- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
------------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
FOR THE FISCAL YEAR ENDED COMMISSION FILE NUMBER
JANUARY 29, 1994 0-16404
SUPERMARKETS GENERAL HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-3408704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 BLAIR ROAD, P. O. BOX 5301 07095-0915
WOODBRIDGE, NJ (Zip Code)
(Address of principal executive office)
908-499-3000
(Registrant's telephone number, including area code)
------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
$3.52 CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK
(Title of Class)
------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO __
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of April 1, 1994.
There were outstanding 650,675 shares of $0.01 par value Class A Common
Stock (voting) and 320,000 shares of $0.01 par value Class B Common Stock
(non-voting), all of which are privately owned and not traded on a public
market.
Documents Incorporated by Reference: None
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 of 97
<PAGE>
PART I
ITEM 1. BUSINESS*
Registrant was incorporated in the State of Delaware in April 1987 as SMG
Holdings Corporation. Subsequently, registrant's name was changed to
Supermarkets General Holdings Corporation (the "Company"). The Company acquired
Supermarkets General Corporation ("Old Supermarkets"), in October 1987 (the
"Acquisition"). References to the Company in this Report refer to the Company
and its subsidiaries on a consolidated basis, except where the context requires
otherwise.
In October 1989, Old Supermarkets adopted an amended and restated Plan of
Liquidation pursuant to which it was liquidated into three wholly owned
subsidiaries of the Company. In November 1989, pursuant to such Plan, Old
Supermarkets transferred substantially all of the assets of its Purity Supreme
division to two of the three above mentioned wholly owned subsidiaries of the
Company, Purity Supreme, Inc. ("Purity") and Li'l Peach Corp. ("Li'l Peach", and
together with Purity, the "Purity Operations"), and said subsidiaries assumed
substantially all of the liabilities of Old Supermarkets related to such
division. Old Supermarkets completed the liquidation just prior to the year
ended February 3, 1990 by merging with the third of the above mentioned wholly
owned subsidiaries of the Company, which retained the name Supermarkets General
Corporation. In connection with the Recapitalization referred to below,
Supermarkets General Corporation changed its name to Pathmark Stores, Inc.
("Pathmark").
On December 17, 1991, the Company completed the sale of the Purity
Operations for approximately $257.0 million (as adjusted), including the
assumption of certain indebtedness of Purity and Li'l Peach. The Company
recognized a loss of $228.0 million on the sale of the Purity Operations.
Included in the loss was a write-off of approximately $214.0 million of goodwill
related to the Purity Operations. The Company retains a 10% common equity
interest in Purity Supreme and a new issue of Purity Supreme exchangeable
preferred stock with an aggregate stated value of approximately $18.0 million.
These retained investments in Purity Supreme are carried on the Company's books
at zero value. Pathmark is contingently liable for certain obligations of the
Purity Operations under certain instruments, primarily 60 leases for real
property, in the event of default thereunder by the Purity Operations, and is
subject to a non-compete agreement with the Purity Operations restricting
Pathmark's ability to operate supermarkets in Massachusetts, New Hampshire and
part of Connecticut until July, 1994. Prior to the sale of the Purity
Operations, three properties of Purity Supreme were transferred to Pathmark. See
"Properties".
THE RECAPITALIZATION
The Company consummated a recapitalization plan (the "Recapitalization") on
October 26, 1993. In connection with the Recapitalization, the Company
transferred all of the capital stock of Pathmark to PTK Holdings, Inc. ("PTK"),
a newly formed, wholly owned subsidiary of the Company. The Recapitalization
reduced Pathmark's interest expense and will allow Pathmark to devote its
capital to growing its core supermarket and drug store business.
The Recapitalization involved the following transactions (dollar amounts
are as of October 26, 1993):
The Creation of PTK. The incorporation in the State of Delaware of PTK
and the transfer to PTK of all the capital stock of Pathmark. PTK owns 100%
of the capital stock of Pathmark and also owns 100% of the capital stock of
Plainbridge, Inc., a newly formed Delaware corporation ("Plainbridge").
Pathmark distributed the capital stock of Plainbridge to PTK in the
Plainbridge Spin-Off (as defined below).
- ---------------
* Except as otherwise indicated, information contained in this Item is given as
of January 29, 1994.
1
<PAGE>
The Spin-Offs. The contribution by Pathmark to Plainbridge of the
Rickel home center business, the warehouse, distribution and transportation
operations and the inventory therein that service the Pathmark supermarkets
and drug stores and certain other assets and the distribution of the shares
of Plainbridge to PTK (the "Plainbridge Spin-Off") and the contribution by
Pathmark to Chefmark, Inc., a newly formed Delaware corporation
("Chefmark"), of the Chefmark deli food preparation operations and a
related warehouse and a leased banana ripening warehouse and the
distribution of the shares of Chefmark to the Company (the "Chefmark
Spin-Off", and, together with the Plainbridge Spin-Off, the "Spin-Offs").
In connection with the Plainbridge Spin-Off, Pathmark entered into a
logistical services agreement with Plainbridge (the "Logistical Services
Agreement") that provides for the continuing supply of merchandise to the
Pathmark supermarkets and drug stores and for the provision of warehousing,
distribution and logistical services relating to the supply of such
merchandise. Pursuant to such agreement, Pathmark directs the purchase of
such merchandise and negotiates the terms and conditions of its sale
directly with the applicable vendors. For a further description of the
terms of the Logistical Services Agreement see "--Business of
Pathmark-Logistical Services Agreement". The Company intends to further
spin off Plainbridge to its common stockholder within the next year,
although there can be no assurance that such spin-off will be consummated.
Any such spin-off would require satisfying the dividend restrictions with
respect to the Company's $3.52 cumulative Exchangeable Redeemable Preferred
Stock (the "Exchangeable Preferred Stock"), as well as, obtaining consents
from various lenders to Plainbridge and PTK.
New Borrowings. (a) Borrowings by Pathmark from banks of $400.0
million under a new term loan facility (the "Term Loan") and $50 million
under a new $175.0 million working capital facility (the "Working Capital
Facility", and, together with the Term Loan, the "Bank Credit Agreement").
(b) The issuance by Pathmark of $440.0 million aggregate principal
amount of its 9 5/8% Senior Subordinated Notes due 2003 (the "Senior
Subordinated Notes").
(c) The consummation of the offer by Pathmark to exchange (the "11
5/8% Exchange Offer") a new issue of its 11 5/8% Subordinated Notes due
2002 (the "Subordinated Notes") for up to the $200.0 million aggregate
principal amount outstanding of the Company's 11 5/8% Subordinated Notes
due 2002 (the "Holdings Subordinated Notes") and, in connection with the
11 5/8% Exchange Offer, the solicitation by the Company of consents from
the holders of the Holdings Subordinated Notes to certain proposed
amendments to delete certain restrictions in the indenture under which
the Holdings Subordinated Notes were issued (the "Holdings Subordinated
Note Indenture") and payment of related consent fees. Holders of over
98% of the outstanding aggregate principal amount of such Notes accepted
the 11 5/8% Exchange Offer and consented to the proposed amendments.
Accordingly, Pathmark issued $198.5 million of its Subordinated Notes
and the Company executed a supplemental indenture to the Holdings
Subordinated Note Indenture reflecting the proposed amendments.
Approximately $1.5 million aggregate principal amount of Holdings
Subordinated Notes not tendered and accepted for exchange in the 11 5/8%
Exchange Offer remains outstanding. An equivalent amount of subordinated
Intercompany Notes with terms corresponding to the terms of the Holdings
Subordinated Notes also remains outstanding.
(d) The consummation of the offer by Pathmark and the Company (the
"12 5/8% Exchange Offer") pursuant to which Pathmark issued $95.8
million aggregate principal amount of its 12 5/8% Subordinated
Debentures due 2002 (the "Subordinated Debentures") in exchange for
$95.8 million aggregate principal amount of the $415.0 million aggregate
principal amount outstanding of the Company's 12 5/8% Subordinated
Debentures due 2002 (the "Holdings Subordinated Debentures") held by
persons other than certain affiliates of The Equitable Life Assurance
Society of the United States (the "Equitable Affiliates"). The Company
also purchased $4.2 million aggregate principal amount of such
Debentures for cash
2
<PAGE>
at a price of 112.125% of the aggregate principal amount thereof,
together with accrued interest to the date of purchase (the "Tender
Offer", and, together with the 12 5/8% Exchange Offer, the "Tender and
Exchange Offer"), solicited consents from all holders of the Holdings
Subordinated Debentures to certain proposed amendments to delete certain
restrictions in the indenture under which the Holdings Subordinated
Debentures were issued (the "Holdings Subordinated Debenture Indenture")
and paid related consent fees. Holders of Holdings Subordinated
Debentures (other than the Equitable Affiliates) tendered $95.8 million
aggregate principal amount of Holdings Subordinated Debentures for
Subordinated Debentures pursuant to the Tender and Exchange Offer, and
holders representing over 99% of the aggregate outstanding principle
amount of the Holdings Subordinated Debentures consented to the proposed
amendments. Accordingly, Pathmark issued its Subordinated Debentures and
the Company executed a supplemental indenture to the Holdings
Subordinated Debenture Indenture reflecting the proposed amendments. In
addition, as part of the Recapitalization, the Company also purchased
for cash $185.0 million aggregate principal amount of the Holdings
Subordinated Debentures from the Equitable Affiliates at the same price
offered in the Tender Offer and sold PTK's Exchangeable Guaranteed
Debentures due 2003 (the "PTK DIBs") with an issue price of $130.0
million to the Equitable Affiliates in exchange for the remaining $130.0
million of Holdings Subordinated Debentures held by the Equitable
Affiliates as described below.
(e) The issuance (the "Deferred Coupon Notes Offering", and,
together with the Senior Subordinated Notes Offering, the "Debt
Offerings") by Pathmark of $225.25 million aggregate principal amount at
maturity of its Junior Subordinated Deferred Coupon Notes due 2003 (the
"Deferred Coupon Notes") at an issue price of $532.74 per $1,000
principal amount at maturity.
(f) The issuance by PTK to the Company of $130.0 million aggregate
principal amount of PTK DIBs that the Company sold to the Equitable
Affiliates in a private placement (the "Private Placement") in exchange
for $130.0 million aggregate principal amount of the Holdings
Subordinated Debentures held by the Equitable Affiliates. The Company
also paid in cash to the Equitable Affiliates the Tender Offer premium
and consent fees with respect to such Holdings Subordinated Debentures.
Such Holdings Subordinated Debentures were cancelled and the related
intercompany indebtedness of Pathmark to the Company (the "Intercompany
Notes") was forgiven resulting in a $130.0 million capital contribution
to the Company.
Debt Repayment. (a) The repayment of the full amount of indebtedness
outstanding under Pathmark's old working capital facility (the "Old Working
Capital Facility"), which amounted to $80.0 million at the date of the
Recapitalization.
(b) The payment by Pathmark to the Company of $894.4 million (which
reflects that holders of $4.2 million aggregate principal amount of
Holdings Subordinated Debentures tendered for cash pursuant to the
Tender Offer) of the proceeds from the Debt Offerings and the other
borrowings described above and the transfer by Pathmark to the Company
of (i) $198.5 million aggregate principal amount of Holdings
Subordinated Notes acquired by Pathmark in the 11 5/8% Exchange Offer
and (ii) $95.8 million aggregate principal amount of Holdings
Subordinated Debentures acquired by Pathmark in the Tender and Exchange
Offer in order to retire Intercompany Notes. The Holdings Subordinated
Debentures acquired in the Private Placement were also used to retire
Intercompany Notes as described above. The Company used the cash
proceeds it received (i) to fund the redemptions of the Holdings' 14
1/2% Senior Subordinated Notes due 1997 (the "Holdings Senior
Subordinated Notes") and the Holdings' 13 1/8% Junior Subordinated
Discount Debentures due 2003 (the "Holdings Discount Debentures"), (ii)
to purchase $4.2 million aggregate principal amount of Holdings
Subordinated Debentures tendered pursuant to the Tender Offer from
holders other than the
3
<PAGE>
Equitable Affiliates, (iii) to purchase $185.0 million aggregate
principal amount of Holdings Subordinated Debentures from the Equitable
Affiliates as described above and (iv) to pay consent fees and expenses
of the Company related to the Recapitalization.
The Company believes that if a recapitalization had not been consummated,
Pathmark's total capital expenditures would have been limited to $125.0 million
over the next three fiscal years and would have resulted in approximately 30
renovations as well as the funding of ongoing projects for Fiscal 1993, which
would not have materially altered Pathmark's total selling square footage. Due
primarily to such limitation on investment, the Company believes that Pathmark's
growth would have been restricted to approximately 0.5% per year if a
recapitalization had not been consummated. Improvements in Pathmark's operating
results also are significantly dependent upon Pathmark's store expansion and
renovation program which in turn depended on a recapitalization. Moreover,
without a recapitalization, the Company believes that its interest costs would
have exceeded its projected operating earnings resulting in additional losses.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Results of Operations" for a discussion of the basis for such
projections and further information on the impact on the Company if a
recapitalization had not been consummated.
BUSINESS OF THE COMPANY
The Company's primary business activity is the management of its interests
in Pathmark, Plainbridge and Chefmark. The Company holds all of the capital
stock of PTK and all of the capital stock of Chefmark. Through PTK, the Company
owns all of the capital stock of Pathmark and Plainbridge.
The primary business activity of Plainbridge is to operate the Rickel home
center business in New Jersey, New York, Pennsylvania and Delaware and the
warehouse distribution and transportation operations that service the Pathmark
supermarkets and drug stores. Chefmark's primary business is to supply Pathmark
will deli food preparation services and merchandise from the banana ripening
facility. The Company intends to further spin off Plainbridge to its common
stockholders within the next year, although there can be no assurance that such
spin-off will be consummated.
BUSINESS OF PATHMARK
Pathmark is the leading supermarket retailer, based on sales volume,
operating under a single trade name in the northeast United States and the
thirteenth largest in the United States. At January 29, 1994, Pathmark operated
143 supermarkets, primarily in the New York-New Jersey and Philadelphia
metropolitan areas. These metropolitan areas contain over 10% of the population
and grocery sales in the United States. At January 29, 1994, Pathmark also
operated 33 freestanding drug stores, primarily in the New York City
metropolitan area, and 136 pharmacies in its supermarkets, making it one of the
leading drug store retailers, based on sales volume, in the northeast United
States.
The following table presents the market area, number of stores and selling
and total square footage for Pathmark's supermarkets and drug stores as of
January 29, 1994.
<TABLE><CAPTION>
SELLING
NUMBER OF SQ. FT. TOTAL SQ. FT.
TYPE OF STORE MARKET AREA STORES (000'S) (000'S)
- ------------------------------------------------------------ ---------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Supermarkets and Super Centers(1)........................... NJ, NY, PA, CT, 143 5,089 7,028
DE
Drug Stores................................................. NY, NJ, CT 33 276 315
</TABLE>
- ---------------
(1) Reflects the Company's decision in the second quarter of the fiscal year
ended January 29, 1994 ("Fiscal 1993") to close or dispose of five stores
(the "Five Stores").
4
<PAGE>
BUSINESS STRATEGY
Pathmark's business strategy is to increase profitability and market
penetration in its existing markets (i) by providing superior value to its
customers through its marketing and merchandising programs, (ii) through store
openings, enlargements and renovations and (iii) through increased operating
efficiencies. In implementing this strategy, Pathmark has used a large-store
format to increase operating efficiencies and to expand its offering of higher
margin merchandise and services, most notably, perishable products.
Marketing and Merchandising
. Super Center Format. The average Pathmark Super Center is over 50% larger than
the average size supermarket in the United States and offers greater
convenience by providing one-stop shopping and a wider assortment of foods and
general merchandise than is offered by conventional supermarkets. Pathmark
expects that its new stores opened during the current and next two fiscal
years will average approximately 62,000 square feet.
. Pathmark 2000. Pathmark 2000 is a new, larger Super Center format designed to
provide Pathmark customers with a substantially greater selection of
perishable products, particularly produce. Pathmark 2000 stores are also
designed to be more "customer friendly", with wider aisles, more accessible
customer service and information departments, improved signs and graphics, and
increased availability of Pathmark associates. Implementation of elements of
this format in certain stores has significantly enhanced sales and operating
margins in these stores. A majority of Pathmark's new supermarkets and
supermarket enlargements completed in Fiscal 1993 employed the Pathmark 2000
concept, and Pathmark expects that virtually all new stores and enlargements
thereafter will employ the same concept. By Fiscal 1996, Pathmark expects that
approximately 50% of its supermarket sales will be derived from stores that
employ this concept.
. Flexible Merchandising. Pathmark believes that its large-store format gives it
considerable flexibility to respond to changing consumer demands and
competition by varying and enhancing its merchandise selection. Pathmark's
"Big Deals" program, currently consisting of over 400 merchandise items offers
large-sized merchandise at prices which Pathmark believes are competitive with
those available in "warehouse" and "club" stores. Pathmark emphasizes
competitive pricing plus weekly sales and promotions supported by extensive
advertising, primarily in print media. Merchandising flexibility and
effectiveness is enhanced through the increased utilization of a category
management approach.
. Pathmark Label. Pathmark believes that it is one of the leading supermarket
retailers of private label merchandise in the United States. During Fiscal
1993, approximately 23% of Pathmark's sales of grocery and frozen merchandise
was derived from private label items (the Pathmark and No Frills brands). Over
3,300 items are currently offered through the complete private label program.
. Pharmacy. Pathmark, which is the leading filler of prescriptions in the New
York metropolitan area, provides full pharmacy services in virtually all of
its Super Center stores and in all of its drug stores. Pathmark's broad market
coverage within its marketing area has enabled it to become a leading filler
of third-party prescriptions in this area. Pathmark believes that its
well-established pharmacy operations provide a competitive advantage in
attracting and retaining customers.
Store Expansion and Renovation Program
. New Stores, Enlargements and Renovations. With the completion of the
Recapitalization, Pathmark plans to accelerate the expansion of its total
selling square footage. During Fiscal 1994, Fiscal 1995 and Fiscal 1996,
Pathmark plans to open an aggregate of 18 new Pathmark Super Centers, nine of
which will replace smaller Pathmark stores, and to complete up to an aggregate
of 85 major renovations and enlargements, at a total investment of
approximately $340.0 million. Realization of this plan would increase
supermarket selling square footage by more than 14% over the three-year
5
<PAGE>
period. Expansion of selling square footage also may occur as a result of the
acquisition of new stores. The Company believes that if a recapitalization had
not been consummated, Pathmark's total capital expenditures would have been
limited to approximately $125.0 million over the same period and would have
resulted in approximately 30 renovations as well as the funding of ongoing
projects for Fiscal 1993, which would not have materially altered Pathmark's
total selling square footage.
Pathmark recognizes the importance of keeping its stores looking fresh and
up-to-date; thus, each store typically receives a major renovation or
enlargement every five years. At the end of Fiscal 1993, Pathmark derived
approximately 73% of its supermarket sales from stores that were opened or
enlarged or underwent major renovations during the last five years.
. Core Market Focus. Pathmark has identified approximately 90 potential
locations for new supermarkets within its current marketing areas and expects
that all new stores opened during Fiscal 1994, Fiscal 1995 and Fiscal 1996
will be located in these areas. Pathmark believes that, by opening stores in
its current marketing areas, it can achieve additional operating economies and
other benefits from its store expansion program without the risks and costs
associated with opening stores in new marketing areas.
Operating Efficiencies
. Technology. Pathmark has made a significant and continuing investment in
information technology and believes it is a leader in the supermarket industry
in this area. All Pathmark supermarket checkout terminals have recently
installed, third-generation "state of the art" IBM 4680 scanner systems
supported by a RISC 6000 application processor in each store. These systems
allow consumer credit and EFT transactions, greatly facilitate system-wide
promotion and merchandising programs, and improve the speed and control of
customer transactions.
. "Outsourcing" Agreement. In Fiscal 1991, Pathmark entered into a long-term
facilities management and systems integration agreement with a subsidiary of
IBM. This contract offers significant advantages to Pathmark in controlling
computer hardware and software costs and providing ongoing access to "state of
the art" information technology.
. Geographic Concentration. Approximately 99% of the Pathmark supermarkets and
drug stores are located within 100 miles of the Pathmark headquarters and
principal warehousing facilities that service them. This allows for more
efficient management supervision, increased speed of delivery and reduced
transportation costs. All of the stores which Pathmark expects to open in
Fiscal 1994, Fiscal 1995 and Fiscal 1996 will be within this 100 mile radius.
6
<PAGE>
PATHMARK SUPERMARKETS AND DRUG STORES
Pathmark operated 143 supermarkets at January 29, 1994. Supermarkets
accounted for approximately 96% of Pathmark's sales for Fiscal 1993. The
following table presents selected data respecting supermarket sales and stores
for the last five fiscal years.
<TABLE><CAPTION>
FISCAL YEARS
-----------------------------------------------------
1993 1992 1991 1990 1989(A)
--------- --------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Supermarket sales............................................ $ 4,027(b) $ 4,143 $ 4,137 $ 4,237 $ 4,256
Average sales per store...................................... 28.7 29.0 28.6 29.5 30.1
Number of Stores:
Major Renovations(c)....................................... 12 8 13 11 14
Enlargements(d)............................................ 5 10 15 5 4
Opened..................................................... 4 3 1 2 3
Closed..................................................... 7(e) 3 1 -- 1
Type of Stores(f):
Super Center............................................... 126 137 139 135 132
Pathmark 2000.............................................. 10 2 -- -- --
Supermarket................................................ 7 7 7 11 12
Total Stores Open at Year End......................... 143 146 146 146 144
</TABLE>
- ---------------
(a) 53-week fiscal year.
(b) Does not include sales from the Five Stores after the first quarter of
Fiscal 1993.
(c) Major renovations involve an investment of $350,000 or more and average
nearly $1.0 million per store.
(d) Enlargements involve the addition of selling space and average an investment
in excess of $2.2 million.
(e) Includes the Five Stores.
(f) Includes two stores not wholly owned, one of which opened in Fiscal 1990.
The sales figures for these stores are not included above.
By industry standards, Pathmark stores are large and productive, averaging
approximately 49,100 square feet in size and generating high average sales
volume of approximately $28.7 million per store ($809 per selling square foot)
for stores open for all of Fiscal 1993. Pathmark's 143 supermarkets at January
29, 1994 ranged from 20,000 to 66,000 square feet in size and included 128
supermarkets that are 40,000 square feet or larger in size. All Pathmark stores
carry a broad variety of food and drug store products, including an extensive
variety of the Pathmark and No Frills brands.
Pathmark pioneered the development of the large "superstore" in the
northeast United States, opening the first "Pathmark Super Center" in 1977, and
currently operates 136 such stores, including 10 "Pathmark 2000" stores. Super
Centers represented 96% of Pathmark supermarket sales for Fiscal 1993. The
majority of Super Centers were created through the enlargement or renovation of
existing stores. Super Centers average approximately 50,000 square feet in size,
approximately 50% larger than the average size supermarket in the United States.
In addition to the broad variety of food and non-food items carried in
conventional Pathmark stores, a typical Super Center includes a customer service
center, pharmacy, additional food selections (including expanded perishables
departments, cheese shops, bakeries, fresh fish-on-ice and service delicatessen
departments), videotape rentals, book departments and expanded health and beauty
care departments. At April 1, 1994, all Super Centers had EFT and credit
transaction capability at their checkout terminals and 130 Super Centers also
featured in-store automated teller machines.
Pathmark has recently developed a new, larger Super Center format called
"Pathmark 2000" designed to provide Pathmark customers with a substantially
greater selection of perishable products, particularly produce. Pathmark 2000
stores are also designed to be more "customer friendly", with wider aisles, more
accessible customer service and information departments, improved signs and
7
<PAGE>
graphics, and increased availability of Pathmark associates. Implementation of
elements of this format in certain stores has significantly enhanced sales and
operating margins in these stores. A majority of Pathmark's new supermarkets and
supermarket enlargements completed in Fiscal 1993 employed the Pathmark 2000
concept and Pathmark expects that virtually all new stores and enlargements
thereafter will employ the same concept. By Fiscal 1996, Pathmark expects that
50% of its supermarket sales will be derived from stores that employ this
concept.
Pathmark was the leader in its market areas in extending the operation of
supermarkets to 24 hours a day. Currently, almost all Pathmark supermarkets are
open seven days a week, 24 hours a day. Pathmark believes that these hours of
operation increase both customer convenience and operating efficiency.
Pathmark also operated 31 freestanding conventional drug stores at January
29, 1994 primarily in the New York City metropolitan area and two
"deep-discount" drug stores in Connecticut. These stores, which accounted for
approximately 4% of Pathmark's sales for Fiscal 1993, average 9,600 square feet
in size and offer the full variety of products customarily offered by drug
stores. In Fiscal 1993, Pathmark pharmacies, in both supermarkets and drug
stores, filled approximately ten million prescriptions, making Pathmark one of
the leading drugstore retailers, based on sales volume, in the northeast United
States and the leading filler of prescriptions in the New York metropolitan
area. In Fiscal 1993, Pathmark renovated a total of four drug stores. Pathmark
plans to open four additional "deep-discount" drug stores in former Pathmark
supermarkets during Fiscal 1994. Pathmark's free-standing drug stores are
generally open seven days a week during conventional hours.
Pathmark's supermarket and drug store business is generally not seasonal,
although sales in the second and fourth quarters tend to be slightly higher than
those in the first and third quarters.
STORE EXPANSION AND RENOVATION PROGRAM
A key feature of Pathmark's business strategy has been and will continue to
be the expansion of the total selling square footage of its operations. Pathmark
believes that by adding new stores and increasing the selling area of existing
stores, it can improve its competitive position and widen operating margins by
achieving economies of scale in merchandising, advertising, distribution and
supervision. During the five years ending with Fiscal 1993, Pathmark completed
102 major renovations and enlargements and opened 13 new supermarkets. At the
close of Fiscal 1993, sales in these stores accounted for 73% of its total
supermarket sales.
Over the past five years, Pathmark has spent approximately $240.0 million
on store openings, enlargements and major renovations including properties
acquired under capital leases. In Fiscal 1993, Pathmark opened four new Super
Centers and completed 12 major renovations and five enlargements of its existing
supermarkets. Pathmark currently expects to open up to four new Pathmark Super
Centers during Fiscal 1994. During Fiscal 1994, Fiscal 1995 and Fiscal 1996,
Pathmark plans to open an aggregate of 18 new Pathmark Super Centers, nine of
which will replace smaller stores, and to complete an aggregate of up to 85
major renovations and enlargements, at a total investment of approximately
$340.0 million, including properties acquired under capital leases. Realization
of this plan would increase supermarket selling square footage by more than 14%
over the three-year period, although no assurance can be given that Pathmark
will be able to successfully complete the number of store openings, renovations
and enlargements planned for each year during this period. Expansion of selling
square footage may also occur as a result of the acquisition of new stores.
ADVERTISING AND PROMOTION
As part of its marketing strategy, Pathmark emphasizes its competitive
pricing through weekly sales and promotions supported by extensive advertising.
Additional savings are offered each week through Pathmark "super coupons" in
newspapers and circulars. Pathmark's advertising expenditures are concentrated
on print advertising, including advertisements and circulars in local and area
newspapers and advertising flyers distributed by shopping malls. Most of the
remaining advertising expenses are for television and radio advertisements.
8
<PAGE>
CONSUMER RESEARCH
Pathmark conducts numerous ongoing and special consumer research projects.
These typically involve customer surveys (both in-store and by telephone) as
well as focus groups. The information derived from these projects is used to
evaluate consumers' attitudes and purchasing patterns and helps shape Pathmark's
marketing programs. Pathmark conducts approximately 300,000 customer interviews
per year.
TECHNOLOGY
Pathmark has made a significant and continuing investment in information
technology and believes it is a leader in the supermarket industry in this area.
All Pathmark supermarket checkout terminals have recently installed,
third-generation "state of the art" IBM 4680 scanner systems supported by a RlSC
6000 application processor in each store. These systems allow consumer credit
and EFT transactions, greatly facilitate system-wide promotion and merchandising
programs, and improve the speed and control of customer transactions. This
technology and the data generated by scanning not only have led to lower labor
costs, improved price control and shelf allocation and quicker customer
check-out, but also have assisted in the analysis of product movement, profit
contribution and demographic merchandising. Pathmark also has a
computer-assisted ordering system which enables it to replenish inventory to
avoid "out of stocks" at store level while maintaining optimum overall inventory
levels.
All of the pharmacies are equipped with pharmacy computers. In addition to
improving customer service, these computers aid pharmacists in detecting drug
interaction, improve the collection of third-party receivables and help to
attract third-party businesses such as health maintenance organizations and
union welfare plans.
In August 1991, Pathmark entered into a long-term facilities management and
systems integration agreement with Integrated Systems Solutions Corporation
("ISSC"), a subsidiary of IBM. Under the agreement, ISSC has taken over
Pathmark's data center operations and mainframe processing and information
system functions (formerly performed by approximately 150 employees) and is
providing business applications and "state of the art" systems designed to
enhance Pathmark's customer service and efficiency. ISSC developed Pathmark's
recently installed scanner and checkout terminals. Additionally, over the next
several years, ISSC has contracted to develop an integrated purchasing
application, a new financial system, and electronic data interchange
capabilities that will streamline communications between Pathmark and its
primary suppliers.
SUPPLY AND DISTRIBUTION
Pursuant to the Logistical Services Agreement and subject to Pathmark's
direction, Plainbridge now supplies Pathmark with most of the merchandise sold
in Pathmark's supermarkets and drug stores through Plainbridge distribution
facilities located in New Jersey, together with warehousing, distribution and
logistical services relating to the supply of such merchandise. See
"--Logistical Services Agreement". During Fiscal 1993, the Plainbridge
distribution facilities supplied approximately 83% of the merchandise sold in
Pathmark's supermarkets and drug stores. In addition, pursuant to a supply
agreement between Chefmark and Pathmark (the "Chefmark Supply Agreement"),
Chefmark now supplies Pathmark with merchandise from its banana ripening and
deli food preparation operations. The Chefmark Supply Agreement provides that,
for a period of seven years, such services are to be performed by Chefmark in
substantially the same manner as they have been performed by Pathmark's banana
ripening and deli food preparation operations prior to the Chefmark Spin-Off.
9
<PAGE>
Approximately 99% of Pathmark's stores are located within 100 miles of the
principal Plainbridge and Chefmark distribution centers. The following table
presents information concerning the distribution and processing facilities
through which Plainbridge and Chefmark will supply Pathmark, and the product
lines relevant to each as of January 29, 1994:
DISTRIBUTION FACILITIES (1)
<TABLE><CAPTION>
SQUARE
LOCATION PRODUCT LINE FOOTAGE YEAR OPENED
- ------------------------------------ --------------------------------- --------- -----------
<S> <C> <C> <C>
Woodbridge, NJ(2)................... Dry Grocery 475,000 1968
Edison, NJ(3)....................... General Merchandise, Health and 266,000 1980
Beauty Care Products,
Pharmaceuticals, Tobacco
Woodbridge, NJ(2)................... Meat, Dairy, Deli, Produce, 255,000 1970
Frozen Food
Rockaway, NJ(3)..................... Frozen Food Distribution Center 72,500 1989
South Plainfield, NJ(2)............. Pathmark Price Break, Rickel 721,000 1973
Merchandise
</TABLE>
PROCESSING FACILITIES
<TABLE><CAPTION>
SQUARE
LOCATION PRODUCT LINE FOOTAGE YEAR OPENED
- ------------------------------------ --------------------------------- --------- -----------
<S> <C> <C> <C>
Somerset, NJ(4)..................... Delicatessen Products 16,000 1976
Avenel, NJ(5)....................... Banana Ripening 30,000 1984
</TABLE>
- ---------------
(1) Pathmark also stores and ships certain products from independent warehouses,
including a food storage facility in North Brunswick, New Jersey.
(2) Owned by Plainbridge.
(3) Leased by Plainbridge.
(4) Owned by Chefmark.
(5) Leased by Chefmark.
LOGISTICAL SERVICES AGREEMENT
In connection with the Plainbridge Spin-Off, Pathmark and Plainbridge
entered into the Logistical Services Agreement to provide for the supply by
Plainbridge to Pathmark of most of the merchandise sold in Pathmark's retail
stores and for the provision of warehousing, distribution and other logistical
services relating to the supply of such merchandise. Pursuant to the Logistical
Services Agreement, Pathmark directs the purchase of the merchandise to be
provided to it by Plainbridge. Pathmark negotiates directly with vendors
regarding the types of merchandise required, the quantities needed, delivery
schedules, pricing, and all other terms and conditions of sale. All merchandise
is ordered by Pathmark for the account of Plainbridge, which pays for, and
retains title to, such merchandise until it has been delivered to Pathmark. If
requested by a vendor, Pathmark, in its sole discretion, may guarantee payment
of such orders by Plainbridge. In general, the Logistical Services Agreement
also requires Plainbridge to perform the same services, in substantially the
same manner, that were performed by Pathmark's warehouse and distribution group
prior to the Plainbridge Spin-Off.
The Logistical Services Agreement requires, with certain exceptions and
subject to certain termination rights, Plainbridge to sell to Pathmark, for a
period of ten years, to the extent requested by Pathmark, all of Pathmark's
merchandise requirements for both its existing and future stores. In addition,
Pathmark has five one-year renewal options following the expiration of the
original ten-year
10
<PAGE>
term. The Logistical Services Agreement does not limit Pathmark's ability to
purchase goods from other suppliers and merchandise that Pathmark customarily
obtains directly from vendors is excluded from the Logistical Services
Agreement.
The Logistical Services Agreement requires Plainbridge to store and deliver
to Pathmark all merchandise purchased at Pathmark's direction. Pathmark is
required in good faith to designate Plainbridge as its carrier with respect to
merchandise customarily shipped directly from vendors to the Pathmark stores.
Plainbridge is required to maintain inventory with a book value of at least
$130.0 million (which amount represents the approximate book value of inventory
contributed by Pathmark to Plainbridge in connection with the Plainbridge
Spin-Off) for the exclusive use of Pathmark, and to the extent that the
inventory value falls below such level, Plainbridge must purchase sufficient
merchandise to maintain such level to the extent such merchandise is ordered by
Pathmark. Plainbridge is also required to accommodate physical annual increases
of up to five percent in the volume of the Pathmark-directed purchases of
merchandise to be handled by Plainbridge. Pathmark reimburses Plainbridge for
all reasonable incremental out-of-pocket costs (but not capital costs) incurred
by Plainbridge for the storage and handling of merchandise that is in excess of
the five percent annual capacity increase, provided that such out-of-pocket
costs do not exceed the costs of storage and handling at local independent
warehouses.
Upon the delivery of merchandise to the Pathmark stores by Plainbridge,
Pathmark will owe Plainbridge for the cost of the merchandise plus a specified
variable payment. This payment will vary according to the type and value of the
merchandise. A minimum guaranteed payment is payable by Pathmark to the extent
that the aggregate of the variable payments described above payable in any year
does not exceed the minimum guaranteed payment. The minimum guaranteed payment
for Fiscal 1994 is $134.9 million and such payment is adjusted upward (but not
downward) each fiscal year by the rate of inflation. Pathmark is obligated to
pay the minimum annual fee to Plainbridge irrespective of whether Pathmark
purchases merchandise from other suppliers, except in cases of force majeure or
when Plainbridge shall have materially breached the Logistical Services
Agreement or shall have failed to obtain or maintain the licenses and permits
needed to operate its business. The minimum guaranteed payment will be reduced
to the extent that the volume of merchandise purchases decreases as a result of
any store dispositions by Pathmark and will also be reduced if the volume of
Pathmark-directed merchandise falls below 90% of the actual volume achieved in
Fiscal 1992, to the extent that Plainbridge is, as a result, able to realize
reductions in its operating costs. Plainbridge will grant Pathmark an allowance,
based on the amount of merchandise purchased by Plainbridge at Pathmark's
direction, which will be credited against the variable fees and minimum
guaranteed payment obligation. In addition, certain cost benefits derived from
increases in the volume of merchandise purchased from Plainbridge by Pathmark or
third parties will be shared equally between Pathmark and Plainbridge. Estimated
payments are payable in weekly installments with an annual reconciliation for
the amount of payments that are actually payable for such year. Pathmark will
pay to Plainbridge the costs of the merchandise at the time a vendor requires
payment from Plainbridge.
