at the end of such five-day period),
and this Lease shall terminate, and all rights of Lessee under this
Lease shall cease. Lessee shall, to the fullest extent permitted
by law, pay as Supplemental Rent all costs and expenses incurred by
or on behalf of Lessor, including without limitation reasonable fees
and expenses of counsel, as a result of any Lease Event of Default
hereunder. As used in this Lease, a "notice" of a Lease Default or
a Lease Event of Default shall mean a written notice to Lessee
pursuant to Section 29.1, which specifies (i) the Lease Default or
the Lease Event of Default and (ii) that it is intended as a notice
of a Lease Default or a Lease Event of Default.
<PAGE>22
17.2 Surrender of Possession. If a Lease Event of Default
shall have occurred and be continuing, and whether or not this
Lease shall have been terminated pursuant to Section 17.1, Lessee shall,
upon thirty (30) days written notice, surrender to Lessor
possession of the Properties. Lessor may enter upon and repossess the
Properties by such means as are available at law or in equity, and
may remove Lessee and all other Persons and any and all personal
property and Lessee's equipment and personalty and severable
Modifications from the Properties. Lessor shall have no liability
by reason of any such entry, repossession or removal performed in
accordance with applicable law. Upon the written demand of Lessor,
Lessee shall return the Properties promptly to Lessor, in the
manner and condition required by, and otherwise in accordance with the
provisions of, Section 22.1(c) hereof.
17.3 Reletting. If a Lease Event of Default shall have
occurred and be continuing, and whether or not this Lease shall
have been terminated pursuant to Section 17.1, Lessor may, but shall be
under no obligation to, relet any or all of the Properties, for the
account of Lessee or otherwise, for such term or terms (which may
be greater or less than the period which would otherwise have
constituted the balance of the Term) and on such conditions (which
may include concessions or free rent) and for such purposes as
Lessor may determine, and Lessor may collect, receive and retain
the rents resulting from such reletting. Lessor shall not be liable
to Lessee for any failure to relet any Property or for any failure to
collect any rent due upon such reletting.
17.4 Damages. Neither (a) the termination of this Lease as to
all or any of the Properties pursuant to Section 17.1; (b) the
repossession of all or any of the Properties; nor (c) the failure
of Lessor to relet all or any of the Properties, the reletting of all
or any portion thereof, nor the failure of Lessor to collect or
receive any rentals due upon any such reletting, shall relieve
Lessee of its liabilities and obligations hereunder, all of which
shall survive any such termination, repossession or reletting.
If any Lease Event of Default shall have occurred and be continuing
and notwithstanding any termination of this Lease pursuant to
Section 17.1, Lessee shall forthwith pay to Lessor all Rent and
other sums due and payable hereunder to and including the date of
such termination. Thereafter, on the days on which the Basic Rent
or Supplemental Rent, as applicable, are payable under this Lease
or would have been payable under this Lease if the same had not been
terminated pursuant to Section 17.1 and until the end of the Term
hereof or what would have been the Term in the absence of such
termination, Lessee shall pay Lessor, as current liquidated damages
(it being agreed that it would be impossible accurately to
determine actual damages) an amount equal to the Basic Rent and Supplemental
Rent that are payable under this Lease or would have been payable
by Lessee hereunder if this Lease had not been terminated pursuant to
Section 17.1, less the net proceeds, if any, which are actually
received by Lessor with respect to the period in question of any
<PAGE>23
reletting of any Property or any portion thereof; provided that
Lessee's obligation to make payments of Basic Rent and Supplemental
Rent under this Section 17.4 shall continue only so long as Lessor
shall not have received the amounts specified in Section 17.6. In
calculating the amount of such net proceeds from reletting, there
shall be deducted all of Lessor's, the Holder's, the Agent's and
any Lenders' reasonable expenses in connection therewith, including
repossession costs, brokerage or sales commissions, fees and
expenses for counsel and any necessary repair or alteration costs
and expenses incurred in preparation for such reletting. To the
extent Lessor receives any damages pursuant to this Section 17.4,
such amounts shall be regarded as amounts paid on account of Rent.
17.5 Power of Sale. Without limiting any other remedies set
forth in this Lease, in the event that a court of competent
jurisdiction rules that this Lease constitutes a mortgage, deed of
trust or other secured financing as is the intent of the parties,
then the Lessor and the Lessee agree that the Lessee has granted,
pursuant to Section 7.1(b) hereof and each Lease Supplement, a Lien
against the Properties WITH POWER OF SALE, and that, upon the
occurrence and during the continuance of any Lease Event of
Default, the Lessor shall have the power and authority, to the extent
provided by law, after prior notice and lapse of such time as may
be required by law, to foreclose its interest (or cause such interest
to be foreclosed) in all or any part of the Properties.
17.6 Final Liquidated Damages. If a Lease Event of Default
shall have occurred and be continuing, whether or not this Lease
shall have been terminated pursuant to Section 17.1 and whether or
not Lessor shall have collected any current liquidated damages
pursuant to Section 17.4, Lessor shall have the right to recover,
by demand to Lessee and at Lessor's election, and Lessee shall pay to
Lessor, as and for final liquidated damages, but exclusive of the
indemnities payable under Section 13 of the Participation
Agreement, and in lieu of all current liquidated damages beyond the date of
such demand (it being agreed that it would be impossible accurately
to determine actual damages) the sum of (a) the Termination Value
for all Properties remaining under this Lease, plus (b) all other
amounts owing in respect of Rent and Supplemental Rent theretofore
accruing under this Lease. Upon payment of the amount specified
pursuant to the first sentence of this Section 17.6, Lessee shall
be entitled to receive from Lessor, either at Lessee's request or
upon Lessor's election, in either case at Lessee's cost, a transfer and
assignment of Lessor's entire right, title and interest in and to
the Properties, the Improvements, Fixtures, Modifications and
Equipment. To effect such transfer and assignment, Lessor shall
execute, acknowledge (where required) and deliver to Lessee each of
the following: (i) a special or limited warranty Deed conveying
the Property (to the extent it is real property) to Lessee free and
clear of the Lien of this Lease, the Lien of the Credit Documents
and any Lessor Liens; (ii) a Bill of Sale conveying the Property
(to the extent it is personal property) to
<PAGE>24
Lessee free and clear of the Lien of this Lease, the Lien of the
Credit Documents and any Lessor Liens; (iii) any real estate tax
affidavit or other document required by law to be executed and
filed in order to record the Deed; and (iv) a FIRPTA affidavit. Subject
to the foregoing, the Properties shall be conveyed to Lessee (or
Lessee's designee) "AS IS" and in their then present physical
condition. If any statute or rule of law shall limit the amount of
such final liquidated damages to less than the amount agreed upon,
Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law; provided, however, Lessee shall not be
entitled to receive an assignment of Lessor's interest in the
Properties, the Improvements, Fixtures, Modifications or Equipment
or documents unless Lessee shall have paid in full the Termination
Value and all other amounts due and owing hereunder and under the
other Operative Agreements.
17.7 Lessee's Purchase Option During Default. If Lessee
exercises its Purchase Option in accordance with Section 20.1 with
respect to a Property while a Lease Default or Lease Event of
Default is continuing, the exercise of such Purchase Option shall
be deemed to have cured such Lease Default or Lease Event of Default
to the extent such Lease Default or Lease Event of Default is no
longer continuing with respect to any other Property remaining
subject to this Lease after the exercise of the Purchase Option.
17.8 Waiver of Certain Rights. If this Lease shall be
terminated pursuant to Section 17.1, Lessee waives, to the fullest
extent permitted by law, (a) any notice of re-entry or the
institution of legal proceedings to obtain re-entry or possession;
(b) any right of redemption, re-entry or possession; (c) the
benefit of any laws now or hereafter in force exempting property from
liability for rent or for debt; and (d) any other rights which
might otherwise limit or modify any of Lessor's rights or remedies under
this Article XVII.
17.9 Assignment of Rights Under Contracts. If a Lease Event
of Default shall have occurred and be continuing, and whether or not
this Lease shall have been terminated pursuant to Section 17.1,
Lessee shall upon Lessor's demand immediately assign, transfer and
set over to Lessor all of Lessee's right, title and interest in and
to each agreement executed by Lessee in connection with the
purchase, construction, development, use or operation of the
Properties (including, without limitation, all right, title and
interest of Lessee with respect to all warranty, performance,
service and indemnity provisions), as and to the extent that the
same relate to the purchase, construction, use and operation of the
Properties.
17.10 Remedies Cumulative. The remedies herein provided shall
be cumulative and in addition to (and not in limitation of) any
other remedies available at law, equity or otherwise, including,
without limitation, any mortgage foreclosure remedies.
<PAGE>25
ARTICLE XVIII
18.1 Lessor's Right to Cure Lessee's Lease Defaults.
Lessor, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to) remedy any Lease
Event of Default for the account and at the sole cost and expense
of Lessee, including the failure by Lessee to maintain the
insurance required by Article XIV, and may, to the fullest extent
permitted by law, and notwithstanding any right of quiet enjoyment
in favor of Lessee, enter upon any Property, or real property owned
or leased by Lessee and take all such action thereon as may be
necessary or appropriate therefor. No such entry shall be deemed
an eviction of any lessee. All reasonable out-of-pocket costs and
expenses so incurred (including without limitation reasonable fees
and expenses of counsel), together with interest thereon at the
Overdue Rate from the date on which such sums or expenses are paid
by Lessor, shall be paid by Lessee to Lessor on demand.
ARTICLE XIX
19.1 Provisions Relating to Lessee's Exercise of its Purchase
Option. Subject to Section 19.2, in connection with any
termination of this Lease with respect to any Property pursuant to the terms
of Section 16.2, or in connection with Lessee's exercise of its
Purchase Option or Expiration Date Purchase Option, upon the date
on which this Lease is to terminate with respect to the applicable
Property or upon the Expiration Date with respect to the applicable
Property, and upon tender by Lessee of the amounts set forth in
Sections 16.2(b), 20.1 or 20.2, as applicable, Lessor shall execute
and deliver to Lessee (or to Lessee's designee) at Lessee's cost
and expense an assignment and transfer of Lessor's entire interest in
the applicable Property (which shall include an assignment of all
of Lessor's right, title and interest in and to any Net Proceeds not
previously received by Lessor). To effect such transfer and
assignment, Lessor shall execute, acknowledge (where required) and
deliver to Lessee each of the following: (i) a special or limited
warranty Deed conveying the Property (to the extent it is real
property) to Lessee free and clear of the Lien of this Lease, the
Lien of the Credit Documents and any Lessor Liens; (ii) a Bill of
Sale conveying the Property (to the extent it is personal property)
to Lessee free and clear of the Lien of this Lease, the Lien of the
Credit Documents and any Lessor Liens; (iii) any real estate tax
affidavit or other document required by law to be executed and
filed in order to record the Deed; and (iv) a FIRPTA affidavit. Subject
to the foregoing, the applicable Property shall be conveyed to
Lessee "AS IS" "WHERE IS" and in then present physical condition.
19.2 No Termination With Respect to Less than All of a
Property. Lessee shall not be entitled to exercise its Purchase
Option separately with respect to portions of a Property consisting
of Land, Equipment and Improvements but shall be
<PAGE>26
required to exercise its Purchase Option with respect to such
entire Property.
ARTICLE XX
20.1 Purchase Options. Provided that no Lease Default of the
types specified in Sections 17.1(a), (b) or (j) or Lease Event of
Default shall have occurred and be continuing (unless such Lease
Event of Default involves a single Property and can be cured by the
exercise of the option to purchase by Lessee of such Property and
such Property is referenced in the Purchase Notice (referenced
below)), and subject to Section 19.2, Lessee shall have the option
(the "Purchase Option), exercisable by giving Lessor no less than
sixty (60) days irrevocable written notice (the "Purchase Notice")
of Lessee's election to exercise such option as to any Property, on
any anniversary of the Basic Term Commencement Date for such
Property (or if all Properties are to be acquired on any such
anniversary), to purchase all or one or more Properties on such
date specified in such Purchase Notice at a price equal to the
Termination Value for such Property or Properties (which the
parties do not intend to be a "bargain" purchase price), and Lessee at
such time shall also pay any and all Rent then due and owing and all
other amounts then due and owing (including without limitation
amounts, if any, described in clause FIRST of Section 22.2) (such
Termination Value, Rent and other amounts being hereafter referred
to as the "Purchase Option Price"); provided, however, that unless
the Lessor otherwise consents or the Purchase Option is exercised
after the Construction Period Termination Date with respect to all
of the Properties, the Purchase Option may not be exercised by the
Lessee if, after giving effect to such exercise, the Maximum
Property Cost of the purchased Properties (together with all other
Properties purchased by Lessee pursuant to this Section 20.1) would
be greater than 35% of the greatest Maximum Property Cost
applicable at any time during the Term. If Lessee exercises its Purchase
Option pursuant to this Section 20.1, Lessor shall transfer to
Lessee all of Lessor's right, title and interest in and to such
Property as of the date specified in the Purchase Notice upon
receipt of the Purchase Option Price, amounts, if any, referred to
in clause FIRST of Section 22.2 and all Rent and other amounts then
due and payable under this Lease and any other Operative Agreement.
To effect any transfer and assignment by Lessor to Lessee under
this Section 20.1, Lessor shall execute, acknowledge (where
required) and deliver to Lessee each of the following: (i) a
special or limited warranty Deed conveying the Property (to the
extent it is real property) to Lessee free and clear of the Lien of
this Lease, the Lien of the Credit Documents and any Lessor Liens;
(ii) a Bill of Sale conveying the Property (to the extent it is
personal property) to Lessee free and clear of the Lien of this
Lease, the Lien of the Credit Documents and any Lessor Liens;
(iii) any real estate tax affidavit or other document required by law to
be executed and filed in order to record the Deed; and (iv) a
FIRPTA affidavit. For purposes of this Lease and the other
Operative Agreements, any and all
<PAGE>27
amounts paid by Lessee pursuant to the provisions of Section
10.3(f) of the Participation Agreement shall be deemed to be amounts paid
and received pursuant to this Section 20.1. Lessee may assign its
rights under this Section 20.1 to another Person; provided, Lessee
shall remain liable for all obligations of Lessee hereunder
respecting Property remaining subject to the terms of this Lease
subsequent to such assignment as if such assignment had not
occurred.
20.2 Expiration Date Purchase or Sale Option. Not less than
90 days and no more than 180 days prior to the Expiration Date,
Lessee may give Lessor and Agent written notice (the "Expiration Date
Election Notice") that Lessee is electing to exercise the
Expiration Date Purchase Option or the option of Lessee to remarket and sell
the Properties pursuant to Section 22.1. If Lessee does not give
an Expiration Date Election Notice at least 90 days and not more than
180 days prior to the then current Expiration Date, then Lessee
shall be obligated to repurchase the Properties pursuant to Section
20.1. If any Property is the subject of remediation efforts
respecting Hazardous Substances at the Expiration Date which could
materially and adversely impact the Fair Market Sales Value of such
Property, then Lessee shall be obligated to repurchase each such
Property pursuant to Section 20.1. Prior to the Expiration Date,
Lessee may rescind its election to remarket the Properties pursuant
to Section 22.1 and elect instead the Expiration Date Purchase
Option. If Lessee shall either (i) elect, or be deemed to have
elected, to exercise the Expiration Date Purchase Option or (ii)
elect to remarket the Properties pursuant to Section 22.1 and fail
to cause all of the Properties to be sold on the Expiration Date in
accordance with the terms of Sections 20.1 or 22.1, respectively,
then in either case, on the Expiration Date Lessee shall pay to
Lessor an amount equal to the Termination Value for all the
Properties (which the parties do not intend to be a "bargain"
purchase) and, upon receipt of such amount plus all Rent and other
amounts then due and payable under this Lease and under any other
Operative Agreement (including without limitation the amounts
described in clause FIRST of Section 22.2), Lessor shall transfer
to Lessee all of Lessor's right, title and interest in and to the
Properties in accordance with Section 19.1.