The Logistical Services Agreement allows Plainbridge to sell merchandise
and provide logistical services to third parties, although it is not permitted
to sell merchandise to supermarkets, drug stores and other retail stores
stocking merchandise carried by Pathmark in Pathmark's current market areas,
except for retail stores that do not in the ordinary course of business engage
to a significant degree in the sale of food or pharmacy-related products,
without Pathmark's prior written consent, which consent may not be unreasonably
withheld. Plainbridge is also permitted to "piggyback" such third parties'
orders onto Pathmark's orders from vendors, so long as they do not interfere
with Pathmark's delivery schedules, quantity needs or other requirements.
Each of Pathmark and Plainbridge is allowed to terminate the Logistical
Services Agreement if the other (i) materially breaches its terms and fails to
cure such breach for 60 days after written notice has been provided by the other
party or (ii) experiences certain insolvency events. Additionally, following
11
<PAGE>
the fourth anniversary of the date of the Logistical Services Agreement,
Pathmark will have the option of terminating it at will on six months' notice.
If Pathmark terminates the Logistical Services Agreement because of a material
breach by, or insolvency of, Plainbridge, Pathmark will have the right to
purchase, within 30 days of the termination, that portion of the assets of
Plainbridge which is essential to the support of Plainbridge's obligations to
Pathmark under the Logistical Services Agreement (the "Pathmark Distribution
Assets") at the lower of (i) their net book value or (ii) their fair market
value. If Pathmark exercises its at will option to terminate the Logistical
Services Agreement, Pathmark will be required to offer to purchase the Pathmark
Distribution Assets at their fair-market value. If Plainbridge terminates the
Logistical Services Agreement because of a material breach by, or insolvency of,
Pathmark, Plainbridge will have the right to sell to Pathmark (and Pathmark will
have the obligation to buy) the Pathmark Distribution Assets at their fair
market value within 30 days of such termination.
Other than in the ordinary course of business, Plainbridge is not permitted
to sell any of the Pathmark Distribution Assets without Pathmark's prior written
consent. Additionally, in the event of a change in the ultimate beneficial
ownership of Plainbridge voting stock such that a person, other than ML&Co. or
an affiliate of ML&Co., holds a majority of such stock, Pathmark has, for a
period of two years, the irrevocable and exclusive right to purchase any or all
of the Pathmark Distribution Assets at their fair market value.
Other provisions of the Logistical Services Agreement include (i) that
Plainbridge will pass on to Pathmark all discounts and allowances made available
to it by vendors in respect of merchandise purchased for Pathmark, unless such
discounts or allowances were made available solely as a result of actions taken
or not taken by Plainbridge, (ii) that Plainbridge must ensure that merchandise
quality meets or exceeds the standards established by Pathmark for such
merchandise, and that Pathmark may place its representatives at the Distribution
Facilities to ensure that such quality is maintained, (iii) that Plainbridge
will deliver merchandise to Pathmark at a 98% or better level of service
measured in accordance with Pathmark's practices prior to the Plainbridge
Spin-Off, (iv) that Pathmark will pay Plainbridge for any use of trailers for
storage and (v) that each of Pathmark and Plainbridge will cooperate to reduce
costs and improve service levels.
Disputes between Pathmark and Plainbridge under the Logistical Services
Agreement will be submitted to an arbitration panel made up of representatives
of both parties. The President of Pathmark shall act as chairman of the dispute
panel and each party shall appoint two other members to the dispute panel, the
decision of which will be subject to the approval of the boards of directors of
each party. If the decision of the dispute panel is not approved by each board
of directors, the dispute will be required to be submitted to independent
arbitration.
The Logistical Services Agreement is a result of a related party
negotiation between Pathmark and Plainbridge. Pathmark believes that the
payments provided for under the terms of the Logistical Services Agreement
represent a reasonable allocation of the costs and benefits for both companies.
In addition, Pathmark believes that the terms of the Logistical Services
Agreement are no less favorable to Pathmark than those which could be obtained
from unaffiliated parties and enable Pathmark to obtain substantially the same
level of supply and other logistical services as was available from the
Distribution Facilities prior to the Spin-Offs at substantially the same or a
lower cost.
COMPETITION
The supermarket and drug store businesses are highly competitive and are
characterized by high asset turnover and narrow profit margins. Pathmark's
earnings are primarily dependent on the maintenance of relatively high sales
volume per supermarket, efficient product purchasing and distribution and
cost-effective store operating techniques. Pathmark's main competitors are
national and regional supermarkets, drug stores, convenience stores, discount
merchandisers, "warehouse" and
12
<PAGE>
"club" stores and other local retailers in the areas served. Principal
competitive factors include price, store location, advertising and promotion,
product mix, quality and service.
TRADE NAMES, SERVICE MARKS AND TRADEMARKS
Pathmark has registered a variety of trade names, service marks and
trademarks with the United States Patent and Trademark Office, each for an
initial period of 20 years, renewable for as long as the use thereof continues.
Pathmark considers its Pathmark service marks to be of material importance to
its business and actively defends and enforces such service marks.
REGULATION
Pathmark's food and drug business requires it to hold various licenses and
to register certain of its facilities with state and federal health, drug and
alcoholic beverage regulatory agencies. By virtue of these licenses and
registration requirements, Pathmark is obligated to observe certain rules and
regulations, and a violation of such rules and regulations could result in a
suspension or revocation of the licenses or registrations. In addition, most of
Pathmark's licenses require periodic renewals. Pathmark has experienced no
material difficulties with respect to obtaining, effecting or retaining its
licenses and registrations.
EMPLOYEES
At January 29, 1994, Pathmark employed approximately 28,000 people, of whom
approximately 20,000 were employed on a part-time basis.
Approximately 90% of Pathmark's associates are covered by 36 collective
bargaining agreements (typically having three or four year terms) negotiated
with approximately 21 different local unions. During May 1993, approximately
7,000 associates belonging to one union struck Pathmark and three of its major
competitors. On May 29, 1993, the labor dispute was settled and subsequently, a
new four year agreement was ratified. During Fiscal 1994, nine contracts
covering approximately 10,000 Pathmark associates and six contracts covering
approximately 1,100 associates at the warehouse, distribution and transportation
operations that service the Pathmark supermarkets and drugstores will expire.
The Company does not anticipate any difficulty renegotiating these contracts.
The Company believes that its relationship with its associates is generally
satisfactory.
ITEM 2. PROPERTIES**
Reference is made to the answer to Item 1, "Business" of this report for
information concerning the states in which the Company's supermarkets, drug
stores and home centers are located.
THE COMPANY
The Company's primary subsidiary, Pathmark, leases and owns a large group
of properties, as described below. In addition, Chefmark owns a 16,000 square
foot delicatessen products processing and distribution facility in Somerset, New
Jersey and leases a 30,000 foot banana ripening facility in Avenel, New Jersey.
These facilities supply Pathmark's supermarkets with delicatessen and produce
products.
- ---------------
** Except as otherwise indicated, information contained in this Item is given as
of January 29, 1994.
13
<PAGE>
PATHMARK
Pathmark's 143 supermarkets have an aggregate selling area of approximately
5.1 million square feet. The ownership interest in the buildings and real
property of ten supermarket locations (one of which is a closed store location)
and the headquarters in Woodbridge, New Jersey were contributed to Plainbridge
in the Spin-Offs and, except for the closed store location, were leased to
Pathmark. Thirteen of the supermarkets are owned by Pathmark (or its
subsidiaries) and the remaining 130 are leased. These supermarkets either are
freestanding stores or are located in shopping centers. Forty leases expire
during the current and next four calendar years and Pathmark has options to
renew 37 of them.
Pathmark's 33 freestanding drug stores (those not located in supermarkets)
have an aggregate selling area of approximately 276,000 square feet. Two of the
drug stores are owned by Pathmark and the remaining 31 are leased. Nineteen
leases expire during the current and next four calendar years and Pathmark has
options to renew 13 of them.
Certain distribution facilities that supply Pathmark supermarkets and drug
stores were transferred to Plainbridge in connection with the Plainbridge
Spin-Off. Certain of these facilities are leased and some are owned. See
"Business of Pathmark--Supply and Distribution" in Item 1 of this report.
Pathmark maintains administrative and accounting offices in Carteret, New
Jersey in leased premises totalling approximately 150,000 square feet in size.
Pathmark also currently leases or owns additional office space totaling
approximately 128,000 square feet in various locations that are used as the
Pathmark headquarters and regional offices for its operating divisions.
Additionally, three Rickel Home Centers are sublet and six Rickel Home Centers
are leased to Plainbridge by Pathmark. See "The Recapitalization--Spin-Offs" in
Item 1 of this report.
Prior to the sale of the Purity Operations, the following three properties
of Purity Supreme were transferred to Pathmark: a closed supermarket leased by
Purity Supreme in Dartmouth, Massachusetts, an office building leased by Purity
Supreme in Newton, Massachusetts, for which Pathmark has assumed the leases, and
a closed distribution center that Purity owned in Woburn, Massachusetts.
Pathmark has transferred the properties located in Dartmouth and Woburn to
Plainbridge.
Most of the facilities owned by Pathmark are owned subject to mortgages.
Pathmark plans to acquire leasehold or fee interests in any property on which
new stores or other facilities are opened and will consider entering into
sale/leaseback or mortgage transactions with respect to owned properties if
Pathmark believes such transactions are financially advantageous.
ITEM 3. LEGAL PROCEEDINGS
On December 7, 1990, a lawsuit (the "Complaint") was commenced by a holder
of the Exchangeable Preferred Stock, Stanley D. Bernstein, as custodian for
Michelle Bernstein, against the Company, SMG-II Holdings Corp. ("SMG-II"),
Merrill Lynch Capital Partners, Inc. ("ML Capital Partners"), ML&Co. and the
directors of the Company in the Chancery Court, New Castle County, Delaware. The
Complaint purports to be a class action and alleges that the original terms of
the Exchangeable Preferred Stock Offer, at $5 per share, constitute a coercive
tender offer and a breach of fiduciary duties owed to holders of Exchangeable
Preferred Stock. The Complaint seeks declaratory and injunctive relief, as well
as monetary damages, with respect to the Exchangeable Preferred Stock Offer, but
no motions seeking any such relief on a provisional or permanent basis were
filed either prior to the completion of the Exchangeable Preferred Stock Offer
on February 4, 1991 or as of the date hereof. The Company has entered
negotiations to settle the Complaint and expects to reach a settlement agreement
during the next several months. The Company does not expect the amount of its
obligations under any settlement agreement to be material and will defend the
Complaint vigorously if a settlement is not reached.
14
<PAGE>
On March 1, 1993 Pathmark was served with a summons and complaint filed by
Hygrade Milk & Cream Co., Inc., Terminal Dairies, Inc., Sunbeam Farms, Inc.,
Hytest Milk Corp., Gold Metal Farms, Inc., Queens Farms Dairy, Inc., Babylon
Dairy Co., Inc. and Meadowbrook Farms, Inc., in an action being heard in the
United States District Court for the Southern District of New York. Also named
as defendants are Tropicana Products, Inc., Tropicana Products Sales, Inc., The
Great Atlantic & Pacific Tea Company, Inc., Fleming Foods East, Inc., and Di
Giorgio Corporation. The action had been pending against certain of the
defendants and wholesale entities since 1988. In the complaint the plaintiffs
allege, among other things, that Pathmark induced processors of Tropicana orange
juice to provide it with favorable price and other terms that discriminated
against other sellers of orange juice in violation of the price discrimination
provisions of the Robinson-Patman Act. The prayer for relief does not claim any
specific amount of damages. After consultation with counsel, the Company
believes that this lawsuit is without merit and intends to defend the action
vigorously.
In addition to the litigation referred to above, the Company is a party to
a number of legal proceedings in the ordinary course of business. Management
believes that the ultimate resolution of these proceedings will not, in the
aggregate, have a material adverse impact on the financial condition, results of
operations or the business of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(AS OF APRIL 1, 1994)
Neither the Company's Class A Common Stock nor its Class B Common Stock,
each $0.01 par value, is publicly traded on any market. All of registrant's
outstanding Common Stock is held by SMG-II.
The authorized preferred stock of the Company consists of 9,000,000 shares
of Exchangeable Preferred Stock, of which 4,890,671 shares were issued and
outstanding at January 29, 1994. The Exchangeable Preferred Stock has a
liquidation preference of $25 per share and its terms provide for cumulative
quarterly dividends at an annual rate of $3.52 per share, when, as, and if
declared by the Board of Directors of the Company. No active public trading
market currently exists for the Company's Exchangeable Preferred Stock.
The Exchangeable Preferred Stock is non-voting, except that if an amount
equal to six quarterly dividends is in arrears in whole or in part, the holders
thereof, voting as a class are entitled to elect an additional two members of
the board of directors of the Company. The Company is currently in arrears on
payment of five quarterly dividends on the Exchangeable Preferred Stock and does
not expect to receive cash flow sufficient to permit payments of dividends on
the Exchangeable Preferred Stock in the forseeable future. See Note 15 to the
Company's Consolidated Financial Statements in Item 8 of this report for
additional information.
The payment of dividends to holders of the Company's Common Stock is
subject to restrictions by the Certificate of Designation of Rights, Preferences
and Privileges under which its Exchangeable Preferred Stock was issued. The
Company has not paid any dividends on its Common Stock and does not anticipate
paying cash dividends on its Common Stock during Fiscal 1994.
The authorized capital stock of SMG-II consists of 3,000,000 shares of
SMG-II Class A Common Stock, 3,000,000 shares of SMG-II Class B Common Stock, of
which 650,675 and 320,000 shares, respectively, were issued and outstanding at
April 1, 1994, and 4,000,000 shares of SMG-II Preferred Stock, of which
1,500,000 shares are SMG-II Series A Preferred Stock and 1,500,000 shares are
SMG-
15
<PAGE>
II Series B Preferred Stock and of which 236,731 and 180,769 shares,
respectively, were issued and outstanding at April 1, 1994.
SMG-II's capital stock is held beneficially as follows: (i) SMG-II Class A
Common Stock by approximately 62 holders, including six affiliates of ML&Co.
(The "ML Common Investors"), CBC Capital Partners, Inc. ("CBC"), an affiliate of
Chemical Bank, and 55 current and former members of the Company's management
(the "Management Investors"); (ii) SMG-II Series A Preferred Stock by five
holders, all affiliates of ML&Co., (the "Merrill Lynch Investors"); (iii) SMG-II
Class B Common Stock held by four holders, including CBC, The Equitable Life
Assurance Society of the United States ("Equitable") and the Equitable
Affiliates (collectively, the "Equitable Investors"); and (iv) SMG-II Series B
Preferred Stock held by four holders, including CBC and the Equitable Investors.
Holders of shares of SMG-II Class A Common Stock are entitled to one vote per
share on all matters to be voted on by stockholders. Holders of shares of SMG-II
Class B Common Stock are not entitled to any voting rights, except as required
by law or as otherwise provided in the Restated Certificate of Incorporation of
SMG-II. Subject to compliance with certain procedures, holders of shares of
SMG-II Class B Common Stock may exchange their shares for shares of SMG-II Class
A Common Stock and holders of shares of SMG-II Class A Common Stock may exchange
their shares for shares of SMG-II Class B Common Stock, in each case on a
share-for-shares basis.
SMG-II Preferred Stock has a stated value and liquidation preference of
$200 per share and bears dividends at the rate of 10% of the stated value per
annum, payable annually. At the option of SMG-II dividends are payable in cash
or may accumulate (and the amount thereof shall compound annually at a rate of
10% of the stated value per annum, payable annually. At the option of SMG-II,
dividends are payable in cash or may accumulate (and the amount thereof shall
compound annually at a rate of 10% per annum).
Holders of shares of SMG-II Series A Preferred Stock are entitled to one
vote per share of SMG-II Class A Common Stock into which such SMG-II Series A
Preferred Stock is convertible on all matters to be voted on by SMG-II
stockholders, subject to increase to 1.11 votes per share upon the occurrence of
certain events. Holders of shares of SMG-II Series B Preferred Stock are
entitled to one vote per share of SMG-II Class B Common Stock into which such
SMG-II Series B Preferred Stock is convertible for the purpose of voting on any
consolidation or merger, any sale, lease or exchange of substantially all of the
assets or any liquidation, dissolution or winding up, of SMG-II. Additionally,
holders of SMG-II Preferred Stock have separate voting rights with respect to
alteration in the voting powers, rights and preferences and certain other terms
affecting the SMG-II Preferred Stock. Subject to compliance with certain
procedures, holders of SMG-II Series B Preferred Stock may exchange their shares
for shares of SMG-II Series A Preferred stock, on a share-for-share basis.
At the option of the holder, SMG-II Preferred Stock is convertible into
SMG-II Common Stock at any time on or prior to the occurrence of certain events,
including an initial public offering of in excess of 25% of the number of
outstanding shares of common stock of SMG-II, at a conversion ratio of one share
of the corresponding class of SMG-II Common Stock for each share of SMG-II
Preferred Stock, subject to adjustment upon the occurrence of certain events.
Holders of SMG-II Preferred Stock are party with the holders of SMG-II
Common Stock to the SMG-II Stockholders Agreement which, among other things,
restricts the transferability of SMG-II capital stock and relates to the
corporate governance of SMG-II. None of SMG-II's capital stock is publicly
traded on any market. See Item 12. "Security Ownership of Certain Beneficial
Owners and Management" and Note 16 to the Company's Consolidated Financial
Statements in Item 8 for additional information.
The Company intends to further spin-off Plainbridge, which includes the
assets of the Rickel homes centers business and the Company's warehouse,
transportation and real estate operations contributed to Plainbridge as part of
the Recapitalization, to the Company's common stockholder within the next year,
although there can be no assurance that such spin-off will be consummated. Any
such spin-off would require satisfying the dividend restrictions with respect to
the Company's Exchangeable Preferred Stock, as well as obtaining consents from
various lenders to Plainbridge and PTK.
16
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
SUPERMARKETS GENERAL HOLDINGS CORPORATION
SUMMARY OF OPERATIONS AND FINANCIAL HIGHLIGHTS
(IN MILLIONS)
<TABLE><CAPTION>
FISCAL YEARS(A)
-----------------------------------------------------------
1993 1992 1991(B) 1990(B) 1989(B)
--------- --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Sales
Pathmark.................................................. $ 4,207 $ 4,340 $ 4,323 $ 4,418 $ 4,436
Purity.................................................... -- -- 997 1,287 1,384
--------- --------- ----------- ----------- -----------
Total sales................................................. 4,207 4,340 5,320 5,705 5,820
Cost of sales (exclusive of depreciation and amortization
shown separately below)..................................... 3,052 3,184 3,965 4,282 4,417
--------- --------- ----------- ----------- -----------
Gross profit................................................ 1,155 1,156 1,355 1,423 1,403
Selling, general and administrative expenses................ 921 894 1,067 1,109 1,102
Depreciation and amortization............................... 68 69 93 94 91
Recapitalization expenses(c)................................ 16 -- -- -- --
Provision for store closings(d)............................. 6 -- -- -- --
Amortization of goodwill.................................... -- 18 23 24 23
Goodwill write-off.......................................... -- 601 -- -- --
Restructuring charge(e)..................................... -- -- -- -- 5
--------- --------- ----------- ----------- -----------
Operating earnings (loss)................................... 144 (426) 172 196 182
Interest expense, net(f).................................... 180 185 204 225 245
Gain on sale of photofinishing plant(g)..................... -- -- 4 -- --
Gain (loss) on disposal of Purity Operations(h)............. -- 2 (228) -- --
--------- --------- ----------- ----------- -----------
Loss from continuing operations before income taxes,
extraordinary items and cumulative effect of accounting
changes..................................................... (36) (609) (256) (29) (63)
Income tax provision (benefit).............................. (20) 7 (30) (1) (13)
--------- --------- ----------- ----------- -----------
Loss from continuing operations before extraordinary items
and cumulative effect of accounting changes................. (16) (616) (226) (28) (50)
Loss from discontinued operations........................... (1) (1) (191)(i) (13) (27)(e)
--------- --------- ----------- ----------- -----------
Loss before extraordinary items and cumulative effect of
accounting changes.......................................... (17) (617) (417) (41) (77)
Extraordinary items, net.................................... (106)(j) (5)(k) 15(l) -- --
--------- --------- ----------- ----------- -----------
Loss before cumulative effect of accounting changes......... (123) (622) (402) (41) (77)
Cumulative effect of accounting changes, net(m)............. (40) -- -- -- --
--------- --------- ----------- ----------- -----------
Net loss.................................................... (163) (622) (402) (41) (77)
Less non-cash preferred stock accretion and
dividend requirements..................................... (19) (18) (14) (10) (12)
--------- --------- ----------- ----------- -----------
Net loss attributable to common stockholders(n)............. $ (182) $ (640) $ (416) $ (51) $ (89)
--------- --------- ----------- ----------- -----------
--------- --------- ----------- ----------- -----------
Deficiency in earnings available to cover fixed
charges(o).................................................. $ 36 $ 609 $ 256 $ 29 $ 63
--------- --------- ----------- ----------- -----------
--------- --------- ----------- ----------- -----------
</TABLE>
<TABLE><CAPTION>
AS OF
---------------------------------------------------------------
JAN. 29, JAN. 30, FEB. 1, FEB. 2, FEB. 3,
1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets............................................... $ 1,145 $ 1,114 $ 1,736 $ 2,439 $ 2,555
Working capital deficiency................................. 117 80 95 138 126
Obligations under capital leases, long-term................ 132 127 136 180 184
Other long-term debt, net of current maturities............ 1,415 1,278 1,248 1,449 1,471
Cumulative exchangeable redeemable preferred stock......... 100 99 85 123 114
Redeemable common stock, net(p)............................ -- -- -- 6 7
Stockholder's deficit...................................... 1,285 1,103 467 168 117
(footnotes on following page)
</TABLE>
17
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO SUMMARY OF OPERATIONS AND FINANCIAL HIGHLIGHTS
<TABLE>
<S> <C>
(a) The Company's fiscal year ends on the Saturday nearest to January 31 of the following calendar year. Fiscal years
consist of 52 weeks except for 53 weeks in Fiscal 1989.
(b) Results for Fiscal 1989 through Fiscal 1991 include the Purity Operations through its December 17, 1991 sale date.
(c) In connection with the Recapitalization, the Company recorded a pretax charge of $16 million related to
reorganization and restructuring costs. See Note 3 to the Company's Consolidated Financial Statements in Item 8 of
this report.
(d) During Fiscal 1993, the Company decided to close or dispose of the Five Stores and recorded a pretax charge of $6
million. See Note 14 to the Company's Consolidated Financial Statements in Item 8 of this report.
(e) During Fiscal 1989, the Company recorded a pretax restructuring charge of $36 million of which approximately $5
million related to continuing operations and $31 million related to discontinued operations.
(f) Interest expense, net reflects interest expense net of interest income allocated to discontinued operations. See
Note 3 to the Company's Consolidated Financial Statements in Item 8 of this report.
(g) During Fiscal 1991, the Company sold its Coastal Photo photofinishing plant to Quality Photo Systems (East), Inc.
(a subsidiary of Konica Corporation) which resulted in a gain on sale of $4 million. See Note 25 to the Company's
Consolidated Financial Statements in Item 8 of this report.
(h) On December 17, 1991, the Company completed the sale of the Purity Operations for approximately $257 million (as
adjusted) including the assumption of certain indebtedness of Purity Supreme and Li'l Peach, to a company organized
by Freeman Spogli & Co. The Company recorded a loss of $228 million on the disposal of the Purity Operations.
Included in this loss is a write-off of approximately $214 million of goodwill related to the Purity Operations.
During Fiscal 1992, the Company recorded a gain of $2 million related to the disposal of the Purity Operations. See
Note 26 to the Company's Consolidated Financial Statements in Item 8 of this report.
(i) Includes a pretax loss of $24 million in connection with the disposition of certain Rickel Stores and a charge of
$170 million accelerating the remaining amortization of goodwill related to its Rickel home centers segment. See
Note 3 to the Company's Consolidated Financial Statements in Item 8 of this report.
(j) During Fiscal 1993, in connection with the Recapitalization, the Company recorded an extraordinary charge of $106
million, net of an income tax benefit, relating to the early extinguishment of debt. See Notes 3 and 18 to the
Company's Consolidated Financial Statements in Item 8 of this report.
(k) During Fiscal 1992, the Company recorded an extraordinary charge of $5 million, net of an income tax provision,
relating to the early extinguishment of debt. See Note 18 to the Company's Consolidated Financial Statements in
Item 8 of this report.
(l) The results for Fiscal 1991 include an extraordinary gain of $15 million, net of an income tax benefit, on the
early extinguishment of debt. See Note 18 to the Company's Consolidated Financial Statements in Item 8 of this
report.
(m) The cumulative effect of accounting changes in Fiscal 1993 of $40 million, net of an income tax benefit of $29
million, reflects the adoption of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits other than Pensions"; the adoption of Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits"; the change in the method utilized to calculate last-in,
first-out (LIFO) inventories; and the change in the determination of the discount rate utilized to record the
present value of certain noncurrent liabilities. All of the accounting changes were made as of the beginning of
Fiscal 1993. See Notes 5, 9, 21, and 22 to the Company's Consolidated Financial Statements in Item 8 of this
report.
(n) On February 4, 1991, the Company became a wholly owned subsidiary of SMG-II through the consummation of an exchange
offer whereby the then existing stockholders exchanged on a one-for-one basis shares of the Company's common stock
for shares of common stock of SMG-II. Since the Company is a wholly owned subsidiary, earnings (loss) per share
information is not presented.
(o) For purposes of determining the deficiency in earnings available to cover fixed charges, earnings are defined as
earnings (loss) before income taxes plus fixed charges. Fixed charges consist of interest expense on all
indebtedness (including amortization of deferred debt issuance costs) and the portion of operating lease rental
expense that is representative of the interest factor (deemed to be one-third of operating lease rentals).
(p) Since the Company is a wholly owned subsidiary, there was no redeemable common stock at January 29, 1994, January
30, 1993 and February 1, 1992.
</TABLE>
18
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion and analysis of the Company's financial
condition and results from continuing operations. The Company intends to
distribute Plainbridge to its common stockholder. Accordingly, discontinued
operations represent the results of operations related to the warehouse,
transportation and certain real estate operations subsequent to the Plainbridge
Spin-off as well as the home center segment for all years presented. See Notes
1, 2 and 3 to the Company's Consolidated Financial Statements in Item 8 of the
report. Although the discontinued operations have generated positive operating
cash flows, the Company believes that the impact of the anticipated distribution
of Plainbridge on the Company's liquidity will not be material. References to
the Company in this section refers to the Company and its subsidiaries, on a
consolidated basis, except as otherwise stated herein.
RESULTS OF OPERATIONS
Fiscal 1993 v. Fiscal 1992
Sales. Sales for Fiscal 1993 were $4.21 billion compared to $4.34 billion
in Fiscal 1992, a decrease of 3.1%. The sales decrease for the year is primarily
due to the impact of the strike and lockouts in the second quarter of Fiscal
1993 and the exclusion from reported results of the sales since the beginning of
the second quarter of Fiscal 1993 of the Five Stores anticipated to be closed or
sold as part of the provision for store closings. During Fiscal 1993 the Company
opened four supermarkets, enlarged five supermarkets, and completed major
renovations in twelve supermarkets. Including the Five Stores, seven
supermarkets were closed during Fiscal 1993. Sales for stores opened in both
periods decreased by 2.4%. At fiscal year end, the Company operated 143
supermarkets, including 136 Pathmark Super Centers, and 33 Pathmark freestanding
drug stores. This compares with Fiscal 1992 year end when the Company operated
146 supermarkets, including 139 Pathmark Super Centers, and 33 Pathmark
freestanding drug stores. In order to improve sales while continuing to improve
profitability in its supermarket businesses, the Company is continuing its focus
on increasing the value and variety of merchandise offerings available to
customers through its enlargement and renovation program which has been proven
to be successful as renovated expanded stores show higher same-store sales
growth than non-modified stores.
Gross Profit. Gross profit for Fiscal 1993 was $1.15 billion or 27.5% of
sales compared with $1.16 billion or 26.6% of sales in Fiscal 1992. This
improvement in gross profit as a percentage of sales for Fiscal 1993 is
attributable primarily to the Company's continuing emphasis on large super
stores allowing expanded variety in all departments, particularly higher margin
perishables and service departments. The gross profit comparisons were affected
by the pretax LIFO credit (which is included in cost of sales) for Fiscal 1993
of $2.6 million which was computed utilizing the Company's new LIFO method of
valuing its Pathmark store inventories (see Note 5 to the Company's Consolidated
Financial Statements), compared with the pretax LIFO provision of $2.2 million
in Fiscal 1992.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for Fiscal 1993 period increased $26.6 million or 3.0%
compared to Fiscal 1992. As a percentage of sales, selling, general and
administrative expenses were 21.9% for Fiscal 1993, up from 20.6% in Fiscal
1992. The increase as a percentage of sales during Fiscal 1993 was primarily
attributable to higher promotional expenses and the lower sales volume and
increased costs resulting from the strike and lockouts.
Recapitalization Expenses. In connection with the Plainbridge Spin-Off and
Recapitalization, the Company recorded a pretax charge of approximately $23.7
million in the third quarter of Fiscal 1993 to record estimated reorganization
and restructuring costs, including an early retirement program offered to
certain Company associates. During the fourth quarter of Fiscal 1993, the
Company determined that the estimated costs related to the reorganization and
restructuring were less than originally estimated and recorded a pretax credit
of approximately $7.1 million. Of the total net pretax charge of $16.6
19
<PAGE>
million for Fiscal 1993, $6.4 million related to the early retirement program
and severance costs incurred to reduce the Company's workforce, $8.1 million
related to additional technical information systems costs incurred in order to
accomplish the Plainbridge Spin-Off, and $2.1 million related to warehouse and
consulting costs associated therewith. Through January 29, 1994, the Company has
expended $11.9 million related to these costs. Management expects to pay the
remaining $4.7 million by the second quarter of Fiscal 1994.
Provision for Store Closings. Effective with the beginning of the second
quarter of Fiscal 1993, the Company made a decision to close or dispose of the
Five Stores which the Company believes will continue to be unprofitable. As a
result, the Company recorded a pretax charge in the second quarter of Fiscal
1993 of approximately $6.0 million. Operating results for the Five Stores have
been excluded from the consolidated statement of operations for the 52 weeks
ended January 29, 1994 since the beginning of the second quarter of Fiscal 1993.
Depreciation and Amortization. Depreciation and amortization expense of
$67.7 million for Fiscal 1993 was $1.5 million less than the $69.2 million in
Fiscal 1992. The decrease in depreciation and amortization expense is primarily
due to the impact of the assets transferred to Plainbridge as part of the
Plainbridge Spin-Off.
Goodwill Write-Off. During Fiscal 1992, the Company wrote off its remaining
goodwill balance of $600.7 million. As a result of the write-off, there was no
amortization of goodwill for Fiscal 1993 compared with $17.5 million for Fiscal
1992.
Operating Earnings. For Fiscal 1993, the Company reported operating
earnings of $143.6 million compared to an operating loss of $425.8 million in
Fiscal 1992. The increase in operating earnings is due to the goodwill write-off
of $600.7 million and the amortization of goodwill in Fiscal 1992, partially
offset in Fiscal 1993 by the impact of the strike and lockouts and the
subsequent promotional programs implemented in order to regain sales levels, the
recapitalization expenses of $16.6 million and the provision for store closings
of $6.0 million. Operating earnings were also affected by a pretax LIFO credit
of $2.6 million in Fiscal 1993, compared to the pretax LIFO provision of $2.2
million in Fiscal 1992.
Interest Expense. Interest expense for Fiscal 1993 was $189.3 million, a
decrease of $8.5 million from the $197.8 million in Fiscal 1992. Interest income
allocated to discontinued operations for Fiscal 1993 was $9.9 million compared
to $12.9 million in Fiscal 1992. The lower interest expense, net of interest
income related to income allocated to discontinued operations, was primarily due
to the benefit of lower interest rates on the debt incurred in connection with
the Recapitalization partially offset by additional interest on the accreted
principal of Holdings 13.125% Discount Debentures.
Income Taxes. As a result of the Company's net operating loss, the Company
recorded income taxes receivable of approximately $22.4 million resulting from
the carryback of such losses. The carryforward of those losses not carried back
results in a net deferred tax asset of approximately $41.3 million at January
29, 1994. Since the Company has experienced pretax losses in each of Fiscal
1993, Fiscal 1992, and Fiscal 1991, the Company was unable to conclude that
realization of such deferred tax assets was more likely than not. Accordingly,
the Company has provided a valuation allowance of $38.4 million to fully reserve
its net deferred tax assets, except for its alternative minimum tax credit
carryforwards which do not expire. The valuation allowance will be adjusted
when, in the opinion of management, significant positive evidence exists which
indicates that its more likely than not that the Company will be able to realize
deferred tax assets. Such reductions in the valuation allowance, if any, will be
reflected as a component of income tax expense (see Note 23 to the Company's
Consolidated Financial Statements).
The Omnibus Budget Reconciliation Act of 1993 was signed into law on August
10, 1993, which, among other things, increased the federal income tax rates for
corporations to 35% from 34%, effective
20
<PAGE>
January 1, 1993. Deferred tax liabilities and assets have been adjusted to
reflect the 1% increase in federal income tax rates.
Summary of Continuing Operations. The Company's loss from continuing
operations before extraordinary items and cumulative effect of accounting
changes was $15.5 million in Fiscal 1993 compared to $17.1 million (excluding
the write-off of the remaining goodwill balance of $600.7 million and the Purity
Operations gain of $2.0 million) in Fiscal 1992. The decrease in the loss is
primarily due to lower interest expense as a result of the Recapitalization,
increased operating earnings as discussed above and the elimination of goodwill
amortization, partially offset by the impact of the strike and lockouts and the
subsequent promotional programs implemented in order to regain sales levels, the
recapitalization expenses, and the provision for store closings.
Extraordinary Items. In connection with the Recapitalization, the Company
recorded a loss on early extinguishment of debt totalling $107.1 million, net of
an income tax benefit, related to the repayment of outstanding debt and the
write off of existing deferred financing fees associated with the
Recapitalization.
Cumulative Effect of Accounting Changes. In the fourth quarter of Fiscal
1993, the Company changed the method it utilizes to calculate LIFO store
inventories related to its indirect wholly owned subsidiary, Pathmark. Prior to
Fiscal 1993, the Company utilized a retail approach to determine current cost
and a general warehouse purchase index to measure inflation in the cost of its
merchandise inventories in its stores. The Company's change arose from the
development and utilization in Fiscal 1993 of internal cost indices based on the
specific identification of merchandise in its stores to measure inflation in the
prices thereby eliminating the average and estimation inherent in the retail and
general warehouse purchase index methods. The Company believes the use of such
specific costs and internal indices results in a more accurate measurement of
the impact of inflation in the cost of its store merchandise. The effect of this
change as of January 31, 1993 resulted in a charge to income of $10.7 million,
net of an income tax benefit of $7.8 million, and has been presented as a
cumulative effect of a change in accounting method in the accompanying
consolidated statement of operations for Fiscal 1993. For Fiscal 1993, this
change of method increased the LIFO credit by $1.3 million, resulting in a total
LIFO credit of $2.6 million for Fiscal 1993. The effect of this change on prior
periods was not determinable.