20.3 Lessor's Transfer Option. If, on the Construction Period
Termination Date, there are fewer than four (4) Properties then
subject to the terms of this Lease, then Lessor shall have the
option to give Lessee irrevocable written notice that Lessor, on a
Payment Date that is not less than thirty (30) days after the date
of such written notice, shall transfer and convey all of its right,
title and interest in and to any or all of the Properties to
Lessee. On any transfer and conveyance date specified by Lessor
pursuant to this Section 20.3, (i) Lessor shall transfer and convey
all of its right, title and interest in and to any or all of the
Properties previously specified to Lessee, (ii) Lessee shall accept
such transfer and conveyance of right, title and interest in and to
the respective Property or Properties and (iii) Lessee shall pay
the Termination Value for
<PAGE>28
such respective Property or Properties and all Rent and other
amounts then due and payable under this Lease and under any other
Operative Agreement (including without limitation all costs and
expenses referred to in clause FIRST of Section 22.2), in
accordance with Section 19.1.
ARTICLE XXI
21.1 Renewal. Provided that no Lease Event of Default shall
have occurred and be continuing and provided that the Lenders agree
at such time to extend the Maturity Date to a date that is
identical to the final day of the Extended Term, at the Basic Term
Expiration Date, Lessee may renew this Lease (the "Renewal Option") for the
Extended Term upon not more than 180 days and not less than 90 days
prior written notice to Lessor, with respect to all Property, other
than Property which Lessee shall have elected to purchase pursuant
to Section 20.1. Unless otherwise agreed, any such renewal of this
Lease for the Extended Term shall be on the same terms and
conditions as set forth in this Lease for the original Term (which
the parties do not intend to be a "bargain" renewal), subject in
any case to renegotiation of the rental rate applicable during the
Extended Term.
ARTICLE XXII
22.1 Sale Procedure.
(a) During the Marketing Period, Lessee, on behalf of
any assignee of Lessee pursuant to Section 25.1 or the Lessor,
shall obtain bids for the cash purchase of all of the
Properties in connection with a sale to one or more purchasers
to be consummated on the Expiration Date for the highest price
available (subject to the proviso in the next sentence), shall
notify Lessor promptly of the name and address of each
prospective purchaser and the cash price which each
prospective purchaser shall have offered to pay for any Property and
shall provide Lessor with such additional information about the
bids and the bid solicitation procedure as Lessor may reasonably
request from time to time. Lessor may reject any and all bids
and may assume sole responsibility for obtaining bids by
giving Lessee written notice to that effect; provided, however, that
notwithstanding the foregoing, Lessor may not reject the bids
for the Properties submitted by the Lessee if such bids, in
the aggregate, are greater than or equal to the sum of the
Limited Recourse Amount for all of the Properties, plus all amounts,
if any, referred to in clause FIRST of Section 22.2 and
represent bona fide offers from one or more third party
purchasers. If the price which a prospective purchaser or
purchasers shall have offered to pay for the Properties is
less than the sum of the Limited Recourse Amount plus all
costs and expenses referred to in clause FIRST of Section
22.2, Lessor may elect to retain all the
<PAGE>29
Properties by giving Lessee prior written notice of Lessor's
election to retain the Properties, and upon receipt of such
notice, Lessee shall surrender, or cause to be surrendered,
the Properties to Lessor pursuant to Section 10.1. Unless Lessor
shall have elected to retain the Properties pursuant to the
preceding sentence, Lessee shall arrange for Lessor to sell
the Properties, for cash on the Expiration Date to the purchaser
or purchasers identified by Lessee or Lessor, as the case may
be. To effect such transfer and assignment, Lessor shall
execute, acknowledge (where required) and deliver to Lessee
each of the following: (i) a special or limited warranty Deed
conveying the Property (to the extent it is real property) to
Lessee free and clear of the Lien of this Lease, the Lien of
the Credit Documents and any Lessor Liens; (ii) a Bill of Sale
conveying the Property (to the extent it is personal property)
to Lessee free and clear of the Lien of this Lease, the Lien
of the Credit Documents and any Lessor Liens; (iii) any real
estate tax affidavit or other document required by law to be
executed and filed in order to record the Deed; and (iv) a
FIRPTA affidavit. Lessee shall surrender, or cause to be
surrendered, the Property so sold or subject to such documents
to each purchaser in the condition specified in Section 10.1.
Neither party shall take any action or fail to take any action
(where action is required under the Operative Agreements)
which would have the effect of discouraging bona fide third
party bids for any Property. If all of the Properties are not
either (i) sold on the Expiration Date in accordance with the
terms of this Section 22.1, or (ii) retained by the Lessor
pursuant to an affirmative election made by the Lessor
pursuant to the third sentence of this Section 22.1(a), then
the Lessee shall be obligated to pay the Lessor on the
Expiration Date an amount equal to the Termination Value for
all of the Properties (plus all Rent and other amounts then
due and payable under this Lease and any other Operative
Agreements) in accordance with the terms of Section 20.2.
(b) If the Properties are sold on the Expiration Date to
one or more third party purchasers in accordance with the
terms of Section 22.1(a) and the aggregate purchase price paid for
the Properties minus the sum of all amounts, if any, referred
to in clause FIRST of Section 22.2 is less than the sum of the
aggregate Termination Values for all of the Properties plus
all Rent and other amounts then due and payable under this Lease
and under any other Operative Agreements (hereinafter such
difference shall be referred to as the "Deficiency Balance"),
then the Lessee hereby unconditionally promises to pay to the
Lessor on the Expiration Date the lesser of (i) the Deficiency
Balance, or (ii) the Maximum Residual Guarantee Amount for all
of the Properties. If the Properties are retained by the
Lessor pursuant to an affirmative election made by the Lessor
pursuant to the third sentence of Section 22.1(a), then the
Lessee hereby unconditionally promises to pay to the Lessor
<PAGE>30
on the Expiration Date an amount equal to the aggregate
Maximum Residual Guaranty Amounts for all of the Properties.
(c) In the event the Properties are either sold to a
third party purchaser on the Expiration Date or retained by
the Lessor in connection with an affirmative election by the
Lessor pursuant to the third sentence of Section 22.1(a), then
in either case on the Expiration Date the Lessee shall
provide, or cause to be provided, Lessor or such third party
purchaser, with (i) all permits, certificates of occupancy,
governmental licenses and authorizations (to the extent such
licenses or authorizations are transferable) necessary to use
and operate such Property for its intended purposes, (ii) such
easements, licenses, rights-of-way and other rights and
privileges in the nature of an easement as are reasonably
necessary or desirable in connection with the use, repair,
access to or maintenance of such Property for its intended
purpose or otherwise as the Lessor shall reasonably request,
and (iii) a services agreement covering such services as
Lessor or such third party purchaser may request in order to
use and operate the Property for its intended purposes at such
rates (not in excess of arm's- length fair market rates) as
shall be acceptable to Lessee and Lessor or such third party
purchaser. All assignments, licenses, easements, agreements
and other deliveries required by clauses (i) and (ii) of this
paragraph (c) shall be in form satisfactory to the Lessor or
such third party purchaser, as applicable, and shall be fully
assignable (including both primary assignments and assignments
given in the nature of security) without payment of any fee,
cost or other charge.
22.2 Application of Proceeds of Sale. The Lessor shall apply
the proceeds of sale of any Property in the following order of
priority:
(i) FIRST, to pay or to reimburse Lessor for the
payment of all reasonable costs and expenses, if any, incurred
by Lessor in connection with the sale;
(ii) SECOND, so long as the Credit Agreement is in
effect and the Holder Advance or any amount is owing to the
Holder under any Operative Agreement, to the Agent to be
applied pursuant to inter-creditor provisions between the
Lenders and the Holder contained in Section 8 of the Credit
Agreement and any other applicable provisions of the Operative
Agreements; and
(iii) THIRD, to the Lessee.
22.3 (intentionally omitted).
22.4 (intentionally omitted).
<PAGE>31
22.5 Certain Obligations Continue. During the Marketing
Period, the obligation of Lessee to pay Rent with respect to the
Properties (including the installment of Basic Rent due on the
Expiration Date) shall continue undiminished until payment in full
to Lessor of the sale proceeds, if any, the Maximum Residual
Guarantee Amount and all other amounts due to Lessor with respect
to all Properties. Lessor shall have the right, but shall be under
no duty, to solicit bids, to inquire into the efforts of Lessee to
obtain bids or otherwise to take action in connection with any such
sale, other than as expressly provided in this Article XXII.
22.6 Sale of Undeveloped Pads. Provided that no Lease Default
or Lease Event of Default shall have occurred and be continuing,
Lessee shall have the option, exercisable by giving Lessor no less
than thirty (30) days written notice of Lessee's election to
transfer and convey any undeveloped Land (excluding any de minimis
site improvements) regarding any Property on the following terms
and conditions: (a) the Person to whom the transfer and conveyance is
made shall not be an Affiliate of Lessee; (b) the purchase price
for such Land shall be equal to or greater than the Fair Market Sales
Value thereof and shall be promptly paid to Lessor (and in any
event within three (3) Business Days after such transfer and
conveyance); (c) the applicable Property, excluding such Land transferred and
conveyed therefrom, shall (on and after the date of such transfer
and conveyance) satisfy all of the terms and conditions of the
Operative Agreements and (d) all Rent and other amounts due and
payable by Lessee under any Operative Agreement shall be paid on or
prior to the date of such transfer and conveyance.
ARTICLE XXIII
23.1 Holding Over. If Lessee shall for any reason remain in
possession of a Property after the expiration or earlier
termination of this Lease as to such Property (unless such Property is
conveyed to Lessee), such possession shall be as a tenancy at sufferance
during which time Lessee shall continue to pay Supplemental Rent
that would be payable by Lessee hereunder were the Lease then in
full force and effect with respect to the Property and Lessee shall
continue to pay Basic Rent at 110% of the Basic Rent that would
otherwise be due and payable at such time. Such Basic Rent shall
be payable from time to time upon demand by Lessor and such
additional 10% amount shall be applied by the Lessor to the payment of the
Loans pursuant to the Credit Agreement and the Holder Advance
pursuant to the Trust Agreement pro rata between the Loans and the
Holder Advance. During any period of tenancy at sufferance, Lessee
shall, subject to the second preceding sentence, be obligated to
perform and observe all of the terms, covenants and conditions of
this Lease, but shall have no rights hereunder other than the
right, to the extent given by law to tenants at sufferance, to continue
their occupancy and use of such Property. Nothing contained in
this Article XXIII shall constitute the consent, express or implied,
<PAGE>32
of Lessor to the holding over of Lessee after the expiration or
earlier termination of this Lease as to any Property (unless such
Property is conveyed to Lessee) and nothing contained herein shall
be read or construed as preventing Lessor from maintaining a suit
for possession of such Property or exercising any other remedy
available to Lessor at law or in equity.
ARTICLE XXIV
24.1 Risk of Loss. During the Term, unless Lessee shall not
be in actual possession of the Property in question solely by reason
of Lessor's exercise of its remedies of dispossession under Article
XVII, the risk of loss or decrease in the enjoyment and beneficial
use of such Property as a result of the damage or destruction
thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be
answerable or accountable therefor.
ARTICLE XXV
25.1 Assignment.
(a) Without the consent of the Lessor, Lessee may
assign, subject to Section 25.1(b), this Lease and its rights
hereunder in whole or in part to any Person provided the
aggregate Property Cost of all such Properties under
assignment, at the time such assignment becomes effective,
does not exceed 25% of the aggregate Property Cost of all
Properties then subject to this Lease. Lessee may not assign
this Lease or its rights hereunder in whole or in part in
addition to that referenced in the preceding sentence without
first obtaining the prior written consent of the Lessor. Each
assignment hereunder shall be made in the normal course of
Lessee's business, on commercially reasonable terms and at
market rates.
(b) No such assignment or other relinquishment of
possession to any Property shall in any way discharge or
diminish any of the obligations of Lessee to Lessor hereunder
and Lessee shall remain directly and primarily liable under
this Lease as to any assignment regarding this Lease.
25.2 Subleases.
(a) Without the consent of the Lessor, Lessee may
sublet, subject to Section 25.2(c), any Property or portion thereof
to (i) any wholly-owned Subsidiary of Lessee or (ii) any Person
(which is not a wholly-owned Subsidiary of Lessee) provided
the aggregate Property Cost of all such Properties under sublease
to Persons (which are not wholly- owned Subsidiaries of
Lessee), at the time such sublease becomes effective, does not
exceed 25% of the aggregate
<PAGE>33
Property Cost of all Properties then subject to this Lease.
Lessee may not sublet any Property or portion thereof in
addition to that referenced in the preceding sentence without
first obtaining the prior written consent of the Lessor. Each
sublease hereunder shall be made in the normal course of
Lessee's business, on commercially reasonable terms and at
market rates. Each sublease may be for a term less than,
equal to or greater than the Term, as extended from time to time.
(b) Promptly following the execution and delivery of any
sublease permitted by this Article XXV, Lessee shall notify
Lessor and the Agent of the execution of such sublease. As of
the date of each Lease Supplement, Lessee shall lease the
respective Properties described in such Lease Supplement from
Lessor, and any existing tenant respecting such Property shall
automatically be deemed to be a subtenant of Lessee and not a
tenant of Lessor.
(c) No such sublease or other relinquishment of
possession to any Property shall in any way discharge or
diminish any of Lessee's obligations to Lessor hereunder and
Lessee shall remain directly and primarily liable under this
Lease as to the Property, or portion thereof, so sublet.
ARTICLE XXVI
26.1 No Waiver. No failure by Lessor or Lessee to insist upon
the strict performance of any term hereof or to exercise any right,
power or remedy upon a default hereunder, and no acceptance of full
or partial payment of Rent during the continuance of any such
default, shall constitute a waiver of any such default or of any
such term. To the fullest extent permitted by law, no waiver of
any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then
existing or subsequent default.
ARTICLE XXVII
27.1 Acceptance of Surrender. No surrender to Lessor of this
Lease or of all or any portion of any Property or of any part of
any thereof or of any interest therein shall be valid or effective
unless agreed to and accepted in writing by Lessor and, prior to
the payment or performance of all obligations under the Credit
Documents, the Agent, and no act by Lessor or the Agent or any
representative or agent of Lessor or the Agent, other than a
written acceptance, shall constitute an acceptance of any such surrender.
27.2 No Merger of Title. There shall be no merger of this
Lease or of the leasehold estate created hereby by reason of the
fact that the same Person may acquire, own or hold, directly or
<PAGE>34
indirectly, in whole or in part, (a) this Lease or the leasehold
estate created hereby or any interest in this Lease or such
leasehold estate, (b) any right, title or interest in any Property,
(c) any Notes, or (d) a beneficial interest in Lessor.
ARTICLE XXVIII
28.1 Incorporation of Covenants. Reference is made to that
certain Credit Agreement dated as of June 30, 1994 (the "1994
Credit Agreement") among the Lessee, Continental Bank, as Agent, and the
other financial institutions party thereto. Further reference is
made to the covenants contained in Section 10 of the 1994 Credit
Agreement (hereinafter referred to as the "Incorporated
Covenants"). The Lessee agrees with the Lessor that the
Incorporated Covenants (and all other relevant provisions of the
Credit Agreement related thereto) are hereby incorporated by
reference into this Lease to the same extent and with the same
effect as if set forth fully herein, without giving effect to any
waiver, amendment, modification or replacement of the 1994 Credit
Agreement or any term or provision of the Incorporated Covenants
occurring subsequent to the date of this Lease, except to the
extent otherwise specifically provided in the following provisions
of this paragraph. In the event a waiver is granted under the 1994
Credit Agreement or an amendment or modification is executed with
respect to the 1994 Credit Agreement, and such waiver, amendment
and/or modification affects the Incorporated Covenants, then such
waiver, amendment or modification shall be effective with respect
to the Incorporated Covenants as incorporated by reference into
this Lease only if consented to in writing by the Lessor and the
Majority Lenders. In the event of any replacement of the 1994
Credit Agreement with a similar credit facility (the "New
Facility") the covenants contained in the New Facility which
correspond to the covenants contained in Section 10 of the 1994
Credit Agreement shall become the Incorporated Covenants hereunder
only if consented to in writing by the Lessor and the Majority
Lenders and, if such consent is not granted or if the 1994 Credit
Agreement is terminated and not replaced, then the covenants
contained in Section 10 of the 1994 Credit Agreement (together with
any modifications or amendments approved in accordance with this
paragraph) shall continue to be the Incorporated Covenants
hereunder.
ARTICLE XXIX
29.1 Notices. All notices required or permitted to be given
under this Lease shall be in writing. Notices may be served by
certified or registered mail, postage paid with return receipt
requested; by private courier, prepaid; by telex, facsimile, or
other telecommunication device capable of transmitting or creating
a written record; or personally. Mailed notices shall be deemed
delivered five days after mailing, properly addressed.
<PAGE>35
Couriered notices shall be deemed delivered when delivered as
addressed, or if the addressee refuses delivery, when presented for
delivery notwithstanding such refusal. Telex or telecommunicated
notices shall be deemed delivered when receipt is either confirmed
by confirming transmission equipment or acknowledged by the
addressee or its office. Personal delivery
shall be effective when accomplished. Unless a party changes its
address by giving notice to the other party as provided herein,
notices shall be delivered to the parties at the following
addresses:
If to Lessee:
Fred Meyer, Inc.
3800 S.E. 22nd Avenue
P.O. Box 42121
Portland, Oregon 97242
Attention: Michael H. Don,
Vice President
and Corporate Treasurer
Telephone: (503) 797-5300
Telecopier: (503) 797-5299
If to Lessor:
First Security Bank of Utah, N.A.
79 South Main Street
Salt Lake City, Utah 84111
Attention: Mr. Val T. Orton
Corporate Trust Counsel
Telephone: (801) 246-5300
Telecopy: (801) 246-5053
with a copy to the Agent:
NationsBank of Texas, N.A.
901 Main Street, 13th Floor
P.O. Box 831000
Dallas, Texas 75283-1000
Attention: Ms. Molly Oxford
Assistant Vice President
Telephone: (214) 508-3255
Telecopy: (214) 508-2515
or such additional parties and/or other address as such party may
hereafter designate, and shall be effective upon receipt or refusal
thereof.
ARTICLE XXX
30.1 Miscellaneous. Anything contained in this Lease to the
contrary notwithstanding, all claims against and liabilities of
Lessee or Lessor arising from events commencing prior to the
expiration or earlier termination of this Lease shall survive
<PAGE>36
such expiration or earlier termination. If any provision of this
Lease shall be held to be unenforceable in any jurisdiction, such
unenforceability shall not affect the enforceability of any other
provision of this Lease and such jurisdiction or of such provision
or of any other provision hereof in any other jurisdiction.
30.2 Amendments and Modifications. Neither this Lease, any
Lease Supplement nor any provision hereof may be amended, waived,
discharged or terminated except by an instrument in writing in
recordable form signed by Lessor and Lessee.
30.3 Successors and Assigns. All the terms and provisions of
this Lease shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
30.4 Headings and Table of Contents. The headings and table
of contents in this Lease are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.
30.5 Counterparts. This Lease may be executed in any number
of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same instrument.
30.6 GOVERNING LAW. THIS LEASE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.
30.7 Calculation of Rent. All calculation of Basic Rent
payable hereunder (to the extent computed with reference to the
Eurodollar Rate) shall be computed based on the actual number of
days elapsed over a year of 360 days.
30.8 Memoranda of Lease and Lease Supplements. This Lease
shall not be recorded; provided, Lessor and Lessee shall promptly
record (a) a memorandum of this Lease and the applicable Lease
Supplement (in substantially the form of Exhibit B-1 attached
hereto) regarding (i) each Improved Property promptly after the
acquisition thereof in the local filing office with respect thereto
and (ii) each Property which is not an Improved Property promptly
after the commencement of the Basic Term therefor in the local
filing office with respect thereto, and (b) a memorandum of this
Lease (in substantially the form of Exhibit B-2 attached hereto)
regarding each Property which is not an Improved Property promptly
after the acquisition thereof in the local filing office with
respect thereto, in all cases at Lessee's cost and expense, and as
required under applicable law to sufficiently evidence this Lease
or any such Lease Supplement in the applicable real estate filing
records.
30.9 Allocations between the Lenders and the Holder.
Notwithstanding any other term or provision of this Lease to the
contrary, the allocations of the proceeds of the Properties and any
and all other Rent and other amounts received hereunder shall be
subject to the inter-creditor provisions between the Lenders and
the Holder contained in the Operative Agreement (or as
<PAGE>37
otherwise agreed among the Lenders and the Holder from time to
time).
30.10 Limitations on Recourse. Notwithstanding anything
contained in this Lease to the contrary, Lessee agrees to look
solely to Lessor's estate and interest in the Properties (and in no
circumstance to the Agent, the Lenders, the Holder or otherwise to
Lessor) for the collection of any judgment requiring the payment of
money by Lessor in the event of liability by Lessor, and no other
property or assets of Lessor or any shareholder, owner or partner
(direct or indirect) in or of Lessor, or any director, officer,
employee, beneficiary, Affiliate of any of the foregoing shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of the remedies of Lessee under or with respect to
this Lease, the relationship of Lessor and Lessee hereunder or Lessee's
use of the Properties or any other liability of Lessor to Lessee.
Nothing in this Section shall be interpreted so as to limit the
terms of Sections 6.1 or 6.2.
30.11 Estoppel Certificates. Upon twenty (20) days' prior
notice of the request, either party will execute, acknowledge and
deliver to the other party a certificate stating (a) that this
Lease is unmodified and in full force and effect (or, if there have been
modifications, that this Lease is in full force and effect as
modified, and setting forth such modifications), (b) the dates to
which Rent and other sums payable hereunder have been paid, and (c)
either that to the knowledge of the party no default exists under
this Lease or specifying each such default of which the party has
knowledge. A party shall not be obligated, except as provided
herein, to update any certificate once delivered.
30.12 Decision Making by Parties. Wherever a party's
consent, approval, decision or determination is required under this
Lease, such consent or approval shall be given or decision or
determination shall be made in writing and in a commercially
reasonable manner. No change in Rent, the rights of the parties or
the economic terms of this Lease shall be required as a condition
to granting of consent. Any denial of consent will include in
reasonable detail the reason for denial or aspect of the request
that was not acceptable.
30.13 Limited Power of Attorney. To the extent required
by Lessee, Lessor hereby agrees to provide Lessee with a Limited
Power of Attorney permitting Lessee to act on behalf of Lessor in
connection with (i) consenting to all Subleases referenced in
Section 25.2 of this Lease (respecting up to, but not to exceed,
25% of the aggregate Property Costs of all Properties then subject to
the Lease), (ii) executing all easements, use, restrictive
covenant, assessment or bonding agreements referenced in the first paragraph
of Section 10.5 of the Participation Agreement and (iii) selling
undeveloped Land as is more specifically described in Section 22.6
of this Lease (provided, all such sales shall be conducted in
compliance with the terms of
<PAGE>38
such Section 22.6, without modification of such provisions pursuant
to the utilization of the Limited Power of attorney by Lessee);
provided, the Limited Power of Attorney may be utilized only to the
extent (x) no Default or Event of Default shall have occurred or be
continuing at the time of the contemplated exercise of the Limited
Power of Attorney and (y) such Sublease, easement, use, restrictive
covenant, assessment or bonding agreement or document of sale shall
be made in the normal course of the Lessee's business, at market
rates, on commercially reasonable terms and accomplished in a
manner so as not to diminish the value of any Property in any material
respect.
To the extent any Event of Default has occurred and is
continuing or the Lessee has received written notice of the
occurrence of any Default, the Limited Power of Attorney shall
immediately terminate and be void and of no further force or effect
unless reinstated in writing by the Lessor and acknowledged and
agreed to by the Holder and the Agent. Each action taken by the
Lessee under the Limited Power of Attorney shall automatically,
without further action, be deemed to be a representation and
warranty as of such date that the conditions set forth in the first
sentence of this Section 30.13 are satisfied in full as of such
date.
30.14 Submission To Jurisdiction; Waivers. Each of the
parties hereto hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal
action or proceeding relating to this Lease and the other Operative
Agreements to which it is a party, or for recognition and
enforcement of any judgement in respect thereof, to the non-
exclusive general jurisdiction of the Courts of the State of
Oregon, the courts of the United States of America for the District of
Oregon, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail)
postage prepaid, to such party at its address set forth in Section
29.1 or at such other address of which the parties hereto shall
have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law,
any right it may have to claim or recover in any legal
<PAGE>39
action or proceeding referred to in this Section 30.14 any special,
exemplary or punitive damages.
30.15 WAIVERS OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE LESSOR AND THE LESSEE HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS LEASE OR ANY OTHER OPERATIVE AGREEMENT
TO WHICH SUCH ENTITY IS A PARTY AND FOR ANY COUNTERCLAIM THEREIN.
[Signature pages follow]
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Lease to be
duly executed and delivered as of the date first above written.
FRED MEYER, INC.
By: MICHAEL H. DON
--------------------------------
Name: Michael H. Don
------------------------------
Title: V.P. & Treasurer
-----------------------------
FIRST BANK OF UTAH, N.A., not
individually, but solely as Owner
Trustee under the FM Trust 1995-1
By: GREG A. HAWLEY
--------------------------------
Name: Greg A. Hawley
------------------------------
Title: Assistant Vice President
-----------------------------
Receipt of this original
counterpart of the foregoing
Lease is hereby
acknowledged as the date
hereof
NationsBank of Texas, N.A.,
as Agent
By: _______________________
Name: William Guffey
Title: Vice President
<PAGE>
EXHIBIT A TO
THE LEASE
------------
LEASE SUPPLEMENT NO. ___
THIS LEASE SUPPLEMENT NO. ___ (this "Lease Supplement") dated
as of [________________________] between FIRST SECURITY BANK OF
UTAH, N.A., a national banking association, not individually, but
solely as Owner Trustee under the FM Trust 1995-1, as lessor (the
"Lessor"), and FRED MEYER, INC., as lessee (the "Lessee").
WHEREAS, the Lessor is the owner or will be owner of the
Property described on Schedule I hereto (the "Leased Property") and
wishes to lease the same to Lessee;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this
Lease Supplement, capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in Appendix
A to the Participation Agreement, dated as of May 5, 1995, among
the Lessee, the Lessor, not individually, except as expressly stated
therein, but solely as Owner Trustee under the FM Trust 1995-1,
NationsBank of Texas, N.A., as the Holder, the various banks and
banking institutions which are parties thereto from time to time
and NationsBank of Texas, N.A., as Agent for the Lenders.
SECTION 2. The Properties. Attached hereto as Schedule I is
the description of the Leased Property, with an Equipment Schedule
attached hereto as Schedule I-A, an Improvement Schedule attached
hereto as Schedule I-B and a legal description of the Land for such
Project attached hereto as Schedule I-C. Effective upon the
execution and delivery of this Lease Supplement by the Lessor and
the Lessee, the Leased Property shall be subject to the terms and
provisions of the Lease.
SECTION 3. Ratification; Incorporation by Reference. Except
as specifically modified hereby, the terms and provisions of the
Lease and the Operative Agreements are hereby ratified and
confirmed and remain in full force and effect. The Lease is hereby
incorporated herein by reference as though restated herein in its
entirety.
SECTION 4. Original Lease Supplement. The single executed
original of this Lease Supplement marked "THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and
containing the receipt of the Agent therefor on or following the
signature page thereof shall be the original executed counterpart
of this Lease Supplement (the "Original Executed Counterpart"). To
the extent that this Lease Supplement constitutes chattel
<PAGE>
paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this
Lease Supplement may be created through the transfer or possession
of any counterpart other than the Original Executed Counterpart.
SECTION 5. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE
OF OREGON.
SECTION 6. Mortgage; Power of Sale. Without limiting any
other remedies set forth in the Lease, in the event that a court of
competent jurisdiction rules that the Lease constitutes a mortgage,
deed of trust or other secured financing as is the intent of the
parties, then the Lessor and the Lessee agree that the Lessee
hereby grants a Lien against the Leased Property WITH POWER OF SALE, and
that, upon the occurrence and during the continuance of any Lease
Event of Default, the Lessor shall have the power and authority, to
the extent provided by law, after prior notice and lapse of such
time as may be required by law, to foreclose its interest (or cause
such interest to be foreclosed) in all or any part of the Leased
Property.
SECTION 7. Counterpart Execution. This Lease Supplement may
be executed in any number of counterparts and by each of the
parties hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
[If necessary, modify to put in recordable form.]
<PAGE>
IN WITNESS WHEREOF, each of the parties have caused this Lease
Supplement to be duly executed by an officer thereunto duly
authorized as of the date first above written.
FIRST SECURITY BANK OF UTAH, N.A.,
not individually, but solely as Owner
Trustee under the FM Trust 1995-1, as
Lessor
By: _______________________________
Name: _____________________________
Title: ____________________________
FRED MEYER, INC., as Lessee
By: _______________________________
Name: _____________________________
Title: ____________________________
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged as the date hereof.
NATIONSBANK OF TEXAS, N.A., as Agent
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
[Conform to State Law Requirements]
ACKNOWLEDGEMENTS
----------------
STATE OF )
) ss.
County of )
The foregoing instrument was acknowledged before me, the
undersigned Notary Public, in the County of ___________, on this
___ day of ______________, 19__ by _______________________________ of
FIRST SECURITY BANK OF UTAH, N.A., a national banking association,
of and on behalf of the national banking association.
____________________________________
(NOTARIAL SEAL) Notary Public for __________________
Residing at: _______________________
My commission expires: _____________
STATE OF OREGON )
) ss.