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
other then Pensions" ("SFAS No. 106"). Under SFAS No. 106, the Company is
required to accrue the expected cost of providing postretirement benefits,
principally health care and life insurance benefits, over the working careers of
the Company's associates. The Company previously expensed the cost of these
benefits as claims were paid.
SFAS No. 106 allows two methods for recognizing the transition obligation,
which is defined as the unfunded and unrecognized accumulated postretirement
benefit obligation at the date of adoption. This obligation could be recognized
immediately as an earnings charge in the year of the change, as the effect of a
change in accounting principles, or deferred and amortized as a component of net
periodic postretirement benefit cost. The Company recognized the transition
obligation immediately upon adoption.
The operating results for Fiscal 1993 include the effect of adopting the
SFAS No. 106 transition obligation as of January 31, 1993 on an immediate
recognition basis. The resulting $15.6 million charge represents the accumulated
postretirement benefit obligation at January 31, 1993 amounting to $26.9
million, less an income tax benefit of approximately $11.3 million determined
utilizing an assumed interest rate of 7.75%. This obligation was determined by
application of the provisions of the Company's medical plans including
established maximums and sharing of costs, relevant actuarial assumptions and
health-care cost trend rates projected at 14.25% and grading down to 5.75% which
is reached in Fiscal 1999.
21
<PAGE>
The annual charges recorded by the Company on a pay-as-you-go (cash basis)
amounted to $1.2 million in each of Fiscal 1992 and Fiscal 1991. In Fiscal 1993,
the effect of adopting SFAS No. 106 reduced the Company's pretax earnings from
continuing operations by $1.8 million, representing the difference between the
accrual in accordance with SFAS No. 106 and the amount paid with respect to
these benefits.
In the fourth quarter of Fiscal 1993, the Company adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits" ("SFAS No. 112") effective January 31, 1993. Under SFAS
No. 112, the Company is required to accrue the expected cost of providing
postemployment benefits, primarily long-term disability, over the working
careers of the Company's associates. The Company previously expensed the cost of
these benefits as claims were paid. The adoption of this new statement did not
have a material impact on the Company's operating results or financial position.
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
Prior to January 31, the Company's financial statements had been prepared in
accordance with Statement of Financial Accounting Standards No. 96, "Accounting
for Income Taxes" ("SFAS No. 96"). SFAS No. 96 and SFAS No. 109 require the
calculation of deferred taxes using the asset and liability method. Under this
method, deferred tax balances must be adjusted to reflect enacted changes in
income tax rates and deferred taxes must be provided on book and tax basis
differences. The implementation of SFAS No. 109 had no effect on the
consolidated statements of operations, however, it resulted in a
reclassification of the current and noncurrent deferred taxes since, in
accordance with SFAS No. 109, the classification of such deferred taxes
correspond with the classification of the related asset or liability which gave
rise to the book and tax basis difference.
Certain noncurrent liabilities, such as self-insured liabilities for
incurred but unpaid claims relating to customer, employee and vehicle accidents,
and closed store liabilities are recorded at present value utilizing a discount
rate based on the projected payout of these claims. The Company made a change in
the determination of the discount rate utilized to record the present value of
certain noncurrent liabilities and reduced such rate from 12%, representing the
Company's effective interest rate, to a risk free rate, estimated at 4% in
Fiscal 1993. The cumulative effect of this accounting change, as of January 31,
1993, totalled $11.6 million, net of an income tax benefit of $8.4 million.
While this change increased total liabilities by approximately $20.0 million,
the actual cash outflows to satify these liabilities will remain unchanged.
Fiscal 1992 v. Fiscal 1991
Sales. Sales for Fiscal 1992 were $4.34 billion compared to $5.32 billion
in Fiscal 1991, a decrease of 18.4%. Excluding the Purity Operations, sales for
Fiscal 1992 were comparable to Fiscal 1991. During Fiscal 1992 the Company
opened three supermarkets, enlarged ten supermarkets, and completed major
renovations in eight supermarkets. Three supermarkets were closed during Fiscal
1992. At fiscal year end, the Company operated 146 supermarkets, including 139
Pathmark Super Centers and 33 Pathmark freestanding drug stores. This compares
with Fiscal 1991 year end, when the Company, excluding the Purity Operations,
operated 146 supermarkets, including 139 Pathmark Super Centers and 32 Pathmark
freestanding drug stores.
Gross Profit. Gross profit for Fiscal 1992 was $1.16 billion or 26.6% of
sales compared with $1.35 billion or 25.5% of sales in Fiscal 1991. Excluding
the Purity Operations, gross profit for Fiscal 1991 was $1.11 billion or 25.8%
of sales. This improvement in gross profit as a percentage of sales for Fiscal
1992 is attributable to the Company's continuing emphasis on large super stores
allowing expanded variety in all departments, particularly higher margin
perishables and service departments. The gross profit comparisons, excluding the
Purity Operations, were affected by the pretax LIFO charge (which is included in
cost of sales) for Fiscal 1992 of $2.2 million compared with $5.8 million in
Fiscal 1991.
22
<PAGE>
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for Fiscal 1992 period decreased $172.3 million or 16.2%
compared to Fiscal 1991. As a percentage of sales, selling, general and
administrative expenses were 20.6% for Fiscal 1992, up from 20.0% in Fiscal
1991. Excluding the Purity Operations, selling, general and administrative
expenses as a percentage of sales were 19.9% in Fiscal 1991. The increase as a
percentage of sales in the period was attributable to promotional costs
representing 0.4%, employee benefit expenses representing 0.2%, public liability
claims expense representing 0.2% and occupancy expense representing 0.1%,
partially offset by administrative expense savings representing 0.2%.
Depreciation and Amortization. Depreciation and amortization of $69.2
million for Fiscal 1992 was $23.9 million less than the $93.2 million in Fiscal
1991. Excluding the Purity Operations, depreciation and amortization for Fiscal
1991 was $73.4 million.
Goodwill Write-Off. Since the Acquisition in 1987, the Company, as
constituted prior to the Recapitalization, did not achieve the sales and
earnings projections prepared at the time of the Acquisition due to the economic
recession in the Company's geographic trading area, increased competitive
pressures (from new and enlarged supermarkets, discount stores and warehouse
club stores), the related weak retail environment and lower food inflation rates
than were projected. These conditions have resulted in higher than expected
losses and a significant deficiency in equity and negatively impacted the real
estate and financial markets so that the Company was not able to achieve the new
store growth, enlargements and remodeling anticipated in the projections. The
Company determined, based on the trend of operating results for Fiscal 1988
through Fiscal 1992, and without anticipating the effects of the
Recapitalization and Spin-Offs on future projections, that its projected results
would not support the future amortization of the Company's remaining goodwill
balance of $600.7 million.
The methodology that the Company used to assess the recoverability of
goodwill was to project results of operations forward 35 years, which
represented the remaining life of the goodwill as of January 30, 1993, based on
a five-year historical trend line of actual results. The Company believed that
the projected future results, based on this historical trend, are the most
likely scenario assuming a recapitalization is not consummated. The Company
evaluated the recoverability of goodwill based on this forecast of future
operations and income. The Company also evaluated recoverability based on the
discounted value of this same forecast using a discount rate that reflects
Pathmark's average cost of funds.
Such methodology established that the goodwill balance was impaired as of
January 30, 1993 and could not be recovered from results of future operations.
The Company's forecast calculated projected revenue growth of approximately 0.5%
per annum over the next 35 years, primarily as a result of limited capital
available for new store growth, enlargements and remodelings, and indicated that
operations conducted through the remaining life of the goodwill yielded a
cumulative loss of $155.0 million on an undiscounted basis and $103.0 million on
a discounted basis of measurement before the effects of goodwill amortization.
Accordingly, the Company wrote off its remaining goodwill balance in the fourth
quarter of Fiscal 1992.
Operating Earnings. For Fiscal 1992, the Company reported an operating loss
of $425.8 million compared to operating earnings of $172.0 million in Fiscal
1991. Excluding the Purity Operations, the Company's operating earnings were
$143.7 million for Fiscal 1991. Excluding the write-off of the remaining
goodwill balance of $600.7 million in Fiscal 1992, and the Purity Operations
impact in Fiscal 1991, the Company's operating earnings for Fiscal 1992 were
$174.9 million, an increase of 8% compared with $162.2 million from the prior
year.
Interest Expense. Interest expense declined $18.7 million to $197.8 million
in Fiscal 1992 compared with $216.5 million in Fiscal 1991. Lower interest
expense was due to the reduction in bank debt
23
<PAGE>
outstanding from the proceeds of the sale of the Purity Operations and lower
interest rates partially offset by the net interest impact of the sale of the
Old Notes.
Gain on Sale of Photofinishing Plant. In Fiscal 1991, the Company sold its
Coastal Photo photofinishing plant to Quality Photo Systems (East), Inc. (a
subsidiary of Konica Corporation) for $5.7 million, including the assumption of
leases, which resulted in a gain on sale of $4.1 million for Fiscal 1991. In
addition, the Company entered into a servicing arrangement under which Quality
Photo Systems (East), Inc. agreed to supply improved photofinishing services at
lower than the Company's previous operating costs.
Loss on Disposal of Purity Operations. On December 17, 1991, the Company
completed the sale of the Purity Operations for approximately $257.0 million (as
adjusted), including the assumption of certain indebtedness of the Purity
Operations. The Company used a portion of the net cash proceeds from the sale to
retire $155.0 million of the Term Loan. The Company applied the remaining net
cash proceeds to repurchase Senior Subordinated Notes in open-market
transactions during the second and third quarters of Fiscal 1992. The Company
recognized a loss of $228.0 million on the disposal of the Purity Operations.
Included in this loss is a write-off of approximately $214.0 million of goodwill
related to the Purity Operations.
Income Taxes. Although the Company reported pretax losses for Fiscal 1992,
the Company generated taxable income due to the effect of amounts expensed for
tax purposes, which were less than amounts used for financial reporting,
primarily the goodwill write-off. In addition, the income tax benefit for the
Fiscal 1991 included a net benefit of $6.9 million relating to a state income
tax refund of prior years' taxes.
Summary of Continuing Operations. Excluding the write-off of the remaining
goodwill balance of $600.7 million and the Purity Operations gain of $2.0
million in Fiscal 1992 and the loss related to the disposal of Purity Operations
of $228.0 million in Fiscal 1991, the Company's loss from continuing operations
for Fiscal 1992 was $17.0 million compared to a loss from continuing operations
of $23.5 million in Fiscal 1991. The improved results are due to lower interest
expense, primarily as a result of the use of the net proceeds from the sale of
the Purity Operations to reduce the outstanding balance of the Term Loan, and
improved operating performance.
FINANCIAL CONDITION
Recapitalization. During Fiscal 1993, the Board of Directors authorized
management of the Company to proceed with the Recapitalization, which resulted
in a refinancing of the Company's debt. On October 26, 1993, the
Recapitalization was consummated. Pathmark borrowed $400.0 million under the
Pathmark Term Loan and $50.0 million under the Pathmark Working Capital
Facility, borrowed $436.6 million through the issuance of Pathmark Senior
Subordinated Notes, issued $120.0 million initial principal amount of the
Pathmark Deferred Coupon Notes, exchanged $95.8 million principal amount of
Pathmark Subordinated Debentures for $95.8 million principal amount of Holdings
Subordinated Debentures and exchanged $198.5 million principal amount of
Pathmark Subordinated Notes for $198.5 million principal amount of Holdings
Subordinated Notes. As part of the Recapitalization, PTK borrowed $126.1 million
through the issuance of the PTK DIBs in a private placement and Plainbridge
borrowed $3.5 million under the $50.0 million Plainbridge Working Capital
Facility. The proceeds from the aforementioned borrowings were used to repay the
Old Working Capital Facility, redeem the Holdings Senior Subordinated Notes and
Holdings Discount Debentures and to purchase for cash $189.2 million aggregate
principal amount of Holdings Subordinated Debentures.
The Pathmark Subordinated Notes mature in Fiscal 2002 and contain a sinking
fund provision that requires Pathmark to deposit $49.4 million (25% of the
original aggregate principal amount) with the trustee of the Pathmark
Subordinated Notes on June 15 in each of Fiscal 2000 and Fiscal 2001 for the
redemption of the Pathmark Subordinated Notes at a redemption price equal to
100% of the principal
24
<PAGE>
amount thereof, plus accrued interest to the redemption date, providing for the
redemption of 50% of the original aggregate principal amount of such notes prior
to maturity.
The Pathmark Deferred Coupon Notes accrete to a maturity value of $225.3
million in Fiscal 2003. These notes begin paying cash interest semiannually on
May 1, 2000 and have no sinking fund requirements.
The PTK DIBs accrete to a maturity value of $218.3 million in Fiscal 2003.
The PTK DIBs begin paying cash interest semiannually on June 30, 1999 and have
no sinking fund requirements.
The Pathmark Senior Subordinated Notes accrete to a maturity value of
$440.0 million in Fiscal 2003. These notes begin paying cash interest
semiannually on May 1, 1994 and have no sinking fund requirements.
The Pathmark Subordinated Debentures mature in Fiscal 2002 and began paying
semi-annual cash interest on December 15, 1993. These Debentures have no sinking
fund requirements.
The Recapitalization improved the Company's liquidity by eliminating the
requirement to repay the $388.2 million principal amount of the Holdings 14.5%
Senior Subordinated Notes due in 1997, partially offset by amortization
requirements of the Pathmark Term Loan. The interest on the Recapitalization
debt versus the interest on the debt repaid will reduce the Company's interest
expense annually by approximately $33.8 million ($60.2 million on cash basis).
Debt Service. During Fiscal 1993, total debt increased $173.6 million from
the prior year end primarily due to the Recapitalization and lower earnings due
to the impact of the strike and lockouts, partially offset by a $7.5 million
reduction in other debt primarily as a result of a $5.7 million prepayment of a
mortgage on the Rickel distribution center and a $2.5 million repayment of a
mortgage on two Pathmark retail properties in connection with the
Recapitalization. Borrowings under the Pathmark Working Capital Facility were
$29.0 million at January 29, 1994 and have decreased to $26.0 million at April
26, 1994. Borrowings under the Plainbridge Working Capital Facility were $8.5
million at January 29, 1994 and have decreased to $7.0 million at April 26,
1994.
Under the Pathmark Working Capital Facility, which expires in Fiscal 1998,
Pathmark can borrow or obtain letters of credit in an aggregate amount not to
exceed $175.0 million subject to an annual cleanup provision commencing in
Fiscal 1994. Under the terms of the Pathmark cleanup provision, in each fiscal
year loans cannot exceed $50.0 million under the Pathmark Working Capital
Facility for a period of 30 consecutive days. Under the Plainbridge Working
Capital Facility, which expires in Fiscal 1996, Plainbridge can borrow or obtain
letters of credit in an aggregate amount not to exceed $50.0 million subject to
an annual cleanup provision, commencing in Fiscal 1994. Under the terms of the
Plainbridge cleanup provision, in each fiscal year, loans cannot be made for a
period of 30 consecutive days. The Company satisfied the terms of the Pathmark
cleanup provision for Fiscal 1994 during the first quarter of Fiscal 1994.
Pathmark is required to repay a portion of its borrowings under the
Pathmark Term Loan each year, which commenced in January 1994, so as to retire
such indebtedness in its entirety by Fiscal 1999.
The indebtedness under the Pathmark and Plainbridge Working Capital
Facilities and the Pathmark Term Loan bear interest at floating rates. To the
extent that certain indebtedness of the Company bears interest at floating
rates, cash interest payments on that indebtedness may vary in future years. The
Company does not currently maintain any interest rate hedging arrangements due
to the reasonable risk that near term interest rates will not rise
significantly. The Company is continuously evaluating this risk and will
implement interest rate hedging arrangements when deemed appropriate.
25
<PAGE>
The amounts of principal payments required each year on outstanding
long-term debt (excluding the original issue discount with respect to the
Pathmark Deferred Coupon Notes and the PTK DIBs) are as follows (dollars in
millions):
<TABLE><CAPTION>
<S> <C>
PRINCIPAL
FISCAL YEARS PAYMENTS
- ------------------------------------------------------------------------- -------------------
1994................................................................... $ 46.2
1995................................................................... 38.2
1996................................................................... 56.7
1997................................................................... 58.3
1998................................................................... 135.7
1999................................................................... 138.8
2000................................................................... 50.6
2001................................................................... 50.0
2002................................................................... 194.2
2003................................................................... 692.7
</TABLE>
Liquidity: The consolidated financial statements of the Company indicates
that at January 29, 1994, current liabilities exceed its current assets by
$117.2 million and the Company's stockholder's deficit approximates $1.3
billion. Management believes that cash flows generated from operations,
supplemented by the unused borrowing capacity under the Pathmark and Plainbridge
Working Capital Facilities (see Note 10 of the Company's Consolidated Financial
Statements) and the availability of capital lease financing will be sufficient
to pay the Company's debts as they come due, provide for its capital expenditure
program and meet its seasonal cash requirements. Further, the Company believes
it will be in compliance throughout the upcoming fiscal year with its various
debt covenants.
Holdings believes that it will be able to make the scheduled payments or
refinance its obligations with respect to its indebtedness through a combination
of operating funds and future borrowing facilities not currently in place.
Future refinancing may be necessary if cash flow from operations is not
sufficient to meet its debt service requirements related to the amortization of
the Term Loan and the maturity of the Working Capital Facility and certain
mortgages in Fiscal 1998, the maturity of the Pathmark Term Loan in Fiscal 1999,
and the maturity of the Pathmark Subordinated Notes and Pathmark Subordinated
Debentures in Fiscal 2002. The Company expects that it will be necessary to
refinance all or a portion of the Pathmark Senior Subordinated Notes, the
Pathmark Deferred Coupon Notes and the PTK DIBs due in Fiscal 2003. The Company
may undertake a refinancing of some or all of such indebtedness sometime prior
to its maturity. The Company's ability to make scheduled payments or to
refinance its obligations with respect to its indebtedness depends on its
financial and operating performance, which, in turn, is subject to prevailing
economic conditions and to financial, business and other factors beyond its
control. Although the Company's cash flow from its operations and borrowings has
been sufficient to meet its debt service obligations, there can be no assurance
that the Company's operating results will continue to be sufficient for payment
of Pathmark's and PTK's indebtedness or that future borrowing facilities will be
available. While it is the Company's intention to enter into refinancings that
it considers advantageous, there can be no assurances that the prevailing market
conditions will be favorable to the Company. In the event the Company obtains
any future refinancing on less than favorable terms, the holders of indebtedness
could experience increased credit risk and could experience a decrease in the
market value of their investment, because the Company might be forced to operate
under terms that would restrict its operations and might find its cash flow
reduced.
Preferred Stock Dividends. The terms of the Exchangeable Preferred Stock
provide for cumulative quarterly dividends at an annual rate of $3.52 per share
when, as, and if declared by the Board of Directors of Holdings. Dividends for
the first 20 quarterly dividend periods (through October 15, 1992)
26
<PAGE>
were paid at the Company's option in additional shares of Exchangeable Preferred
Stock. Prior to the Recapitalization, the Old Working Capital Facility and the
terms of the indentures governing the Company's public debt restricted the
payment of cash dividends on the Holdings Exchangeable Preferred Stock unless
certain conditions were met, including tests relating to earnings and cash flow
ratios of Holdings. Prior to the Recapitalization, Holdings had not met the
conditions permitting cash dividend payments on the Holdings Exchangeable
Preferred Stock. Subsequent to the Recapitalization, the Company does not expect
to receive cash flow sufficient to permit further payments of dividends on the
Exchangeable Preferred Stock in the foreseeable future. All dividends not paid
in cash will cumulate at the rate of $3.52 per share per annum, without
interest, until declared and paid. As of January 29, 1994, unpaid dividends of
$21.5 million were accrued.
Capital Expenditures. Capital expenditures related to Pathmark supermarkets
and drug stores for Fiscal 1993, including property acquired under capital
leases, were approximately $74.0 million compared to approximately $64.1 million
for Fiscal 1992 and $56.9 million for Fiscal 1991. In Fiscal 1993, Pathmark
opened four new Super Centers and completed 12 major renovations and five
enlargements of its existing supermarkets. In Fiscal 1992, Pathmark opened three
new Super Centers and completed eight major renovations and ten enlargements of
its existing supermarkets. In Fiscal 1991, Pathmark opened one new Super Center
and completed 13 major renovations and 15 enlargements of its existing
supermarkets. The Company currently expects Pathmark to open up to five new
Pathmark Super Centers during Fiscal 1994, two of which will replace smaller
stores. The Company also expects Pathmark to complete up to 14 major renovations
and ten enlargements in Fiscal 1994. During Fiscal 1994, Fiscal 1995 and Fiscal
1996, Pathmark plans to open 18 new Pathmark Super Centers, nine of which will
replace smaller stores, and to complete up to 85 major renovations and
enlargements, at a total investment of approximately $340.0 million including
properties acquired under capital leases. The Company expects such investment to
be approximately in the range of $110.0 million to $115.0 million each year
during such period. Realization of this plan would increase supermarket selling
square footage by more than 14% over the three year period, although the Company
can give no assurance that Pathmark will be able to successfully complete the
number of store openings, renovations and enlargements planned for each year
during this period. Pathmark intends to fund this program through the leasing of
certain properties and equipment and cash provided from operations. The extent
of lease financing will depend on the availability of such financing on
favorable terms and the amount of cash provided from operations. Pathmark
believes that if a recapitalization were not consummated, the total capital
expenditures would have been limited to approximately $125.0 million over the
same period and would have resulted in approximately 30 renovations as well as
the funding of ongoing projects for Fiscal 1993, which would not have materially
altered Pathmark's total selling square footage.
Cash Flows. Net cash provided by operating activities amounted to $66.9
million for Fiscal 1993, compared to $132.2 million for Fiscal 1992 and $138.0
million for Fiscal 1991. Cash provided by financing activities for Fiscal 1993
was $4.8 million, compared to cash used for financing activities of $69.4
million for Fiscal 1992 and $270.2 million for Fiscal 1991. The increase in cash
provided by financing activities for Fiscal 1993 was primarily due to the net
proceeds realized from the Recapitalization. The decrease in cash used for
Fiscal 1992 compared to Fiscal 1991 primarily reflected the sale of the
Subordinated Notes during Fiscal 1992 and greater use of cash to repay the Term
Loan during Fiscal 1991, partially offset by greater use of cash to repay the
Old Working Capital Facility during Fiscal 1992. Cash used for investing
activities was $69.4 million for Fiscal 1993, compared to $63.1 million for
Fiscal 1992 and cash provided by investing activities was $131.5 million for
Fiscal 1991. Cash provided by investing activities during Fiscal 1991 reflected
the proceeds of the sale of the Purity Operations.
27
<PAGE>
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS.
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE><CAPTION>
52 WEEKS ENDED
-------------------------------------------
JANUARY 29, JANUARY 30, FEBRUARY 1,
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Sales
Pathmark.............................................................. $ 4,207,187 $ 4,339,834 $ 4,323,030
Purity................................................................ -- -- 996,892
------------- ------------- -------------
Total sales............................................................. 4,207,187 4,339,834 5,319,922
Cost of sales (exclusive of depreciation and amortization shown
separately below)....................................................... 3,052,483 3,183,951 3,965,404
------------- ------------- -------------
Gross profit............................................................ 1,154,704 1,155,883 1,354,518
Selling, general and administrative expenses............................ 920,835 894,261 1,066,605
Depreciation and amortization........................................... 67,665 69,243 93,173
Recapitalization expenses............................................... 16,612 -- --
Provision for store closings............................................ 5,975 -- --
Amortization of goodwill................................................ -- 17,459 22,681
Goodwill write-off...................................................... -- 600,714 --
------------- ------------- -------------
Operating earnings (loss)............................................... 143,617 (425,794) 172,059
Interest expense........................................................ 189,304 197,773 216,508
Interest income allocated to discontinued operations.................... 9,869 12,953 12,748
Gain on sale of photofinishing plant.................................... -- -- 4,068
Gain (loss) on disposal of Purity Operations............................ -- 2,000 (227,985)
------------- ------------- -------------
Loss from continuing operations before income taxes, extraordinary items
and cumulative effect of accounting changes........................... (35,818) (608,614) (255,618)
Income tax provision (benefit).......................................... (20,281) 7,176 (29,336)
------------- ------------- -------------
Loss from continuing operations before extraordinary items and
cumulative effect of accounting changes................................. (15,537) (615,790) (226,282)
Loss from discontinued operations....................................... (1,177) (1,165) (191,215)
------------- ------------- -------------
Loss before extraordinary items and cumulative effect of accounting
changes................................................................. (16,714) (616,955) (417,497)
Extraordinary items, net of an income tax benefit of $9,354 in Fiscal
1993, an income tax benefit of $3,276 in Fiscal 1992 and an income tax
provision of $10,099 in Fiscal 1991................................... (106,155) (4,763) 15,055
------------- ------------- -------------
Loss before cumulative effect of accounting changes..................... (122,869) (621,718) (402,442)
Cumulative effect of accounting changes
Postretirement benefits other than pensions, net of
an income tax benefit of $11,289................................... (15,636) -- --
Postemployment benefits, net of an income tax
benefit of $1,813.................................................. (2,488) -- --
Change in the determination of the discount rate utilized to record
the present value of certain noncurrent liabilities, net of an
income tax benefit of $8,430............................................ (11,570) -- --
Change in the method utilized to calculate last-in, first-out (LIFO)
inventories, net of an income tax benefit of $7,770................ (10,664) -- --
------------- ------------- -------------
Net loss................................................................ (163,227) (621,718) (402,442)
Less non-cash preferred stock accretion and
dividend requirements................................................. (18,771) (18,025) (13,813)
------------- ------------- -------------
Net loss attributable to common stockholders............................ $ (181,998) $ (639,743) $ (416,255)
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to consolidated financial statements.
28
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
------------- -------------
<S> <C> <C>
ASSETS
Current Assets
Cash.............................................................................. $ 6,168 $ 3,806
Accounts receivable, net.......................................................... 15,428 12,182
Merchandise inventories........................................................... 323,036 349,418
Income taxes receivable........................................................... 22,422 2,524
Prepaid expenses.................................................................. 21,838 26,511
Due from suppliers................................................................ 20,600 25,302
Other current assets.............................................................. 12,432 11,197
------------- -------------
Total Current Assets......................................................... 421,924 430,940
Property and Equipment, Net......................................................... 645,843 636,811
Deferred Financing Costs, Net....................................................... 46,497 19,923
Deferred Income Taxes............................................................... 2,890 --
Investment in Purity Supreme (net of valuation allowance of $30,017
at January 29, 1994 and $29,889 at January 30, 1993).............................. -- --
Other Assets........................................................................ 27,736 26,102
------------- -------------
$ 1,144,890 $ 1,113,776
------------- -------------
------------- -------------
LIABILITIES AND STOCKHOLDER'S DEFICIT
Current Liabilities
Accounts payable.................................................................. $ 282,771 $ 263,480
Current maturities of long-term debt.............................................. 46,244 9,520
Accrued payroll and payroll taxes................................................. 60,204 60,552
Current portion of obligations under capital leases............................... 18,844 15,210
Current portion of deferred income taxes.......................................... -- 2,244
Accrued interest payable.......................................................... 16,633 40,674
Accrued expenses and other current liabilities.................................... 114,431 118,954
------------- -------------
Total Current Liabilities.................................................... 539,127 510,634
------------- -------------
Long-Term Debt...................................................................... 1,415,236 1,278,315
------------- -------------
Obligations Under Capital Leases, Long-Term......................................... 131,506 127,048
------------- -------------
Deferred Income Taxes............................................................... -- 37,266
------------- -------------
Other Noncurrent Liabilities........................................................ 243,385 164,434
------------- -------------
Redeemable Securities
Exchangeable Preferred Stock, $.01 par value...................................... 100,346 98,791
Authorized: 9,000,000 shares
Issued and outstanding: 4,890,671 shares at January 29, 1994 and
January 30, 1993
Liquidation preference, $25 per share: $122,267 at January 29, 1994 and
January 30, 1993
------------- -------------
Total Redeemable Securities.................................................. 100,346 98,791
------------- -------------
Commitments and Contingencies
Stockholder's Deficit
Class A Common Stock, $.01 par value.............................................. 7 7
Authorized: 1,075,000 shares
Issued and outstanding: 650,675 shares at January 29, 1994 and
January 30, 1993
Class B Common Stock, $.01 par value.............................................. 3 3
Authorized: 1,000,000 shares
Issued and outstanding: 320,000 shares at January 29, 1994 and
January 30, 1993
Paid-in Capital................................................................... 200,748 202,303
Accumulated Deficit............................................................... (1,485,468) (1,305,025)
------------- -------------
Total Stockholder's Deficit.................................................. (1,284,710) (1,102,712)
------------- -------------
$ 1,144,890 $ 1,113,776
------------- -------------
------------- -------------
</TABLE>
See notes to consolidated financial statements.
29
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
(IN THOUSANDS EXCEPT SHARE AMOUNTS)
<TABLE><CAPTION>
CLASS A
CLASS A CLASS B COMMON TOTAL
COMMON COMMON PAID-IN STOCK IN ACCUMULATED STOCKHOLDER'S
STOCK STOCK CAPITAL TREASURY DEFICIT DEFICIT
------------- ------------- ---------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, February 2, 1991.................... $ 6 $ 3 $ 87,130 $ (2,918) $ (251,953) $ (167,732)
Net loss................................... -- -- -- -- (402,442) (402,442)
Purchase of Class A common stock........... -- -- 349 (412) -- (63)
Exchange of Company common stock for SMG-II
common stock................................. 1 -- 3,736 3,330 -- 7,067
Capital contribution from SMG-II of Company
preferred stock.............................. -- -- 21,339 -- -- 21,339
Capital contribution from SMG-II of Company
merger debentures............................ -- -- 35,142 -- -- 35,142
Capital contribution from SMG-II of Company
senior notes, including accrued
interest..................................... -- -- 10,457 -- -- 10,457
Cash capital contribution from SMG-II...... -- -- 12,260 -- -- 12,260
Gain on retirement of preferred stock...... -- -- 30,797 -- -- 30,797
Dividends on preferred stock (.0352
share per share of preferred stock)..... -- -- -- -- (12,395) (12,395)
Accretion on preferred stock............... -- -- (1,418) -- -- (1,418)
--- --- ---------- --------- ------------- -------------
Balance, February 1, 1992.................... 7 3 199,792 -- (666,790) (466,988)
Net loss................................... -- -- -- -- (621,718) (621,718)
Dividends on preferred stock (.0352 share
per share of preferred stock) ............... -- -- -- -- (12,214) (12,214)
Accrued dividends on preferred stock ($.88
per share)................................... -- -- -- -- (4,303) (4,303)
Accretion on preferred stock............... -- -- (1,508) -- -- (1,508)
Capital contribution from SMG-II of Company
senior notes, including accrued
interest..................................... -- -- 4,019 -- -- 4,019
--- --- ---------- --------- ------------- -------------
Balance, January 30, 1993.................... 7 3 202,303 -- (1,305,025) (1,102,712)
Net loss................................... -- -- -- -- (163,227) (163,227)
Accrued dividends on preferred stock ($.88
per share)................................... -- -- -- -- (17,216) (17,216)
Accretion on preferred stock............... -- -- (1,555) -- -- (1,555)
--- --- ---------- --------- ------------- -------------
Balance January 29, 1994..................... $ 7 $ 3 $ 200,748 $ -- $ (1,485,468) $ (1,284,710)
--- --- ---------- --------- ------------- -------------
--- --- ---------- --------- ------------- -------------
</TABLE>
See notes to consolidated financial statements.
30
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE><CAPTION>
52 WEEKS ENDED
-------------------------------------
JANUARY 29, JANUARY 30, FEBRUARY 1,
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Operating Activities
Net loss..................................................................... $(163,227) $(621,718) $(402,442)
Adjustments to reconcile net loss to net cash provided by
operating activities
Extraordinary (gain) loss on early extinguishment of debt................ 106,155 4,763 (15,055)
Cumulative effect of accounting changes.................................. 40,358 -- --
Depreciation and amortization............................................ 67,665 69,243 93,173
Deferred income tax benefit.............................................. (28,895) (12,228) (37,880)
Amortization of goodwill................................................. -- 17,459 22,681
Goodwill write-off....................................................... -- 600,714 --
Interest accruable but not payable....................................... 3,312 18,480 45,688
Amortization of original issue discount.................................. 4,593 18,295 23,870
Amortization of debt issuance costs...................................... 4,767 4,369 5,208
(Gain) loss on disposal of property and equipment........................ (93) 1,637 (320)
Loss from discontinued operations........................................ 1,177 1,165 191,215
(Gain) loss on disposal of Purity Operations............................. -- (2,000) 227,985
Cash provided by (used for) operating assets and liabilities.............
Accounts receivable, net............................................... (3,246) (580) 262
Merchandise inventories................................................ 7,948 441 (8,108)
Income taxes receivable................................................ (19,898) (2,026) (498)
Other current assets................................................... 7,500 (5,725) (9,183)
Accounts payable....................................................... 19,291 26,032 32,176
Income taxes payable................................................... -- -- (20,766)
Other current liabilities.............................................. (15,224) 8,353 (9,672)
Other noncurrent assets and liabilities, net........................... 34,749 5,504 (373)
----------- ----------- -----------
Cash provided by operating activities................................ 66,932 132,178 137,961
----------- ----------- -----------
Investing Activities
Property and equipment expenditures.......................................... (70,853) (65,622) (59,446)
Proceeds from disposition of property and equipment.......................... 1,486 519 5,663
Proceeds from note receivable................................................ -- -- 1,163
Proceeds from disposal of Purity Operations.................................. -- 2,000 184,100
----------- ----------- -----------
Cash provided by (used for) investing activities..................... (69,367) (63,103) 131,480
----------- ----------- -----------
Financing Activities
Borrowings under Pathmark Term Loan.......................................... 400,000 -- --
Proceeds from issuance of Pathmark Senior Subordinated Notes................. 436,625 -- --
Proceeds from issuance of Pathmark Deferred Coupon Notes..................... 120,000 -- --
Proceeds from issuance of PTK Deferred Interest Bonds........................ 126,100 -- --
Proceeds from New Working Capital Facilities borrowings in connection with
the Recapitalization....................................................... 53,500 -- --
Purchase of Holdings Senior Subordinated Notes............................... (388,192) (72,208) --
Purchase of Holdings Subordinated Debentures................................. (319,229) -- --
Purchase of Holdings Discount Debentures..................................... (184,752) -- --
Repayment of Old Working Capital Facility in connection with the
Recapitalization............................................................... (80,000) -- --
Premiums and other fees in connection with the Recapitalization.............. (98,499) -- --
Deferred financing fees in connection with the Recapitalization.............. (47,538) -- --
Increase (decrease) in Old Working Capital Facility borrowings prior to the
Recapitalization............................................................... 40,000 (53,280) (43,000)
Decrease in New Working Capital Facilities borrowings subsequent to the
Recapitalization............................................................... (16,000) -- --
Decrease in Pathmark Term Loan subsequent to the Recapitalization............ (15,000) -- --
Old Working Capital Facility borrowings related to the sale of the Holdings
Subordinated Notes and purchase of Holdings Senior Subordinated Notes.......... -- 16,280 --
Increase in other borrowings................................................. 2,581 3,969 4,280
Cash capital contribution from SMG-II........................................ -- -- 12,714
Proceeds from the sale of the Holdings Subordinated Notes.................... -- 200,000 --
Premium on purchase of Holdings Senior Subordinated Notes.................... -- (5,394) --
Fees associated with the sale of Holdings Subordinated Notes................. -- (6,678) --
Repayment of Holdings Term Loan.............................................. -- (132,000) (225,000)
Repayment of other long-term borrowings...................................... (9,768) (5,912) (7,104)
Reduction in obligations under capital leases................................ (15,031) (14,182) (11,762)
Purchase of Class A common stock............................................. -- -- (313)
----------- ----------- -----------
Cash provided by (used for) financing activities..................... 4,797 (69,405) (270,185)
----------- ----------- -----------
Increase (decrease) in cash.................................................... 2,362 (330) (744)
Cash at beginning of period.................................................... 3,806 4,136 4,880
----------- ----------- -----------
Cash at end of period.......................................................... $ 6,168 $ 3,806 $ 4,136
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements.