County of )
On this ___ day of __________, 19__, before me,
_____________________ [notary's name], a Notary Public of the State
of Oregon, duly commissioned and sworn, personally appeared
______________________ to me personally known to me (or proved to
me on the basis of satisfactory evidence) to be the person who
executed the written instrument as the ______________________ of
FRED MEYER, INC., a Delaware corporation, of and on behalf of such
corporation and acknowledged to me that such corporation executed
the same.
_____________________________________
(NOTARIAL SEAL) Notary Public for the State of Oregon
Residing at: ________________________
My commission expires: ______________
<PAGE>
STATE OF ________________)
) ss:
COUNTY OF _______________)
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of ________________ this
_____ day of ______________, by ________________, as
__________________ of First Security Bank of Utah, N.A., not
individually, but solely as Owner Trustee under the FM Trust
1995-1, on behalf of the Owner Trustee.
[Notarial Seal] ________________________________
Notary Public
My commission expires: _________ Residing at: ___________________
________________________________
STATE OF ________________)
) ss:
COUNTY OF _______________)
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of ________________ this
_____ day of ______________, by ________________, as
_______________ of FRED MEYER, INC., a Delaware corporation, on behalf of the
corporation.
[Notarial Seal] ________________________________
Notary Public
My commission expires: __________ Residing at: ___________________
________________________________
STATE OF ________________)
) ss:
COUNTY OF _______________)
The foregoing Lease Supplement was acknowledged before me, the
undersigned Notary Public, in the County of ________________ this
_____ day of ______________, by ________________, as
_______________ of NATIONSBANK OF TEXAS, N.A., a national banking association,
as Agent.
[Notarial Seal] ________________________________
Notary Public
My commission expires: __________ Residing at: ___________________
________________________________
<PAGE>A-1
- ---------------------------------------------------------------------------
Appendix A
Rules of Usage and Definitions
- ---------------------------------------------------------------------------
I. Rules of Usage
The following rules of usage shall apply to this Appendix A and
the Operative Agreements (and each appendix, schedule, exhibit and
annex to the foregoing) unless otherwise required by the context or
unless otherwise defined therein:
(a) Except as otherwise expressly provided, any definitions
set forth herein or in any other document shall be equally
applicable to the singular and plural forms of the terms defined.
(b) Except as otherwise expressly provided, references in
any document to articles, sections, paragraphs, clauses, annexes,
appendices, schedules or exhibits are references to articles,
sections, paragraphs, clauses, annexes, appendices, schedules or
exhibits in or to such document.
(c) The headings, subheadings and table of contents used in
any document are solely for convenience of reference and shall
not constitute a part of any such document nor shall they affect
the meaning, construction or effect of any provision thereof.
(d) References to any Person shall include such Person, its
successors and permitted assigns and transferees.
(e) Except as otherwise expressly provided, reference to
any agreement means such agreement as amended, modified,
extended, supplemented, restated and/or replaced from time to
time in accordance with the applicable provisions thereof.
(f) Except as otherwise expressly provided, references to
any law includes any amendment or modification to such law and
any rules or regulations issued thereunder or any law enacted in
substitution or replacement therefor.
(g) When used in any document, words such as "hereunder",
"hereto", "hereof" and "herein" and other words of like import
shall, unless the context clearly indicates to the contrary,
refer to the whole of the applicable document and not to any
particular article, section, subsection, paragraph or clause
thereof.
<PAGE>A-2
(h) References to "including" means including without
limiting the generality of any description preceding such term
and for purposes hereof the rule of ejusdem generis shall not be
applicable to limit a general statement, followed by or referable
to an enumeration of specific matters to matters similar to those
specifically mentioned.
(i) References herein to "attorney's fees", "legal fees",
"costs of counsel" or other such references shall be deemed to
include the allocated cost of in-house counsel.
(j) Each of the parties to the Operative Agreements and
their counsel have reviewed and revised, or requested revisions
to, the Operative Agreements, and the usual rule of construction
that any ambiguities are to be resolved against the drafting
party shall be inapplicable in the construing and interpretation
of the Operative Agreements and any amendments or exhibits
thereto.
II. Definitions
"ABR" shall have the meaning specified in Section 1.1 of the
Credit Agreement.
"acquire" or "purchase" shall mean, with respect to any Property,
the acquisition, lease or purchase of such Property by the Owner
Trustee from any Person.
"Acquisition Advance" shall mean an advance of funds to pay
Property Acquisition Costs and other amounts related thereto pursuant
to Section 5.3 of the Participation Agreement.
"Advance" shall mean a Construction Advance or Modification
Advance or an Acquisition Advance.
"Affiliate" shall have the meaning specified in Section 1.1 of
the Credit Agreement.
"After Tax Basis" shall mean, with respect to any payment to be
received, the amount of such payment increased so that, after
deduction of the amount of all taxes required to be paid by the
recipient calculated at the then maximum marginal rates generally
applicable to Persons of the same type as the recipients (less any tax
savings realized as a result of the payment of the indemnified amount)
with respect to the receipt by the recipient of such amounts, such
increased payment (as so reduced) is equal to the payment otherwise
required to be made.
"Agency Agreement" shall mean the Agency Agreement, dated as of
the Initial Closing Date, between the Construction Agent and the Owner
Trustee.
"Agency Agreement Event of Default" shall mean an "Event of
Default" as defined in Section 5.1 of the Agency Agreement.
<PAGE>A-3
"Agent" or "Administrative Agent" shall mean NationsBank of
Texas, N.A., as Administrative Agent for the Lenders pursuant to the
Credit Agreement, or any successor agent appointed in accordance with
the terms of the Credit Agreement.
"Allocated Interest" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Applicable Margin" shall have the meaning given such term in
Section 1.1 of the Credit Agreement.
"Appraisal" shall mean, with respect to any Property an appraisal
to be delivered in connection with a Property Closing Date or in
accordance with the terms of Section 10.1(e) of the Lease, in each
case prepared by a reputable appraiser reasonably acceptable to the
Agent, which in the judgment of counsel to the Agent, complies with
all of the provisions of the Financial Institutions Reform, Recovery
and Enforcement Act of 1989, as amended, the rules and regulations
adopted pursuant thereto, and all other applicable Legal Requirements,
with such appraisal to be performed by an appraiser selected by the
Agent after consultation with Lessee.
"Approved States" shall mean Washington, Oregon, Utah and Idaho,
and any other state approved in writing by the Lessor and the Agent.
"Appurtenant Rights" shall mean (i) all agreements, easements,
rights of way or use, rights of ingress or egress, privileges,
appurtenances, tenements, hereditaments and other rights and benefits
at any time belonging or pertaining to the Land underlying any
Improvements, or the Improvements, including, without limitation, the
use of any streets, ways, alleys, vaults or strips of land adjoining,
abutting, adjacent or contiguous to the Land and (ii) all permits,
licenses and rights, whether or not of record, appurtenant to such
Land.
"Available Commitment" shall have the meaning specified in
Section 1.1 of the Credit Agreement.
"Base Amount" shall have the meaning specified in Section 10.1 of
the Lease.
"Basic Rent" shall mean, the sum of (i) the Loan Basic Rent and
(ii) the Lessor Basic Rent, calculated as of the applicable date on
which Basic Rent is due.
"Basic Term" shall have the meaning specified in Section 2.2 of
the Lease.
"Basic Term Commencement Date" shall have the meaning specified
in Section 2.2 of the Lease.
"Basic Term Expiration Date" shall have the meaning specified in
Section 2.2 of the Lease.
<PAGE>A-4
"Bill of Sale" shall mean a Bill of Sale regarding Equipment in
form and substance satisfactory to the Holder and the Agent.
"Borrowing Date" shall have the meaning specified in Section 1.1
of the Credit Agreement.
"Business Day" shall mean a day other than a Saturday, Sunday or
other day on which commercial banks in Charlotte, North Carolina,
Dallas, Texas, Los Angeles, California, San Francisco, California, New
York, New York or Portland, Oregon, are authorized or required by law
to close; provided, however, that when used in connection with a Loan
bearing interest based on the Eurodollar Rate, the term "Business Day"
shall also exclude any day on which banks are not open for dealings in
dollar deposits in the London interbank market.
"Capital Lease" means any lease of property (whether real,
personal or mixed) which would, in accordance with GAAP, be required
to be classified and accounted for on the books of the lessee as a
capital lease.
"Casualty" shall mean any damage or destruction of all or any
portion of a Property as a result of a fire or other casualty.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601 et seq., as
amended by the Superfund Amendments and Reauthorization Act of 1986.
"Certificate" shall mean a Certificate in favor of the Holder
regarding the Holder Commitment of the Holder issued pursuant to the
terms and conditions of the Trust Agreement in favor of the Holder.
"Certifying Party" shall have the meaning specified in Section
26.1 of the Lease.
"Change in Control" means the acquisition by any Person, or two
or more Persons acting in concert, of beneficial ownership (within the
meaning of Rule 13d-3 of the SEC under the Securities Exchange Act of
1934, as amended) of outstanding shares of voting stock of Lessee
representing in excess of 50% of voting control of Company, which
Person or Persons have beneficial ownership of less than 5% of the
outstanding shares of voting stock of Lessee as of the date of the
Participation Agreement.
"Claims" shall mean any and all obligations, liabilities, losses,
actions, suits, penalties, claims, demands, costs and expenses
(including, without limitation, reasonable attorney's fees and
expenses) of any nature whatsoever.
"Closing Date" shall mean the Initial Closing Date and each
Property Closing Date.
<PAGE>A-5
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, or any successor statute hereto.
"Collateral" shall have the meaning specified in Section 1.1 of
the Credit Agreement.
"Commitment" shall have the meaning specified in Section 1.1 of
the Credit Agreement.
"Commitment Fee Payment Date" shall mean each Specified Interest
Payment Date and the last day of the Commitment Period, or such
earlier date as the Commitments shall terminate as provided in the
Credit Agreement.
"Commitment Fee Rate" shall mean, with respect to the
Commitments, a rate equal to 15 basis points (0.15%) per annum for the
Commitment Period.
"Commitment Period" shall mean the period from the Initial
Closing Date to and including the Construction Period Termination
Date, or such earlier date as the Commitments shall terminate as
provided in the Credit Agreement.
"Company" shall have the meaning specified in Section 7.3 of the
Participation Agreement.
"Completion" shall mean, with respect to a Property, such time as
final completion of the Improvements on such Property has been
achieved in accordance with the Plans and Specifications, the Agency
Agreement and/or the Lease, and in compliance with all material Legal
Requirements and Insurance Requirements and (unless not required in
connection with the construction, renovation and/or modification of
Improvements on Improved Property) a certificate of occupancy has been
issued with respect to such Property by the appropriate governmental
entity.
"Completion Date" shall mean, with respect to a Property, the
earlier of (i) the date on which Completion for such Property has
occurred and (ii) the Construction Period Termination Date.
"Condemnation" shall mean any taking or sale of the use, access,
occupancy, easement rights or title to any Property or any part
thereof, wholly or partially (temporarily or permanently), by or on
account of any actual or threatened eminent domain proceeding or other
taking of action by any Person having the power of eminent domain,
including an action by a Governmental Authority to change the grade
of, or widen the streets adjacent to, any Property or alter the
pedestrian or vehicular traffic flow to any Property so as to result
in a change in access to such Property, or by or on account of an
eviction by paramount title or any transfer made in lieu of any such
proceeding or action.
"Construction Advance" shall mean an advance of funds to pay
Property Costs and other amounts related thereto with respect to
<PAGE>A-6
Unimproved Property pursuant to Section 5.4 or 5.5 of the
Participation Agreement.
"Construction Agent" shall mean Fred Meyer, Inc., a Delaware
corporation, as construction agent under the Agency Agreement.
"Construction Budget" shall mean, as to any Property, the
aggregate of Land acquisition costs and the estimated cost of
constructing and developing any Improvements, on a Property by
Property basis, as determined by the Construction Agent or the Lessee,
as the case may be, in its reasonable, good faith judgment, specifying
the acquisition cost for Land and the projected hard costs relating to
Improvements and soft costs relating to Improvements.
"Construction Commencement Date" shall mean, with respect to
Improvements, the date on which construction of such Improvements
commences pursuant to the Agency Agreement.
"Construction Period" shall mean, with respect to a Property, the
period commencing on the Construction Commencement Date for such
Property and ending on the Completion Date for such Property.
"Construction Period Property" shall have the meaning specified
in Section 1.1 of the Credit Agreement.
"Construction Period Termination Date" shall mean the second
annual anniversary of the Initial Closing Date, as such date may be
extended for up to six (6) additional months to the extent that a
delay in construction is caused by a Force Majeure Event.
"Control" shall mean (including the correlative meanings of the
terms "controlled by" and "under common control with"), as used with
respect to any Person, the possession directly or indirectly, of the
power to direct or cause the direction of the management and policies
of such Person, whether through the ownership of voting securities or
by contract or otherwise.
"Co-Owner Trustee" shall have the meaning specified in Section
9.2 of the Trust Agreement.
"Credit Agreement" shall mean the Credit Agreement, dated as of
the Initial Closing Date, among the Lessor, the Agent and the Lenders,
as specified therein.
"Credit Agreement Default" shall mean any event or condition
which, with the lapse of time or the giving of notice, or both, would
constitute a Credit Agreement Event of Default.
"Credit Agreement Event of Default" shall mean any event or
condition defined as an "Event of Default" in Section 6 of the Credit
Agreement.
<PAGE>A-7
"Credit Documents" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Debt" of any Person means, without duplication, (a) all
indebtedness of such Person for borrowed money, whether or not
evidenced by bonds, debentures, notes or similar instruments, (b) all
obligations of such Person as lessee under Capital Leases which have
been recorded as liabilities on a balance sheet of such Person, (c)
all obligations of such Person to pay the deferred purchase price of
property or services (other than current accounts payable in the
ordinary course of business), (d) all indebtedness secured by a Lien
on the property of such Person, whether or not such indebtedness shall
have been assumed by such Person (it being understood that if such
Person has not assumed or otherwise become personally liable for any
such indebtedness, the amount of the Debt of such Person in connection
therewith shall be limited to the lesser of the face amount of such
indebtedness or the fair market value of all property of such Person
securing such indebtedness), (e) all obligations, contingent or
otherwise, with respect to the face amount of all letters of credit
(whether or not drawn) and banker's acceptances issued for the account
of such Person, (f) all obligations of such Person in respect of
Hedging Arrangements, (g) all Suretyship Liabilities of such Person
and (h) all Debt (as defined above) of any partnership in which such
Person is a general partner. The amount of the Debt of any Person in
respect of Hedging Arrangements shall be deemed to be the unrealized
net loss position of such Person thereunder (determined for each
counterparty individually, but netted for all Hedging Arrangements
maintained with such counterparty).
"Deed" shall mean a special or limited warranty deed regarding
Land and/or Improvements in form and substance satisfactory to the
Owner Trustee and the Agent.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of
Default.
"Employee Benefit Plan" or "Plan" shall mean an employee benefit
plan (within the meaning of Section 3(3) of ERISA, including any
Multiemployer Plan), or any "plan" as defined in Section 4975(e)(1) of
the Code and as interpreted by the Internal Revenue Service and the
Department of Labor in rules, regulations, releases or bulletins in
effect on any Closing Date.
"Environmental Claims" shall mean any investigation, notice,
violation, demand, allegation, action, suit, injunction, judgment,
order, consent decree, penalty, fine, lien, proceeding, or claim
(whether administrative, judicial, or private in nature) arising (a)
pursuant to, or in connection with, an actual or alleged violation of,
any Environmental Law, (b) in connection with any Hazardous Substance,
(c) from any abatement, removal, remedial, corrective, or other
response action in connection with a Hazardous Material, Environmental
Law, or other order of a
<PAGE>A-8
Tribunal or (d) from any actual or alleged damage, injury, threat, or
harm to health, safety, natural resources, or the environment.
"Environmental Laws" shall mean any Law, permit, consent,
approval, license, award, or other authorization or requirement of any
Tribunal relating to emissions, discharges, releases, threatened
releases of any Hazardous Substance into ambient air, surface water,
ground water, publicly owned treatment works, septic system, or land,
or otherwise relating to the handling, storage, treatment, generation,
use, or disposal of Hazardous Substances, pollution or to the
protection of health or the environment, including without limitation
CERCLA, the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., and state statutes analogous thereto.
"Environmental Violation" shall mean any activity, occurrence or
condition that violates or threatens (if the threat requires
remediation under any Environmental Law and is not remediated during
any grace period allowed under such Environmental Law) to violate or
results in or threatens (if the threat requires remediation under any
Environmental Law and is not remediated during any grace period
allowed under such Environmental Law) to result in noncompliance with
any Environmental Law.
"Equipment" shall mean equipment, apparatus, furnishings,
fittings and personal property of every kind and nature whatsoever
purchased, leased or otherwise acquired using the proceeds of the
Loans or the Holder Advance by the Construction Agent, the Lessee or
the Lessor as specified or described in either a Requisition or a
Lease Supplement, whether or not now or subsequently attached to,
contained in or used or usable in any way in connection with any
operation of any Improvements or other improvements to Land.
"Equipment Schedule" shall mean (a) each Equipment schedule
attached to the applicable Requisition and (b) each Equipment Schedule
attached to the applicable Lease Supplement as Schedule I-A.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Affiliate" shall mean each entity required to be
aggregated with any Lessee pursuant to the requirements of Section
414(b) or (c) of the Code.
"Eurocurrency Reserve Requirements" shall have the meaning
specified in Section 1.1 of the Credit Agreement.
"Eurodollar Holder Advance" shall mean the Holder Advance bearing
a Holder Yield based on the Eurodollar Rate.
<PAGE>A-9
"Eurodollar Rate" shall have the meaning specified in Section 1.1
of the Credit Agreement.
"Eurodollar Reserve Rate" shall have the meaning specified in
Section 1.1 of the Credit Agreement.
"Event of Default" shall mean a Lease Event of Default, an Agency
Agreement Event of Default or a Credit Agreement Event of Default.
"Excepted Payments" shall mean: (a) all indemnity payments
(including indemnity payments made pursuant to Section 13 of the
Participation Agreement), whether made by adjustment to Basic Rent or
otherwise, to which the Owner Trustee, the Holder or any of their
respective Affiliates, agents, officers, directors or employees is
entitled;
(b) any amounts (other than Basic Rent, Termination Value, or
Purchase Option Price) payable under any Operative Agreement to
reimburse the Owner Trustee, the Trust Company, the Holder or any of
their respective Affiliates (including the reasonable expenses of the
Owner Trustee, the Trust Company and the Holder incurred in connection
with any such payment) for performing or complying with any of the
obligations of the Lessee under and as permitted by any Operative
Agreement;
(c) any amount payable to the Holder by any transferee of such
interest of the Holder as the purchase price of the Holder's interest
in the Trust Estate (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies other
than such proceeds or payments payable to the Agent;
(e) any insurance proceeds under policies maintained by the
Owner Trustee or the Holder;
(f) Transaction Expenses or other amounts or expenses paid or
payable to or for the benefit of the Owner Trustee or the Holder;
(g) all right, title and interest of the Holder or the Owner
Trustee to any Property or any portion thereof or any other property
to the extent any of the foregoing has been released from the Liens of
the Security Documents and the Lease pursuant to the terms thereof;
(h) upon termination of the Credit Agreement pursuant to the
terms thereof, all remaining property covered by the Lease or Security
Documents;
(i) all payments in respect of the Holder Yield;
<PAGE>A-10
(j) any payments in respect of interest to the extent
attributable to payments referred to in clauses (a) through (i) above;
and
(k) any rights of either the Owner Trustee or Trust Company to
demand, collect, sue for or otherwise receive and enforce payment of
any of the foregoing amounts.
"Excepted Rights" shall mean the rights retained by the Owner
Trustee pursuant to Section 8.2(a)(i) of the Credit Agreement and all
right, title and interest of Owner Trustee in the Shared Rights.
"Excess Proceeds" shall mean the excess, if any, of the aggregate
of all awards, compensation or insurance proceeds payable in
connection with a Casualty or Condemnation over the Termination Value
paid by the Lessee pursuant to the Lease with respect to such Casualty
or Condemnation.
"Excluded Taxes" shall have the meaning specified in Section
13.2(e) of the Participation Agreement.
"Exemption Agreement" shall have the meaning specified in Section
12.2(e) of the Participation Agreement.
"Exemption Representation" shall have the meaning specified in
Section 13.2(e) of the Participation Agreement.
"Expiration Date" shall mean the Basic Term Expiration Date or
the last day of the Extended Term, if applicable.
"Expiration Date Election Notice" shall have the meaning
specified in Section 20.2 of the Lease.
"Expiration Date Purchase Option" shall mean the Lessee's option
to purchase all (but not less than all) of the Properties on the
Expiration Date.
"Extended Term" shall mean the five year period which immediately
follows the end of the Basic Term and expires on May 5, 2005 with
respect to which Lessee has exercised its Renewal Option pursuant to
Section 21.1 of the Lease.
"Facility" shall mean a facility used for the treatment, storage
or disposal of Hazardous Substances.
"Fair Market Sales Value" shall mean, with respect to any
Property, the amount, which in any event, shall not be less than zero,
that would be paid in cash in an arms-length transaction between an
informed and willing purchaser and an informed and willing seller,
neither of whom is under any compulsion to purchase or sell,
respectively, such Property. Fair Market Sales Value of any Property
shall be determined based on the assumption that, except for purposes
of Section 17 of the Lease, such Property is in the condition and
state of repair required under
<PAGE>A-11
Section 10.1 of the Lease and the Lessee is in compliance with the
other requirements of the Operative Agreements.
"Fixtures" shall mean all fixtures relating to the Improvements,
including all components thereof, located in or on the Improvements,
together with all replacements, modifications, alterations and
additions thereto.
"FM Trust 1995-1" shall mean the grantor trust created pursuant
to the terms and conditions of the Trust Agreement.
"Force Majeure Event" shall mean any event beyond the control of
the Construction Agent, including, but not limited to, strikes,
lockouts, adverse soil conditions, acts of God, adverse weather
conditions, inability to obtain labor or materials, governmental
activities, civil commotion and enemy action; but excluding any event,
cause or condition that results from the Construction Agent's
financial condition.
"GAAP" shall mean the principles of accounting set forth in
pronouncements of the Financial Accounting standards Board, the
American Institute of Certified Public Accountants, as such principles
are from time to time supplemented and amended.
"Governmental Action" shall mean all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances,
orders, judgments, written interpretations, decrees, licenses,
exemptions, publications, filings, notices to and declarations of or
with, or required by, any Governmental Authority, or required by any
Legal Requirement, and shall include, without limitation, all
environmental and operating permits and licenses that are required for
the contemplated use, occupancy, zoning and operations of any
Property.
"Governmental Authority" shall mean any nation or government, any
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Ground Lease" shall mean a ground lease respecting any Property
owned by Lessee or a wholly-owned Subsidiary of Lessee in form and
substance satisfactory to Lessor (i) having a 99 year term and
payments set at $1.00 per year or (ii) subject to such other terms and
conditions as are reasonably satisfactory to Lessor, Lessee and the
Agent.
"Hedging Arrangement" means any interest rate swap, cap or collar
agreement, currency swap agreement, commodity swap agreement or other
arrangement designed to hedge interest rate and/or currency risk or
changes in commodity prices.
"Hazardous Substance" shall mean any of the following: (i) any
petroleum or petroleum product, explosives, radioactive materials,
asbestos, formaldehyde, polychlorinated biphenyls,
<PAGE>A-12
lead and radon gas; (ii) any substance, material, product, derivative,
compound or mixture, mineral, chemical, waste, gas, medical waste, or
pollutant, in each case whether naturally occurring, man-made or the
by-product of any process, that is toxic, harmful or hazardous to the
environment or human health or safety as determined in accordance with
any Environmental Law; or (iii) any substance, material, product,
derivative, compound or mixture, mineral, chemical, waste, gas,
medical waste or pollutant that would support the assertion of any
claim under any Environmental Law, whether or not defined as hazardous
as such under any Environmental Law. The term "Hazardous Substances"
shall not include (a) cleaning products, landscape fertilizers and
other products in the ordinary quantities that are customarily used in
the ordinary course of business of operating and maintaining
commercial properties or (b) products held in sealed containers for
sale to customers.
"Holder" shall mean NationsBank of Texas, N.A. and the several
banks and other financial institutions which are from time to time
holders of Certificates in connection with the FM Trust 1995-1.
"Holder Advance" shall have the meaning specified in section 2 of
the Participation Agreement.
"Holder Amount" shall mean as of any date, the aggregate amount
of the Holder Advance made by the Holder to the Trust Estate pursuant
to Section 2 of the Participation Agreement and Section 3.1 of the
Trust Agreement less any payments of the Holder Advance received by
the Holder pursuant to Section 3.4 of the Trust Agreement.
"Holder Applicable Margin" shall mean the Applicable Margin plus,
in each case, .575%.
"Holder Commitment" shall mean $3,000,000.
"Holder Overdue Rate" shall mean the lesser of (i) the Overdue
Interest, as defined in the Credit Agreement, plus .575% and (ii) the
highest rate permitted by applicable law.
"Holder Property Cost" shall mean with respect to each Property,
at any date of determination, an amount equal to the product of (a) a
fraction, the numerator of which is the Property Cost for such
individual Property and the denominator of which is the aggregate
Property Cost for all Properties which are then subject to the terms
and conditions of the Operative Agreements multiplied by (b) the
outstanding Holder Advance.
"Holder Up-Front Fee" shall have the meaning specified in Section
9.4 of the Participation Agreement.
"Holder Yield" shall mean the Eurodollar Reserve Rate plus the
Holder Applicable Margin; provided, however, (i) upon delivery of the
notice described in Section 3.7(c) of the Trust
<PAGE>A-13
Agreement, the outstanding Holder Advance of the Holder shall bear a
yield at the ABR applicable from time to time from and after the dates
and during the periods specified in Section 3.7(c) of the Trust
Agreement, and (ii) upon the delivery by the Holder of the notice
described in Section 3.8(c) of the Trust Agreement, the Holder Advance
of the Holder shall bear a yield at the ABR applicable from time to
time after the dates and during the periods specified in Section
3.8(c) of the Trust Agreement.
"Impositions" shall mean, except to the extent described in the
following sentence, any and all liabilities, losses, expenses, costs,
charges and Liens of any kind whatsoever for fees, taxes, levies,
imposts, duties, charges, assessments or withholdings ("Taxes"),
including (i) real and personal property taxes, including personal
property taxes on any property covered by the Lease that is classified
by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes,
use taxes and other similar taxes (including rent taxes and
intangibles taxes); (iii) any excise taxes; (iv) real estate transfer
taxes, conveyance taxes, stamp taxes and documentary recording taxes
and fees; (v) taxes that are or are in the nature of franchise,
income, value added, privilege and doing business taxes, license and
registration fees; (vi) assessments on any Property, including all
assessments for public improvements or benefits, whether or not such
improvements are commenced or completed within the Term; and (vii) any
tax, Lien, assessment or charge asserted, imposed or assessed by the
PBGC or any governmental authority succeeding to or performing
functions similar to, the PBGC; and in each case all interest,
additions to tax and penalties thereon, which at any time prior to,
during or with respect to the Term or in respect of any period for
which the Lessee shall be obligated to pay Supplemental Rent, may be
levied, assessed or imposed by any Governmental Authority upon or with
respect to (a) any Property or any part thereof or interest therein;
(b) the leasing, financing, refinancing, demolition, construction,
substitution, subleasing, assignment, control, condition, occupancy,
servicing, maintenance, repair, ownership, possession, activity
conducted on, delivery, insuring, use, operation, improvement,
transfer of title, return or other disposition of such Property or any
part thereof or interest therein; (c) the Notes or other indebtedness
with respect to any Property or any part thereof or interest therein;
(d) the rentals, receipts or earnings arising from any Property or any
part thereof or interest therein; (e) the Operative Agreements, the
performance thereof, or any payment made or accrued pursuant thereto;
(f) the income or other proceeds received with respect to any Property
or any part thereof or interest therein upon the sale or disposition
thereof; (g) any contract (including the Agency Agreement) relating to
the construction, acquisition or delivery of the Improvements or any
part thereof or interest therein; (h) the issuance of the Notes; or
(i) otherwise in connection with the transactions contemplated by the
Operative Agreements.
<PAGE>A-14
The term "Imposition" shall not mean or include:
(i) Taxes and impositions (other than Taxes that are, or
are in the nature of, sales, use, rental, value added, transfer
or property taxes) that are imposed on a Indemnified Person
(other than Lessor) by the United States federal government that
are based on or measured by the net income (including taxes based
on capital gains, and minimum taxes or any tax imposed by Code
Section 59A) of such Indemnified Person; provided, that this clause (i)
shall not be interpreted to prevent a payment from being made on
an After Tax Basis if such payment is otherwise required to be so
made;
(ii) Taxes and impositions (other than Taxes that are, or
are in the nature of, sales, use, rental, value added, transfer
or property taxes) that are imposed on any Indemnified Person
(other than Lessor) by any state or local jurisdiction or taxing
authority within any state or local jurisdiction and that are in
the nature of franchise taxes or are based upon or measured by
the overall gross or net income or overall gross or net receipts
of such Indemnified Person except that this clause (ii) shall not
apply to (and thus shall not exclude) any such Taxes imposed on
an Indemnified Person by a state (or any local taxing authority
thereof or therein) to the extent that (A) such Taxes would not
have been imposed but for the location, possession or use of any
Property in such jurisdiction, and (B) in the case of Taxes based
upon overall gross or net income or overall gross or net
receipts, such Taxes would not have been imposed had the
transactions described in the Operative Agreements been
structured as a standard financing arrangement (i.e, with the
Indemnity Provider (x) being the borrower of funds advanced by
the Lenders and the Holder, (y) holding title to each Property,
and (z) being treated as the owner of each Property for both
financial accounting and federal income tax purposes) rather than
as a tax retention operating lease (it being understood that any
such indemnity would be payable only to the extent of the net
harm incurred by such Indemnified Person from such Taxes, taking
into account any incremental tax benefit in another tax
jurisdiction resulting from payment of such Taxes); provided,
that this clause (ii) shall not be interpreted to prevent a
payment from being made on an After Tax Basis if such payment is
otherwise required to be so made;
(iii) any Tax or imposition to the extent, but only to such
extent, it relates to any act, event or omission that occurs
after the termination of the Lease and redelivery or sale of the
property in accordance with the terms of the Lease (but not any
Tax or imposition that relates to such termination, redelivery or
sale and/or to any period prior to such termination, redelivery
or sale); or
<PAGE>A-15
(iv) any Taxes which are imposed on an Indemnified Person as
a result of the gross negligence or wilful misconduct of such
Indemnified Person itself (as opposed to gross negligence or
wilful misconduct imputed to such Indemnified Person), but not
Taxes imposed as a result of ordinary negligence of such
Indemnified Person;
Any Tax or imposition excluded from the defined term "Imposition" in
any one of the foregoing clauses (i) through (v) shall not be
construed as constituting an Imposition by any provision of any other
of the aforementioned clauses.