31
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION
Supermarkets General Holdings Corporation and its wholly owned subsidiary
SMG Acquisition Corporation ("SMG") were formed by Merrill Lynch Capital
Partners, Inc., a wholly owned subsidiary of Merrill Lynch & Co., Inc., to
effect the acquisition (the "Acquisition") of Supermarkets General Corporation
("Old Supermarkets"). On June 15, 1987, Supermarkets General Holdings
Corporation completed the first step of the Acquisition when it acquired
32,800,000 shares (approximately 85%) of Old Supermarkets' common stock through
a tender offer (the "Tender Offer") by SMG. The remaining outstanding common
stock of Old Supermarkets was acquired on October 5, 1987 when SMG was merged
with and into Old Supermarkets pursuant to a Merger Agreement dated April 22,
1987, as amended.
The Acquisition was accounted for as a purchase, and accordingly, Holdings
recorded the assets and liabilities of Old Supermarkets at their fair values at
the date of the Acquisition. The tax basis for the assets and liabilities
acquired was retained.
In October 1989, Old Supermarkets adopted an amended and restated Plan of
Liquidation pursuant to which it was liquidated into three wholly owned
subsidiaries of Supermarkets General Holdings Corporation. In November 1989,
pursuant to such Plan, Old Supermarkets transferred substantially all of the
assets of its Purity Supreme division to two of the three above-mentioned wholly
owned subsidiaries, Purity Supreme, Inc. and Li'l Peach Corp., and said
subsidiaries assumed substantially all of the liabilities of Old Supermarkets
related to such division. Old Supermarkets completed the liquidation just prior
to the year ended February 3, 1990 by merging with the third of the above-
mentioned wholly owned subsidiaries which retained the name Supermarkets General
Corporation ("Supermarkets"). On December 17, 1991, Purity Supreme, Inc. and
Li'l Peach Corp. were sold (see Note 26). Supermarkets General Holdings
Corporation and its respective subsidiaries are hereafter collectively referred
to as "Holdings" or the "Company".
On November 15, 1990, SMG-II Holdings Corporation, a newly incorporated
Delaware corporation ("SMG-II"), commenced offers to purchase for cash up to
$155.5 million principal amount of the Company's Junior Subordinated Discount
Debentures (the "Discount Debenture Offer") and up to 1.7 million shares of the
Company's Cumulative Exchangeable Redeemable Preferred Stock (the "Exchangeable
Preferred Stock Offer"). Concurrently with the Discount Debenture Offer and
Exchangeable Preferred Stock Offer, SMG-II commenced an exchange offer (the
"Exchange Offer", together with the Discount Debenture Offer and Exchangeable
Preferred Stock Offer, the "Offers") pursuant to which the then existing common
stockholders of the Company could exchange on a one-for-one basis shares of the
Company's common stock for shares of SMG-II's common stock. The Offers were
subsequently amended to provide for offers to purchase up to $110.0 million
principal amount of the Company's Junior Subordinated Discount Debentures (the
"Discount Debentures") and up to 3.4 million shares of the Company's Cumulative
Exchangeable Redeemable Preferred Stock (the "Exchangeable Preferred Stock").
In February 1991, SMG-II purchased approximately $74.1 million principal
amount of the Discount Debentures at 33% of their principal amount and 2.7
million shares of Exchangeable Preferred Stock at $7.00 net per share, pursuant
to the Discount Debenture Offer and the Exchangeable Preferred Stock Offer,
respectively. In addition, all outstanding shares of the Company's common stock
were exchanged pursuant to the Exchange Offer. As a result of the Exchange
Offer, SMG-II owns all of the Company's common stock and is effectively a
holding company for the operations of the Company. SMG-II financed the Purchases
by selling 417,500 shares of its Cumulative Convertible Preferred Stock (the
"SMG-II Preferred Stock") for an aggregate purchase price of $83.5 million to
various
32
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 1--ORGANIZATION AND BASIS OF PRESENTATION--(CONTINUED)
institutional investors. The holders of SMG-II's voting and non-voting common
stock and SMG-II Preferred Stock include certain limited partnerships controlled
directly or indirectly by Merrill Lynch Capital Partners, Inc. and certain
indirectly wholly owned subsidiaries of Merrill Lynch & Co., Inc. ("ML & Co.").
ML & Co. beneficially owns approximately 88.6% of the outstanding stock of
SMG-II, and accordingly, controls SMG-II and, indirectly, the Company.
Subsequent to the completion of the Offers in Fiscal 1991, SMG-II acquired
through open market transactions approximately $21.3 million principal amount of
Discount Debentures, $9.8 million principal amount of the Company's 14.5% Senior
Subordinated Notes due 1997 (the "Senior Subordinated Notes") and 94,900 shares
of Exchangeable Preferred Stock and made a capital contribution to the Company
of such securities together with the amounts of the Discount Debentures and
Exchangeable Preferred Stock purchased pursuant to the Discount Debenture Offer
and Exchangeable Preferred Stock Offer, respectively, as well as cash sufficient
to pay associated taxes. The Company has retired the Senior Subordinated Notes,
Discount Debentures and Exchangeable Preferred Stock contributed by SMG-II.
The accompanying consolidated financial statements of the Company indicate
that at January 29, 1994 current liabilities exceed its current assets by $117.2
million and the Company's stockholder's deficit approximates $1.3 billion.
Management believes that cash flows generated from operations, supplemented by
the unused borrowing capacity under the Pathmark and Plainbridge Working
Capital Facilities (see Note 10) and the availability of capital lease financing
will be sufficient to pay the Company's debts as they come due, provide for
its capital expenditure program and meet its seasonal cash requirements.
Further, the Company believes it will be in compliance throughout the upcoming
fiscal year with its various debt covenants.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation:
The financial statements include the accounts of the Company and its
subsidiaries, all wholly owned. The Company intends to distribute Plainbridge to
certain of the Company's stockholders. Accordingly, discontinued operations
represent the results of operations related to the warehouse, transportation and
real estate operations subsequent to the Plainbridge Spin-Off as well as the
home center segment for all years presented (see Note 3).
Fiscal Year:
The Company's fiscal year ends on the Saturday nearest January 31 of the
following calendar year. Normally each fiscal year consists of 52 weeks, but
every five or six years, as was the case in Fiscal 1989, the fiscal year
consists of 53 weeks.
Reclassifications:
Certain reclassifications have been made to the prior years' consolidated
financial statements to conform to the Fiscal 1993 presentation.
33
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Statements of Cash Flows:
All short-term investments with a maturity of three months or less are
considered to be cash equivalents. The Company had no such investments during
all periods presented.
Merchandise Inventories:
Merchandise inventories are valued at the lower of cost or market. Cost for
substantially all merchandise inventories is determined on a last-in, first-out
(LIFO) basis. See Note 5 for the change in the method utilized to calculate LIFO
store inventories related to the Company's indirect wholly-owned subsidiary,
Pathmark Stores, Inc.
Property and Equipment:
Property and equipment are stated at cost. Depreciation and amortization
expense on owned property and equipment is computed on the straight-line method
over their estimated useful lives. Amortization of property under capital leases
is computed on the straight-line method over the term of the lease or the leased
property's estimated useful life, whichever is shorter.
Income Taxes:
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
Prior to January 31, 1993, the Company's financial statements had been prepared
in accordance with Statement of Financial Accounting Standards No. 96,
"Accounting for Income Taxes" ("SFAS No. 96"). SFAS No. 96 and SFAS No. 109
require the calculation of deferred taxes using the asset and liability method.
Under this method, deferred tax balances must be adjusted to reflect enacted
changes in income tax rates and deferred taxes must be provided on book and tax
basis differences. The implementation of SFAS No. 109 had no effect on the
consolidated statements of operations, however, it resulted in a
reclassification of the current and noncurrent deferred taxes since, in
accordance with SFAS No. 109, the classification of such deferred taxes
correspond with the classification of the related asset or liability which gave
rise to the book and tax basis difference (see Note 23).
Deferred Financing Costs:
Deferred financing costs are amortized on the interest method over the life
of the related debt.
Net Loss Per Common Share:
Since the Company is a wholly owned subsidiary, loss per share information
is not presented.
Store Preopening and Closing Costs:
Store preopening costs are expensed as incurred. Costs associated with the
closing of stores, such as future rent and real estate taxes, net of expected
sublease recovery, are expensed when management makes a decision to close such
stores.
Postretirement Benefits other than Pensions:
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
other than Pensions" ("SFAS No. 106"). In accordance with SFAS No. 106, the
Company accrued for the cost of providing
34
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
postretirement benefits, principally health care and life insurance benefits,
over the working careers of the Company's associates. The Company previously
expensed the cost of these benefits as claims were paid (see Note 21).
Postemployment Benefits:
Effective January 31, 1993, the Company adopted Statement of Financial
Accounting Standards No. 112, "Employers' Accounting for Postemployment
Benefits" ("SFAS No. 112"). In accordance with SFAS No. 112, the Company accrued
for the expected cost of providing postemployment benefits, primarily long-term
disability, over the working careers of the Company's associates. The Company
previously expensed the cost of these benefits as claims were paid (see Note
22).
NOTE 3--RECAPITALIZATION AND DISCONTINUED OPERATIONS
During Fiscal 1993, the Board of Directors authorized management of the
Company to proceed with a recapitalization plan (the "Recapitalization")
consisting of a refinancing of the Company's debt.
On October 26, 1993, the Recapitalization was consummated. Pathmark Stores,
Inc. (formerly Supermarkets General Corporation, hereinafter referred to as
"Pathmark") borrowed $450.0 million under a bank credit agreement, consisting of
$400.0 million under a term loan facility ("the Pathmark Term Loan") and $50.0
million under a $175.0 million working capital facility (the "Pathmark Working
Capital Facility"), borrowed $436.6 million from the issuance of its 9.625%
Senior Subordinated Notes due 2003 (the "Pathmark Senior Subordinated Notes"),
issued $120.0 million initial principal amount of its 10.75% Junior Subordinated
Deferred Coupon Notes due 2003 (the "Pathmark Deferred Coupon Notes"), exchanged
$95.8 million principal amount of its 12.625% Subordinated Debentures due 2002
(the "Pathmark Subordinated Debentures") for $95.8 million principal amount
outstanding of Holdings Subordinated Debentures and exchanged $198.5 million
principal amount of its 11.625% Subordinated Notes due 2002 (the "Pathmark
Subordinated Notes") for $198.5 million principal amount outstanding of the
Holdings Subordinated Notes. As part of the Recapitalization, PTK Holdings, Inc.
("PTK"), a newly formed wholly owned subsidiary of Holdings, borrowed $126.1
million through the issuance of its $130.0 million aggregate principal amount
10.25% Exchangeable Guaranteed Debentures due 2003 (the "PTK DIBs") in a private
placement, which bonds the Company has guaranteed. The proceeds from the
aforementioned borrowings were used to redeem the Old Working Capital Facility,
Holdings 14.5% Senior Subordinated Notes due 1997 (the "Holdings Senior
Subordinate Notes") and Holdings 13.125% Junior Subordinated Discount Debentures
due 2003 (the "Holdings Discount Debentures") and to purchase $185.0 million
aggregate principal amount of the Holdings 12.625% Subordinated Debentures due
2002 (the "Holdings Subordinated Debentures") from the Equitable Affiliates. In
addition, on October 26, 1993, Plainbridge, Inc. ("Plainbridge"), a newly formed
indirectly wholly owned subsidiary of the Company, borrowed $3.5 million under a
$50.0 million bank revolving credit agreement (the "Plainbridge Working Capital
Facility").
In conjunction with the Recapitalization, the assets, liabilities and
related operations of the Company's home centers segment as well as certain
assets and liabilities of the warehouse, distribution and processing facilities
which service Pathmark's supermarkets and drug stores and certain inventories
and real property, were contributed by Pathmark to Plainbridge and the shares of
Plainbridge were distributed to PTK (the "Plainbridge Spin-Off"). As a result,
PTK holds 100% of the capital stock of both Plainbridge and Pathmark. The
Company intends to further spin-off Plainbridge to its common
35
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--RECAPITALIZATION AND DISCONTINUED OPERATIONS--(CONTINUED)
stockholder within the next year, although there can be no assurance that such
spin-off will be consummated. Any such spin-off would require satisfying the
dividend restrictions with respect to Holding's Exchangeable Preferred Stock
(see Note 15) as well as obtaining consents from various lenders to Plainbridge
and PTK. Accordingly, the accompanying consolidated statements of operations for
all periods presented include the operating results of the Company's home
centers segment as discontinued operations. The results of operations related to
the warehouses and distribution facilities are included in the continuing
operating results of the Company through the date of the Plainbridge Spin-Off
since such operations represented a portion of the supermarkets and drug stores
segment. Subsequent to the Plainbridge Spin-Off, the operating results related
to the warehouses and distribution facilities are included as discontinued
operations. The net assets of Plainbridge as of January 29, 1994 were
approximately $223.5 million.
In conjunction with the Recapitalization, Pathmark entered into a 10-year
logistical services agreement with Plainbridge. The terms of the logistical
services agreement were designed to require Plainbridge to continue to provide
Pathmark with substantially the same level of supply and other logistical
services as was available from the warehouse, distribution and processing
facilities prior to the Plainbridge Spin-Off at substantially the same or a
lower cost. Subsequent to the Plainbridge Spin-Off, these intercompany purchases
from Plainbridge are included in the Company's continuing operations. The
corresponding revenues generated by Plainbridge from such transactions are
included in the Company's discontinued operations.
Operating results of the discontinued operations were as follows (dollars
in thousands):
<TABLE><CAPTION>
FISCAL YEARS
----------------------------------------
1993(A) 1992 1991
------------- ----------- ------------
<S> <C> <C> <C>
Sales
Rickel home centers...................................... $ 343,643 $ 344,279 $ 409,679
Affiliate................................................ 705,785 -- --
Other.................................................... 6,164 -- --
------------- ----------- ------------
Total sales................................................ $ 1,055,592 $ 344,279 $ 409,679
------------- ----------- ------------
------------- ----------- ------------
Loss before income taxes(b)................................ $ (2,120) $ (2,069) $ (206,115)(c)
Income tax benefit......................................... (943) (904) (14,900)
------------- ----------- ------------
Net loss from discontinued operations...................... $ (1,177) $ (1,165) $ (191,215)
------------- ----------- ------------
------------- ----------- ------------
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Represents the results of operations related to the warehouse and distribution facilities subsequent to the
Plainbridge Spin-Off as well as the Rickel's home center segment for the entire fiscal year.
(b) The home centers segment was not allocated any portion of the Company's Acquisition debt (see Note 10).
However, the Company charged the home centers segment interest expense relating to a proportionate share of
certain borrowings. These charges amounted to $13.1 million, $13.0 million, and $12.7 million in Fiscal 1993,
Fiscal 1992 and Fiscal 1991, respectively, and are included in the results of the discontinued operations.
</TABLE>
(Footnotes continued on following page)
36
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 3--RECAPITALIZATION AND DISCONTINUED OPERATIONS--(CONTINUED)
(Footnotes continued from preceding page)
<TABLE>
<S> <C>
(c) Includes charges in connection with the Company's dispostion of 12 Rickel stores in connection with its
strategic plan to withdraw from the Connecticut and Long Island, New York market areas (the "Home Centers
Partial Disposition"). At the end of Fiscal 1993, ten stores were closed and have been partially or fully
leased, subleased or assigned. One store has been closed and is expected to be subleased in the future and
the lease for the remaining store is expected to terminate by mutual consent during Fiscal 1994. During the
fourth quarter of Fiscal 1991, the Company recorded a charge of $23.6 million, including $16.3 million of
non-cash charges (primarily related to the write-off of intangibles allocated to fixed assets as a result of
the Acquisition) as a result of the Home Centers Partial Disposition. The Company determined that the reduced
scope of operations and the increased competitive environment have impacted future prospects of the home
centers segment and, therefore, the operations of the remaining Rickel stores would not support the future
amortization of the home centers segment goodwill. Accordingly, the Company recorded a non-cash charge of
$170.2 million in the fourth quarter of Fiscal 1991 accelerating the remaining amortization of goodwill
related to its home centers segment.
</TABLE>
In connection with the Plainbridge Spin-Off and Recapitalization, the
Company recorded a pretax charge of approximately $23.7 million in the third
quarter of Fiscal 1993 to record estimated reorganization and restructuring
costs, including an early retirement program offered to certain Company
associates. During the fourth quarter of Fiscal 1993, the Company determined
that the estimated costs related to the reorganization and restructuring were
less than originally estimated and recorded a pretax credit of approximately
$7.1 million. Of the total net pretax charge of $16.6 million for Fiscal 1993,
$6.4 million related to the early retirement program and severance costs
incurred to reduce the Company's workforce, $8.1 million related to the
additional technical information systems costs incurred in order to accomplish
the Plainbridge Spin-Off, and $2.1 million related to warehouse and consulting
costs associated therewith. Through January 29, 1994, the Company has paid $11.9
million related to these costs. Management expects to pay the remaining $4.7
million included in other accrued expenses by the second quarter of Fiscal 1994.
NOTE 4--ACCOUNTS RECEIVABLE
Accounts receivable are comprised of the following (dollars in thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
<S> <C> <C>
Prescription plans..................................................................... $ 13,377 $ 11,271
Other.................................................................................. 3,842 2,625
----------- -----------
Accounts receivable.................................................................... 17,219 13,896
Less allowance for doubtful accounts................................................... 1,791 1,714
----------- -----------
Accounts receivable, net............................................................... $ 15,428 $ 12,182
----------- -----------
----------- -----------
</TABLE>
37
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5--MERCHANDISE INVENTORIES
Merchandise inventories are comprised of the following (dollars in
thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
<S> <C> <C>
Merchandise inventories at FIFO cost............................................... $ 377,516 $ 386,901
Less LIFO reserve.................................................................. 54,480 37,483
----------- -----------
Merchandise inventories at LIFO cost............................................... $ 323,036 $ 349,418
----------- -----------
----------- -----------
</TABLE>
In the fourth quarter of Fiscal 1993, the Company changed its method
utilized to calculate LIFO store inventories related to its indirect wholly
owned subsidiary, Pathmark. Prior to Fiscal 1993, the Company utilized a retail
approach to determine current cost and a general warehouse purchase index to
measure inflation in the cost of its merchandise inventories in its stores. The
Company's change arose from the development and utilization in Fiscal 1993 of
internal cost indices based on the specific identification of merchandise in its
stores to measure inflation in the prices, thereby eliminating the averaging and
estimation inherent in the retail and general warehouse purchase index methods.
The Company believes the use of such specific costs and internal indices results
in a more accurate measurement of the impact of inflation in the cost of its
store merchandise. The effect of this change as of January 31, 1993 resulted in
a charge to income of $10.7 million, net of an income tax benefit of $7.8
million, and has been presented as a cumulative effect of a change in accounting
method in the accompanying consolidated statement of operations for Fiscal 1993.
This change of method increased the LIFO credit by $1.3 million, resulting in a
total LIFO credit of $2.6 million for Fiscal 1993. The effect of this change on
prior periods was not determinable.
Liquidation of LIFO layers in the periods reported did not have a
significant effect on the results of continuing operations.
NOTE 6--PROPERTY AND EQUIPMENT
Property and equipment are comprised of the following (dollars in
thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
<S> <C> <C>
Land................................................................................... $ 65,840 $ 64,594
Buildings and building improvements.................................................... 196,212 177,148
Fixtures and equipment................................................................. 225,582 234,114
Leasehold costs and improvements....................................................... 309,995 300,269
Transportation equipment............................................................... 19,771 22,705
Construction in progress............................................................... 680 3,985
----------- -----------
Property and equipment, owned.......................................................... 818,080 802,815
Property and equipment under capital leases............................................ 176,496 155,813
----------- -----------
Property and equipment, at cost........................................................ 994,576 958,628
Less accumulated depreciation and amortization......................................... 348,733 321,817
----------- -----------
Property and equipment, net............................................................ $ 645,843 $ 636,811
----------- -----------
----------- -----------
</TABLE>
NOTE 7--GOODWILL
In the fourth quarter of Fiscal 1992, the Company wrote off its remaining
goodwill balance of $600.7 million.
38
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 7--GOODWILL--(CONTINUED)
Since the Acquisition in Fiscal 1987, the Company, as constituted prior to
the Recapitalization, did not achieve the sales and earnings projections
prepared at the time of the Acquisition due to the economic recession in the
Company's geographic trading area, increased competitive pressures (from new and
enlarged supermarkets, discount stores and warehouse club stores), the related
weak retail environment and lower food inflation rates than were projected.
These conditions resulted in higher than expected losses and a significant
deficiency in equity and negatively impacted the real estate and financial
markets so that the Company was not able to achieve the new store growth,
enlargements and remodeling anticipated in the projections. The Company
determined, based on the trend of operating results for Fiscal 1988 through
Fiscal 1992, and without anticipating the effects of the Recapitalization and
Spin-Offs on future projections, that its projected results, as of January 30,
1993, would not support the future amortization of the Company's remaining
goodwill balance of $600.7 million.
The methodology that management used to assess the recoverability of
goodwill was to project results of operations forward 35 years, which
represented the remaining life of the goodwill as of January 30, 1993, based on
a five year historical trend line of actual results. Management believed that
the projected future results, based on this historical trend, were the most
likely scenario assuming a recapitalization was not consummated. Management
evaluated the recoverability of goodwill based on this forecast of future
operations and income. Management also evaluated recoverability based on the
discounted value of this same forecast using a discount rate that reflected the
Company's average cost of funds.
Management believed that if a recapitalization was not consummated,
Pathmark's total capital expenditures would be limited to approximately $125.0
million between Fiscal 1993 and Fiscal 1996 and would result in approximately 30
renovations as well as the funding of ongoing projects for Fiscal 1993, which
would not materially alter Pathmark's total selling square footage. Assuming a
recapitalization was not consummated, sales growth would be restricted to
approximately 0.5% per year. Management's projection of 0.5% sales growth per
year was derived from the Company's five-year historical sales trend and the
management's estimate of future sales performance. In the projection, management
assumed the five-year historical average rates of inflation, financing costs and
competitive conditions to be representative during the projected period.
Management believed that these projected future results so derived depict the
Company's projected performance without the benefits of a recapitalization. Such
projection indicated that operations to Fiscal 2026 yielded a cumulative loss of
$155.0 million on an undiscounted basis and $103.0 million on a discounted basis
of measurement before the effects of goodwill amortization.
NOTE 8--DEFERRED FINANCING COSTS
Deferred financing costs are comprised of the following (dollars in
thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
<S> <C> <C>
Deferred financing costs.............................................................. $ 49,086 $ 56,015
Less accumulated amortization......................................................... 2,589 36,092
----------- -----------
Deferred financing costs, net......................................................... $ 46,497 $ 19,923
----------- -----------
----------- -----------
</TABLE>
In connection with the Recapitalization, the Company incurred deferred
financing costs of approximately $47.5 million. Also in connection therewith,
the Company wrote off, as part of the extraordinary items, $16.8 million of
deferred financing costs associated with debt which was extinguished (see Notes
3 and 18).
39
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 9--OTHER NONCURRENT LIABILITIES
Other noncurrent liabilities are comprised of the following (dollars in
thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
----------- -----------
<S> <C> <C>
Self-insured liabilities............................................................. $ 85,943 $ 74,631
Pension and deferred compensation.................................................... 15,975 14,216
Disposal of Purity Operations........................................................ 41,028 34,700
Postretirement benefits other than pensions.......................................... 35,670 6,700
Postemployment benefits.............................................................. 4,938 1,093
Accrued dividends.................................................................... 21,519 4,304
Other................................................................................ 38,312 28,790
----------- -----------
Other noncurrent liabilities......................................................... $ 243,385 $ 164,434
----------- -----------
----------- -----------
</TABLE>
Certain noncurrent liabilities, such as self-insured liabilities for
incurred but unpaid claims relating to customer, employee and vehicle accidents,
and closed store liabilities are recorded at present value utilizing a discount
rate based on the projected payout of these claims. The Company made a change in
the determination of the discount rate utilized to record the present value of
certain noncurrent liabilities and reduced such rate from 12%, representing the
Company's effective interest rate, to a risk free rate, estimated at 4% in
Fiscal 1993. The cumulative effect of this accounting change as of January 31,
1993 totalled $11.6 million, net of an income tax benefit of $8.4 million. While
this change increased total liabilities by approximately $20.0 million, the cash
outflows to satisfy these liabilities will remain unchanged.
NOTE 10--LONG-TERM DEBT
Long-term debt is comprised of the following (dollars in thousands):
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
------------- -------------
<S> <C> <C>
Pathmark Term Loan.................................................................. $ 385,000 $ --
Pathmark Working Capital Facility................................................... 29,000 --
Plainbridge Working Capital Facility................................................ 8,500 --
10.25% PTK Exchangeable Guaranteed Debentures due 2003.............................. 129,649 --
9.625% Pathmark Senior Subordinated Notes due 2003.................................. 436,718 --
10.75% Pathmark Deferred Coupon Notes due 2003...................................... 123,312 --
12.625% Pathmark Subordinated Debentures due 2002................................... 95,750 --
11.625% Pathmark Subordinated Notes due 2002........................................ 198,517 --
11.625% Holdings Subordinated Notes due 2002........................................ 1,483 200,000
13.125% Holdings Junior Subordinated Discount Debentures............................ -- 183,801
Old Working Capital Facility........................................................ -- 40,000
14.5% Holdings Senior Subordinated Notes............................................ -- 388,192
12.625% Holdings Subordinated Debentures............................................ -- 414,979
Industrial Revenue Bonds............................................................ 6,375 6,375
Other Debt (primarily mortgages).................................................... 47,176 54,488
------------- -------------
Total debt.......................................................................... 1,461,480 1,287,835
Less current maturities............................................................. 46,244 9,520
------------- -------------
Long-term portion................................................................... $ 1,415,236 $ 1,278,315
------------- -------------
------------- -------------
</TABLE>
40
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--LONG-TERM DEBT--(CONTINUED)
Scheduled Maturities of Debt:
Long-term debt principal payments required during the next five fiscal
years are as follows (dollars in thousands):
<TABLE><CAPTION>
PRINCIPAL
FISCAL YEARS PAYMENTS
- ---------------------------------------------------------------------- -----------
<S> <C>
1994................................................................ $ 46,244
1995................................................................ 38,244
1996................................................................ 56,694
1997................................................................ 58,272
1998................................................................ 135,654
-----------
$ 335,108
-----------
-----------
</TABLE>
Recapitalization:
On October 26, 1993, the Recapitalization was consummated. Pathmark
borrowed $400.0 million under the Pathmark Term Loan and $50.0 million under the
Pathmark Working Capital Facility, borrowed $436.6 million through the issuance
of Pathmark Senior Subordinated Notes, issued $120.0 million initial principal
amount of Pathmark Deferred Coupon Notes, exchanged $95.8 million principal
amount of Pathmark Subordinated Debentures for $95.8 million principal amount of
Holdings Subordinated Debentures and exchanged $198.5 million principal amount
of Pathmark Subordinated Notes for $198.5 million principal amount outstanding
of the Holdings Subordinated Notes. As part of the Recapitalization, PTK
borrowed $126.1 million through the issuance of PTK DIBs in a private placement
which bonds the Company has guaranteed. The proceeds from the aforementioned
borrowings were used to redeem the Old Working Capital Facility, Holdings Senior
Subordinated Notes and Holdings Discount Debentures and to purchase $189.2
million aggregate principal amount of the Holdings Subordinated Debentures. In
addition, on October 26, 1993, Plainbridge borrowed $3.5 million under the $50.0
million Plainbridge Working Capital Facility (see Notes 3 and 18).
The indebtedness under the Pathmark and Plainbridge Working Capital
Facilities and the Pathmark Term Loan bear interest at floating rates. Pathmark
is required to repay a portion of its borrowings under the Pathmark Term Loan
each year, which commenced in January 1994, so as to retire such indebtedness in
its entirety by October 31, 1999. Under the Pathmark Working Capital Facility,
which expires on July 31, 1998, Pathmark can borrow or obtain letters of credit
in an aggregate amount not to exceed $175.0 million subject to an annual cleanup
provision commencing in Fiscal 1994. Under the terms of the Pathmark cleanup
provision, in each fiscal year loans cannot exceed $50.0 million under the
Pathmark Working Capital Facility for a period of 30 consecutive days.
Subsequent to January 29, 1994, the Company satisfied its cleanup provision
related to the Pathmark Working Capital Facility for Fiscal 1994. Under the
Plainbridge Working Capital Facility, which expires in Fiscal 1996, Plainbridge
can borrow or obtain letters of credit in an aggregate amount not to exceed
$50.0 million subject to annual cleanup provision, commencing in Fiscal 1994.
Under the terms of the Plainbridge cleanup provision, in each fiscal year, loans
cannot be made for a period of 30 consecutive days. Holdings believes that
Pathmark and Plainbridge have sufficient unused borrowing capacity under their
respective working capital facilities which can be utilized for unforeseen or
seasonal cash requirements. At January 29, 1994 and April 26, 1994, Pathmark and
Plainbridge, in the aggregate, had approximately $110.2 million and $112.8
million, respectively, in unused borrowing capacity under their working capital
facilities. At January 29, 1994, the Company was in compliance
41
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--LONG-TERM DEBT--(CONTINUED)
with all of its debt covenants and based upon projected results for the upcoming
fiscal year, the Company believes it will be in compliance throughout the
upcoming fiscal year with its various debt covenants.
The PTK DIBs accrete to a maturity value of $218.3 million in Fiscal 2003.
The PTK DIBs begin paying cash interest semiannually on June 30, 1999 and have
no sinking fund requirements.
The Pathmark Senior Subordinated Notes accrete to a maturity value of
$440.0 million in Fiscal 2003. These notes begin paying cash interest
semiannually on May 1, 1994 and have no sinking fund requirements.
The Pathmark Deferred Coupon Notes accrete to a maturity value of $225.3
million in Fiscal 2003. These notes begin paying cash interest semiannually on
May 1, 2000 and have no sinking fund requirements.
The Pathmark Subordinated Debentures mature in Fiscal 2002 and began paying
semi-annual cash interest on December 15, 1993. These Debentures have no sinking
fund requirements.
The Pathmark Subordinated Notes mature in Fiscal 2002 and contain a sinking
fund provision that requires Holdings to deposit $49.4 million (25% of the
original aggregate principal amount) with the trustee of the Pathmark
Subordinated Notes on June 15 in each of Fiscal 2000 and Fiscal 2001 for the
redemption of the Pathmark Subordinated Notes at a redemption price equal to
100% of the principal amount thereof, plus accrued interest to the redemption
date, providing for the redemption of 50% of the original aggregate principal
amount of such notes prior to maturity.
On April 30, 1993, the Company repaid $5.7 million of indebtedness secured
by a mortgage on the distribution center of the home centers segment transferred
to Plainbridge and on May 14, 1993, the Company repaid $2.5 million of
indebtedness secured by mortgages on two Pathmark retail properties transferred
to Plainbridge (see Notes 3 and 18).
Under the Old Working Capital Facility, the Company could borrow or obtain
letters of credit in an aggregate amount not to exceed $210.0 million at
floating rates. On October 26, 1993, as part of the Recapitalization, the
balance of $40.0 million outstanding was paid off.
The Pathmark Term Loan, the Pathmark and Plainbridge Working Capital
Facilities and the indentures for the recapitalized debt contain covenants,
including, but not limited to, covenants with respect to the following matters:
(i) limitation on indebtedness; (ii) limitation on restricted payments; (iii)
limitation on transactions with affiliates; (iv) limitation on liens; (v)
limitation on the issuance of preferred stock by subsidiaries; (vi) limitation
on issuances of guarantees of indebtedness by subsidiaries; (vii) limitation on
transfer of assets to subsidiaries; (viii) limitation on dividends and other
payment restrictions affecting subsidiaries; and (ix) restriction on mergers and
transfers of assets.
14.5% Holdings Senior Subordinated Notes due 1997:
The Holdings Senior Subordinated Notes original maturity date was September
15, 1997. Interest was payable semi-annually in cash. On October 26, 1993, as
part of the Recapitalization, the balance of $388.2 million principal amount
outstanding was paid off.
During Fiscal 1992, the Company retired $72.2 million principal amount of
Holdings Senior Subordinated Notes, which were purchased through open market
transactions utilizing a portion of the proceeds from the sale of the $200.0
million principal amount of 11.625% Subordinated Notes due 2002 (the
"Subordinated Notes") as well as additional Old Working Capital Facility
borrowings. In
42
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--LONG-TERM DEBT--(CONTINUED)
addition, SMG-II purchased and made a capital contribution to the Company of
$4.8 million principal amount of Senior Subordinated Notes, which were retired
by the Company.
12.625% Holdings Subordinated Debentures due 2002:
The Holdings Subordinated Debentures mature on June 15, 2002. Interest on
the Subordinated Debentures accrued semi-annually, but was not payable to
holders thereof until December 15, 1992. Interest accrued but not paid was added
to the original principal amount thereof in accordance with the terms of the
indenture. On October 26, 1993, as part of the Recapitalization, $189.2 million
principal amount of the balance outstanding was paid off, $95.8 million of the
balance outstanding was exchanged for $95.8 million of Pathmark Subordinated
Debentures and $130.0 million of the balance outstanding was exchanged for
$130.0 million aggregate principal amount of the PTK DIBs.
11.625% Holdings Subordinated Notes due 2002:
On May 28, 1992, the Company completed a public offering of $200.0 million
principal amount of the Holdings Subordinated Notes. The Subordinated Notes rank
junior to indebtedness under the Bank Credit Agreement and the Senior
Subordinated Notes, pari passu with the Subordinated Debentures and senior to
the Discount Debentures. Interest on the Subordinated Notes is payable
semi-annually. On October 26, 1993, as part of the Recapitalization, $198.5
million principal amount of the Holdings Subordinated Notes were exchanged for
$198.5 million principal amount of Pathmark Subordinated Notes. Approximately
$1.5 million principal amount of the Subordinated Notes remain outstanding.
13.125% Holdings Junior Subordinated Discount Debentures Due 2003.
The Holdings Junior Subordinated Discount Debentures were issued at a fair
market value of $122.5 million with a maturity value of $311.0 million at
October 5, 2003. The original issue discount (difference between fair market
value at date of issue and maturity value) was amortized on the interest method
over the life of the Discount Debentures. The Discount Debentures represented
unsecured subordinated obligations of the Company and did not require cash
interest payments for the first five years. On October 26, 1993, as part of the
Recapitalization, the Discount Debentures were redeemed.
Industrial Revenue Bonds:
Interest rates for the industrial revenue bonds range from 10.5%-10.9%. The
bonds are payable in installments ending in Fiscal 2003. The industrial revenue
bonds outstanding at January 29, 1994 are unsecured.
Other Debt:
Other debt includes mortgage notes which are secured by property and
equipment having a net book value of $72.1 million at January 29, 1994 and $88.6
million at January 30, 1993. Rates applied to these borrowings range from
4%-11%. The borrowings are payable in installments ending in Fiscal 2000.
Fair Value of Debt Instruments:
The estimated fair value of the debt instruments referred to above were
based on the quoted market prices at January 29, 1994 and January 30, 1993, to
the extent such debt instrument were publicly traded. Management has evaluated
all non-publicly traded debt instruments and has determined based on interest
rates and terms, that the fair value of such instruments approximates carrying
value. At
43
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 10--LONG-TERM DEBT--(CONTINUED)
January 29, 1994 and January 30, 1993, the fair value of the Company's debt
instruments in the aggregate was $1,509.8 million and $1,370.9 million,
respectively.