"Improved Property" shall mean a Property acquired by the Lessor
which contains Improvements that are suitable as of the Property
Closing Date for occupancy by the Lessee and the operation by the
Lessee of a Store therein.
"Improvements" shall mean, with respect to the construction,
renovation and/or Modification of a Store, all buildings, structures,
Fixtures, and other improvements of every kind existing at any time
and from time to time on or under the Land purchased, leased or
otherwise acquired using the proceeds of the Loans or the Holder
Advance, together with any and all appurtenances to such buildings,
structures or improvements, including sidewalks, utility pipes,
conduits and lines, parking areas and roadways, and including all
Modifications and other additions to or changes in the Improvements at
any time, including without limitation (a) any Improvements existing
as of the Property Closing Date as such Improvements may be referenced
on the applicable Requisition and (b) any Improvements made subsequent
to such Property Closing Date.
"Incorporated Covenants" shall have the meaning specified in
Section 28.1 of the Lease Agreement.
"Indebtedness" shall have the meaning specified in Section 1.1 of
the Credit Agreement.
"Indemnified Person" shall mean the Lessor, the Owner Trustee, in
its individual and its trust capacity, the Agent, the Holder, the
Lenders and their respective successors, assigns, directors,
shareholders, partners, officers, employees, agents and Affiliates.
"Indemnity Provider" shall mean, respecting each Property, the
Construction Agent from the date of the Participation Agreement to and
including the Basic Term Commencement Date for such Property and the
Lessee for the duration of the Term for such Property.
"Initial Closing Date" shall mean the date of the Participation
Agreement.
"Initial Construction Advance" shall mean any initial Advance
(which may be either a Construction Advance or a
<PAGE>A-16
Modification Advance) to pay for: (i) Property Costs for construction
of any Improvements; (ii) the Property Costs of restoring or repairing
any Property which is required to be restored or repaired in
accordance with Section 15.1(e) of the Lease; and (iii) the costs of
any Modifications in accordance with Section 11.1 of the Lease.
"Insurance Requirements" shall mean all terms and conditions of
any insurance policy either required by the Lease to be maintained by
the Lessee or required by the Agency Agreement to be maintained by the
Construction Agent, and all requirements of the issuer of any such
policy and, regarding self insurance, any other requirements of
Lessee.
"Interest Period" shall have the meaning specified in Section 1.1
of the Credit Agreement.
"Investment Company Act" shall mean the Investment Company Act of
1940, as amended, together with the rules and regulations promulgated
thereunder.
"Land" shall mean a parcel of real property described on (a) the
Requisition issued by the Construction Agent on the Property Closing
Date relating to such parcel and (b) Schedule I-C to each applicable
Lease Supplement executed and delivered in accordance with the
requirements of Section 2.4 of the Lease.
"Law" shall mean any statute, law, ordinance, regulation, rule,
order, writ, injunction or decree of any Tribunal.
"Lease" or "Lease Agreement" shall mean the Lease Agreement (Tax
Retention Operating Lease) dated as of the Initial Closing Date,
between the Lessor and the Lessee, together with any Lease Supplements
thereto, as such Lease Agreement may from time to time be
supplemented, amended or modified in accordance with the terms
thereof.
"Lease Default" shall mean any event or condition which, with the
lapse of time or the giving of notice, or both, would constitute a
Lease Event of Default.
"Lease Event of Default" shall have the meaning specified in
Section 17.1 of the Lease.
"Lease Supplement" shall mean each Lease Supplement substantially
in the form of Exhibit A to the Lease, together with all attachments
and schedules thereto, as such Lease Supplement may be supplemented,
amended or modified from time to time.
"Lease Term Debt Percentage" shall mean, as of the date of
determination, a percentage equal to 1.000 minus the Lease Term Holder
Percentage.
"Lease Term Holder Percentage" shall mean, as of the date of
determination, a percentage equal to $3,000,000 divided by the
<PAGE>A-17
aggregate Property Costs for all Properties after the Completion
thereof and with respect to any Improved Property, after the
acquisition thereof.
"Legal Requirements" shall mean as to any Person all foreign,
Federal, state, county, municipal and other governmental statutes,
laws, rules, orders, regulations, ordinances, judgments, decrees and
injunctions affecting such Person and all foreign, Federal, state,
county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and impositions
affecting any Property or the taxation, demolition, construction, use
or alteration of such Property, whether now or hereafter enacted and
in force, including any that require repairs, modifications or
alterations in or to any Property or in any way limit the use and
enjoyment thereof (including all building, zoning and fire codes and
the Americans with Disabilities Act of 1990, 42 U.S.C. Section 12101 et.
seq., and any other similar Federal, state or local laws or ordinances
and the regulations promulgated thereunder) and any that may relate to
environmental requirements (including all Environmental Laws), and all
permits, certificates of occupancy, licenses, authorizations and
regulations relating thereto, and all covenants, agreements,
restrictions and encumbrances contained in any instruments which are
either of record or known to the Lessee affecting any Property, the
Appurtenant Rights and any easements, licenses or other agreements
entered into pursuant to Section 12.2 of the Lease.
"Lender Commitment Fee" shall have the meaning specified in
Section 9.5(a) of the Participation Agreement.
"Lender Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and executed for filing in
the applicable jurisdiction in order to procure a security interest in
favor of the Agent in any Equipment or in any Improvements.
"Lender Up-Front Fee" shall have the meaning specified in Section
9.4 of the Participation Agreement.
"Lenders" shall mean the several banks and other financial
institutions from time to time party to the Credit Agreement.
"Lessee" shall have the meaning set forth in the Lease.
"Lessor" shall mean the Owner Trustee, not in its individual
capacity, but as Lessor under the Lease.
"Lessor Basic Rent" shall mean the scheduled Holder Yield due on
the Holder Advance on any Specified Interest Payment Date pursuant to
the Trust Agreement (but not including interest on overdue amounts
under the Trust Agreement or otherwise).
"Lessor Financing Statements" shall mean UCC financing statements
and fixture filings appropriately completed and
<PAGE>A-18
executed for filing in the applicable jurisdictions in order to
protect the Lessor's interest under the Lease to the extent the Lease
is a security agreement or a mortgage.
"Lessor Lien" shall mean any Lien, true lease or sublease or
disposition of title arising as a result of (a) any claim against the
Lessor or Trust Company, in its individual capacity, not resulting
from the transactions contemplated by the Operative Agreements, (b)
any act or omission of the Lessor or Trust Company, in its individual
capacity, which is not required by the Operative Agreements or is in
violation of any of the terms of the Operative Agreements, (c) any
claim against the Lessor or Trust Company, in its individual capacity,
with respect to Taxes or Transaction Expenses against which the Lessee
is not required to indemnify Lessor or Trust Company, in its
individual capacity, pursuant to Section 13 of the Participation
Agreement or (d) any claim against the Lessor arising out of any
transfer by the Lessor of all or any portion of the interest of the
Lessor in the Properties, the Trust Estate or the Operative Agreements
other than the transfer of title to or possession of any Properties by
the Lessor pursuant to and in accordance with the Lease, the Credit
Agreement or the Participation Agreement or pursuant to the exercise
of the remedies set forth in Article XVII of the Lease.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien, option or charge of any kind.
"Limited Power of Attorney" shall mean the Limited Power of
Attorney dated as of the Initial Closing Date given by the Owner
Trustee in favor of the Company and in form and substance satisfactory
to the Agent, the Holder, the Owner Trustee and the Company.
"Limited Recourse Amount" shall mean with respect to the
Properties on an aggregate basis, an amount equal to the sum of the
Termination Values with respect to all of the Properties on each
Payment Date, less the Maximum Residual guarantee Amount as of such
date with respect to the Properties.
"Loans" shall have the meaning specified in Section 2.1 of the
Credit Agreement.
"Loan Basic Rent" shall mean the interest due on the Loans on any
Specified Interest Payment Date pursuant to the Credit Agreement (but
not including interest on (i) any such Loan prior to the Basic Term
Commencement Date with respect to the Property to which such Loan
relates or (ii) any overdue amounts under Section 2.7(b) of the Credit
Agreement or otherwise).
"Loan Property Cost" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Majority Lenders" shall have the meaning specified in Section
1.1 of the Credit Agreement.
<PAGE>A-19
"Marketing Period" shall mean, if the Lessee have not given the
Expiration Date Election Notice in accordance with Section 20.2 of the
Lease, the period commencing on the date 90 days prior to the
applicable Expiration Date and ending on such Expiration Date.
"Material Adverse Effect" shall mean a material adverse effect on
(a) the ability of the Lessee or any Subsidiary to perform its
respective obligations under any Operative Agreement to which it is a
party, (b) the validity or enforceability of any Operative Agreement
or the rights and remedies of the Agent, the Lenders, the Holder, or
the Lessor thereunder, (c) the validity, priority or enforceability of
any Lien on any Property created by any of the Operative Agreements,
or (d) the value, utility or useful life of any Property or the use,
or ability of the Lessee to use, any Property for the purpose for
which it was intended.
"Material Subsidiary" means any Subsidiary of Lessee which either
(a) has assets which constitute 5% or more of the consolidated assets
of Lessee and its Subsidiaries or (b) has revenues during its most
recently-ended fiscal year which constitute more than 5% of the
consolidated revenues of Lessee and its Subsidiaries during the most
recently-ended fiscal year of Lessee.
"Maturity Date" shall have the meaning specified in Section 1.1
of the Credit Agreement.
"Maximum Property Cost" shall mean the aggregate amount of the
Property Costs for all Properties subject to the Lease as of the
applicable determination date.
"Maximum Residual Guarantee Amount" shall mean an amount equal to
the product of the aggregate Property Cost for all of the Properties
times 89 1/2%.
"Modification Advance" shall mean an advance of funds to pay
Property Costs and other amounts related thereto with respect to
Improved Property pursuant to Section 5.4 or 5.5 of the Participation
Agreement.
"Modifications" shall have the meaning specified in Section
11.1(a) of the Lease.
"Mortgage Instrument" shall mean any mortgage, deed of trust or
any other instrument executed by the Owner Trustee in favor of the
Agent and evidencing a Lien on a Property, in form and substance
substantially in the form attached as Exhibit J to the Participation
Agreement.
"Multiemployer Plan" shall mean any plan described in Section
4001(a)(3) of ERISA to which contributions are or have been made or
required by the Lessee or any of its Subsidiaries or ERISA Affiliates.
<PAGE>A-20
"Multiple Employer Plan" shall mean a plan to which the Lessee or
any ERISA Affiliate and at least one other employer other than an
ERISA Affiliate is making or accruing an obligation to make, or has
made or accrued an obligation to make, contributions.
"Net Proceeds" shall mean all amounts paid in connection with any
Casualty or Condemnation, and all interest earned thereon, less the
expense of claiming and collecting such amounts, including all costs
and expenses in connection therewith for which the Agent or Lessor are
entitled to be reimbursed pursuant to the Lease.
"1994 Credit Agreement" shall have the meaning specified in
Section 28.1 of the Lease.
"Notes" shall have the meaning specified in Section 1.1 of the
Credit Agreement.
"Occupational Safety and Health Law" shall mean the Occupational
Safety and Health Act of 1970 and any other federal, state or local
statute, law, ordinance, code, rule, regulation, order or decree
regulating or relating to, or imposing liability or standards of
conduct concerning, employee health and/or safety, as now or at any
time hereafter in effect.
"Officer's Certificate" shall mean a certificate signed by any
individual holding the office of vice president or higher, which
certificate shall certify as true and correct the subject matter being
certified to in such certificate.
"Operative Agreements" shall mean the following: the
Participation Agreement, the Agency Agreement, the Trust Agreement,
the Certificates, the Credit Agreement, the Notes, the Lease (and a
memorandum thereof in a form reasonably acceptable to the Agent), each
Lease Supplement (and a memorandum thereof in a form reasonably
acceptable to the Agent), the Security Agreement and each Mortgage
Instrument.
"Overdue Rate" shall mean (i) with respect to Basic Rent, and any
other amount owed under or with respect to the Credit Agreement or the
Security Documents, the rate specified in Section 2.7(b) of the Credit
Agreement, (ii) with respect to Lessor Basic Rent, the Holder Yield
and any other amount owed under or with respect to the Trust
Agreement, the applicable rate specified in the Trust Agreement, and
(iii) with respect to any other amount, the amount specified in
Section 2.7(b) of the Credit Agreement.
"Owner Trustee" shall mean First Security Bank of Utah, N.A., not
individually, except as expressly stated in the various Operative
Agreements, but solely as Owner Trustee under the FM Trust 1995-1, and
any successor or replacement Owner Trustee expressly permitted under
the Operative Agreements.
<PAGE>A-21
"Participation Agreement" shall mean the Participation Agreement
dated as of May 5, 1995, among the Lessee, the Owner Trustee, not in
its individual capacity except as expressly stated therein, the
Holder, the Lenders and the Agent, as such Participation Agreement may
be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof or of any other Operative Agreement.
"Payment Date" shall mean any Specified Interest Payment Date and
any date on which interest or Holder Yield in connection with a
prepayment of principal on the Loans or of the Holder Advance is due
under the Credit Agreement or the Trust Agreement.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
created by Section 4002(a) of ERISA or any successor thereto.
"Permitted Exceptions" shall mean:
(i) Liens of the types described in clauses (i), (ii) and
(v) of the definition of Permitted Liens;
(ii) Liens for Taxes not yet due; and
(iii) all encumbrances, exceptions, restrictions,
easements, rights of way, servitudes, encroachments and
irregularities in title, other than Liens which, in the
reasonable assessment of the Agent, do not materially impair
the use of the Property for its intended purpose.
"Permitted Liens" shall mean:
(i) the respective rights and interests of the parties to
the Operative Agreements as provided in the Operative Agreements;
(ii) the rights of any sublessee, assignee or other
transferee expressly permitted by the terms of the Lease;
(iii) Liens for Taxes that either are not yet due or are
being contested in accordance with the provisions of Section
13.1 of the Lease;
(iv) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', carriers',
warehousemen's and other like Liens relating to the
construction of the Improvements or in connection with any
modifications or arising in the ordinary course of business
for amounts that either are not more than 30 days past due
or are being diligently contested in good faith by
appropriate proceedings, so long as such proceedings satisfy
the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.1 of the Lease;
<PAGE>A-22
(v) Liens of any of the types referred to in clause (iv)
above that have been bonded for not less than the full amount in
dispute (or as to which other security arrangements satisfactory
to the Lessor and the Agent have been made), which bonding (or
arrangements) shall comply with applicable Legal Requirements,
and shall have effectively stayed any execution or enforcement of
such Liens;
(vi) Liens arising out of judgments or awards with
respect to which appeals or other proceedings for review are
being prosecuted in good faith and for the payment of which
adequate reserves have been provided as required by GAAP or
other appropriate provisions have been made, so long as such
proceedings have the effect of staying the execution of such
judgments or awards and satisfy the conditions for the
continuation of proceedings set forth in Section 13.1 of the
Lease;
(vii) Liens in favor of municipalities to the extent
agreed to by the Lessor; and
(viii) Permitted Exceptions.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to title IV of ERISA (other
than a Multiemployer Plan), and to which the Company or any ERISA
Affiliate may have any liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of
being deemed to be a contributing sponsor under section 4069 of ERISA.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization, governmental authority or any other entity.