NOTE 11--INTEREST EXPENSE
Interest expense is comprised of the following (dollars in thousands):
<TABLE><CAPTION>
FISCAL YEARS
-------------------------------------
1993 1992 1991
----------- ----------- -----------
<S> <C> <C> <C>
Pathmark Term Loan......................................................... $ 6,471 $ -- $ --
Pathmark Working Capital Facility.......................................... 978 -- --
Plainbridge Working Capital Facility....................................... 118 -- --
Pathmark Senior Subordinated Notes
Amortization of original issue discount.................................. 93 -- --
Currently payable........................................................ 11,176 -- --
Pathmark Deferred Coupon Notes
Accruable but not payable................................................ 3,312 -- --
Pathmark Subordinated Debentures........................................... 3,156 -- --
Pathmark Subordinated Notes................................................ 6,068 -- --
Amortization of PTK DIBs original issue discount........................... 3,549 -- --
Old bank credit agreement.................................................. 4,337 7,595 35,257
Holdings Senior Subordinated Notes......................................... 41,573 60,550 68,796
Holdings Subordinated Debentures
Accruable but not payable................................................ -- 18,480 45,688
Currently payable........................................................ 38,711 32,744 --
Holdings Subordinated Notes................................................ 17,253 15,629 --
Holdings Discount Debentures............................................... 20,794 9,196 --
Amortization of Holdings original issue discount........................... 951 18,295 23,870
Amortization of debt issuance costs........................................ 4,767 4,369 5,208
Obligations under capital leases........................................... 14,818 15,500 20,354
Mortgages.................................................................. 4,491 4,853 5,408
Other, net................................................................. 6,688 10,562 11,927
----------- ----------- -----------
Interest expense........................................................... $ 189,304 $ 197,773 $ 216,508
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The Company made cash interest payments of $196.6 million in Fiscal 1993,
$132.8 million in Fiscal 1992 and $135.3 million in Fiscal 1991.
44
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 12--LEASES
At January 29, 1994 the Company was liable under terms of noncancellable
leases for the following minimum lease commitments (dollars in thousands):
<TABLE><CAPTION>
CAPITAL OPERATING
LEASES LEASES
----------- -----------
<S> <C> <C>
1994.................................................................................... $ 34,256 $ 31,360
1995.................................................................................... 31,076 30,852
1996.................................................................................... 27,436 29,530
1997.................................................................................... 24,309 27,772
1998.................................................................................... 20,449 26,645
Later years............................................................................. 159,230 273,732
----------- -----------
Total minimum lease payments(a)......................................................... 296,756 $ 419,891
-----------
-----------
Less executory costs (such as taxes, maintenance and insurance)......................... 2,953
-----------
Net minimum lease payments.............................................................. 293,803
Less amounts representing interest...................................................... 143,453
-----------
Present value of net minimum lease payments (including current installments of
$18,844)................................................................................ $ 150,350
-----------
-----------
</TABLE>
- ---------------
(a) Net of sublease income of $12,472 and $68,203 for capital and operating
leases, respectively.
During Fiscal 1993, Fiscal 1992 and Fiscal 1991 the Company incurred
capital lease obligations of $25.7 million, $8.7 million and $19.4 million,
respectively, in connection with lease agreements to acquire property and
equipment.
Rent expense included in continuing operations under all operating leases
having noncancellable terms of more than one year is summarized as follows
(dollars in thousands):
<TABLE><CAPTION>
FISCAL YEARS
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Minimum rentals................................................................ $ 43,716 $ 37,894 $ 47,738
Contingent rentals(b).......................................................... 193 196 1,890
Less rentals from subleases.................................................... (4,329) (3,831) (5,777)
--------- --------- ---------
Rent expense................................................................... $ 39,580 $ 34,259 $ 43,851
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ---------------
(b) Primarily based on sales.
NOTE 13--LABOR DISPUTE
The Company's pretax earnings in the second quarter of Fiscal 1993 were
adversely impacted by a labor dispute and the related promotional programs
implemented subsequent to such labor dispute in order to regain sales levels.
The Company, with three other major supermarket companies (ShopRite, Foodtown
and Grand Union), conducted separate but simultaneous negotiations with respect
to an expired labor contract. The major issues of the contract concerned health
care and related benefits. On May 7, 1993, the union began selective strikes
against one of the Company's competitors. Over the course of the next three
weeks, the labor dispute expanded until, on May 28, 1993, union members at over
250 supermarkets, including 53 Pathmark supermarkets, were either on strike or
locked out. On May 29, 1993, the labor dispute was settled and, in June, the
union membership ratified a new four-year contract, and the membership returned
to work.
45
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14--PROVISION FOR STORE CLOSINGS
Effective with the beginning of the second quarter of Fiscal 1993, the
Company made a decision to close or dispose of five stores which the Company
believes will continue to be unprofitable. As a result, the Company recorded a
pretax charge in the second quarter of Fiscal 1993 of approximately $6.0
million. Operating results for these five stores have been excluded from the
consolidated statements of operations for the 52 weeks ended January 29, 1994
since the beginning of the second quarter of Fiscal 1993.
NOTE 15--CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK
The Company's Exchangeable Preferred Stock, which has a maturity date of
December 31, 2007, consists of 9,000,000 authorized shares of which 4,890,671
shares are issued and outstanding at January 29, 1994. The fair market value of
the Exchangeable Preferred Stock at date of original issuance of October 5, 1987
was $20 per share and the liquidation preference is $25 per share. Due to its
mandatory redemption requirements, the Exchangeable Preferred Stock has been
stated on the balance sheet as Redeemable Securities. The difference between
fair market value at date of issue and liquidation preference is being accreted
quarterly.
Cumulative dividends at the rate of $3.52 per annum, payable quarterly,
accrue on each share of Exchangeable Preferred Stock. The Old Bank Credit
Agreement prohibited the payment of cash dividends through April 30, 1993.
Dividends in additional shares of Exchangeable Preferred Stock were paid in lieu
of cash at the rate of .0352 shares per share and recorded at fair value at the
date of dividend issuance through October 15, 1992. As of January 29, 1994, the
Company is in arrears on the payment of five quarterly dividends on the
Exchangeable Preferred Stock and does not expect to receive cash flow sufficient
to permit payments of dividends on the Exchangeable Preferred Stock in the
foreseable future.
In the event of any liquidation, dissolution or winding up of the Company,
holders of the Exchangeable Preferred Stock will be entitled to receive their
full liquidation preference per share, together with accrued and unpaid
dividends, before the distribution of any assets of the Company to the holders
of shares of the Company's common stock or other shares which would rank junior
to the Exchangeable Preferred Stock.
The Exchangeable Preferred Stock may be redeemed, at the option of the
Company, in whole or in part, at liquidation preference, together with all
accrued and unpaid dividends to the redemption date. Optional redemption of the
Exchangeable Preferred Stock will be subject to restricted payments and other
similar provisions of the Company's debt instruments.
Commencing December 31, 2004, the Company is required to redeem in each
year 20% of the highest amount at any time outstanding of the Exchangeable
Preferred Stock, calculated to retire 60% of the issue prior to final maturity
with the remaining amount of the issue to be redeemed at maturity.
If an amount equal to six quarterly dividends is in arrears in whole or in
part, the holders of the Exchangeable Preferred Stock voting as a class, may
elect two members of the Board of Directors of the Company at a special meeting
called by the Company until such time as all accrued dividends on the
Exchangeable Preferred Stock shall have been paid for all dividend periods.
The Company has the option to require holders to exchange the Exchangeable
Preferred Stock on any dividend payment date, in whole or in part, for exchange
debentures (the "Exchange Debentures") of the Company. Such option is available
at any time if (a) no event of default exists under any of the Company's loan
agreements and (b) the exchange is allowed under the provisions of the
limitation on
46
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15--CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK--(CONTINUED)
the Company's indebtedness and other applicable provisions of the Company's loan
agreements. Any such exchange will result in the issuance of Exchange Debentures
in an amount equal to the aggregate liquidation preference of all shares of
Exchangeable Preferred Stock being exchanged into Exchange Debentures and an
amount equal to all accrued but unpaid dividends.
During Fiscal 1991, SMG-II made a capital contribution to the Company of
2.8 million shares of Exchangeable Preferred Stock purchased pursuant to the
Exchangeable Preferred Stock Offer and open market transactions. The Company has
retired these shares (see Note 1).
At January 29, 1994, the fair value of the Exchangeable Preferred Stock
based on quoted market price was $136.9 million. Exchangeable Preferred Stock
activity for the three years ended January 29, 1994 was as follows (dollars in
thousands):
<TABLE><CAPTION>
NUMBER OF
SHARES AMOUNT
------------ -----------
<S> <C> <C>
Balance, February 2, 1991............................................................ 6,647,649 $ 123,392
Retirement of shares contributed from SMG-II....................................... (2,808,772) (52,136)
Non-cash dividends................................................................. 569,728 12,395
Accretion.......................................................................... -- 1,418
------------ -----------
Balance, February 1, 1992............................................................ 4,408,605 85,069
Non-cash dividends................................................................. 482,066 12,214
Accretion.......................................................................... -- 1,508
------------ -----------
Balance, January 30, 1993............................................................ 4,890,671 98,791
Accretion.......................................................................... -- 1,555
------------ -----------
Balance, January 29, 1994............................................................ 4,890,671 $ 100,346
------------ -----------
------------ -----------
</TABLE>
The terms of the Exchangeable Preferred Stock provide for cumulative
quarterly dividends at an annual rate of $3.52 per share when, as, and if
declared by the Board of Directors of the Company. Dividends for the first 20
quarterly dividend periods (through October 15, 1992) were paid at the Company's
option in additional shares of Exchangeable Preferred Stock. Prior to the
Recapitalization, the Old Bank Credit Agreement and the terms of the indentures
governing the Company's public debt restricted the payment of cash dividends on
the Exchangeable Preferred Stock unless certain conditions were met, including
tests relating to earnings and cash flow ratios of the Company. Prior to the
Recapitalization, the Company had not met the conditions permitting cash
dividend payments on the Exchangeable Preferred Stock. However, these tests were
not deemed to be a default under the Old Bank Credit Agreement or Holdings
public debt. Holdings does not expect to receive cash flow sufficient to permit
payments of dividends on the Holdings Exchangeable Preferred Stock in the
foreseeable future. All dividends not paid in cash will cumulate at the rate of
$3.52 per share per annum, without interest, until declared and paid. As such,
at January 29, 1994, the unpaid dividends of $21.5 million was accrued and
included in other noncurrent liabilities.
Dividends on the Exchangeable Preferred Stock must be paid in full for all
prior periods as of the most recent dividend payment date before any dividends,
other than dividends payable in shares of the Company's common stock or any
other class of the Company's capital stock ranking junior to the Exchangeable
Preferred Stock, can be paid or set apart for payment to holders of common stock
or any other shares which would rank junior to the Exchangeable Preferred Stock.
47
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15--CUMULATIVE EXCHANGEABLE REDEEMABLE PREFERRED STOCK--(CONTINUED)
In addition, dividends on the Exchangeable Preferred Stock must be paid in
full for all prior periods before the redemption or purchase by the Company of
shares of common stock or any other shares which would rank junior to the
Exchangeable Preferred Stock.
NOTE 16--COMMON STOCK
The Company's authorized common stock, par value $.01 per share, consists
of 1,075,000 shares of Class A common stock and 1,000,000 shares of Class B
common stock of which 650,675 shares and 320,000 shares, respectively, were
issued and outstanding at January 29, 1994 and January 30, 1993.
Holders of shares of Class A common stock are entitled to one vote per
share on all matters to be voted on by stockholders. Holders of shares of Class
B common stock are not entitled to any voting rights, except as required by law
or as otherwise provided in the Restated Certificate of Incorporation of the
Company. Subject to compliance with certain procedures, holders of Class B
common stock may exchange their shares for Class A common stock and holders of
Class A common stock may exchange their shares for shares of Class B common
stock on a share-for-share basis. Upon liquidation or dissolution of the
Company, holders of the Company's common stock are entitled to share ratably in
all assets available for distribution to stockholders after payment of all prior
claims, including liquidation rights of any Exchangeable Preferred Stock
outstanding. Holders of the Company's common stock have no preemptive or
subscription rights.
On February 4, 1991, as a result of the consummation of the Exchange Offer,
all shares of the Company's Class A common stock and Class B common stock were
owned directly by SMG-II. SMG-II is effectively a holding company for the
operations of the Company (see Note 1).
The Company and certain executives of Supermarkets ("Management Investors")
entered into a management subscription agreement under which, on October 5,
1987, the Management Investors purchased an aggregate of 100,000 shares of Class
A common stock for consideration of $100 per share. In connection with the
Exchange Offer, the Management Investors entered into an agreement (the
"Management Investors Exchange Agreement") with respect to the SMG-II common
stock which was received in exchange for the Company's Class A common stock.
Under the terms of the Bank Credit Agreement there are limitations in the amount
of repurchases from Management Investors to $2 million during any fiscal year
and $5 million in the aggregate. Prior to the Exchange Offer, all of the Class A
common stock held by Management Investors was classified as Redeemable
Securities. In Fiscal 1991, prior to the Exchange Offer, the Company repurchased
3,490 shares from Management Investors at an aggregate cost of $.4 million.
Certain Management Investors who purchased shares of Class A common stock
borrowed a portion of the purchase price from the Company and were required to
deliver a note to the Company ("Recourse Note") in the principal amount of the
loan. Interest on the Recourse Note is to be paid annually and the principal is
payable on the tenth anniversary of the date of issue. Each Management Investor
who issued a Recourse Note was required to enter into a stock pledge agreement
("Stock Pledge Agreement") with the Company pursuant to which the Management
Investor pledged shares of Class A common stock to secure the repayment of the
Recourse Note. In connection with the Exchange Offer, each Management Investor
who issued a Recourse Note was required to execute an amendment to the Stock
Pledge Agreement which provided for the substitution of the SMG-II common stock
received in the Exchange Offer for the Company Class A common stock to secure
the repayment of the Recourse Note. In connection with the repurchases of common
stock from Management Investors, approximately $.1 million of Recourse Notes
were repaid during Fiscal 1991. No payments were made
48
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 16--COMMON STOCK--(CONTINUED)
during Fiscal 1993 and Fiscal 1992. Recourse Notes in the amount of
approximately $1.7 million were outstanding at January 29, 1994 and January 30,
1993. The Recourse Notes have been classified as Other Assets.
NOTE 17--STOCK OPTION PLANS
The Management Investors 1987 Stock Option Plan (the "Management Plan") and
the 1987 Employee Stock Option Plan (the "Employee Plan") were approved by the
Board of Directors of the Company on November 24, 1987 and by the Stockholders
on December 21, 1987. Under the terms of the Management and the Employee Plans,
associates receive either incentive stock options or nonqualified stock options,
the duration of which may not exceed ten years from the date of grant, to
purchase shares of the Company's Class A common stock. In connection with the
Exchange Offer, adjustments to outstanding options under the Management and the
Employee Plans were made. As a result of these adjustments, each option under
the Management and the Employee Plans outstanding on February 4, 1991 became an
option for the purchase of an equal number of shares of SMG-II Class A common
stock.
NOTE 18--EXTRAORDINARY ITEMS
The extraordinary items reflected in the statements of operations are
comprised of (dollars in thousands):
<TABLE><CAPTION>
TAX NET
GAIN PROVISION GAIN
FISCAL 1993 (LOSS) (BENEFIT) (LOSS)
- ------------------------------------------------------------------------ ------------ ---------- ------------
<S> <C> <C> <C>
Loss on early extinguishment of indebtedness............................ $ (115,509) $ (9,354) $ (106,155)
------------ ---------- ------------
------------ ---------- ------------
FISCAL 1992
- ------------------------------------------------------------------------
Loss on acceleration of Term Loan paydown............................... $ (1,087) $ (455) $ (632)
Loss on early extinguishment of Senior Subordinated Notes............... (6,952) (2,821) (4,131)
------------ ---------- ------------
Extraordinary items..................................................... $ (8,039) $ (3,276) $ (4,763)
------------ ---------- ------------
------------ ---------- ------------
FISCAL 1991
- ------------------------------------------------------------------------
Gain on early extinguishment of Discount Debentures..................... $ 27,804 $ 11,214 $ 16,590
Loss on acceleration of Term Loan paydown............................... (2,257) (943) (1,314)
Loss on early extinguishment of Senior Subordinated Notes............... (393) (172) (221)
------------ ---------- ------------
Extraordinary items..................................................... $ 25,154 $ 10,099 $ 15,055
------------ ---------- ------------
------------ ---------- ------------
</TABLE>
On October 26, 1993, in connection with the Recapitalization, the Company
repaid or exchanged $1.3 billion of debt through the issuance of new Pathmark
and PTK indebtedness. This repayment of outstanding debt and origination of new
debt included premiums and other expenses, including the write off of existing
deferred financing fees associated with debt which was extinguished, which
resulted in a net loss on early extinguishment of debt of $106.0 million.
On July 31, 1993, in connection with the Recapitalization, the Company
repaid $2.5 million principal amount of indebtedness secured by mortgages on two
retail properties to be transferred to Plainbridge. This repayment resulted in a
net loss on early extinguishment of debt of $0.06 million.
49
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 18--EXTRAORDINARY ITEMS--(CONTINUED)
On May 1, 1993, in connection with the Recapitalization, the Company repaid
$5.7 million aggregate principal amount of indebtedness secured by a mortgage on
the distribution center of the home centers segment to be transferred to
Plainbridge. This repayment resulted in a net loss on early extinguishment of
debt of $0.1 million.
In May 1992, the Company paid off the remaining $132.0 million principal
outstanding under the Term Loan by utilizing a portion of the proceeds from the
sale of the Subordinated Notes resulting in the accelerated amortization of the
deferred financing costs related to the Term Loan of $1.1 million, before
applicable income tax benefit of $0.5 million.
In June 1992, utilizing a portion of the proceeds from the sale of the
Subordinated Notes as well as additional Working Capital Facility borrowings,
the Company, through open market purchases, purchased $71.0 million principal
amount of Senior Subordinated Notes at a cost of $76.0 million. The premium paid
of $5.0 million, as well as the accelerated amortization of deferred financing
costs and transaction expenses of $1.5 million related to the repurchased Senior
Subordinated Notes, resulted in a loss of $6.5 million, before applicable income
tax benefit of $2.6 million.
In October 1992, SMG-II purchased and subsequently contributed to the
Company $4.8 million principal amount of Senior Subordinated Notes and the
Company, through open market purchases, purchased an additional $1.2 million
principal amount of Senior Subordinated Notes. The premium paid on the
contributed and purchased Senior Subordinated Notes of $0.3 million, as well as
the accelerated amortization of deferred financing costs and transaction
expenses of $0.1 million related to the repurchased Senior Subordinated Notes
resulted in a loss of $0.4 million, before applicable income tax benefit of $0.2
million.
In March 1991, SMG-II made a capital contribution to the Company of $95.4
million face value of the Company's Discount Debentures which were acquired by
SMG-II in February 1991 pursuant to the Discount Debenture Offer and additional
open market purchases for an aggregate cost of $33.2 million. The Discount
Debentures, which had a net accreted book value of $62.9 million, were retired
by the Company resulting in a gain of $27.8 million, net of $1.9 million of
transaction expenses, before applicable income tax provision of $11.2 million.
In December 1991, the Company permanently reduced its Term Loan $155
million by applying a portion of the net cash proceeds from the disposal of the
Purity Operations resulting in an accelerated amortization of the deferred
financing cost related to the Term Loan of $2.3 million, before applicable
income tax benefit of $0.9 million.
In January 1992, SMG -II made a capital contribution to the Company of $9.8
million face value of the Company's Senior Subordinated Notes which were
acquired by SMG-II through open market purchases in February 1991. The Company
has retired the Senior Subordinated Notes resulting in an accelerated
amortization of deferred financing costs and transactions expenses of $0.4
million, before applicable income tax benefit of $0.2 million.
Income taxes on the extraordinary items for Fiscal 1992 and Fiscal 1991
have been provided based on statutory income tax rates.
50
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19--RELATED PARTY TRANSACTIONS
The following is a summary of the related party agreements and transactions
between Pathmark and Plainbridge:
1) Spin-off:
A) Services Agreements:
Pathmark, Plainbridge and the Company have entered into agreements pursuant
to which Pathmark will continue to provide certain administrative services
relating to the warehouse, distribution and home centers operations of
Plainbridge and certain administrative services to Chefmark. Such services
include, among other things, legal, human resources, data processing, insurance,
accounting, tax, treasury and property management services. Each of the
agreements have a term of five years, with renewal options at the end of such
term. The cost of the services under the Plainbridge and Chefmark service
agreements in the aggregate was approximately $4.2 million for the period ended
January 29, 1994.
B) The Logistical Services Agreement:
In connection with Plainbridge Spin-Off, Pathmark Plainbridge have entered
into the Logistical Services Agreement to provide for the supply by Plainbridge
to Pathmark of most of the merchandise sold in Pathmark's retail stores and for
the provision of warehousing, distribution and other logistical services
relating to the supply of such merchandise. Pursuant to the Logistical Services
Agreement, Pathmark directs the purchase of the merchandise to be provided to it
by Plainbridge. Pathmark negotiates directly with vendors regarding the types of
merchandise required, the quantities needed, delivery schedules, pricing, and
all other terms and conditions of sale. All merchandise is ordered by Pathmark
for the account of Plainbridge, which will pay for and will retain title to such
merchandise until it has been delivered to Pathmark. If requested by a vendor,
Pathmark, in its sole discretion, may guarantee payment of such orders by
Plainbridge. At January 29, 1994, Pathmark has guaranteed approximately $42.8
million of such orders. In general, the Logistical Services Agreement also
requires Plainbridge to perform the same services in substantially the same
manner as they were performed by Pathmark's warehouse and distribution group
prior to the Plainbridge Spin-Off.
The Logistical Services Agreement requires that, with certain exceptions
and subject to certain termination rights, Plainbridge is to sell to Pathmark,
for a period of ten years, to the extent requested by Pathmark, all of
Pathmark's merchandise requirements for both its existing and future stores. In
addition, Pathmark has five one-year renewal options following the expiration of
the original ten-year term. The Logistical Services Agreement does not limit
Pathmark's ability to purchase goods from other suppliers, and merchandise that
Pathmark customarily obtains directly from vendors is excluded from the
Logistical Services Agreement.
The Logistical Services Agreement provides that Plainbridge is to store and
deliver to Pathmark all merchandise purchased at Pathmark's directions. Pathmark
is required in good faith to designate Plainbridge as its carrier with respect
to merchandise customarily shipped directly from vendors to Pathmark's stores.
Plainbridge is required to maintain inventory with a book value of at least
$130.0 million for the exclusive use of Pathmark, and to the extent that the
inventory value falls below such level, Plainbridge must purchase sufficient
merchandise to maintain such level to the extent such merchandise is ordered by
Pathmark. Plainbridge is also required to accommodate physical annual increases
of up to five percent in the volume of Pathmark directed purchases of
merchandise to be handled by Plainbridge. Pathmark is to reimburse Plainbridge
for all reasonable incremental out-of-
51
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19--RELATED PARTY TRANSACTIONS--(CONTINUED)
pocket costs (but not capital costs) incurred by Plainbridge for the storage and
handling of merchandise that is in excess of the five percent annual capacity
increase, provided that such out-of-pocket costs do not exceed the costs of
storage and handling at local independent warehouses.
Upon the delivery of merchandise to Pathmark's stores by Plainbridge,
Pathmark will owe Plainbridge for the cost of the merchandise plus a specified
variable payment. This payment will vary according to the type and value of the
merchandise. A minimum annual fee will be payable by Pathmark to the extent that
the aggregate of the variable fees described above payable in any year does not
exceed the minimum annual fee. The annual fee for Fiscal 1994 is $134.9 million
and such fee is adjusted upward (but not downward) each fiscal year by the rate
of inflation. This fee approximates the historical cost to Pathmark of operating
the warehouse, distribution and transportation facilities. The initial minimum
annual fee was determined by applying the variable fees to 95% of the volume of
merchandise purchased in Fiscal 1992 by Pathmark. Pathmark is obligated to pay
the minimum annual fee to Plainbridge irrespective of whether Pathmark purchases
merchandise from other suppliers, except in cases of force majeure or when
Plainbridge shall have materially breached the Logistical Services Agreement or
shall have failed to obtain or maintain the licenses and permits needed to
operate its business. The minimum annual fee will be reduced to the extent that
the volume of merchandise purchases decreases as a result of any store
dispositions by Pathmark and will also be reduced if the volume of
Pathmark-directed merchandise falls below 90% of the actual volume achieved in
Fiscal 1992, to the extent that Plainbridge is, as a result able to realize
reductions in its operating costs. Under this agreement, Pathmark paid
Plainbridge approximately $36.1 million during the period from the date of the
Plainbridge Spin-Off to January 29, 1994. Plainbridge grants Pathmark an
allowance, based on the amount of merchandise purchased by Plainbridge at
Pathmark's direction, which is credited against the variable fees and minimum
annual fee obligation. For the period from the date of the Plainbridge Spin-Off
through January 29, 1994, an allowance of approximately $6.6 million was
received by Pathmark. In addition, certain cost benefits derived from increases
in the volume or value of merchandise purchased from Plainbridge by Pathmark or
third parties is to be shared equally between Pathmark and Plainbridge.
Estimated fees are payable in weekly installments with an annual reconciliation
for the amount of fees that are actually payable for such year. Pathmark will
pay to Plainbridge the costs of the merchandise at the time a vendor requires
payment from Plainbridge.
The Logistical Services Agreement provides that Plainbridge may sell
merchandise and provide logistical services to third parties, although it is not
permitted to sell merchandise to supermarkets, drug stores and other retail
stores stocking merchandise carried by Pathmark in Pathmark's current market
areas, except for retail stores that do not in the ordinary course of business
engage to a significant degree in the sale of food or pharmacy related products,
without Pathmark's prior written consent which consent may not be unreasonably
withheld. Plainbridge is also permitted to "piggyback" such third parties'
orders onto Pathmark's orders from vendors, so long as they do not interfere
with Pathmark's delivery schedules, quantity needs or other requirements.
Plainbridge and Pathmark are allowed to terminate the Logistical Services
Agreement if the other (i) materially breaches its terms and fails to cure such
breach for 60 days after written notice has been provided by the other party or
(ii) experiences certain insolvency events. Additionally, following the fourth
anniversary of the date of the Logistical Services Agreement, the Company has
the option of terminating it at will on six months' notice. If Pathmark
terminates the Logistical Services Agreement because of a material breach by, or
insolvency of, Plainbridge, Pathmark has the right to purchase, within 30 days
of the termination, that portion of the assets of Plainbridge which is essential
to the support of Plainbridge's obligations to Pathmark under the Logistical
Services Agreement (the
52
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19--RELATED PARTY TRANSACTIONS--(CONTINUED)
"Pathmark Distribution Assets") at the lower of (i) their net book value or (ii)
their fair market value. If the Company exercises its at will option to
terminate the Logistical Services Agreement, the Company is required to offer to
purchase the Pathmark Distribution Assets at their fair market value. If
Plainbridge terminates the Logistical Services Agreement because of a material
breach by, or insolvency of Pathmark, Plainbridge has the right to sell (and
Pathmark will have the obligation to buy) the Pathmark Distribution Assets at
their fair market value within 30 days of such termination.
Other than in the ordinary course of business, Plainbridge is not permitted
to sell any of the Pathmark Distribution Assets without Pathmark's prior written
consent. Additionally, in the event of a change in the ultimate beneficial
ownership of Plainbridge's voting stock such that a person, other than ML & Co.
or an affiliate of ML & Co. (the majority shareholder of Holdings), holds a
majority of such stock, the Company has for a period of two years, the
irrevocable and exclusive right to purchase any or all of the Pathmark
Distribution Assets at their fair market value.
Other provisions of the Logistical Services Agreement include (i) that
Plainbridge passes on to Pathmark all discounts and allowances made available to
it by vendors in respect of merchandise purchased for Pathmark, unless such
discounts or allowances were made available solely as a result of actions taken
or not taken by Plainbridge, (ii) that Plainbridge must ensure that merchandise
quality meets or exceeds the standards established by Pathmark for such
merchandise, and that Pathmark may place its representatives at the Distribution
Facilities to ensure that such quality is maintained, (iii) that Plainbridge
deliver merchandise to Pathmark at a 98% or better level of service measured in
accordance with Pathmark's practices prior to the Plainbridge Spin-Off, (iv)
that Pathmark pay Plainbridge for any use of trailers for storage and (v) that
each of Pathmark and Plainbridge cooperate to reduce costs and improve service
levels.
2) Other:
In conjunction with the Plainbridge Spin-Off, certain real property with a
net book value of $64.5 million was transferred to Plainbridge and is being
leased to Pathmark at rentals which the Company believes approximate fair value.
For the period from the date of the Plainbridge Spin-Off through January 29,
1994, such rentals amounted to $1.1 million.
In addition, Pathmark is leasing six store properties to Plainbridge with a
net book value of $9.5 million. The Company believes that the rentals received
from Plainbridge approximate fair value. For the period from the date of the
Plainbridge Spin-Off through January 29, 1994, such rentals amounted to $1.0
million.
As discussed in Note 16, certain Management Investors issued Recourse Notes
to the Company related to the purchase of the Company's Class A common stock.
These Management Investors have pledged shares of SMG-II Class A common stock to
secure the repayment of the Recourse Notes. Recourse Notes in the amount of $1.7
million were outstanding at January 29, 1994 and January 30, 1993.
During Fiscal 1993, in conjunction with the Recapitalization, the Company
paid ML & Co. fees of $12.8 million.
The Company engaged ML & Co. to act as dealer-manager in connection with
the Discount Debenture Offer and the Exchangeable Preferred Stock Offer for
which ML & Co. was paid fees of $1.2 million in Fiscal 1991. During Fiscal 1991,
the Company also paid ML & Co. an advisory fee of $2.0 million relating to the
sale of the Purity Operations.
53
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 19--RELATED PARTY TRANSACTIONS--(CONTINUED)
SMG-II, the Company's parent, purchased $9.8 million of the Company's
Senior Subordinated Notes through open market purchases in February and March
1991. The Senior Subordinated Notes were contributed to the Company by SMG-II on
January 10, 1992. Interest expense of approximately $1.5 million was recorded by
the Company during the period the $9.8 million of Senior Subordinated Notes were
held by SMG-II.
NOTE 20--BENEFIT PLANS
The Company has several noncontributory defined benefit pension plans
covering substantially all nonunion and some union associates. Pension benefits
to retired and terminated vested associates are primarily based upon their
length of service and a percentage of qualifying compensation. The Company's
funding policy, which is consistent with federal funding requirements, is
intended to provide not only for benefits attributed to service to date but also
for those expected to be earned in the future.
The following table sets forth the funded status of the pension plans and
amounts recognized in the Company's financial statements at January 29, 1994 and
January 30, 1993 (dollars in thousands):
<TABLE><CAPTION>
JANUARY 29, 1994 JANUARY 30, 1993
-------------------------- --------------------------
ASSETS ACCUMULATED ASSETS ACCUMULATED
EXCEED BENEFITS EXCEED BENEFITS
ACCUMULATED EXCEED ACCUMULATED EXCEED
BENEFITS ASSETS BENEFITS ASSETS
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Actuarial present value of accumulated
benefit obligation:
Vested............................................ $ (93,214) $ (15,852) $ (84,607) $ (14,505)
Unvested.......................................... (6,194) (149) (5,943) (77)
------------ ------------ ------------ ------------
Total............................................. (99,408) (16,001) (90,550) (14,582)
Plan assets at fair value.............................. 147,329 508 137,345 58
------------ ------------ ------------ ------------
Plan assets higher (lower) than accumulated benefit
obligation............................................. $ 47,921 $ (15,493) $ 46,795 $ (14,524)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Actuarial present value of projected
benefit obligation................................... $ (131,877) $ (17,657) $ (119,067) $ (15,633)
Plan assets at fair value.............................. 147,329 508 137,345 58
------------ ------------ ------------ ------------
Plan assets higher (lower) than projected benefit
obligation............................................. 15,452 (17,149) 18,278 (15,575)
Unrecognized net loss (gain) from past experience
different from that assumed and effects of changes in
assumptions............................................ (13,034) 535 (12,904) 746
Unrecognized prior service cost........................ 1,086 392 1,951 151
------------ ------------ ------------ ------------
Prepaid (accrued) pension cost......................... $ 3,504 $ (16,222) $ 7,325 $ (14,678)
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
Assets of the Company's pension plans are invested in marketable securities
which are primarily equities of domestic corporations, U.S. Government
instruments and money market investments.
54
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 20--BENEFIT PLANS--(CONTINUED)
The following table provides the assumptions used in determining the
actuarial present value of the projected benefit obligation at January 29, 1994
and January 30, 1993:
<TABLE><CAPTION>
JANUARY 29, JANUARY 30,
1994 1993
------------- -------------
<S> <C> <C>
Weighted average discount rate....................................................... 7.25 % 7.75 %
Rate of increase in future compensation levels....................................... 5.5 6.25
Expected long-term rate of return on plan assets..................................... 9.5 9.5
</TABLE>
These changes in assumptions used in determining the actuarial present
value of the projected benefit obligation will not have a material impact on the
Company's net pension cost for Fiscal 1994.
Net periodic pension cost included in continuing operations includes the
following components (dollars in thousands):
<TABLE><CAPTION>
FISCAL YEARS
----------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Service cost of benefits earned during the period.......................... $ 3,915 $ 4,018 $ 5,737
Interest cost on projected benefit obligation.............................. 8,530 8,499 9,440
Actual gain on plans' assets............................................... (10,352) (9,221) (25,944)
Deferred gain (loss)....................................................... 55 (583) 14,743
---------- ---------- ----------
Net periodic pension cost.................................................. $ 2,148 $ 2,713 $ 3,976
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
The Company also contributes to many multi-employer plans which provide
defined benefits to certain union associates. The Company's contributions to
these multi-employer plans were $17.9 million in Fiscal 1993, $17.7 million in
Fiscal 1992 and $20.0 million in Fiscal 1991.
The Company sponsors a savings plan for eligible nonunion associates.
Contributions under the plan are based on specified percentages of associate
contributions. The Company's contribution to the savings plan were $4.0 million
in Fiscal 1993, $3.0 million in Fiscal 1992 and $3.3 million in Fiscal 1991.
The Company has established and funded a Voluntary Employee Benefit
Association ("VEBA") to provide for certain employee health benefits. The
Company's tax-deductible contributions to the VEBA were $25.8 million in Fiscal
1993, $21.3 million in Fiscal 1992 and $24.7 million in Fiscal 1991.
NOTE 21--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Effective January 31, 1993, the Company adopted SFAS No. 106. Under SFAS
No. 106, the Company is required to accrue the expected cost of providing
postretirement benefits, principally health care and life insurance benefits,
over the working careers of the Company's associates. The Company previously
expensed the cost of these benefits as claims were paid.
SFAS No. 106 allows two methods for recognizing the transition obligation,
which is defined as the unfunded and unrecognized accumulated postretirement
benefit obligation at the date of adoption. This obligation could be recognized
immediately as an earnings charge in the year of the change, as the effect of a
change in accounting principles, or deferred and amortized as a component of net
periodic postretirement benefits cost. The Company recognized the transition
obligation immediately upon adoption.
The operating results for the year ended January 29, 1994 include the
effect of adopting the SFAS No. 106 transition obligation as of January 31, 1993
on an immediate recognition basis. The resulting $15.6 million charge represents
the accumulated postretirement benefit obligation at January 31, 1993 amounting
to $26.9 million, less an income tax benefit of approximately $11.3 million,
determined utilizing an assumed discount rate of 7.75%. This obligation was
determined by application of the provisions of the Company's medical plans
including established maximums and sharing of costs,
55
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 21--POSTRETIREMENT BENEFITS OTHER THAN PENSIONS--(CONTINUED)
relevant actuarial assumptions and health-care cost trend rates projected at
14.25% and grading down to 5.75% which is reached in Fiscal 1999.