"Plans and Specifications" shall mean, with respect to
Improvements, the plans and specifications for such Improvements to be
constructed or already existing as such Plans and Specifications may
be amended, modified or supplemented from time to time.
"Prime Lending Rate" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Property" shall mean, with respect to each Store that is
acquired, constructed and/or renovated pursuant to the terms of the
Operative Agreements, the Land and each item of Equipment and the
various Improvements, in each case located on such Land.
"Property Acquisition Cost" shall mean the cost to Lessor to
purchase a Property on a Property Closing Date.
<PAGE>A-23
"Property Closing Date" shall mean each date on which the Lessor
purchases or leases (pursuant to Ground Lease) a Property.
"Property Cost" shall mean with respect to a Property the
aggregate amount of Advances for such Property (as such amounts shall
be increased equally among all Properties respecting the Loans in
regard to Section 9.1 of the Participation Agreement extended from
time to time to pay for the Transaction Expenses, fees, expenses and
other disbursements referenced in Sections 9.1(a) and (b) of the
Participation Agreement).
"Purchase Notice" shall have the meaning given to such term in
Section 20.1 of the Lease.
"Purchase Option" shall have the meaning given to such term in
Section 20.1 of the Lease.
"Purchase Option Price" shall have the meaning given to such term
in Section 20.1 of the Lease.
"Recipient Taxes" shall have the meaning specified in Section
13.2(e) of the Participation Agreement.
"Release" shall mean any release, pumping, pouring, emptying,
injecting, escaping, leaching, dumping, seepage, spill, leak, flow,
discharge, disposal or emission of a Hazardous Substance.
"Renewal Option" shall have the meaning specified in Section 21.1
of the Lease.
"Rent" shall mean, collectively, the Basic Rent and the
Supplemental Rent, in each case payable under the Lease.
"Reportable Event" shall have the meaning specified in ERISA.
"Requested Funds" shall mean any funds requested by the Lessee or
the Construction Agent, as applicable, in accordance with Section 5 of
the Participation Agreement.
"Requirement of Law" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Requisition" shall have the meaning specified in Section 4.2 of
the Participation Agreement.
"Responsible Officer" shall mean the Chairman or Vice Chairman of
the Board of Directors, the Chairman or Vice Chairman of the Executive
Committee of the Board of Directors, the President, any Senior Vice
President or Executive Vice President, any Vice President, the
Secretary, any Assistant Secretary, the Treasurer, or any Assistant
Treasurer, except that when used with respect to the Trust Company or
the Owner Trustee, "Responsible Officer" shall also include the
Cashier, any Assistant Cashier,
<PAGE>A-24
any Trust Officer or Assistant Trust Officer, the Controller and any
Assistant Controller or any other officer of the Trust Company or the
Owner Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and
familiarity with the particular subject.
"Scheduled Interest Payment Date" shall have the meaning
specified in Section 1.1 of the Credit Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated
thereunder.
"Security Agreement" shall mean the Security Agreement, dated as
of the Initial Closing Date between the Owner Trustee and the Agent.
"Security Documents" shall have the meaning specified in Section
1.1 of the Credit Agreement.
"Shared Rights" shall mean the rights retained by the Lessor, but
not to the exclusion of the Agent, pursuant to Section 8.2(a)(ii) of
the Credit Agreement.
"Specialized Equipment" shall mean Equipment which is not, and is
not intended to be, affixed to or a component of any of the various
Improvements or Land subject to the Operative Agreements.
"Specified Interest Payment Date" shall have the meaning
specified in Section 1.1 of the Credit Agreement.
"Store" means a combination supermarket and general merchandise
multidepartment store that is substantially similar to stores owned
and/or leased by the Lessee as of the Initial Closing Date.
"Subsidiary" shall have the meaning specified in Section 1.1 of
the Credit Agreement.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Basic Rent) which the Lessee assumes or agrees
to pay to Lessor, the Holder, the Administrative Agent or any other
Person under the Lease or under any of the other Operative Agreements
including, without limitation, payments of Purchase Option Price,
Termination Value and the Maximum Residual Guarantee Amount and all
indemnification amounts, liabilities and obligations.
"Suretyship Liability" means any agreement, undertaking or other
contractual arrangement by which any Person guarantees, endorses or
otherwise becomes or is contingently liable upon (by
<PAGE>A-25
direct or indirect agreement, contingent or otherwise, to provide
funds for payment, to supply funds to or otherwise to invest in a
debtors or otherwise to assure a creditor against loss) any
indebtedness, obligation or other liability (including accounts
payable) of any other Person (other than by endorsements of
instruments in the course of collection), or guarantees the payment of
dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Suretyship Liability
shall (subject to any limitation set forth therein) be deemed to be
the principal amount of the indebtedness, obligation or other
liability guaranteed thereby.
"Taxes" shall have the meaning specified in the definition of
Impositions; provided, solely for purposes of Section 13.2(e) of the
Participation Agreement "Taxes" shall have the meaning specified in
such Section 13.2(e).
"Term" shall mean the Basic Term and each Extended Term, if any.
"Termination Date" shall have the meaning specified in Section
16.2(a) of the Lease.
"Termination Event" shall mean (a) with respect to any Plan, the
occurrence of a Reportable Event or an event described in Section
4062(e) of ERISA, (b) the withdrawal of the Lessee or any ERISA
Affiliate from a Multiple Employer Plan during a plan year in which it
was a substantial employer (as such term is defined in Section
4001(a)(2) of ERISA), or the termination of a Multiple Employer Plan,
(c) the distribution of a notice of intent to terminate a Plan or
Multiemployer Plan pursuant to Section 4041(a)(2) or 4041A of ERISA,
(d) the institution of proceedings to terminate a Plan or
Multiemployer Plan by the PBGC under Section 4042 of ERISA, (e) any
other event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan or Multiemployer Plan, or (f) the complete or
partial withdrawal of the Lessee or any ERISA Affiliate from a
Multiemployer Plan.
"Termination Notice" shall have the meaning specified in Section
16.1 of the Lease.
"Termination Value" shall mean, as of any Payment Date, (a) with
respect to all Properties, an amount equal to the sum of (i) the
aggregate outstanding principal of the Notes, plus (ii) the aggregate
Holder Property Cost, in each case as of the applicable Payment Date
and (b) with respect to a particular Property, an amount equal to the
product of the Termination Value of all the Properties as of such
Payment Date times a fraction, the numerator of which is the Property
Cost as of such Payment Date allocable to the particular Property in
question and the denominator of which is the aggregate Property Cost
for all the Properties as of such Payment Date.
<PAGE>A-26
"Total Condemnation" shall mean a Condemnation that involves a
taking of Lessor's entire title to a Property.
"Transaction Expenses" shall mean all reasonable costs and
expenses incurred in connection with the preparation, execution and
delivery of the Operative Agreements and the transactions contemplated
by the Operative Agreements including without limitation:
(a) the reasonable fees, out-of-pocket expenses and
disbursements of counsel in negotiating the terms of the
Operative Agreements and the other transaction documents,
preparing for the closings under, and rendering opinions in
connection with, such transactions and in rendering other
services customary for counsel representing parties to
transactions of the types involved in the transactions
contemplated by the Operative Agreements;
(b) any and all other reasonable fees, charges or other
amounts payable to the Lenders, Agent, the Holder, the Owner
Trustee or any broker which arises under any of the Operative
Agreements;
(c) any other reasonable fee, out-of-pocket expenses,
disbursement or cost of any party to the Operative Agreements or
any of the other transaction documents; and
(d) any and all Taxes and fees incurred in recording or
filing any Operative Agreement or any other transaction document,
any deed, declaration, mortgage, security agreement, notice or
financing statement with any public office, registry or
governmental agency in connection with the transactions
contemplated by the Operative Agreement.
"Tribunal" shall mean any state, commonwealth, federal, foreign,
territorial, or other court or government body, subdivision agency,
department, commission, board, bureau or instrumentality of a
governmental body.
"Trust Agreement" shall mean the Trust Agreement dated as of the
Initial Closing Date between the Holder and the Owner Trustee.
"Trust Company" shall mean First Security Bank of Utah, N.A., in
its individual capacity, and any successor owner trustee under the
Trust Agreement in its individual capacity.
"Trust Estate" shall have the meaning specified in Section 2.2 of
the Trust Agreement.
"UCC Financing Statements" shall mean collectively the Lender
Financing Statements and the Lessor Financing Statements.
"Unfunded Amount" shall have the meaning specified in Section 3.2
of the Agency Agreement.
<PAGE>A-27
"Uniform Commercial Code" and "UCC" shall mean the Uniform
Commercial Code as in effect in any applicable jurisdiction.
"Unimproved Property" shall mean a Property acquired by the
Lessor which either consists entirely of Land or consists of Land and
Improvements but the existing Improvements are not suitable as of the
Property Closing Date for occupancy by the Lessee and the operation by
the Lessee of a Store therein.
"Up-Front Fee" shall mean the fee payable by Lessee to Lessor on
or prior to the Initial Closing Date pursuant to the terms and
conditions of Section 9.4 of the Participation Agreement.
"Voting Power" shall mean, with respect to securities issued by
any Person, the combined voting power of all securities of such person
which are issued and outstanding at the time of determination and
which are entitled to vote in the election of directors or such
Person, other than securities having such power only by reason of the
happening of a contingency.
"Withdrawal Liability" shall mean liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such
Multiemployer Plan, as such terms are defined in Part 1 of Subtitle E
of Title IV of ERISA.
"Work" shall mean the furnishing of labor, materials, components,
furniture, furnishings, fixtures, appliances, machinery, equipment,
tools, power, water, fuel, lubricants, supplies, goods and/or services
with respect to any Property.
<PAGE>
LEASE SUPPLEMENT NO. 1
THIS LEASE SUPPLEMENT NO. 1 (this "Lease Supplement") dated as
of May 3, 1995 between FIRST SECURITY BANK OF UTAH, N.A., a national
banking association, not individually, but solely as Owner Trustee
under the FM Trust 1995-1, as lessor (the "Lessor"), and FRED MEYER,
INC., as lessee (the "Lessee").
WHEREAS, the Lessor is the owner or will be owner of the Property
described on Schedule I hereto (the "Leased Property") and wishes to
lease the same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this
Lease Supplement, capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in Appendix A
to the Participation Agreement, dated as of May 3, 1995, among the
Lessee, the Lessor, not individually, except as expressly stated
therein, but solely as Owner Trustee under the FM Trust 1995-1,
NationsBank of Texas, N.A., as the Holder, the various banks and
banking institutions which are parties thereto from time to time and
NationsBank of Texas, N.A., as Agent for the Lenders.
SECTION 2. The Properties. Attached hereto as Schedule I is
the description of the Leased Property, with an Equipment Schedule
attached hereto as Schedule I-A, an Improvement Schedule attached
hereto as Schedule I-B and a legal description of the Land for such
Project attached hereto as Schedule I-C. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee,
the Leased Property shall be subject to the terms and provisions of
the Lease.
SECTION 3. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease
and the Operative Agreements are hereby ratified and confirmed and
remain in full force and effect. The Lease is hereby incorporated
herein by reference as though restated herein in its entirety.
SECTION 4. Original Lease Supplement. The single executed
original of this Lease Supplement marked "THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and
containing the receipt of the Agent therefor on or following the
signature page thereof shall be the original executed counterpart of
this Lease Supplement (the "Original Executed Counterpart"). To the
extent that this Lease Supplement constitutes chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest in this Lease
Supplement may be created through the transfer or
<PAGE>2
possession of any counterpart other than the Original Executed
Counterpart.
SECTION 5. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
OREGON.
SECTION 6. Counterpart Execution. This Lease Supplement may be
executed in any number of counterparts and by each of the parties
hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Lease Supplement to be duly executed by an officer thereunto duly
authorized as of the date and year first above written.
FIRST SECURITY BANK OF UTAH, N.A.,
not individually, but solely as
Owner Trustee under the FM Trust
1995-1, as Lessor
By: C. SCOTT NIELSEN
------------------------------
Name: C. Scott Nielsen
----------------------------
Title: Asst. Vice President
---------------------------
FRED MEYER, INC., as Lessee
By: MICHAEL H. DON
------------------------------
Name: Michael H. Don
----------------------------
Title: Vice President/Treasurer
---------------------------
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged as the date hereof.
NATIONSBANK OF TEXAS, N.A., as Agent
By: WILLIAM GUFFEY
-------------------------------
Name: William Guffey
-----------------------------
Title: Vice President
----------------------------
<PAGE>
SCHEDULE I
TO LEASE SUPPLEMENT NO. 1
<PAGE>
SCHEDULE I-A
TO LEASE SUPPLEMENT NO. 1
(Equipment)
None
<PAGE>
SCHEDULE I-B
TO LEASE SUPPLEMENT NO. 1
(Improvements)
<PAGE>
SCHEDULE I-C
TO LEASE SUPPLEMENT NO. 1
(Land)
<PAGE>
LEASE SUPPLEMENT NO. 2
THIS LEASE SUPPLEMENT NO. 2 (this "Lease Supplement") dated as
of May 3, 1995 between FIRST SECURITY BANK OF UTAH, N.A., a national
banking association, not individually, but solely as Owner Trustee
under the FM Trust 1995-1, as lessor (the "Lessor"), and FRED MEYER,
INC., as lessee (the "Lessee").
WHEREAS, the Lessor is the owner or will be owner of the Property
described on Schedule I hereto (the "Leased Property") and wishes to
lease the same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this
Lease Supplement, capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in Appendix A
to the Participation Agreement, dated as of May 3, 1995, among the
Lessee, the Lessor, not individually, except as expressly stated
therein, but solely as Owner Trustee under the FM Trust 1995-1,
NationsBank of Texas, N.A., as the Holder, the various banks and
banking institutions which are parties thereto from time to time and
NationsBank of Texas, N.A., as Agent for the Lenders.
SECTION 2. The Properties. Attached hereto as Schedule I is
the description of the Leased Property, with an Equipment Schedule
attached hereto as Schedule I-A, an Improvement Schedule attached
hereto as Schedule I-B and a legal description of the Land for such
Project attached hereto as Schedule I-C. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee,
the Leased Property shall be subject to the terms and provisions of
the Lease.
SECTION 3. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease
and the Operative Agreements are hereby ratified and confirmed and
remain in full force and effect. The Lease is hereby incorporated
herein by reference as though restated herein in its entirety.
SECTION 4. Original Lease Supplement. The single executed
original of this Lease Supplement marked "THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and
containing the receipt of the Agent therefor on or following the
signature page thereof shall be the original executed counterpart of
this Lease Supplement (the "Original Executed Counterpart"). To the
extent that this Lease Supplement constitutes chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest in this Lease
Supplement may be created through the transfer or
<PAGE>2
possession of any counterpart other than the Original Executed
Counterpart.
SECTION 5. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
OREGON.
SECTION 6. Counterpart Execution. This Lease Supplement may be
executed in any number of counterparts and by each of the parties
hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Lease Supplement to be duly executed by an officer thereunto duly
authorized as of the date and year first above written.
FIRST SECURITY BANK OF UTAH, N.A.,
not individually, but solely as
Owner Trustee under the FM Trust
1995-1, as Lessor
By: C. SCOTT NIELSEN
------------------------------
Name: C. Scott Nielsen
----------------------------
Title: Asst. Vice President
---------------------------
FRED MEYER, INC., as Lessee
By: MICHAEL H. DON
------------------------------
Name: Michael H. Don
----------------------------
Title: Vice President/Treasurer
---------------------------
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged as the date hereof.
NATIONSBANK OF TEXAS, N.A., as Agent
By: WILLIAM GUFFEY
-------------------------------
Name: William Guffey
-----------------------------
Title: Vice President
----------------------------
<PAGE>
SCHEDULE I-A
TO LEASE SUPPLEMENT NO. 2
(Equipment)
None
<PAGE>
SCHEDULE I-B
TO LEASE SUPPLEMENT NO. 2
(Improvements)
<PAGE>
SCHEDULE I-C
TO LEASE SUPPLEMENT NO. 2
(Land)
<PAGE>
RECORDING REQUESTED
BY AND WHEN RECORDED
RETURN TO:
Moore & Van Allen, P.L.L.C.
NationsBank Corporate Center
100 North Tryon Street, Floor 47
Charlotte, NC 28202-4003
- ---------------------------------------------------------------------
LEASE ASSIGNMENT AGREEMENT
(Assignment of Lessor's Interest - Hawthorne Sublease and
Assignment of Lessee's Interest - Hawthorne Master Lease)
This Lease Assignment Agreement (this "Agreement"), dated as of
May 11, 1995 between REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an
Oregon limited partnership whose address is Suite 200, 15115 SW
Sequoia Parkway, Portland, OR 97224 ("Assignor"), and FIRST SECURITY
BANK OF UTAH, N.A., not individually, but solely as Owner Trustee
under the FM Trust 1995-1 ("Assignee"), recites and provides as
follows:
Assignor currently leases the real property located in Portland,
Multnomah County, Oregon, described in the attached Exhibit A, from
REC Resolution Company, Inc., an Oregon corporation ("REC"), pursuant
to a lease agreement dated as of February 5, 1963 (the "Hawthorne
Master Lease"). Assignor subleases the Hawthorne Property to Fred
Meyer, Inc., a Delaware corporation, pursuant to a lease agreement
dated as of October 22, 1986 (the "Hawthorne Sublease"). The
Hawthorne Master Lease and the Hawthorne Sublease are, collectively,
the "Lease Agreements."
FOR good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Assignor hereby sells, assigns,
transfers, conveys and delivers to Assignee all of Assignor's right,
title and interest in and to the Hawthorne Master Lease (as lessee)
and the Hawthorne Sublease (as lessor). The rights conveyed hereby
are referred to herein as the "Leasehold Interests".
Assignee hereby accepts the foregoing assignment, but without
assumption of any liability or obligation of any kind under the Lease
Agreements, which liabilities and obligations will be terminated
contemporaneously with the consummation of such assignment. Neither
the assignment nor acceptance of the Leasehold Interests will be
construed as an assumption of the Lease Agreements. Assignee assumes
no liabilities or obligations of Assignor of any nature whatsoever,
whether or not accrued or affixed, absolute or contingent, known or
unknown,
<PAGE>2
determined or determinable, or incurred prior to, on or after the
effective date of such assignment (the "Closing Date").
Assignor represents, warrants and covenants to and with Assignee
that: (1) Assignor has good and indefeasible title to the Leasehold
Interests, subject to no encumbrances created or suffered by Assignor
other than the matters identified on Exhibit B hereto; (2) Assignor
has the full right, power and authority to assign the Leasehold
Interests to Assignee in accordance herewith; and (3) Assignor will
defend Assignee's right, title and interest in and to the Leasehold
Interests from and against any claim by, through or under Assignor.
Assignee is, concurrently with the assignments pursuant to this
Agreement, acquiring fee title to the property covered by the
Hawthorne Master Lease from REC, together with the interest of REC as
the lessor under the Hawthorne Master Lease (the "REC Interests").
The parties acknowledge that, upon consummation of the assignments
under this Agreement, and Assignee's acquisition of the REC Interests,
the Hawthorne Master Lease will be terminated by merger of estates,
and will thereafter have no force or effect.
This Agreement shall bind and inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors,
heirs, and permitted assigns. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute
one agreement binding on all the parties. Each party agrees, at the
request of the other party, at any time and from time to time after
the date hereof, to execute and deliver all such further documents,
and to take and forbear from all such action, as may be reasonably
necessary or appropriate in order more effectively to perfect the
transfers of rights contemplated herein or otherwise to confirm or
carry out the provisions of this Agreement.
EXECUTED effective the date first written above.
ASSIGNOR: REAL ESTATE PROPERTIES LIMITED PARTNERSHIP, an
Oregon limited partnership, by FMGP Associates,
an Oregon limited partnership, its general partner,
by FMGP Incorporated, a Delaware corporation, its
general partner
By: PETER F. BECHEN
-----------------------------------
Title: President
--------------------------------
ASSIGNEE: FIRST SECURITY BANK OF UTAH, N.A., not
individually, but solely as Owner Trustee under
the FM Trust 1995-1
By: VAL T. ORTON
-----------------------------------
Title: Vice President
--------------------------------
<PAGE>3
STATE OF UTAH )
) ss.
COUNTY OF SALT LAKE )
This instrument was acknowledged before me this 9th day of May,
1995, by Val T. Orton, as Vice President of FIRST SECURITY BANK OF
UTAH, N.A., on behalf of said association, not individually, but
solely as Owner Trustee under the FM Trust 1995-1.
MELE V. FONUA
-----------------------------------
Notary Public for State of Utah
My Commission Expires: Oct. 3, 1998
STATE OF OREGON )
) ss.
COUNTY OF Washington )
On this 28 day of April, 1995, before me, the undersigned, a
Notary Public in and for the State of Oregon, duly commissioned and
sworn, personally appeared Peter F. Bechen, to me known to be the
person who signed as President of FMGP INCORPORATED, a Delaware
corporation, the corporation that executed the within and foregoing
instrument as the general partner of FMGP ASSOCIATES, an Oregon
limited partnership, itself the limited partnership that executed the
within and foregoing instrument as a general partner of REAL ESTATE
PROPERTIES LIMITED PARTNERSHIP, an Oregon limited partnership, and
acknowledged said instrument to be the free and voluntary act and
deed of said corporation, and that said corporation executed the same,
pursuant to its bylaws or a resolution of its board of directors, as
the general partner of said limited partnership; and that said
limited partnership executed the same as a general partner of said
partnership, and that said partnership executed the same.
JENNIFER SEIFERT
NOTARY PUBLIC in and for the State of Oregon
My Appointment Expires: Mar. 28, 1997
<PAGE>
Exhibit A - Legal Description
Order No. 759048
REVISED EXHIBIT "A"
PARCEL I:
Lots 1-16, inclusive, Block 1, SUNNYSIDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon. TOGETHER WITH
that portion vacated of SE Madison Street which inured thereto by reason
of Ordinance vacating SE Madison Street recorded December 4, 1970 in
Book 762, page 1551.
PARCEL II:
Lots 1-16, inclusive, Block 2, SUNNYSlDE ADDITION, in the City of
Portland, County of Multnomah and State of Oregon.
EXCEPT the East 12 feet of Lots 8 and 9 of said Block 2, described in
deeds to the City of Portland, recorded October 16, 1962 in Book
2139, page 424 and Book 2139, page 428.
TOGETHER WITH that portion of vacated SE Madison Street which inured
thereto by reason of Ordinance vacating SE Madison Street recorded
December 4, 1970 in book 762, page 1551.
<PAGE>
EXHIBIT B
EXCEPTIONS TO TITLE - HAWTHORNE
1. Conditions and Restrictions contained in Ordinance No. 93277, of the
City of Portland, a copy of which was
Recorded : January 9, 1951 in Book 1453, page 142
2. Conditions and Restrictions contained in Ordinance No. 94128, of the
City of Portland, a copy of which was
Recorded : May 21, 1951 in Book 1477, page 355
3. Conditions and Restrictions contained in Ordinance No. 98444, of the
City of Portland, a copy of which was
Recorded : May 22, 1953 in Book 1602, page 361
4. Conditions and Restrictions contained in Ordinance No. 98964, of the
City of Portland, a copy of which was
Recorded : August 17, 1953 Book 1616, page 370
5. Conditions and Restrictions contained in Ordinance No. 115437, of the
City of Portland, a copy of which was
Recorded : July 9, 1962 in Book 2124, page 408
6. Any rights, interests or claims which may exist or arise by reason of
the matters noted in the survey dated January 30, 1995 by Westlake
Consultants, Inc., Job No. 720-04.
7. Subleases and tenancies affecting the Property that were created or
suffered by Fred Meyer, Inc. as lessee.
8. Reservation of utilities in vacated street area and the right to
maintain the same as set forth in Ordinance No. 131479, a copy of
which was
Recorded : December 4, 1970 in Book 762, page 1551
9. Conditions and Restrictions contained in Ordinance No. 132582, of the
City of Portland, a copy of which was
Recorded : May 17, 1971 in Book 787, page 1632
<PAGE>
LEASE SUPPLEMENT NO. 3
THIS LEASE SUPPLEMENT NO. 3 (this "Lease Supplement") dated as
of May 3, 1995 between FIRST SECURITY BANK OF UTAH, N.A., a national
banking association, not individually, but solely as Owner Trustee
under the FM Trust 1995-1, as lessor (the "Lessor"), and FRED MEYER,
INC., as lessee (the "Lessee").
WHEREAS, the Lessor is the owner or will be owner of the Property
described on Schedule I hereto (the "Leased Property") and wishes to
lease the same to Lessee;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Definitions; Rules of Usage. For purposes of this
Lease Supplement, capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to them in Appendix A
to the Participation Agreement, dated as of May 3, 1995, among the
Lessee, the Lessor, not individually, except as expressly stated
therein, but solely as Owner Trustee under the FM Trust 1995-1,
NationsBank of Texas, N.A., as the Holder, the various banks and
banking institutions which are parties thereto from time to time and
NationsBank of Texas, N.A., as Agent for the Lenders.
SECTION 2. The Properties. Attached hereto as Schedule I is
the description of the Leased Property, with an Equipment Schedule
attached hereto as Schedule I-A, an Improvement Schedule attached
hereto as Schedule I-B and a legal description of the Land for such
Project attached hereto as Schedule I-C. Effective upon the execution
and delivery of this Lease Supplement by the Lessor and the Lessee,
the Leased Property shall be subject to the terms and provisions of
the Lease.
SECTION 3. Ratification; Incorporation by Reference. Except as
specifically modified hereby, the terms and provisions of the Lease
and the Operative Agreements are hereby ratified and confirmed and
remain in full force and effect. The Lease is hereby incorporated
herein by reference as though restated herein in its entirety.
SECTION 4. Original Lease Supplement. The single executed
original of this Lease Supplement marked "THIS COUNTERPART IS THE
ORIGINAL EXECUTED COUNTERPART" on the signature page thereof and
containing the receipt of the Agent therefor on or following the
signature page thereof shall be the original executed counterpart of
this Lease Supplement (the "Original Executed Counterpart"). To the
extent that this Lease Supplement constitutes chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest in this Lease
Supplement may be created through the transfer or
<PAGE>2
possession of any counterpart other than the Original Executed
Counterpart.
SECTION 5. GOVERNING LAW. THIS LEASE SUPPLEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
OREGON.
SECTION 6. Counterpart Execution. This Lease Supplement may
be, executed in any number of counterparts and by each of the parties
hereto in separate counterparts, all such counterparts together
constituting but one and the same instrument.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this
Lease Supplement to be duly executed by an officer thereunto duly
authorized as of the date and year first above written.
FIRST SECURITY BANK OF UTAH, N.A.,
not individually, but solely as
Owner Trustee under the FM Trust
1995-1, as Lessor
By: C. SCOTT NIELSEN
------------------------------
Name: C. Scott Nielsen
----------------------------
Title: Asst. Vice President
---------------------------
FRED MEYER, INC., as Lessee
By: MICHAEL H. DON
------------------------------
Name: Michael H. Don
----------------------------
Title: Vice President/Treasurer
---------------------------
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged as the date hereof.
NATIONSBANK OF TEXAS, N.A., as Agent
By: WILLIAM GUFFEY
-------------------------------
Name: William Guffey
-----------------------------
Title: Vice President
----------------------------
<PAGE>
SCHEDULE I
TO LEASE SUPPLEMENT NO. 3
<PAGE>
SCHEDULE I-A
TO LEASE SUPPLEMENT NO. 3
(Equipment)
None
<PAGE>
SCHEDULE I-B
TO LEASE SUPPLEMENT NO. 3
(Improvements)
<PAGE>
SCHEDULE I-C
TO LEASE SUPPLEMENT NO. 3
(Land)
EXHIBIT 11
FRED MEYER, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In thousands, except per share amounts)
(Unaudited)
12 Weeks Ended 40 Weeks Ended
------------------ ------------------
Nov. 4, Nov. 5, Nov. 4, Nov. 5,
1995 1994 1995 1994
-------- -------- -------- --------
Weighted average number of
shares outstanding.............. 26,704 26,548 26,676 26,500
Weighted average number of
shares under option............. 2,467 3,521 2,772 3,609
Shares assumed to have been
purchased under the
treasury stock method........... (917) (1,513) (1,075) (1,449)
------ ------- ------ ------
Weighted average number of
common and common equivalent
shares outstanding.............. 28,254 28,556 28,373 28,660
====== ======= ====== ======
Net income........................ $(2,309) $(36,579) $11,447 $(1,400)
====== ======= ====== ======
Earnings per common share......... $ (.08) $ (1.28) $ .40 $ (.05)
====== ======= ====== ======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> NOV-04-1995
<CASH> 41,735
<SECURITIES> 0
<RECEIVABLES> 24,928
<ALLOWANCES> 0
<INVENTORY> 620,441
<CURRENT-ASSETS> 742,167
<PP&E> 1,520,015
<DEPRECIATION> 512,159
<TOTAL-ASSETS> 1,772,285
<CURRENT-LIABILITIES> 461,915
<BONDS> 674,014
<COMMON> 270
0
0
<OTHER-SE> 550,867
<TOTAL-LIABILITY-AND-EQUITY> 1,772,285
<SALES> 2,462,530
<TOTAL-REVENUES> 2,462,530
<CGS> 1,765,782
<TOTAL-COSTS> 649,997
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,288
<INCOME-PRETAX> 18,463
<INCOME-TAX> 7,016
<INCOME-CONTINUING> 11,447
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,447
<EPS-PRIMARY> $.40
<EPS-DILUTED> $.40
</TABLE>