The effect of a 1% change in the assumed cost trend rate would change the
accumulated postretirement benefit obligation by approximately $4.0 million as
of January 29, 1994 and the net periodic postretirement benefit cost by $0.4
million for Fiscal 1993. The assumed discount rate used in determining the
postretirement benefit obligation as of January 29, 1994 was 7.25%. This change
in assumption used in determining the actuarial present value of the projected
benefit obligation will not have a material impact on the Company's net periodic
postretirement benefit cost for Fiscal 1994.
The annual charges recorded by the Company on a pay-as-you-go (cash basis)
amounted to $1.2 million in Fiscal 1992 and Fiscal 1991. In Fiscal 1993, the
effect of adopting SFAS No. 106 reduced the Company's pretax earnings from
continuing operations by $1.8 million, representing the difference between the
accrual in accordance with SFAS No. 106 and the amount paid with respect to
these benefits.
The following table provides information on the status of the plans
(dollars in thousands):
<TABLE><CAPTION>
JANUARY 29,
1994
-----------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees........................................................................................... $ 9,995
Other active plan participants..................................................................... 25,590
-----------
Total................................................................................................ $ 35,585
-----------
-----------
</TABLE>
Net postretirement benefit cost related to continuing operations for the
year ended January 29, 1994 consisted of the following components (dollars in
thousands):
<TABLE><CAPTION>
FISCAL YEAR
1993
-----------
<S> <C>
Service cost of benefits earned during the year...................................................... $ 995
Interest cost on accumulated postretirement benefit obligation....................................... 2,241
-----------
Net postretirement benefit cost...................................................................... $ 3,236
-----------
-----------
</TABLE>
NOTE 22--POSTEMPLOYMENT BENEFITS
In the fourth quarter of Fiscal 1993, the Company adopted SFAS No. 112.
Under SFAS No. 112, the Company is required to accrue the expected cost of
providing postemployment benefits, primarily long-term disability, over the
working careers of the Company's associates. The Company previously expensed the
cost of these benefits as claims were paid.
The effect of this change as of January 31, 1993 resulted in a charge to
income of $2.5 million, net of an income tax benefit of $1.8 million, and has
been presented as a cumulative effect of a change in accounting method in the
accompanying consolidated statement of operations for Fiscal 1993.
This obligation was determined by application of the provisions of the
Company's long-term disability plan including age of active claimants at
disability and at valuation, length of time on disability and the probability of
claimant remaining on disability to maximum duration. These liabilities are
recorded at their present value utilizing a discount rate of 4%.
The annual charges recorded by the Company on a pay-as-you-go (cash basis)
amounted to $0.7 million in Fiscal 1992 and $1.0 million in Fiscal 1991. In
Fiscal 1993, the effect of adopting SFAS No. 112 increased the Company's pretax
earnings from continuing operations by $0.3 million, representing the difference
between the accrual and interest charge in accordance with SFAS No. 112 and the
amount paid with respect to these benefits.
56
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 22--POSTEMPLOYMENT BENEFITS--(CONTINUED)
The accumulated postemployment benefit obligation as of January 29, 1994 is
$4.9 million. The net postemployment benefit cost for continuing operations for
the year ending January 29, 1994 consisted of the following components (dollars
in thousands):
<TABLE><CAPTION>
FISCAL YEAR
1993
-------------
<S> <C>
Service cost of benefits earned during year.......................................................... $ 335
Interest cost on accumulated postemployment obligation............................................... 186
------
Net postemployment benefit cost...................................................................... $ 521
------
------
</TABLE>
NOTE 23--INCOME TAXES
The income tax provision (benefit) from continuing operations is comprised
of the following (dollars in thousands):
<TABLE><CAPTION>
FISCAL YEARS
----------------------------------
1993 1992 1991
---------- ---------- ----------
<S> <C> <C> <C>
Current
Federal................................................................... $ 1,219 $ 8,948 $ 7,799
State..................................................................... 7,395 10,456 745
Deferred
Federal................................................................... (14,539) (9,814) (28,710)
State..................................................................... (5,406) (2,414) (9,170)
Change in valuation allowance............................................... (8,950) -- --
---------- ---------- ----------
Income tax provision (benefit).............................................. $ (20,281) $ 7,176 $ (29,336)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
Deferred tax assets and liabilities as of January 29, 1994 consist of the
following (dollars in thousands):
<TABLE><CAPTION>
ASSETS LIABILITIES
------------ -----------
<S> <C> <C>
Depreciation........................................................................... $ -- $ 107,924
Self-insured liabilities............................................................... 56,158 --
Benefit plans.......................................................................... 23,434 --
Lease capitalization................................................................... 18,960 --
Closed store reserves.................................................................. 15,586 --
Merchandise inventory and gross profit................................................. 12,150 29,096
Alternative minimum taxes.............................................................. 2,890 --
General business credits............................................................... 9,029 --
Net operating loss carryforward........................................................ 19,156 --
Other accrued expenses................................................................. 5,010 --
Prepaid expenses....................................................................... -- 7,234
Postretirement benefits................................................................ 16,850 --
Capital loss carryforward expiring in Fiscal 1996...................................... 5,084 --
Other.................................................................................. 5,815 4,542
------------ -----------
Subtotal............................................................................. 190,122 148,796
Less valuation allowance............................................................... 38,436 --
------------ -----------
Total................................................................................ $ 151,686 $ 148,796
------------ -----------
------------ -----------
</TABLE>
Effective January 31, 1993, the Company adopted SFAS No. 109. Prior to
January 31, 1993 the Company's financial statements had been prepared in
accordance with SFAS No. 96. SFAS No. 96 and SFAS No. 109 require the
calculation of deferred taxes using the asset and liability method. Under this
57
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 23--INCOME TAXES--(CONTINUED)
method, deferred tax balances must be adjusted to reflect enacted changes in
income tax rates and deferred taxes must be provided on book and tax basis
differences. The implementation of SFAS No. 109 had no effect on the
consolidated statements of operations, however, it resulted in a
reclassification of the current and noncurrent deferred taxes since, in
accordance with SFAS No. 109, the classification of such deferred taxes
correspond with the classification of the related asset or liability which gave
rise to the book and tax basis difference.
As a result of the Company's net operating tax loss, the Company recorded
income taxes receivable of approximately $22.4 million resulting from the
carryback of such losses. The carryforward of those losses not carried back
results in a net deferred tax asset of approximately $41.3 million at January
29, 1994. Since the Company has experienced pretax losses in each of Fiscal
1993, Fiscal 1992 and Fiscal 1991, the Company was unable to conclude that
realization of such deferred tax assets was more likely than not. Accordingly,
the Company has provided a valuation allowance of $38.4 million to fully reserve
its net deferred tax assets, except for its alternative minimum tax credit
carryforwards which do not expire. The valuation allowance will be adjusted
when, in the opinion of management, significant positive evidence exists which
indicates that its more likely than not that the Company will be able to realize
deferred tax assets. Such reductions in the valuation allowance, if any, will be
reflected as a component of income tax expense.
The Omnibus Budget Reconciliation Act of 1993 was signed into law on
August 10, 1993, which, among other things, increased the federal income tax
rates for corporations to 35% from 34%, effective January 1, 1993. Deferred tax
liabilities and assets have been adjusted to reflect the 1% increase in federal
income tax rates.
Although the Company reported a pretax loss for Fiscal 1992 and Fiscal
1991, the Company has generated taxable income in Fiscal 1992 and 1991 due to
the effect of amounts expensed for tax purposes which were less than amounts
used for financial reporting, primarily the goodwill write-off of $600.7 million
in Fiscal 1992, the net capital loss related to the disposal of the Purity
Operations in Fiscal 1991, the amortization of goodwill related to the
Acquisition in the two years, as well as the certain deferred federal income tax
items. The Company's state income tax provision in Fiscal 1993 and Fiscal 1992
resulted primarily from taxable income generated in New Jersey. The Company's
state income tax benefit in Fiscal 1991 resulted from $10.4 million in state
income tax refunds of prior years' taxes partially offset by New Jersey income
taxes.
In Fiscal 1993, Fiscal 1992 and Fiscal 1991 the Company made income tax
payments of $3.1 million, $21.0 million and $41.2 million, respectively, and
received income tax refunds of $10.1 million, $5.9 million and $6.0 million. A
federal income tax refund of $20.5 million was received in February, 1994
related to the carryback of the Fiscal 1993 net operating losses.
58
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 23--INCOME TAXES--(CONTINUED)
The effective tax rate applicable to continuing operations differs from the
federal statutory tax rate as follows:
<TABLE><CAPTION>
FISCAL YEARS
-------------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Federal income tax benefit at statutory tax rate............................... (35.0)% (34.0)% (34.0)%
Effect of loss carryback at 34% rate........................................... 1.0 -- --
Capital loss on disposal of Purity Operations.................................. -- -- 22.3
State income taxes, net of federal income tax benefit.......................... 3.7 .9 (2.2)
Tax credits.................................................................... (2.1) (.1) (.6)
Amortization of goodwill....................................................... -- 1.0 3.0
Goodwill write-off............................................................. -- 33.6 --
Change in valuation allowance.................................................. (22.4) -- --
Other.......................................................................... (1.8) (.2) --
--------- --------- ---------
Effective tax rate............................................................. (56.6)% 1.2% (11.5)%
--------- --------- ---------
--------- --------- ---------
</TABLE>
NOTE 24--COMMITMENTS AND CONTINGENCIES
On December 7, 1990, a lawsuit was commenced by a holder of the
Exchangeable Preferred Stock against the Company, SMG-II, Merrill Lynch Capital
Partners, Inc., Merrill Lynch & Co., Inc., and the directors of the Company (the
"Director Defendants") in the Chancery Court, New Castle County, Delaware. The
complaint purports to be a class action and alleges that original terms of the
Exchangeable Preferred Stock Offer, at $5 per share, constitute a breach of
fiduciary duties owed by the Director Defendants to holders of the Exchangeable
Preferred Stock. The complaint seeks declaratory and injuctive relief, as well
as monetary damages, with respect to the Exchangeable Preferred Stock Offer, but
no motions seeking any such relief on a provisional or permanent basis were
filed either prior to the completion of the Exchangeable Preferred Stock Offer
on February 4, 1991 or as of the date hereof. The Company has entered
negotiations to settle the complaint and expects to reach a settlement agreement
during the next several months. The Company does not expect the amount of its
obligations under any settlement agreement to be material and will defend the
Complaint vigorously if a settlement is not reached.
On March 1, 1993 the Company was served with a summons and complaint which
alleges, among other things, that the Company and other co-defendants induced
processors of Tropicana orange juice to provide it with a favorable price and
other terms that discriminated against other sellers of orange juice in
violation of the price discrimination provisions of the Robinson-Patman Act. The
prayer for relief does not claim any specific amount of damages. After
consultation with counsel, the Company believes that this lawsuit is without
merit and intends to defend the action vigorously.
In addition to the litigation referred to above, the Company is a party to
a number of legal proceedings in the ordinary course of business. Management
believes that the ultimate resolution of these proceedings will not, in the
aggregate, have a material adverse impact on the financial condition, results of
operations or business of the Company.
The Company is contingently liable for certain obligations of the Purity
Operations under certain instruments, primarily approximately 60 leases for real
property, in the event of default thereunder by the purchaser of the Purity
Operations. As of January 29, 1994, the estimated present value of such lease
obligations approximated $115 million. In addition, the Company is bound by a
non-compete agreement, expiring in Fiscal 1994, with the purchaser of the Purity
Operations restricting the Company from operating supermarkets in Massachusetts,
New Hampshire and part of Connecticut.
59
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 24--COMMITMENTS AND CONTINGENCIES--(CONTINUED)
In August 1991, the Company entered into a long-term agreement with
Integrated Systems Solutions Corporation ("ISSC"), a subsidiary of IBM, to
provide a wide range of information systems services. Under the agreement, ISSC
has taken over the Company's data center operations and mainframe processing and
information system functions and is providing business applications and systems
designed to enhance the Company's customer service and efficiency. The charges
under this agreement are based upon the services requested at predetermined
rates. The Company may terminate the agreement upon 90 days notice in payment of
a specified termination charge. The amounts expensed under this agreement and
included in selling, general and administrative expenses in the accompanying
statements of operations were $12.6 million, $12.9 million and $6.2 million
during Fiscal 1993, Fiscal 1992 and Fiscal 1991, respectively. Further, the
Company expensed an additional $8.1 million of technical information costs in
connection with the Plainbridge Spin-Off (see Note 3).
NOTE 25--GAIN ON SALE OF PHOTOFINISHING PLANT
In Fiscal 1991 the Company sold its Coastal Photo photofinishing plant to
Quality Photo Systems (East), Inc. (a subsidiary of Konica Corporation) for $5.7
million, including the assumption of leases, which resulted in a pretax gain on
sale of $4.1 million. In addition, the Company entered into a servicing
agreement under which Quality Photo Systems (East), Inc. has agreed to supply
improved photofinishing services at lower than the Company's previous operating
costs.
NOTE 26--GAIN (LOSS) ON DISPOSAL OF PURITY OPERATIONS AND INVESTMENT IN PURITY
SUPREME
On December 17, 1991, the Company completed the sale of two subsidiaries,
Purity Supreme, Inc. ("Purity Supreme") and Li'l Peach Corp. ("Li'l Peach", and
together with Purity Supreme, the "Purity Operations"), for approximately $257.0
million (as adjusted), including the assumption of certain indebtedness of the
Purity Operations to a Company organized by Freeman Spogli & Co. In connection
with the disposal of the Purity Operations, the Company retained a 10% common
equity interest in Purity Supreme with a net book value of $8.9 million (as of
sale date), a new issue of Purity Supreme exchangeable preferred stock (the
"Purity Preferred Stock") with an aggregate stated value of $18.0 million and a
convertible subordinated note of Purity Supreme (the "Purity Note") in the
principal amount of $2.0 million.
The Purity Preferred Stock matures December 17, 2003 and accrues dividends
at 6.24% per annum on a semi-annual basis each June 17 and December 17. The
Purity Preferred Stock is subordinated to Purity Supreme's Series B Preferred
Stock, redeemable at the option of Purity Supreme at stated discount rates and
convertible into Purity Supreme debentures at the option of Purity Supreme.
Due to the Company's inability to readily convert these securities into
cash, as there exists no current trading market, and the uncertainty of the
future cash flows from these securities, a valuation allowance for the face
value of these securities has been recorded at January 30, 1993 and February 1,
1992.
During Fiscal 1991, the Company recognized a loss of $228.0 million on the
disposal of the Purity Operations. Included in this loss is a write-off of
$214.0 million of goodwill related to the Purity Operations. During Fiscal 1992,
the Company collected the principal amount of the Purity Note and recorded a
gain of $2.0 million reflecting the reversal of the valuation reserve recorded
upon the disposal of the Purity Operations.
60
<PAGE>
SUPERMARKETS GENERAL HOLDINGS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 27--QUARTERLY FINANCIAL DATA (UNAUDITED)
Financial data for the interim periods of Fiscal 1993 and Fiscal 1992 is as
follows (dollars in thousands):
<TABLE><CAPTION>
13 WEEKS ENDED 52 WEEKS
--------------------------------------------------- ENDED
MAY 1, JULY 31, OCTOBER 30, JANUARY 29, JANUARY 29,
1993* 1993* 1993* 1994 1994
----------- ----------- ------------ ----------- -----------
52 WEEKS ENDED JANUARY 29, 1994
<S> <C> <C> <C> <C> <C>
Sales............................................... $ 1,071,307 $ 1,003,055 $1,050,880 $1,081,945 $4,207,187
Gross profit(a)..................................... 295,653 273,372 278,078 307,601 1,154,704
Selling, general and administrative expenses........ 238,539 227,292 223,067 231,937 920,835
Recapitalization expenses........................... -- -- 23,737 (7,125) 16,612
Provision for stores closings....................... -- 5,975 -- -- 5,975
Depreciation and amortization....................... 17,160 17,644 17,883 14,978 67,665
Operating earnings.................................. 39,954 22,461 13,391 67,811 143,617
Interest expense, net............................... 45,713 46,807 45,168 41,747 179,435
Earnings (loss) from continuing operations before
income taxes, extraordinary items and cumulative
effect of accounting changes........................ (5,759) (24,346) (31,777) 26,064 (35,818)
Income tax provision (benefit)...................... (1,192) (9,129) (11,597) 1,637 (20,281)
Earnings (loss) from continuing operations before
extraordinary items and cumulative effect of
accounting changes.................................. (4,567) (15,217) (20,180) 24,427 (15,537)
Earnings (loss) from discontinued operations........ (1,959) 1,984 890 (2,092) (1,177)
Earnings (loss) before extraordinary items and
cumulative effect of accounting changes............. (6,526) (13,233) (19,290) 22,335 (16,714)
Extraordinary items, net of income tax benefit...... (99) (39) (106,017) -- (106,155)
Earnings (loss) before cumulative effect of
accounting changes.................................. (6,625) (13,272) (125,307) 22,335 (122,869)
Cumulative effect of accounting changes, net of an
income tax benefit of $29,302....................... (40,358) -- -- -- (40,358)
Net earnings (loss)................................. (46,983) (13,272) (125,307) 22,335 (163,227)
52 WEEKS ENDED JANUARY 30, 1993
Sales............................................... $ 1,060,802 $ 1,073,525 $1,071,738 $1,133,769 $4,339,834
Gross profit(b)..................................... 280,838 286,994 282,910 305,141 1,155,883
Selling, general and administrative expenses........ 217,679 220,781 226,669 229,132 894,261
Depreciation and amortization....................... 18,056 17,321 16,922 16,944 69,243
Amortization of goodwill............................ 4,365 4,365 4,365 4,364 17,459
Goodwill write-off.................................. -- -- -- 600,714 600,714
Operating earnings (loss)........................... 40,738 44,527 34,954 (546,013) (425,794)
Interest expense, net............................... 45,619 46,484 46,304 46,413 184,820
Gain on disposal of Purity Operations............... -- -- -- 2,000 2,000
Loss from continuing operations before income taxes
and extraordinary items............................. (4,881) (1,957) (11,350) (590,426) (608,614)
Income tax provision (benefit)...................... 432 1,912 (1,957) 6,789 7,176
Loss from continuing operations before extraordinary
items............................................... (5,313) (3,869) (9,393) (597,215) (615,790)
Earnings (loss) from discontinued operations........ (1,574) 2,311 (791) (1,111) (1,165)
Loss before extraordinary items..................... (6,887) (1,558) (10,184) (598,326) (616,955)
Extraordinary items, net of income tax benefit...... -- (4,499) (264) -- (4,763)
Net loss............................................ (6,887) (6,057) (10,448) (598,326) (621,718)
</TABLE>
- ---------------
(a) The pretax LIFO inventory credit for the 52 weeks ended January 29, 1994 was
estimated to be $0.65 million in each of the four fiscal quarters. The
annual credit was $2.6 million.
(b) The pretax LIFO inventory provision for the 52 weeks ended January 30, 1993
was estimated to be $1.6 million in each of the first two fiscal quarters
and $1.1 million in the third fiscal quarter. The annual provision was $2.2
million, resulting in a $2.1 million credit in the fourth quarter.
* The quarterly financial data for the 13 weeks ended May 1, 1993, July 31,
1993 and October 30, 1993 have been restated to the reflect the effects of
the accounting changes adopted as of January 31, 1993. As a result of these
changes, the net loss for the 13 weeks ended May 1, 1993, July 31, 1993 and
October 30, 1993 have been adjusted by $25.3 million, $0.1 million and $18.0
million, respectively. For further information with respect to such changes
(see Notes 5, 9, 21, 22 and 23).
61
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholder
SUPERMARKETS GENERAL HOLDINGS CORPORATION
Woodbridge, New Jersey
We have audited the accompanying consolidated balance sheets of
Supermarkets General Holdings Corporation and its subsidiaries as of January 29,
1994 and January 30, 1993, and the related consolidated statements of
operations, stockholder's deficit and cash flows for each of the three years in
the period ended January 29, 1994. Our audits also included the financial
statement schedules listed in the Index at Part IV, Item 14(a)(2). These
financial statements and financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on the
financial statements and financial statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Supermarkets General Holdings
Corporation and its subsidiaries as of January 29, 1994 and January 30, 1993,
and the results of their operations and their cash flows for each of the three
years in the period ended January 29, 1994 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement schedules,
when considered in relation to the basic consolidated financial statements taken
as a whole, present fairly in all material respects the information set forth
therein.
As discussed in Notes 5, 9, 21, 22 and 23 to the consolidated financial
statements, the Company changed its method of accounting for postretirement
benefits other than pensions, postemployment benefits, income taxes, LIFO
inventories and the determination of the discount rate utilized to record
certain noncurrent liabilities.
DELOITTE & TOUCHE
Parsippany, New Jersey
April 28, 1994
62
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY (AS OF APRIL 15, 1994)
(A) DIRECTORS OF THE COMPANY
The following table sets forth the name, principal occupation or employment
at the present time and during the last five years, and the name and principal
business of any corporation or other organization in which such occupation or
employment is or was conducted, of the directors of the Company, all of whom are
citizens of the United States unless otherwise indicated. Each individual named
below is a director of both the Company and Pathmark, except for Mr. Rubenstein,
who is a director of the Company only.
<TABLE><CAPTION>
DIRECTOR OF THE
COMPANY
NAME, AGE, PRINCIPAL OCCUPATION AND OTHER DIRECTORSHIPS SINCE(1)
- -------------------------------------------------------------------------------------------------- -----------------
<S> <C>
JACK FUTTERMAN, 60, Chairman and Chief Executive Officer of the Company.(2) 1986
ANTHONY J. CUTI, 48, President and Chief Financial Officer of the Company.(2) 1993
JAMES J. BURKE, JR., 42, President and Chief Executive Officer, Merrill Lynch Capital Partners 1988
("MLCP") since 1987; Managing Director of Merrill Lynch since 1985; First Vice President of
MLPF&S since 1988. Mr. Burke is also a Director of Amstar Corporation, AnnTaylor, Inc., Borg
Warner Security Corporation, John Alden Financial Corp, London Fog Corporation, United Artists
Theatre Circuit, Inc., World Color Press, Inc. and Wherehouse Entertainment, Inc.
STEPHEN M. MCLEAN, 36, Senior Vice President, MLCP since 1987; Managing Director of Merrill Lynch 1987
since 1988; Vice President of MLPF&S from 1984 to 1988. Mr. McLean is also a director of Ithaca
Industries, Inc. and Clinton Mills Inc.
SUNIL C. KHANNA, 37, (Citizen of India) Principal, MLCP since May 1993. Director of Merrill Lynch 1987
& Co., Inc. since January 1993. Vice President of Merrill Lynch, MLPF&S and MLCP since 1989,
Assistant Vice President MLCP, from 1987 to 1989; Associate of Merrill Lynch from 1986 to 1989.
SUSAN C. PENNY, 44, Senior Vice President, Alliance Corporate Finance Group 1994
Incorporated--Investment Advisors (since July 1993); Senior Vice President, Equitable Capital
Management Corp.--Investment Advisors prior thereto.
JERRY G. RUBENSTEIN, 63, Managing Partner, Omni Management Associates. Mr. Rubenstein is also a 1988
director of Esstar, Inc.; Consultant to ML Capital Partners since 1988.
</TABLE>
- ---------------
(1) Includes service with Old Supermarkets.
(2) Prior positions are reflected under "--Executive Officers".
Pursuant to the SMG-II Stockholders Agreement, the Merrill Lynch Investors
are entitled to designate seven directors, the Management Investors are entitled
to designate three directors and The Equitable Life Assurance Society of the
United States and the Equitable Affiliates (collectively, the "Equitable
Investors") are entitled to designate one director to Holdings' Board of
Directors. Currently, four of the persons serving as directors were designated
by the Merrill Lynch Investors (Messrs. Burke, Khanna, McLean and Rubenstein),
two were designated by the Management Investors (Messrs. Futterman and Cuti) and
one was designated by the Equitable Investors (Ms. Penny). No
63
<PAGE>
family relationship exists between any director and any other director or
executive officer of the Company.
(B) EXECUTIVE OFFICERS
The following table sets forth the name, principal occupation or employment
at the present time and during the last five years, and the name of any
corporation or other organization in which such occupation or employment is or
was conducted, of the executive officers of the Company, all of whom are
citizens of the United States unless otherwise indicated and serve at the
discretion of the Board of Directors of the Company. The executive officers of
the Company listed below were elected to office for an indefinite period of
time. No family relationship exists between any executive officer and any other
executive officer or director of the Company. All current executive officers now
hold identical positions with the Company and Pathmark, except for Messrs. Kenny
and Rallo, who are executive officers of Pathmark only and Mr. Borshadel who is
an executive officer solely of the Plainbridge subsidiary.
<TABLE><CAPTION>
OFFICER OF
THE
COMPANY
NAME AGE POSITIONS AND OFFICE SINCE(1)
- ---------------------------------- ----------- --------------------------------------------------------- -------------
<S> <C> <C> <C>
JACK FUTTERMAN 60 Chairman and Chief Executive Officer (since September 1986(2)
1989); President from September 1989 to August 1993);
Vice Chairman prior thereto. Mr. Futterman joined the
Company in 1973.(3)
ANTHONY J. CUTI 48 President (since August 1993) and Chief Financial Officer 1990
(since October 1990); Executive Vice President (from
October 1990 to August 1993); Vice President--Bristol-
Myers Squibb Co. (from January 1990 to September 1990);
Vice President of Finance Operations and Chief
Financial Officer, Bristol-Myers International Group, a
division of Bristol-Myers Co., prior thereto.(3)
JULES BORSHADEL 54 Chairman of Plainbridge (since October 1993); 1989
President--Rickel division (since July 1990); Senior
Vice President--Retail Development of the Company (from
October 1989 until July 1990); Senior Vice
President--Planning, Administration and Retail
Development, Pathmark division prior thereto. Mr.
Borshadel joined the Company in 1965.
HARVEY M. GUTMAN 48 Senior Vice President--Retail Development of the Company 1990
(since December 1991); Vice President--Retail
Development of the Company (from October 1990 to
December 1991); Vice President--Grocery/Frozen Sales &
Merchandising, Pathmark division (from January 1990 to
September 1990); Vice President--Non-Foods/Pharmacy
Sales & Merchandising, Pathmark division prior thereto.
Mr. Gutman joined the Company in 1976.
</TABLE>
64
<PAGE>
<TABLE><CAPTION>
OFFICER OF
THE
COMPANY
NAME AGE POSITIONS AND OFFICE SINCE(1)
- ---------------------------------- ----------- --------------------------------------------------------- -------------
<S> <C> <C> <C>
ROBERT JOYCE 48 Senior Vice President--Administration (since October 1989
1990); Senior Vice President-- Human Resources (from
April 1990 to October 1990); Vice President--Human
Resources (from October 1989 to April 1990); Vice
President--Human Resources, Pathmark division prior
thereto. Mr. Joyce joined the Company in 1963.
BERNARD KENNY 56 Senior Vice President--Operations (since July 1993); 1993
Senior Vice President--Southern division, Pathmark
division prior thereto. Mr. Kenny joined the Company in
1960.
RONALD RALLO 56 Senior Vice President--Merchandising (since July 1993); 1993
Senior Vice President-- Merchandising Pathmark division
(from September 1992 to July 1993); Senior Vice
President--Perishable Merchandising, Pathmark division
(from February 1991 to September 1992); Vice
President--Dairy, Deli and Bakery Sales and
Merchandising, Pathmark division prior thereto. Mr.
Rallo joined the Company in 1962.
JOSEPH W. ADELHARDT 47 Vice President and Controller (since March 1990); 1987
Controller prior thereto. Mr. Adelhardt joined the
Company in 1976.
JOHN HENRY 44 Vice President--Operational Reporting and Planning (since 1992
March 1992); Senior Vice President--Finance and
Systems, Rickel division (from September 1989 to
February 1992); Vice President--Finance and Systems,
Rickel division prior thereto. Mr. Henry joined the
Company in 1974.
MAUREEN MCGURL 46 Vice President--Human Resources. Ms. McGurl joined the 1984(2)
Company in 1973.
MARC A. STRASSLER 45 Vice President, Secretary and General Counsel (since 1987
December 1991); Secretary and General Counsel prior
thereto. Mr. Strassler joined the Company in 1974.
MYRON D. WAXBERG 60 Vice President and General Counsel--Real Estate (since 1991
December 1991); General Counsel--Real Estate prior
thereto. Mr. Waxberg joined the Company in 1976.
</TABLE>
- ---------------
(1) Includes service with Old Supermarkets.
(2) Officer of holdings since 1987.
(3) Member of the Company's Board of Directors.
65
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
<TABLE><CAPTION>
LONG TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
------------------------------------- -------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
COMPENSATION OPTIONS/ COMPENSATION
NAME AND PRINCIPAL POSITION FY SALARY ($) BONUS ($) ($)(1)(2) SARS (3) ($)(2)(4)
- ---------------------------------------------- ----------- ----------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jack Futterman................................ 1993 482,539 138,762 -- -- 8,254
Chairman and Chief Executive Officer 1992 431,385 419,510 -- 3,000 8,010
1991 426,539 159,952 -- -- --
Jules Borshadel............................... 1993 286,750 216,583 -- 500 8,254
Chairman of Plainbridge 1992 246,827 148,096 -- 1,000 8,010
1991 228,750 137,250 -- -- --
Anthony J. Cuti............................... 1993 280,250 76,260 -- 3,000 8,254
President and Chief Financial Officer 1992 255,000 198,450 -- 1,000 8,010
1991 252,500 90,900 -- 900 --
Bernard Kenny(5).............................. 1993 179,026 42,966 -- 750 8,254
Senior Vice President--Operations of
Pathmark
Ronald Rallo(5)............................... 1993 177,500 42,600 4,311 750 8,098
Senior Vice President--Merchandising of
Pathmark
</TABLE>
- ---------------
(1) Represents amounts paid to Mr. Rallo as Reimbursement Amounts as described
in "Certain Relationships and Related Transactions" in Item 13 of this
report with respect to a loan to Mr. Rallo of less than $60,000.
(2) Information is provided solely with respect to Fiscal 1993 and Fiscal 1992.
(3) Stock options shown were granted pursuant to the Management Investors 1987
Stock Option Plan of SMG-II (the "Plan") and relate to shares of Class A
Common Stock of SMG-II.
(4) Represents Pathmark's matching contribution to the Supermarkets General
Corporation Savings Plan (the "Savings Plan").
(5) Messrs. Kenny and Rallo became executive officers of Pathmark in October
1993.
OPTION/SAR GRANTS IN LAST FISCAL YEAR(1)(2)
<TABLE><CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL
RATES OF
STOCK
PRICE
APPRECIATION
FOR
OPTION
INDIVIDUAL GRANTS TERM
- --------------------------------------------------------------------------------------------------------------- ---------
NUMBER OF
SECURITIES % OF TOTAL
UNDERLYING OPTIONS/ SARS
OPTIONS/ GRANTED TO EXERCISE OR
SARS EMPLOYEES IN BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR PRICE ($/SH) DATE 5% ($)
- ------------------------------------------------- ------------- --------------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Jack Futterman................................... -- -- -- -- --
Jules Borshadel.................................. 500 3.3 100 3/12/03 31,445
Anthony J. Cuti.................................. 1,750 11.7 100 3/12/03 110,057
1,250 8.4 100 1/13/04 78,612
Bernard Kenny.................................... 750 5.0 100 1/13/04 47,167
Ronald Rallo..................................... 750 5.0 100 1/13/04 47,167
<CAPTION>
IN
- -------------------------------------------------
NAME 10% ($)
- ------------------------------------------------- ---------
Jack Futterman................................... --
Jules Borshadel.................................. 79,687
Anthony J. Cuti.................................. 278,905
199,218
Bernard Kenny.................................... 119,531
Ronald Rallo..................................... 119,531
</TABLE>
- ---------------
(1) Options shown were granted pursuant to the Management Investors 1987 Stock
Option Plan of SMG-II, and relate to shares of Class A Common Stock of
SMG-II.
(2) Except for 500 options granted to Mr. Kenny, 500 options granted to Mr.
Rallo and 833 options granted to Mr. Cuti, options are fully vested and
exercisable at the time of grant, provided that no exercise may occur unless
a registration statement has been filed under the Securities Act of 1933
with respect to the shares subject to the option or the Compensation
Committee of the Board of Directors of SMG-II determines that an exemption
from registration is available.
66
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES(1)
<TABLE><CAPTION>
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS/SARS
AT FY-END (#)
EXERCISABLE/
NAME UNEXERCISABLE
- ------------------------------------------------------------------------------------------------ -------------
<S> <C>
Jack Futterman.................................................................................. 13,000/0
Jules Borshadel................................................................................. 2,640/0
Anthony J. Cuti................................................................................. 4,967/833
Bernard Kenny................................................................................... 1,700/500
Ronald Rallo.................................................................................... 2,350/500
</TABLE>
- ---------------
(1) Options shown were granted pursuant to the Management Investors 1987 Stock
Option Plan of SMG-II and relate to shares of Class A Common Stock of
SMG-II. No options were exercised in Fiscal 1993.
PENSION PLAN TABLE
<TABLE><CAPTION>
YEARS OF SERVICE
--------------------------------------------------------------------------
FINAL AVERAGE PAY 10 15 20 25 30 35
- ------------------------------------ --------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
$150,000............................ $ 20,000 $ 30,000 $ 40,000 $ 50,000 $ 60,000 $ 60,000
200,000............................ 26,667 40,000 53,333 66,667 80,000 80,000
225,000............................ 30,000 45,000 60,000 75,000 90,000 90,000
250,000............................ 33,333 50,000 66,667 83,333 100,000 100,000
300,000............................ 40,000 60,000 80,000 100,000 120,000 120,000
350,000............................ 46,667 70,000 93,333 116,667 140,000 140,000
450,000............................ 60,000 90,000 120,000 150,000 180,000 180,000
500,000............................ 66,667 100,000 133,333 166,667 200,000 200,000
550,000............................ 73,333 110,000 146,667 183,333 220,000 220,000
600,000............................ 80,000 120,000 160,000 200,000 240,000 240,000
650,000............................ 86,667 130,000 173,333 216,667 260,000 260,000
700,000............................ 93,333 140,000 186,667 233,333 280,000 280,000
750,000............................ 100,000 150,000 200,000 250,000 300,000 300,000
</TABLE>
- ---------------
(1) The table above illustrates the aggregate annual pension benefits payable
under the Supermarkets General Pension Plan and Excess Benefit Plan
(collectively, the "Pension Plans"). The retirement benefit for individuals
with 30 years of credited service is 40% of the individual's average
compensation during his or her highest five compensation years in the last
ten years before retirement, less one-half of the social security benefit
received. The retirement benefit is reduced by 3.33% for every year of
credited service less than 30. Covered compensation user the Pension Plans
includes all cash compensation subject to withholding plus amounts deferred
under the Savings Plan pursuant to Section 401(k) of the Internal Revenue
Code of 1986, as amended, and as to individuals identified in the Summary
Compensation Table, would be the amount set forth in that table under the
headings "Salary" and 'Bonus". The table shows the estimated annual benefits
an individual would be entitled to receive if normal retirement at age 65
occurred in January 1994 after the indicated number of years of covered
employment and if the average of the participant's covered compensation for
the five years out of the last ten years of such employment yielding the
highest such average equalled the amounts indicated. The estimated annual
benefits are based on the assumption that the individual will receive
retirement benefits in the form of a single life annuity (married
participants may elect a joint survivorship option) and are before
applicable deductions for social security benefits in effect as of January
1994. As of December 31, 1993, the following individuals had the number of
years of credited service indicated after their names:
(footnotes continued on following page)
67
<PAGE>
(footnotes continued from preceding page)
Mr. Futterman, 20.6; Mr. Borshadel, 28.5; Mr. Cuti, 2.0; Mr. Kenny, 30 and
Mr. Rallo, 30. As described below in "Compensation Plans and
Arrangements--Supplemental Retirement Agreements", each of the named
executives (other than Mr. Rallo) is party to a Supplemental Retirement
Agreement with Pathmark.
COMPENSATION PLANS AND ARRANGEMENTS
Directors' Fees. Directors of the Company are not currently compensated for
their services as such, except for Mr. Rubenstein who receives an annual fee of
$20,000.
Supplemental Retirement Agreements. The Company has entered into
supplemental retirement agreements with certain key executives, including four
of the executive officers named in the Summary Compensation Table, which provide
that the executive will be paid upon termination of employment after attainment
of age 60 a supplemental pension benefit in such an amount as to assure him or
her an annual amount of pension benefits payable under the supplemental
retirement agreement, the Company's qualified pension plans and certain other
plans of the Company, including Savings Plan balances as of March 31, 1983, (a)
in the case of Mr. Futterman, equal to (i) $475,000 or (ii) his base salary on
the date of his retirement, death or disability, whichever is greater, and (b)
in the cases of Messrs. Borshadel, Cuti and Kenny, equal to 30% of his final
average Compensation (as hereinabove defined) based on ten years of service with
the Company and increasing 1% per year for each year of service thereafter to a
maximum of 40% of his final average Compensation based on 20 years of service.
"Compensation" includes base salary and payments under the Executive Incentive
Plan, but excludes Company matching contributions under the Savings Plan and
cash awards under Old Supermarkets' former Long-Term Incentive Plan. If the
executive leaves the Company prior to completing 20 years of service (other than
for disability), the supplemental benefit would be reduced proportionately.
Should the executive die, the surviving spouse then receiving or, if he or she
was not then receiving a supplemental pension benefit, the spouse would be
entitled to a benefit equal to two-thirds of the benefit to which the executive
would have been entitled, provided the executive has attained at least ten years
of service with the Company. Mr. Cuti's agreement credits him with ten years of
service over and above his actual service.
Employment Agreements. As of August 1, 1993, the Company and Pathmark
entered into an employment agreement with Mr. Futterman (the "1993 Employment
Agreement"). The 1993 Employment Agreement is for an initial term of three
years, which term is automatically extended for an additional year on the second
anniversary of the commencement of the term and on each successive anniversary
thereafter. Under the 1993 Employment Agreement, Mr. Futterman is entitled to a
minimum annual base salary of $475,000. The 1993 Employment Agreement also
provides that Mr. Futterman shall be eligible to receive an annual bonus of up
to 75% of his annual base salary and shall be provided the opportunity to
participate in pension and welfare plans, programs and arrangements that are
generally made available to executives of Pathmark, or as may be deemed
appropriate by the Compensation Committee of the Board of Directors of Holdings.
As of August 1, 1993, the Company entered into employment agreements (the
"August Agreements", together with the 1993 Employment Agreement, the
"Employment Agreements") with Messrs. Cuti and Borshadel. Each August Agreement
is for an initial term of three years, which term is automatically extended for
an additional year on the second anniversary of the commencement of the term and
on each successive anniversary thereafter. Under the August Agreements, Mr. Cuti
and Mr. Borshadel are each entitled to a minimum annual base salary of $300,000.
The August Agreements also provide that each of them shall be eligible to
receive an annual bonus of up to 75% of his annual base salary and shall be
provided the opportunity to participate in pension and welfare plans, programs
and arrangements that are generally made available to executives of Pathmark,
with respect to Mr. Cuti and Rickel, with respect to Mr. Borshadel, or as may be
deemed appropriate by the Compensation Committee of the Board of Directors of
Holdings.
68
<PAGE>
In the event one of the above named executives' employment is terminated by
the Company without Cause (as defined in the Employment Agreements), or by the
executive for Good Reason (as defined in the Employment Agreements) prior to the
termination of the applicable Employment Agreement, such executive will be
entitled to continue to receive his base salary, plus bonus (if earned) and
continued coverage under health and insurance plans for the two year period
commencing on the date of such termination or resignation, reduced by any
compensation or benefits which the executive is entitled to receive in
connection with his employment by another employer during said period. In
addition, if Mr. Futterman's employment is terminated by the Company without
Cause or by him for Good Reason on or after a Change in Control, he will then be
entitled to receive such benefits for a three year period, and his base salary
shall be the greater of his base salary at the annual rate in effect immediately
prior to such termination of resignation or $500,000.
Under the 1993 Employment Agreement, a Change in Control means (a) the
acquisition by a Third Party (as hereinafter defined) of beneficial ownership of
more than 30% of the issued and outstanding voting common stock of SMG-II,
Holdings or the Company or (b) the acquisition of all or substantially all of
the assets of the Company by a Third Party; provided, however, that no Change in
Control will be deemed to occur as long as (i) the ML Investors, (ii) the
management employees of the Company, or (iii) the ML Investors, in combination
with the management employees of the Company, beneficially own, directly or
indirectly, more than 50% of the voting common stock of the Company. "Third
Party" shall mean any person other than the Company, Holdings or SMG-II, each of
the ML Investors, or The Equitable Life Assurance Society of the United States
and its affiliates. For purposes of the 1993 Employment Agreement, "person" and
"beneficial ownership" shall have the meanings assigned to such terms under
Section 13(d) of the Exchange Act, as amended, and "affiliate" of any first
person shall mean a second person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, such first person.
The Employment Agreements contain agreements by the executives not to
compete with the Company as long as they are receiving payments under an
Employment Agreement and an agreement by the executives not to disclose
confidential information.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Burke, Khanna and McLean comprise the compensation committees of
the Board of Directors of both Holdings and SMG-II, and were responsible for
decisions concerning compensation of the executive officers of the Company.
Messrs. Burke, Khanna and McLean are all executive officers of ML&Co. and ML
Capital Partners. See "Certain Transactions--Certain Relationships and Related
Transactions".
69
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Since February 4, 1991, all shares of the Company's Common Stock are held
by SMG-II. As of April 1, 1994, the number of shares of SMG-II(i) Class A Common
Stock, (ii) Class B Common Stock, (iii) Series A Preferred Stock, and (iv)
Series B Preferred Stock beneficially owned by the persons known by management
of the Company to be the beneficial owners of more than 5% of the outstanding
shares of any class as "beneficial ownership" has been defined under Rule 13d-3,
as amended, under the Securities Exchange Act of 1934, are set forth in the
following table:
<TABLE><CAPTION>
NUMBER % OF
NAME OF SHARES CLASS
- -------------------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
SMG-II Class A Common Stock
Merrill Lynch Capital Appreciation Partnership No. IX, L.P.(2)...................... 488,704.8 68.2
ML Offshore LBO Partnership No. IX(2)............................................... 12,424.7 1.7
Barfield House
St. Julians Avenue
St. Peter Port
Guernsey
Channel Islands
ML Employees LBO Partnership No. I, L.P.(2)......................................... 12,148.6 1.7
ML IBK Positions, Inc.(3)........................................................... 21,258.9 3.0
Merchant Banking L.P. No. 1(3)...................................................... 8,119 1.1
Merrill Lynch KECALP L.P. 1987(3)................................................... 7,344 1.0
CBC Capital Partners, Inc.(4)....................................................... 30,000 4.2
270 Park Avenue
New York, NY 10017
Management and other employees (including former employees of Pathmark)............. 138,917 (1) 19.3
301 Blair Road
Woodbridge, NJ 07095
SMG-II Class B Common Stock
The Equitable Life Assurance Society of the United States(5)........................ 114,000 35.6
c/o Equitable Capital Management Corporation
1285 Avenue of the Americas, 19th Floor
New York, NY 10019
Equitable Deal Flow Fund, L.P.(5)................................................... 150,000 46.9
c/o Equitable Capital Management Corporation
1285 Avenue of the Americas, 19th Floor
New York, NY 10019
Equitable Variable Life Insurance Company(5)........................................ 36,000 11.3
2 Penn Plaza, 21-C
New York, NY 10121
CBC Capital Partners, Inc.(4)....................................................... 20,000 6.2
SMG-II Series A Preferred Stock(6)
Merrill Lynch Capital Appreciation Partnership No. B-X, L.P.(2)..................... 133,043 56.2
ML Offshore LBO Partnership No. B-X(2).............................................. 40,950 17.3
MLCP Associates, L.P. No. II(2)..................................................... 1,740 .7
ML IBK Positions, Inc.(3)........................................................... 46,344.5 19.6
Merchant Banking L.P. No. IV(3)..................................................... 3,779 1.6
Merrill Lynch KECALP L.P. 1989(3)................................................... 7,000 3.0
Merrill Lynch KECALP L.P. 1991(3)................................................... 3,874.5 1.6
SMG-II Series B Preferred Stock(6)
CBC Capital Partners, Inc.(4)....................................................... 12,500 6.9
Equitable Variable Life Insurance Company(5)........................................ 20,192 11.2
The Equitable Life Assurance Society of the United States(5)........................ 63,942 35.4
Equitable Deal Flow Fund, L.P.(5)................................................... 84,135 46.5
</TABLE>
(footnotes on following page)
70
<PAGE>
(footnotes for preceding page)
- ---------------
(1) Includes presently exercisable options granted under the Plan for 67,492
shares of SMG-II Class A Common Stock held by Management Investors and 750
shares of SMG-II Class A Common Stock that SMG-II has agreed to sell to
three of the Company's employees, including 250 shares to Mr. Cuti. Does not
include 39,744 options to purchase shares of SMG-II Class A Common Stock
granted to non-management employees of the Company, which options are not
exercisable until a public offering of SMG-II Common Stock occurs. The total
number of Management Investors is 55.
(2) ML Capital Partners and its affiliates are the direct or indirect managing
partners of ML Offshore LBO Partnership No. IX, Merrill Lynch Capital
Appreciation Partnership No. IX, L.P., ML Employees LBO Partnership No. 1,
L.P., Merrill Lynch Capital Appreciation Partnership No. B-X, L.P., ML
Offshore LBO Partnership No. B-X and MLCP Associates, L.P. No. II. Such in
footnote (3) below, are referred to herein as the "Merrill Lynch Investors".
The address of such entities is c/o ML Capital Partners, 767 Fifth Avenue,
New York, New York 10153. ML Capital Partners is a wholly owned subsidiary
of ML&Co.
(3) Merchant Banking L.P. No. 1, Merchant Banking L.P. No. IV, Merrill Lynch
KECALP L.P. 1987, Merrill Lynch KECALP L.P. 1989, Merrill Lynch KECALP L.P.
1991 and ML IBK Positions, Inc. are indirectly controlled by ML&Co. The
address of such entities is c/o James Caruso, Merrill Lynch & Co., Inc.,
World Financial Center, North Tower, New York, New York 10281-1326.
(4) CBC Capital Partners, Inc. is a wholly owned subsidiary of Chemical Banking
Corp.
(5) The Equitable Investors are separate purchasers who are affiliates of each
other.
(6) SMG-II Preferred Stock may be converted into an equivalent number of shares
of common stock of SMG-II in accordance with its terms.
No officer or director claims beneficial ownership of any share of the
Company's Common Stock, or of SMG-II stock other than SMG-II Class A Common
Stock. The number of shares of SMG-II Class A Common Stock beneficially owned by
each director, by each of the five highest compensated executive officers and by
all directors and all current and executive officers as a group is as follows:
<TABLE><CAPTION>
NAME NUMBER OF SHARES % OF CLASS
- ------------------------------------------------------- ------------------- -------------
<S> <C> <C>
Jules Borshadel(1) .................................... 5,140 .7
James J. Burke, Jr. ................................... -- --
Anthony J. Cuti(1)..................................... 5,217 .7
Jack Futterman(1)...................................... 23,000 3.2
Sunil C. Khanna........................................ 700 .1
Bernard Kenny(1) ...................................... 4,700 .7
Stephen M. McLean...................................... -- --
Susan C. Penny ........................................ -- --
Ronald Rallo(1) ....................................... 2,750 .4
Jerry G. Rubenstein(1)................................. 2,500 .3
Directors and executive officers as a group(1)......... 55,662 7.8
</TABLE>
- ---------------
(1) Includes 250 shares of SMG-II Class A Common Stock that SMG-II has agreed to
sell to Mr. Cuti and presently exercisable options granted under the Plan to
purchase shares of SMG-II Class A Common Stock as follows: Mr. Borshadel,
2,640; Mr. Cuti, 5,217; Mr. Futterman, 13,000; Mr. Kenny, 1,700; Mr. Rallo,
2,350; Mr. Rubenstein, 1,000, and all directors and executive officers as a
group, 33,612.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1990, Jerry G. Rubenstein, a Director, borrowed from the Company
$100,000 in order to help finance his purchase of Company Class A Common Stock.
Subsequently, such shares of Company
71
<PAGE>
Class A Common Stock were exchanged for shares of SMG-II Class A Common Stock.
The foregoing indebtedness to the Company is evidenced by a full recourse
promissory note (the "Recourse Note"). The Recourse Note is for a term of ten
years and bears interest at the rate of 8.02% per annum, payable annually.
Except as otherwise provided in the Recourse Note, no principal on such recourse
loan shall be due and payable until the tenth anniversary of the date of issue
of such Recourse Note. Under the terms of the agreement pursuant to which the
shares of Company Class A Common Stock were exchanged for shares of SMG-II Class
A Common Stock, the Company is obligated to pay to each Management Investor who
pays interest on his Recourse Note (except under certain circumstances) an
amount equal to such interest, plus an amount sufficient to pay any income taxes
resulting from the above described payment after taking into account the value
of any deduction available to him as a result of the payment of such interest or
taxes (the "Reimbursement Amount"). As of April 1, 1994, Mr. Rubenstein remained
indebted to the Company in the amount of $100,000.
During Fiscal 1992, the Company retained Merrill Lynch, of which Messrs.
Burke, Khanna and McLean are principals, to act as underwriter in connection
with its offering of the Subordinated Notes. In addition, in Fiscal 1993 Merrill
Lynch acted as Dealer Manager in connection with the Exchange Offer and related
Solicitation, and as underwriter in connection with the Pathmark Senior
Subordinated Notes and Junior Subordinated Deferred Coupon Notes Offerings for
which it received customary fees. The Company believes that the terms of the
transactions referred to under this paragraph were no less favorable than those
obtainable in transactions with unrelated persons.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents filed as part of this Report.
<TABLE><CAPTION>
PAGE NUMBER
-----------------
<S> <C> <C>
1. Financial Statements:
2. Financial Statement Schedules:
</TABLE>
<TABLE>
<S> <C> <C> <C>
Schedule V-- Property and Equipment 74
Schedule VI-- Accumulated Depreciation and Amortization of Property and 75
Equipment
Schedule VIII-- Allowance for Doubtful Accounts Receivable, Trade 76
Schedule X-- Supplementary Income Statement Information 77
All other schedules are omitted because they are not applicable, or not required, or because the
required information is included in the consolidated financial statements or notes thereto.
3. Exhibits:
Incorporated herein by reference is a list of the Exhibits contained in the Exhibit Index on Pages 78
through 80 of this Report.
</TABLE>
(b) Reports on Form 8-K.
Current report on Form 8-K dated November 1, 1993 (Items 5 and 7).
(c) Exhibits required by Item 601 of Regulation S-K.
See item 14(a) 3 above.
72
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: April 29, 1994 SUPERMARKETS GENERAL HOLDINGS
CORPORATION
By: /s/ ANTHONY
CUTI
..................................
Anthony Cuti
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- ---------------------------------------------- ---------------------------------------------- -----------------
<S> <C> <C>
JACK FUTTERMAN Director, Chairman and Chief Executive Officer April 29, 1994
.............................................. (Principal Executive Officer)*
(Jack Futterman)
/S/ ANTHONY CUTI Director, President April 29, 1994
.............................................. and Chief Financial Officer
(Anthony Cuti) (Principal Financial Officer)
/s/ JOSEPH ADELHARDT Vice President and Controller (Principal April 29, 1994
.............................................. Accounting Officer)
(Joseph Adelhardt)
JAMES J. BURKE, JR. Director* April 29, 1994
..............................................
(James J. Burke, Jr.)
SUNIL C. KHANNA Director* April 29, 1994
..............................................
(Sunil C. Khanna)
STEPHEN M. MCLEAN Director* April 29, 1994
..............................................
(Stephen M. McLean)
SUSAN C. PENNY Director* April 29, 1994
..............................................
(Susan C. Penny)
JERRY G. RUBENSTEIN Director* April 29, 1994
..............................................
(Jerry G. Rubenstein)
*By: /s/ MARC A. STRASSLER
.........................
Marc A. Strassler
Attorney-in-Fact
</TABLE>
73
<PAGE>
SCHEDULE V
SUPERMARKETS GENERAL HOLDINGS CORPORATION
PROPERTY AND EQUIPMENT
(IN THOUSANDS)
<TABLE><CAPTION>
COLUMN B COLUMN E COLUMN G
------------ COLUMN C COLUMN D ---------- ----------
COLUMN A BALANCE AT --------- ----------- DISPOSITION COLUMN F BALANCE
- -------------------------------------------------- BEGINNING ADDITIONS RETIREMENTS OF PURITY ----------- AT CLOSE
CLASSIFICATION OF PERIOD AT COST OR SALES OPERATIONS TRANSFERS OF PERIOD
- -------------------------------------------------- ------------ --------- ----------- ---------- ----------- ----------
52 WEEKS ENDED JANUARY 29, 1994
<S> <C> <C> <C> <C> <C> <C>
Land.............................................. $ 64,594 $ 1,814 $ 568 $ -- $ -- $ 65,840
Buildings and building improvements............... 177,148 17,309 1,926 -- 3,681 196,212
Fixtures and equipment............................ 234,114 24,991 35,182 -- 1,659 225,582
Leasehold costs and improvements.................. 300,269 24,139 14,893 -- 480 309,995
Transportation equipment.......................... 22,705 85 3,019 -- -- 19,771
Construction in progress.......................... 3,985 2,515 -- -- (5,820) 680
------------ --------- ----------- ---------- ----------- ----------
802,815 70,853 55,588 -- -- 818,080
Property and equipment under capital leases....... 155,813 25,655 4,972 -- -- 176,496
------------ --------- ----------- ---------- ----------- ----------
Total.................................... $ 958,628 $ 96,508 $ 60,560 $ -- $ -- $ 994,576
------------ --------- ----------- ---------- ----------- ----------
------------ --------- ----------- ---------- ----------- ----------
52 WEEKS ENDED JANUARY 30, 1993
Land.............................................. $ 57,496 $ 7,341 $ 243 $ -- $ -- $ 64,594
Buildings and building improvements............... 166,637 8,870 3,335 -- 4,976 177,148
Fixtures and equipment............................ 264,040 23,496 53,555 -- 133 234,114
Leasehold costs and improvements.................. 293,058 20,525 8,874 -- (4,440) 300,269
Transportation equipment.......................... 21,818 1,487 600 -- -- 22,705
Construction in progress.......................... 811 3,903 60 -- (669) 3,985
------------ --------- ----------- ---------- ----------- ----------
803,860 65,622 66,667 -- -- 802,815
Property and equipment under capital leases....... 148,694 8,724 1,605 -- -- 155,813
------------ --------- ----------- ---------- ----------- ----------
Total.................................... $ 952,554 $ 74,346 $ 68,272 $ -- $ $ 958,628
------------ --------- ----------- ---------- ----------- ----------
------------ --------- ----------- ---------- ----------- ----------
52 WEEKS ENDED FEBRUARY 1, 1992
Land.............................................. $ 63,566 $ 701 $ 3,750 $ 3,032 $ 11 $ 57,496
Buildings and building improvements............... 186,658 5,476 10,659 14,838 -- 166,637
Fixtures and equipment............................ 349,174 26,447 27,269 84,742 430 264,040
Leasehold costs and improvements.................. 352,907 21,550 36,357 47,131 2,089 293,058
Transportation equipment.......................... 29,327 123 1,963 6,012 343 21,818
Construction in progress.......................... 3,250 5,149 4 4,711 (2,873) 811
------------ --------- ----------- ---------- ----------- ----------
984,882 59,446 80,002 160,466 -- 803,860
Property and equipment under capital leases....... 184,939 19,409 9,916 45,738 -- 148,694
------------ --------- ----------- ---------- ----------- ----------
Total.................................... $ 1,169,821 $ 78,855 $ 89,918 $ 206,204 $ -- $ 952,554
------------ --------- ----------- ---------- ----------- ----------
------------ --------- ----------- ---------- ----------- ----------
</TABLE>
74
<PAGE>
SCHEDULE VI
SUPERMARKETS GENERAL HOLDINGS CORPORATION
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY AND EQUIPMENT
(IN THOUSANDS)
<TABLE><CAPTION>
COLUMN B COLUMN C COLUMN D COLUMN F
---------- ----------- ----------- COLUMN E ---------
COLUMN A BALANCE AT CONTINUING DISCONTINUED ----------- DISPOSITION COLUMN G
- ------------------------------------------------- BEGINNING OPERATIONS OPERATIONS RETIREMENTS OF PURITY -----------
CLASSIFICATION OF PERIOD ADDITIONS ADDITIONS OR SALES OPERATIONS TRANSFERS
- ------------------------------------------------- ---------- ----------- ----------- ----------- --------- -----------
52 WEEKS ENDED JANUARY 29, 1994
<S> <C> <C> <C> <C> <C> <C>
Buildings and building improvements.............. $ 43,068 $ 7,364 $ 2,537 $ 2,418 $ -- $ --
Fixtures and equipment........................... 115,796 22,717 4,240 30,922 -- --
Leasehold costs and improvements................. 97,832 21,837 3,043 13,746 -- --
Transportation equipment......................... 13,955 1,691 525 2,651 -- --
---------- ----------- ----------- ----------- --------- -----------
270,651 53,609 10,345 49,737 -- --
Property and equipment under capital leases...... 51,166 14,056 1,571 2,928 -- --
---------- ----------- ----------- ----------- --------- -----------
Total................................... $ 321,817 $ 67,665 $ 11,916 $ 52,665 $ -- $ --
---------- ----------- ----------- ----------- --------- -----------
---------- ----------- ----------- ----------- --------- -----------
52 WEEKS ENDED JANUARY 30, 1993
Buildings and building improvements.............. $ 35,405 $ 8,045 $ 1,173 $ 2,540 $ -- $ 985
Fixtures and equipment........................... 133,105 25,916 3,707 46,995 -- 63
Leasehold costs and improvements................. 82,971 20,189 2,909 7,189 -- (1,048)
Transportation equipment......................... 12,068 2,322 123 558 -- --
---------- ----------- ----------- ----------- --------- -----------
263,549 56,472 7,912 57,282 -- --
Property and equipment under capital leases...... 37,515 12,771 1,132 252 -- --
---------- ----------- ----------- ----------- --------- -----------
Total................................... $ 301,064 $ 69,243 $ 9,044 $ 57,534 $ -- $ --
---------- ----------- ----------- ----------- --------- -----------
---------- ----------- ----------- ----------- --------- -----------
52 WEEKS ENDED FEBRUARY 1, 1992
Buildings and building improvements.............. $ 31,467 8,948 1,178 $ 2,319 $ 3,869 $ --
Fixtures and equipment........................... 150,170 41,628 4,443 22,876 40,260 --
Leasehold costs and improvements................. 84,583 25,242 3,953 10,483 20,324 --
Transportation equipment......................... 12,467 3,543 225 1,384 2,783 --
---------- ----------- ----------- ----------- --------- -----------
278,687 79,361 9,799 37,062 67,236 --
Property and equipment under capital leases...... 36,981 13,811 1,707 4,992 9,992 --
---------- ----------- ----------- ----------- --------- -----------
Total................................... $ 315,668 $ 93,172 $ 11,506 $ 42,054 $ 77,228 $ --
---------- ----------- ----------- ----------- --------- -----------
---------- ----------- ----------- ----------- --------- -----------
<CAPTION>
COLUMN H
COLUMN A BALANCE AT
- ------------------------------------------------- CLOSE OF
CLASSIFICATION PERIOD
- ------------------------------------------------- ----------
52 WEEKS ENDED JANUARY 29, 1994
Buildings and building improvements.............. $ 50,551
Fixtures and equipment........................... 111,831
Leasehold costs and improvements................. 108,966
Transportation equipment......................... 13,520
----------
284,868
Property and equipment under capital leases...... 63,865
----------
Total................................... $ 348,733
----------
----------
52 WEEKS ENDED JANUARY 30, 1993
Buildings and building improvements.............. $ 43,068
Fixtures and equipment........................... 115,796
Leasehold costs and improvements................. 97,832
Transportation equipment......................... 13,955
----------
270,651
Property and equipment under capital leases...... 51,166
----------
Total................................... $ 321,817
----------
----------
52 WEEKS ENDED FEBRUARY 1, 1992
Buildings and building improvements.............. $ 35,405
Fixtures and equipment........................... 133,105
Leasehold costs and improvements................. 82,971
Transportation equipment......................... 12,068
----------
263,549
Property and equipment under capital leases...... 37,515
----------
Total................................... $ 301,064
----------
----------
----------
</TABLE>
Depreciation and amortization expense of owned property and equipment is
computed on the straight-line method over their estimated useful lives.
Amortization of property under capital leases is computed on the straight-line
method over the remaining terms of the leases. Depreciable lives are primarily
the following:
<TABLE>
<S> <C>
Buildings....................................... 40 years
Building/leasehold improvements:
Structural.................................... Remaining life of building or lease
Other improvements............................ 8 to 15 years
Fixtures and equipment.......................... 3 to 10 years
Transportation equipment........................ 3 to 8 years
</TABLE>
75
<PAGE>
SCHEDULE VIII
SUPERMARKETS GENERAL HOLDINGS CORPORATION
ALLOWANCE FOR DOUBTFUL ACCOUNTS RECEIVABLE, TRADE
(IN THOUSANDS)
<TABLE><CAPTION>
52 WEEKS ENDED
-------------------------------------
JANUARY 29, JANUARY 30, FEBRUARY 1,
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
Balance, beginning of period............................................. $ 1,714 $ 2,120 $ 2,210
Additions charged to earnings............................................ 3,245 4,211 4,935
Deductions:
Items determined to be uncollectible, less recovery of amounts
previously written off................................................... (3,168) (4,617) (4,983)
Disposal of Purity Operations.......................................... -- -- (42)
----------- ----------- -----------
Balance, end of period................................................... $ 1,791 $ 1,714 $ 2,120
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
76
<PAGE>
SCHEDULE X
SUPERMARKETS GENERAL HOLDINGS CORPORATION
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(IN THOUSANDS)
<TABLE><CAPTION>
52 WEEKS ENDED
-------------------------------------
JANUARY 29, JANUARY 30, FEBRUARY 1,
ITEM 1994 1993 1992
- ------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Maintenance and repairs.................................................. $ 51,807 $ 49,757 $ 62,763
</TABLE>
Certain items noted in Rule 12-11 of Regulation S-X have been excluded from
the above schedule on the basis that each is less than 1% of net sales as
reported in the related Consolidated Statements of Operations.
77
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE
NO. EXHIBIT NO.
- -------- --------------------------------------------------------------------- -----------
<S> <C> <C>
2.1* --Distribution and Transfer Agreement among Pathmark, PTK and
Plainbridge..........................................................
2.2* --Distribution and Transfer Agreement dated as of May 3, 1993 among
Pathmark, the Company and Chefmark. (incorporated by reference from
Exhibit 2.2 to the Registration Statement on Form S-1 of the
Company and Pathmark, File No. 33-59616 the "1993 Registration
Statement")..........................................................
2.3 --Agreement and Plan of Merger dated as of April 22, 1987 by and
among Old Supermarkets, SMG Acquisition Corporation and Holdings,
as amended and restated (incorporated by reference from Exhibit 2
to the Registration Statement on Form S-1 of the Company, File No.
33-16963)............................................................
2.4 --Agreement and Plan of Merger dated as of July 29, 1991 among
Holdings, Purity Supreme, Inc. and PSLP Holding Corporation
(incorporated by reference from Exhibit 10.55 to the Registration
Statement on Form S-1 of the Company, No. 33-16963)................
2.5 --Amendment No. 1 dated as of October 23, 1991 to the Agreement and
Plan of Merger dated as of July 29, 1991 among the Company, Purity
Supreme, Inc. and PSLP Holding Corporation (incorporated by
reference from Exhibit 2.2 to the Current Report on Form 8-K of the
Company dated December 17, 1991).....................................
3.1 --Restated Certificate of Incorporation of the Company, as amended.
(incorporated by reference from Exhibit 3.3 to the Registration
Statement on Form S-1 of Pathmark, File No. 33-59612, the "October
1993 Registration Statement")........................................
3.2 --Amendment to the Restated Certificate of Incorporation of the
Company, as amended. (incorporated by reference from Exhibit 3.2 to
the October Registration Statement)................................
3.3 --By-Laws of the Company, as amended. (incorporated by reference from
Exhibit 3.6 to the 1993 Registration Statement)....................
3.4 --Restated Certificate of Incorporation of the Company, as amended.
(incorporated by reference from Exhibit 3.4 to the 1993
Registration Statement)..............................................
3.5 --Certificate of Designation of the $3.52 Cumulative Exchangeable
Redeemable Preferred Stock of Holdings. (incorporated by reference
from Exhibit 3.5 to the 1993 "Registration Statement").............
4.1* --Indenture dated as of May 1, 1992 between the Company and
Wilmington Trust Company, Trustee, relating to the 11 5/8%
Subordinated Notes due 2002 of Holdings..............................
4.2* --Supplemental Indenture between the Company and Wilmington Trust
Company, Trustee, to the Indenture dated as of May 1, 1992 between
Holdings and Wilmington Trust Company, Trustee, relating to the 11
5/8% Subordinated Notes dues 2002 of Holdings......................
4.3 --Commitment Letter dated March 12, 1993 between the Company and
Bankers Trust Company. (incorporated by reference from Exhibit 4.4B
to the 1993 Registration Statement)................................
4.4* --Credit Agreement among Pathmark, the Lenders, listed therein, and
Banker's Trust Company as Agent....................................
4.5* --Credit Agreement among Plainbridge, the Lenders, listed therein,
and Banker's Trust Company as Agent................................
4.6* --Indenture between Pathmark and United States Trust Company of New
York, Trustee, relating to the Senior Subordinated Notes due 2003
of Pathmark..........................................................
4.7* --Indenture between Pathmark and NationsBank of Georgia, National
Association, Trustee, relating to the Junior Subordinated Deferred
Coupon Notes due 2003 of Pathmark..................................
</TABLE>
78
<PAGE>
<TABLE><CAPTION>
EXHIBIT PAGE
NO. EXHIBIT NO.
- -------- --------------------------------------------------------------------- -----------
<S> <C> <C>
4.8* --Indenture between Pathmark and Wilmington Trust Company, Trustee,
relating to the 11 5/8% Subordinated Notes due 2002 of Pathmark....
4.9* --Indenture between Pathmark and Wilmington Trust Company, Trustee,
relating to the 12 5/8% Subordinated Debentures due 2002 of
Pathmark.............................................................
10.1* --Logistical Services Agreement between Pathmark and Plainbridge.....
10.2* --Services Agreement between Pathmark and Plainbridge relating to the
Rickel home centers................................................
10.3 --Services Agreement between the Company and Plainbridge relating to
the warehouse and distribution facilities. (incorporated by
reference from Exhibit 10.3 to the October 1993 Registration
Statement)...........................................................
10.4 --Services Agreement dated as of May 3, 1993 between the Company and
Chefmark (incorporated by reference from Exhibit 10.4 to the 1993
Registration Statement)..............................................
10.5 --Chefmark Supply Agreement, dated May 3, 1993, between the Company
and Chefmark (incorporated by reference from Exhibit 10.5 to the
1993 Registration Statement).......................................
10.6* --Tax Sharing Agreement between the Company and SMG-II...............
10.7* --Tax Indemnity Agreement between the Company and Plainbridge........
10.8 --Supermarkets General Corporation Pension Plan (as Amended and
Restated effective January 1, 1979) as amended through May 29, 1987
(incorporated by reference from Exhibit 10.21 to the Registration
Statement on Form S-1 of Holdings, File No. 33-16963)..............
10.9 --Supermarkets General Corporation Savings Plan (as Amended and
Restated effective April 1, 1983) as amended through January 1,
1987 (incorporated by reference from Exhibit 10.22 to the
Registration Statement on Form S-1 of Holdings, File No.
33-16963)............................................................
10.10 --Supermarkets General Corporation Management Incentive Plan
effective June 17, 1971 (incorporated by reference from Exhibit
10.23 to the Registration Statement on Form S-1 of Holdings, File
No. 33-16963)........................................................
10.11 --Supplemental Retirement Agreements dated as of March 9, 1987
between Old Supermarkets and Jack Futterman, Jeffrey C. Girard,
Jules Borshadel and Isadore Lemmerman (incorporated by reference
from Exhibit 10.25 to the Registration Statement on Form S-1 of
Holdings, File No. 33-16963).........................................
10.12 --Excess Benefit Plan of Supermarkets General Corporation, effective
as of March 9, 1987................................................
10.13 --Recourse Secured Promissory Note, dated October 5, 1987, given to
Holdings from each Management Investor listed therein (incorporated
by reference from Exhibit 10.43 to Post-Effective Amendment No. 1
to the Registration Statement on Form S-1 of Holdings, File No.
33-16963)............................................................
10.14 --Stock Pledge Agreement dated October 5, 1987, between Holdings and
each Management Investor listed therein (incorporated by reference
from Exhibit 10.44 to Post-Effective Amendment No. 1 to the
Registration Statement on Form S-1 of Holdings, File No.
33-16963)............................................................
10.15 --SMG-II Holdings Corporation Management Investors Stock Option Plan,
as amended May 17, 1991 (the "Option Plan")........................
10.16 --Form of Stock Option Agreement under the Option Plan...............
10.17 --SMG-II Holdings Corporation Employees 1987 Stock Option Plan, as
amended May 17, 1991...............................................
10.18* --Employment Agreement dated as of August 1, 1993 among the Company,
Pathmark, SMG-II and Jack Futterman..................................
</TABLE>
79
<PAGE>
<TABLE><CAPTION>
EXHIBIT PAGE
NO. EXHIBIT NO.
- -------- --------------------------------------------------------------------- -----------
<S> <C> <C>
10.19* --Employment Agreement dated as of August 1, 1993 between the
Pathmark and Jules Borshadel.......................................
10.20* --Employment Agreement dated as of August 1, 1993 between the
Company, SMG-II and Anthony Cuti...................................
10.21 --Stockholders Agreement, dated as of February 4, 1991, among SMG-II
Holdings Corporation and its Stockholders (incorporated by
reference from Exhibit 10.54 to the Registration Statement on Form
S-1 of Holdings, File No. 33-16963)..................................
10.24 --Supplemental Retirement Agreements dated as of March 12, 1993
between the Company and Anthony Cuti and Isadore Zalkin............
10.25 --Supplemental Retirement Agreement, dated March 9, 1987 between the
Company and Bernard Kenny..........................................
22.* --List of Subsidiaries of the Company
23.* --Letter from Deloitte & Touche as to preferability of accounting
change.............................................................
24.* --Powers of Attorney
</TABLE>
- ---------------
*Filed herewith.
80
DISTRIBUTION AND TRANSFER AGREEMENT
AMONG
PTK HOLDINGS, INC.,
PATHMARK STORES, INC.
AND
PLAINBRIDGE, INC.
DATED AS OF OCTOBER 26, 1993
<PAGE>
DISTRIBUTION AND TRANSFER AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Certain Defined Terms ............... 2
ARTICLE II
THE REORGANIZATION
Section 2.01 The Asset and Liability Transfer .... 7
Section 2.02 The Distribution .................... 7
Section 2.03 Cooperation Prior to the
Distribution ...................... 8
Section 2.04 Conditions Precedent ................ 8
ARTICLE III
CERTAIN MATTERS RELATING TO THE REORGANIZATION
Section 3.01 Transfer Instruments ................ 9
Section 3.02 No Representations or Warranties .... 9
Section 3.03 Further Assurances and Consents ..... 10
Section 3.04 Sales and Transfer Taxes ............ 11
Section 3.05 Proration of Taxes, Lease and
Utility Payments .................. 12
Section 3.06 Signs; Use of Pathmark Name ......... 12
Section 3.07 Products, Supplies and Documents .... 13
Section 3.08 Plant Closings and Layoffs .......... 13
Section 3.09 Competition ......................... 14
Section 3.10 Insurance ........................... 14
ARTICLE IV
INDEMNIFICATION
Section 4.01 Indemnification by Pathmark ......... 16
Section 4.02 Indemnification by Plainbridge ...... 16
Section 4.03 Limitations on and Adjustments to
Indemnification Obligations ....... 17
Section 4.04 Procedures for Indemnification
of Third Party Claims ............. 19
Section 4.05 Remedies Cumulative ................. 22
Section 4.06 Survival of Indemnities ............. 22
i
<PAGE>
Page
ARTICLE V
ACCESS TO INFORMATION
Section 5.01 Provision of Books and Records ...... 22
Section 5.02 Access to Information ............... 23
Section 5.03 Production of Witnesses ............. 23
Section 5.04 Retention of Records ................ 23
Section 5.05 Confidentiality ..................... 24
Section 5.06 Privileged Matters .................. 24
ARTICLE VI
DISPUTE RESOLUTION
Section 6.01 Mediation and Binding Arbitration ... 26
Section 6.02 Initiation .......................... 26
Section 6.03 Submission to Mediation ............. 26
Section 6.04 Selection of Mediator ............... 26
Section 6.05 Mediation ........................... 27
Section 6.06 Selection of Arbitrator ............. 27
Section 6.07 Cost of Arbitration ................. 27
ARTICLE VII
GENERAL PROVISIONS
Section 7.01 Complete Agreement; Construction .... 27
Section 7.02 Survival of Agreements .............. 28
Section 7.03 Expenses ............................ 28
Section 7.04 Governing Law ....................... 28
Section 7.05 Notices ............................. 28
Section 7.06 Amendments .......................... 29
Section 7.07 Successors and Assigns .............. 29
Section 7.08 Termination ......................... 29
Section 7.09 No Third-Party Beneficiaries ........ 30
Section 7.10 Headings ............................ 30
Section 7.11 Severability ........................ 30
Section 7.12 Counterparts ........................ 30
SCHEDULE I Transferred Assets
SCHEDULE II Assumed Liabilities
ANNEX A Rickel Services Agreement
ANNEX B Blair Services Agreement
ANNEX C Logistical Services Agreement
ANNEX D Tax Indemnity Agreement
ii
<PAGE>
DISTRIBUTION AND TRANSFER AGREEMENT, dated as of
October 26, 1993 (this "Agreement"), among PTK HOLDINGS,
INC., a Delaware corporation ("Holdings"), PATHMARK STORES,
INC., a Delaware corporation and, as of the date hereof, a
wholly owned subsidiary of Holdings ("Pathmark"), and
PLAINBRIDGE, INC., a Delaware corporation and, as of the date
hereof, a wholly owned subsidiary of Pathmark ("Plainbridge").
W I T N E S S E T H :
WHEREAS, in connection with a Reorganization (the
"Reorganization") of Pathmark, as described in Registration
Statements Nos. 33-59616, 33-59612 and 33-50053 filed with the
Securities and Exchange Commission (collectively and as amended
and declared effective, the "Registration Statements"), the
Board of Directors of Pathmark has determined that it is
appropriate and desirable to contribute certain owned Pathmark
retail properties and certain assets and properties related to
the operations of its Rickel division and its warehouse and
distribution operations (collectively, the "Transferred
Businesses") to the capital of Plainbridge and for Plainbridge
to assume certain of the liabilities and obligations relating
to the Transferred Businesses (such contribution and assumption
being the "Asset and Liability Transfer");
WHEREAS, the Board of Directors of Pathmark has
determined that it would be in the best interest of Pathmark
for Pathmark to distribute (the "Distribution") to Holdings all
the outstanding shares of the Class A common stock, par value
$.01 per share, of Plainbridge (the "Plainbridge Class A Common
Stock");
WHEREAS, the Board of Directors of each of Pathmark
and Plainbridge has determined that it is in the best interest
of Pathmark and Plainbridge, respectively, to participate in
the Asset and Liability Transfer;
WHEREAS, it is intended that, for federal income tax
purposes, the Distribution shall qualify as a tax-free
distribution under the provisions of Section 355 of the United
States Internal Revenue Code of 1986, as amended (the "Code");
and
<PAGE>
WHEREAS, Holdings, Pathmark and Plainbridge have
determined that it is appropriate and desirable to set forth
their agreements regarding the principal corporate transactions
required to effect the Asset and Liability Transfer and the
Distribution and certain other agreements relating to the Asset
and Liability Transfer and the Distribution;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements and covenants hereinafter set forth,
Holdings, Pathmark and Plainbridge hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following
meanings:
"Action" means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any
Governmental Authority.
"Affiliate" means, with respect to any specified
Person, any other Person that directly, or indirectly
through one or more intermediaries, controls, is controlled
by, or is under common control with, such specified Person;
provided, however, that Holdings and its Subsidiaries,
Pathmark and its Subsidiaries and Plainbridge and its
Subsidiaries, respectively, shall not be deemed to be
Affiliates of one another for purposes of this Agreement.
"Agreement" has the meaning specified in the preamble
to this Agreement.
"Asset and Liability Transfer" has the meaning
specified in the recitals to this Agreement.
"Assumed Liabilities" means, collectively, all the
Liabilities and other obligations of Pathmark described on
Schedule II.
"Blair Services Agreement" means the Blair Services
Agreement, to be dated as of the Pathmark Distribution
Date, between Pathmark and Plainbridge, substantially in
the form of Annex B.
<PAGE>
"Code" has the meaning specified in the recitals to
this Agreement.
"Distribution" has the meaning specified in the
recitals to this Agreement.
"Distribution Date" means the date on which the
Distribution shall occur.
"Final Determination" means, with respect to any issue
or item for any taxable period: (i) a decision by a court
of competent jurisdiction, but only after such decision has
become final and unappealable; (ii) the expiration of the
time for filing a claim for refund or, if a refund claim
has been timely filed, the time for instituting a suit in
respect of such refund claim, provided that no further
adjustment to the items of income, gain, loss, deduction or
credit for such period may thereafter be made; (iii) the
execution by or on behalf of the taxpayer and the IRS of a
closing agreement under section 7121 of the Code or
comparable agreements under the laws of other
jurisdictions; (iv) the acceptance by the IRS or its
counsel of a tender pursuant to an offer in compromise
under section 7122 of the Code, or comparable agreements of
other jurisdictions; (v) the execution of a Form 870 or
Form 870AD and the subsequent payment of the tax deficiency
or the receipt of the refund reflected therein; or (vi) any
other final and irrevocable determination of the tax
liability of a party to this Agreement for any taxable
period.
"Governmental Authority" means any United States
federal, state or local or any foreign government,
governmental, regulatory or administrative authority,
agency or commission or any court, tribunal, or judicial or
arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award
entered by or with any Governmental Authority.
"Holdings" has the meaning specified in the preamble
to this Agreement.
"Holdings Common Stock" means the common stock, par
value $.01 per share, of Holdings.
<PAGE>
"Indemnifiable Loss" means, with respect to any claim
by an Indemnitee for indemnification authorized pursuant to
Article IV hereof, any and all losses, liabilities, claims,
damages, obligations, payments, costs, and expenses
(including, without limitation, the costs and expenses of
any and all Actions, demands, assessments, judgments,
settlements, and compromises relating thereto and
attorneys' fees and expenses in connection therewith)
suffered by such Indemnitee with respect to such claim.
"Insurance Proceeds" means those monies (i) received
by an insured from an insurance carrier or (ii) paid by an
insurance carrier on behalf of the insured, in either case
net of any applicable premium adjustments (including
reserves), retrospectively rated premium adjustments,
deductibles, retentions and costs paid by such insured.
"Insurance Program" means, collectively, the series of
policies pursuant to which various insurance carriers
provide insurance coverage to Pathmark in respect of claims
or occurrences relating to, without limitation, property
damage, business interruption, transit, fire, extended
coverage, fiduciary, fidelity, environmental impairment,
employee crime, general liability, products' liability,
automobile liability and employer's liability.
"IRS" means the United States Internal Revenue
Service.
"Law" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order,
other requirement or rule of law.
"Liabilities" means any and all debts, liabilities,
and obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured, or determined or
undeterminable, including, without limitation, those
arising under any Law (including, without limitation, any
environmental Law), Action, or Governmental Order and those
arising under any contract, agreement, arrangement,
commitment, or undertaking.
"Logistical Services Agreement" means the Logistical
Services Agreement, to be dated as of the Distribution
Date, between Pathmark and Plainbridge, substantially in
the form of Annex C.
<PAGE>
"Losses" means any and all losses, Liabilities,
claims, damages, obligations, payments, costs and expenses,
matured or unmatured, absolute or contingent, accrued or
unaccrued, liquidated or unliquidated, known or unknown
(including, without limitation, the costs and expenses of
any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises
relating thereto and attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or
defending against any such Actions or threatened Actions).
"Pathmark" has the meaning specified in the preamble
to this Agreement.
"Pathmark Subsidiary" means any Subsidiary of Pathmark
other than Plainbridge or any Plainbridge Subsidiary.
"Person" means any individual, partnership, firm,
corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or
group that would be deemed to be a person under Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Plainbridge" has the meaning specified in the
preamble to this Agreement.
"Plainbridge Class A Common Stock" has the meaning
specified in the recitals to this Agreement.
"Plainbridge Subsidiary" means any Subsidiary of
Pathmark that will become a Subsidiary of Plainbridge
immediately following the Asset and Liability Transfer, and
any other Subsidiary of Plainbridge that thereafter may be
organized or acquired by Plainbridge.
"Prospectuses" means the prospectuses included in the
Registration Statements, as supplemented and filed with the
United States Securities and Exchange Commission pursuant
to Rule 424(b) promulgated under the Securities Act of
1933, as amended.
"Registration Statements" has the meaning specified in
the recitals to this Agreement.
"Related Agreements" means, collectively, the Rickel
Services Agreement, the Logistical Services Agreement,
the Blair Services Agreement and the Tax Indemnity Agreement.
<PAGE>
"Reorganization" has the meaning specified in the
recitals to this Agreement.
"Rickel Services Agreement" means the Rickel Services
Agreement, to be dated as of the Distribution Date, between
Pathmark and Plainbridge, substantially in the form of
Annex A.
"Services Agreements" means, collectively, the Rickel
Services Agreement and the Blair Services Agreement.
"SGHC" has the meaning specified in the recitals to
this Agreement.
"Subsidiary" of a Person means any corporation,
partnership, joint venture, association or other entity
controlled by such Person directly or indirectly through
one or more intermediaries.
"Tax" means all federal, state, local, foreign and
other income, gross receipts, alternative or added on
minimum, gains, sales, use, employment, franchise, profits,
excise, payroll, social security (or similar), property
(real or personal), value added, license, registration or
other taxes, fees, stamp taxes and duties, assessments or
charges of any kind whatsoever (whether payable directly or
by withholding), together with any interest and penalties,
additions to tax or additional amounts imposed by any
taxing authority with respect thereto.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement, to
be dated as of the Distribution Date, between Pathmark and Plainbridge,
substantially in the form of Annex D.
"Transfer Date" means the date on which the Asset and
Liability Transfer shall occur.
"Transfer Instruments" means, collectively, the
various agreements, instruments and other documents to be
entered into in order to effect the Asset and Liability
Transfer.
"Transferred Assets" means, collectively, all the
assets and properties of Pathmark identified on Schedule I.
"Transferred Businesses" has the meaning specified in
the recitals to this Agreement.
<PAGE>
ARTICLE II
THE REORGANIZATION
SECTION 2.01. The Asset and Liability Transfer.
Subject to Section 2.04(a), Pathmark and Plainbridge shall use
their respective best efforts to cause, prior to the
Distribution, (i) all of Pathmark's right, title and interest
in and to the Transferred Assets to be conveyed, assigned,
transferred and delivered to Plainbridge, and (ii) all of
Pathmark's duties, obligations and responsibilities in respect
of the Assumed Liabilities to be assumed by Plainbridge.
Except as otherwise expressly provided in this Agreement or the
Related Agreements, Plainbridge shall, following the Asset and
Liability Transfer, assume, perform, pay, and discharge when
due, any and all of the Assumed Liabilities. Subject to
Section 3.03, to the extent that any such conveyances,
assignments, transfers and deliveries shall not have been so
consummated prior to the Distribution, Pathmark and Plainbridge
shall cooperate to effect such consummation as promptly
thereafter as shall be practicable, it nonetheless being
understood and agreed by Pathmark and Plainbridge that neither
shall be liable in any manner to any Person who is not a party
to this Agreement for any failure of any of the transfers
contemplated by this Article II to be consummated prior to, on
the date of or subsequent to the Distribution. Whether or not
all the Transferred Assets or the Assumed Liabilities shall
have been legally transferred to or assumed by Plainbridge
prior to the Distribution Date, Pathmark and Plainbridge agree
that, as of the Transfer Date, Plainbridge shall have, and
shall be deemed to have acquired, complete and sole ownership
of all the Transferred Assets, except as described herein with
respect to assets that are non-assignable, together with all of
Pathmark's rights, powers and privileges (except as provided in
Section 5.06) incidental thereto, and shall be deemed to have
assumed in accordance with the terms of this Agreement all the
Assumed Liabilities and all of Pathmark's duties, obligations
and responsibilities incidental thereto.
SECTION 2.02. The Distribution. Subject to Section
2.04(b), Pathmark shall, on the Distribution Date, deliver to
Holdings stock certificates evidencing all the shares of
Plainbridge Class A Common Stock then owned by Pathmark. The
Board of Directors of Pathmark shall in its discretion
establish the Distribution Date and all appropriate procedures
in connection with the Distribution. The Distribution shall be
effective as of 5:00 P.M., New York City time, on the
Distribution Date. Plainbridge shall provide to Pathmark any
information required in order to complete the Distribution.
<PAGE>
SECTION 2.03. Cooperation Prior to the Distribution.
Holdings, Pathmark and Plainbridge shall cooperate with each
other in effecting, and (i) if so requested by Pathmark,
Holdings shall, as the sole stockholder of Pathmark, (ii) if so
requested by Plainbridge, Pathmark shall, as the sole
stockholder of Plainbridge prior to the Distribution Date, and
(iii) Holdings shall, as the sole stockholder of Plainbridge
after the Distribution Date, approve or ratify, as the case may
be, any actions that are reasonably necessary or desirable to
be taken by Holdings, Pathmark or Plainbridge, as the case may
be, to effectuate the transactions referenced in or
contemplated by this Agreement or the Related Agreements in a
manner consistent with the terms of such agreements, including,
without limitation, the preparation and implementation of
appropriate plans, agreements, and arrangements for the
establishment of, or amendments to, any employee benefit and
other plans contemplated by this Agreement.
SECTION 2.04. Conditions Precedent. (a) The
obligations of Pathmark and Plainbridge to effect the Asset and
Liability Transfer are subject to the satisfaction or waiver at
or prior to the Transfer Date of each of the following
conditions:
(i) This Agreement, the Related Agreements and the
consummation of each of the transactions provided for
herein and therein shall have been approved by the Boards
of Directors of Holdings, Pathmark and Plainbridge, as
applicable.
(ii) All authorizations, consents, approvals, and
clearances of all federal, state, and local governmental
agencies required to permit the valid consummation of the
Asset and Liability Transfer shall have been obtained
without any conditions being imposed that would have a
material adverse effect on Pathmark or Plainbridge.
(iii) No action shall have been instituted or
threatened by or before any court or administrative body to
restrain, enjoin, or otherwise prevent the Asset and
Liability Transfer, and no restraining order or injunction
issued by any court of competent jurisdiction shall be in
effect restraining the Asset and Liability Transfer.
(b) Upon the consummation of the Asset and Liability
Transfer, the obligation of Pathmark to effect the Distribution
is subject to the satisfaction or waiver at or prior to the
Distribution Date of each of the following conditions:
<PAGE>
(i) Plainbridge shall have obtained commitments
satisfactory to it for a bank credit facility or other
financing for an aggregate principal amount of at least $50
million.
(ii) All authorizations, consents, approvals, and
clearances of all federal, state, and local governmental
agencies required to permit the valid consummation of the
Distribution shall have been obtained without any
conditions being imposed that would have a material adverse
effect on Holdings, Pathmark or Plainbridge.
(iii) Pathmark shall have received an opinion of
Shearman & Sterling, counsel to Pathmark, and of Deloitte &
Touche, independent accountants of Pathmark, dated as of
the Distribution Date, in form satisfactory to Pathmark, to
the effect that no income, gain or loss should be
recognized by Pathmark or its stockholders upon the
Distribution and that the Distribution should constitute a
tax-free distribution under Section 355 of the Code.
(iv) No action shall have been instituted or
threatened by or before any court or administrative body to
restrain, enjoin, or otherwise prevent the Distribution,
and no restraining order or injunction issued by any court
of competent jurisdiction shall be in effect restraining
the Distribution.
ARTICLE III
CERTAIN MATTERS RELATING TO THE REORGANIZATION
SECTION 3.01. Transfer Instruments. Subject to
Section 2.04(a), Pathmark and Plainbridge agree to execute or
cause to be executed and to deliver the Transfer Instruments.
SECTION 3.02. No Representations or Warranties.
Plainbridge understands and agrees that Pathmark does not
represent or warrant in any way, and shall not be deemed or
implied to represent or warrant in any way, in this Agreement
or in any other agreement or document contemplated by this
Agreement, as to (a) the value or freedom from encumbrance of,
or any other matter concerning, any Transferred Asset or (b)
the legal sufficiency to convey title to any Transferred Asset
by the execution, delivery, and filing of the Transfer
Instruments, IT BEING UNDERSTOOD AND AGREED THAT ALL SUCH
ASSETS ARE BEING TRANSFERRED "AS IS, WHERE IS" and that
Plainbridge shall bear the economic and legal risk that any
<PAGE>
conveyances of the Transferred Assets shall be insufficient or
that Plainbridge's title to any Transferred Assets shall be
other than good and marketable and free from encumbrances.
Similarly, Plainbridge understands and agrees that Pathmark
does not represent or warrant in any way, in this Agreement or
in any other agreement or document contemplated by this
Agreement, that the obtaining of the consents and approvals,
the execution and delivery of any amendatory agreements, or the
makings of the filings and applications contemplated by this
Agreement shall satisfy the provisions of all applicable
agreements or the requirements of all applicable Laws, it being
understood and agreed that, subject to Section 3.03(b) hereof,
Plainbridge shall bear the economic and legal risk that any
necessary consents or approvals are not obtained or that any
requirements of Law are not complied with.
SECTION 3.03. Further Assurances and Consents.
(a) Each of Pathmark and Plainbridge shall execute and deliver
such further instruments of conveyance, transfer and assignment
and shall take such other actions as each of them may
reasonably request of the other in order to effectuate the
purposes of this Agreement and to carry out the terms hereof.
Without limiting the generality of the foregoing, at any time
and from time to time after the Transfer Date, at the request
of Plainbridge and without further consideration, Pathmark
shall execute and deliver to Plainbridge such other instruments
of transfer, conveyance, assignment and confirmation and take
such action as Plainbridge may reasonably deem necessary or
desirable in order to more effectively transfer, convey and
assign to Plainbridge and to confirm Plainbridge's title to all
the Transferred Assets, to put Plainbridge in actual possession
and operating control thereof and to permit Plainbridge to
exercise all rights with respect thereto (including, without
limitation, rights under contracts and other arrangements as to
which the consent of any third party to the transfer thereof
shall not have previously been obtained), and Plainbridge shall
execute and deliver to Pathmark all instruments, undertakings
and other documents and take such other actions as Pathmark may
reasonably deem necessary or desirable in order for Plainbridge
to assume fully the Assumed Liabilities and relieve Pathmark of
all Liabilities and obligations with respect thereto and
evidence the same to third parties. Notwithstanding the
foregoing, Pathmark and Plainbridge shall not be obligated, in
connection with the foregoing, to expend monies other than
reasonable out-of-pocket expenses and attorneys' fees.
<PAGE>
(b) Pathmark and Plainbridge shall use their best
efforts to obtain all consents, approvals and amendments
required to novate or assign all agreements, leases, licenses
and other rights of any nature whatsoever relating to the
Transferred Assets to Plainbridge; provided, however, that
Pathmark shall not be obligated to pay any consideration
therefor (except for filing fees and other administrative
charges) to the third party from whom such consents, approvals
and amendments are requested. In the event and to the extent
that Pathmark is unable to obtain any such required consent,
approval or amendment (i) Pathmark shall continue to be bound
thereby and (ii) unless not permitted by law or the terms
thereof, Plainbridge shall pay, perform and discharge fully all
the obligations of Pathmark thereunder from and after the
Transfer Date and indemnify Pathmark for all Indemnifiable
Losses arising out of such performance by Plainbridge, and
Pathmark shall, without further consideration therefor, pay and
remit to Plainbridge promptly all monies, rights and other
consideration received in respect of such performance.
Pathmark shall exercise or exploit its rights and options under
all such agreements, leases, licenses and other rights and
commitments referred to in this Section 3.03(b) only as
reasonably directed by Plainbridge and at Plainbridge's
expense. If and when any such consent shall be obtained or
such agreement, lease, license or other right shall be obtained
or such agreement, lease, license or other right shall
otherwise become assignable or able to be novated, Pathmark
shall promptly assign and novate all its rights and obligations
thereunder to Plainbridge without payment of further
consideration and Plainbridge shall, without the payment of any
further consideration therefor, assume such rights and
obligations. To the extent that the assignment of any
agreement, lease, license or other right (or any proceeds
therefrom) pursuant to this Section 3.03(b) is prohibited by
law, the assignment provisions of this Section 3.03 shall
operate to create a subcontract with Plainbridge to perform
each relevant unassignable Pathmark contract or agreement at a
subcontract price equal to the monies, rights and other
considerations received by Pathmark with respect to the
performance by Plainbridge under such subcontract.
SECTION 3.04. Sales and Transfer Taxes.
(a) Plainbridge and Pathmark agree to cooperate to determine
the amount of sales, transfer and other taxes and fees
(including, without limitation, all real estate, copyright and
trademark transfer taxes and recording fees) payable in
connection with the Asset and Liability Transfer (the "Asset
and Liability Transfer Transaction Taxes"). Pathmark agrees to
file promptly and timely the returns for such Asset and
<PAGE>
Liability Transfer Transaction Taxes with the appropriate
taxing authorities and remit payment of the Asset and Liability
Transfer Transaction Taxes, and Plainbridge shall join in the
execution of any such tax returns or other documentation as
appropriate.
(b) Pathmark and Plainbridge agree to cooperate to
determine the amount of sales, transfer and other taxes and
fees (including, without limitation, all real estate, copyright
and trademark transfer taxes and recording fees) payable in
connection with the Distribution (the "Distribution Transaction
Taxes"). Pathmark agrees to file promptly and timely the
returns for such Distribution Transaction Taxes with the
appropriate taxing authorities and remit payment of the
Distribution Transaction Taxes, and Plainbridge shall join in
the execution of any such tax returns or other documentation as
appropriate.
SECTION 3.05. Proration of Taxes, Lease and Utility
Payments. All real property, personal property and similar
taxes and installments of general and special assessments, if
any, with respect to the Transferred Assets shall be prorated
on the basis of actual days elapsed between the commencement of
the relevant fiscal tax year and the Transfer Date, based on a
365-day year and the most recent tax statements or bills
applicable thereto, without later adjustment. Any installment
of rental payments with respect to leases that are part of the
Transferred Assets or utility or similar periodic charges
incurred by the Transferred Businesses which are payable with
respect to the current period in which the Transfer Date occurs
shall be prorated between Pathmark and Plainbridge on the basis
of actual days elapsed from the first day of the relevant
period to the Transfer Date. Pathmark shall be responsible for
all such taxes, payments and charges allocable to all times
prior to and including the Transfer Date and Plainbridge shall
be responsible for all such taxes, payments and charges
allocable to all times after the Transfer Date. Following the
Transfer Date, each of Pathmark and Plainbridge (each, for
purposes of this Section 3.05, a "party") shall, upon the
request of the other party, immediately reimburse the other
party for any such taxes, payments and charges or other
expenses for which said party is responsible but have been paid
by or are owed by the other party and for collections made by
one party on behalf of the other party.
SECTION 3.06. Signs; Use of Pathmark Name. (a)
Except as provided in Section 3.06(b) or as otherwise agreed to
by Pathmark, within 120 days after the Distribution Date,
Plainbridge, at its own expense, shall remove (or, if
<PAGE>
necessary, on an interim basis, cover up) any and all exterior
and interior signs and identifiers which refer or pertain to
Pathmark at the Transferred Businesses. After such period,
Plainbridge shall not and shall cause each of its Subsidiaries
not to use or display the name "Pathmark" or other trademarks,
tradenames or their identifiers owned by Pathmark that have not
been assigned or licensed to Plainbridge or such Subsidiaries
("Non-Permitted Names"), without the prior written consent of
Pathmark.
(b) Plainbridge shall be permitted to continue to use
and display the name "Pathmark" on vehicles used in the
distribution of merchandise to retail grocery and other stores;
provided, however, that such right is subject to revocation by
Pathmark 90 days after written notice of such revocation has
been delivered by Pathmark to Plainbridge.
SECTION 3.07. Products, Supplies and Documents.
Plainbridge shall have the right to use existing products,
supplies and documents (including, but not limited to, purchase
orders, forms, labels, shipping materials, catalogues, sales
brochures, operating manuals, instructional documents and
similar materials, and advertising material) being transferred
to it pursuant to this Agreement which have imprinted thereon
the name "Pathmark" or trademarks, logotypes or variations
comprising the name "Pathmark" or a Non-Permitted Name, for a
period not to exceed six months following the Distribution Date
(or for such longer period as necessary to fulfill existing
contractual relationships under contracts which have not been
novated), provided that Plainbridge agrees (i) to use only such
supplies and documents existing in inventory as of the Transfer
Date, (ii) to conspicuously state on such supplies and
documents when used that they are no longer documents of
Pathmark and (iii) not to order or utilize in any manner any
additional supplies and documents containing the name
"Pathmark". This Section 3.07 shall not apply to merchandise
labeled with the Pathmark name that is to be handled by
Plainbridge for Pathmark pursuant to the Logistical Services
Agreement.
SECTION 3.08. Plant Closings and Layoffs.
Plainbridge agrees that it shall not, at any time during the
90-day period following the Transfer Date, (i) effectuate a
"plant closing" as defined in the Worker Adjustment and
Retraining Notification Act of 1988, as amended (the "WARN
Act"), affecting any site of employment or operating units
within any site of employment of the Transferred Businesses or
(ii) take any action to precipitate a "mass layoff" as defined
in the WARN Act. Plainbridge agrees to indemnify Pathmark and
to defend and hold Pathmark harmless from and
<PAGE>
against any and all claims, losses, damages, expenses,
obligations and liabilities (including attorneys' fees and
other costs of defense) that Pathmark may incur in connection
with any suit or claim of violation brought against Pathmark
under the WARN Act, that relate, in whole or in part, to
actions taken by Plainbridge or any Plainbridge Subsidiary with
regard to any site of employment operated by Plainbridge or any
Plainbridge Subsidiary.
SECTION 3.09. Competition. Except as otherwise
provided in the Logistical Services Agreement, Pathmark and
Plainbridge expressly acknowledge that Pathmark and Plainbridge
may, after the Transfer Date, engage, either directly or
through their Subsidiaries and Affiliates, in certain
activities that may compete with the business of Plainbridge or
Pathmark, as the case may be, and nothing contained in this
Agreement shall be construed in such a manner as to prohibit
Pathmark or Plainbridge or any of their Subsidiaries or
Affiliates from engaging in such activities.
SECTION 3.10. Insurance. (a) Plainbridge
understands that to the extent that the applicable insurance
policy or policies in the Insurance Program may be amended,
Pathmark is transferring or adding coverage under its Insurance
Program with respect to the Transferred Assets and Transferred
Businesses as of the Transfer Date. Plainbridge shall
reimburse Pathmark for the cost of such transferred or added
coverage pursuant to the Services Agreements. To the extent
that the applicable policy or policies in the Insurance Program
may not be amended so as to transfer or add coverage under the
Insurance Program with respect to the Transferred Assets and
the Transferred Businesses, Pathmark shall assist Plainbridge
in obtaining initial insurance coverage for Plainbridge from
and after the Transfer Date in such amounts as are agreed to by
the parties. Pathmark's Insurance Program will allow
Plainbridge to make claims for any occurrence (an "Occurrence"
as defined in the applicable insurance policy or policies in
the Insurance Program) on or prior to the Transfer Date.
Following the Transfer Date, Pathmark and Plainbridge shall
cooperate with and assist each other in the prevention of
conflicts or gaps in insurance coverage and collection of
proceeds.
(b) Pathmark and Plainbridge agree that Plainbridge
shall have the right to present claims to Pathmark or
Pathmark's insurers under all policies of insurance placed by
Pathmark on Plainbridge's behalf, or which include Plainbridge
within them, for insured incidents occurring from the date such
coverage first commenced until the Transfer Date. The parties
agree that any such policies written on a
<PAGE>
"claims made" rather than "occurrence" basis may not provide
coverage to Plainbridge for incidents occurring prior to the
Transfer Date but which are first reported after the Transfer
Date.
(c) Pathmark agrees that with respect to claims made
prior to the Transfer Date by Pathmark and claims made
following the Transfer Date at Plainbridge's request for
Occurrences that, in either case, relate to the Transferred
Businesses, it will use its reasonable efforts to obtain
recoveries for Plainbridge and that it will reimburse
Plainbridge for any recovery obtained by it pursuant to such
claims; provided, however, that notwithstanding the foregoing,
if Pathmark has made a claim or claims under an insurance
policy that is not to be paid to Plainbridge pursuant to this
Section 3.10(c) and a claim or claims that are to be paid to
Plainbridge pursuant to this Section 3.10(c) and the amount of
the recovery for such claims in the aggregate is limited by the
amount of coverage provided by such policy, Pathmark may use
its reasonable discretion in allocating the recovery between it
and Plainbridge for such claims. Plainbridge shall pay all
costs incurred by Pathmark after the Transfer Date in making
any claim pursuant to this Section 3.10(c), including the
salaries of its officers and employees based on the portion of
time spent on such claims and that such costs incurred in
pursuing a claim may be deducted from any recovery for such
claim and Plainbridge agrees to make available to Pathmark such
of its employees as Pathmark may reasonably request as
witnesses or deponents in connection with Pathmark's management
of claims, at Plainbridge's sole cost and expense.
(d) With respect to any insured Losses or retroactive
premium adjustments relating to assets or operations of
Plainbridge or any Plainbridge Subsidiary prior to the Transfer
Date or such later date as may be agreed to pursuant to Section
3.03(a): (i) Pathmark shall pay over to Plainbridge any
Insurance Proceeds it receives on account of such Losses and
any such retroactive premium reductions; and (ii) Plainbridge
and the Plainbridge Subsidiaries shall reimburse Pathmark for
all costs and expenses incurred and payments made by Pathmark
after the Transfer Date to insurers on account of such Losses
(including, without limitation, any self-insured retention
payments) and any such retroactive premium increases.
<PAGE>
ARTICLE IV
INDEMNIFICATION
SECTION 4.01. Indemnification by Pathmark. Except
with respect to insurance claims, which shall be governed by
Sections 3.10 and 4.03, Pathmark shall indemnify, defend, and
hold harmless Plainbridge, each Affiliate of Plainbridge, and
each of their respective directors, officers, and employees and
each of the heirs, executors, successors, and assigns of any of
the foregoing (the "Transferee Indemnitees") from and against
any and all Losses of the Plainbridge Indemnitees arising out
of or due to, directly or indirectly, (i) all Losses arising
out of any business conducted or to be conducted by Pathmark or
any Pathmark Subsidiary, whether such Losses relate to events
occurring, or whether such Losses are asserted, before or after
the Transfer Date, excluding the Transferred Businesses to be
conducted by Plainbridge (whether directly or through a
subsidiary or Affiliate of Plainbridge) and the Transferred
Assets, (ii) any claim that (A) the Registration Statements, at
the time the Registration Statements became effective,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (B)
the Prospectuses, at the time the Prospectuses were first filed
pursuant to Rule 424(b) promulgated under the Securities Act of
1933, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading and
(iii) any failure by Pathmark to perform or otherwise comply
with any provision of this Agreement, the Related Agreements or
any other agreement to be entered into in connection with this
Agreement that calls for performance or compliance by Pathmark.
Anything in this Section 4.01 to the contrary notwithstanding,
neither Pathmark nor any Pathmark Subsidiary shall have any
liability whatsoever to either Plainbridge or any Plainbridge
Subsidiary in respect of any Tax except as otherwise provided
in Section 3.04, 3.05 or 4.03 or the Tax Indemnity Agreement.
SECTION 4.02. Indemnification by Plainbridge. Except
with respect to insurance claims, which shall be governed by
Sections 3.10 and 4.03, Plainbridge shall indemnify, defend and
hold harmless Pathmark, each Affiliate of Pathmark and each of
their respective directors, officers and employees and each of
the heirs, executors, successors and assigns of any of the
foregoing (the "Pathmark Indemnitees") from and against any and
all Losses of the Pathmark Indemnitees arising out of or due to
the failure or alleged failure of Plainbridge or any of its
Affiliates to
<PAGE>
pay, perform or otherwise discharge in due course (i) all
Losses arising out of the Transferred Businesses and the
Transferred Assets (whether directly or through an Affiliate of
Plainbridge or a Plainbridge Subsidiary), whether such Losses
relate to events occurring, or whether such Losses are
asserted, before, on or after the Transfer Date, (ii) all
Losses arising out of any guarantees or obligations to third
parties of Pathmark or any Pathmark Subsidiary with respect to
any obligations of Plainbridge or any Plainbridge Subsidiary to
third parties and (iii) any failure by Plainbridge to perform
or otherwise comply with any provision of this Agreement, the
Related Agreements or any other agreement to be entered into in
connection with this Agreement which calls for performance or
compliance by Plainbridge. Anything in this Section 4.02 to
the contrary notwithstanding, neither Plainbridge nor any
Plainbridge Subsidiary shall have any liability whatsoever to
either Pathmark or any Pathmark Subsidiary in respect of any
Tax, except as otherwise provided in Section 3.05 or 4.03
or the Tax Indemnity Agreement.
SECTION 4.03. Limitations on and Adjustments to
Indemnification Obligations. (a) The amount that Pathmark or
Plainbridge, as the case may be (an "Indemnifying Party"), is
or may be required to pay to any Person (an "Indemnitee")
pursuant to Section 4.01 or Section 4.02 (an "Indemnity
Payment") shall be reduced (including, without limitation,
retroactively) by any Insurance Proceeds or other amounts
actually recovered by or on behalf of such Indemnitee, in
reduction of the related Loss. If an Indemnitee shall have
received the payment required by this Agreement from an
Indemnifying Party in respect of any Loss and shall
subsequently actually receive Insurance Proceeds or other
amounts in respect of such Loss, then such Indemnitee shall pay
to such Indemnifying Party a sum equal to the amount of such
Insurance Proceeds or other amounts actually received (up to
but not in excess of the amount of any indemnity payment made
hereunder). An insurer who would otherwise be obligated to pay
any claim shall not be relieved of the responsibility with
respect thereto, or, solely by virtue of the indemnification
provisions hereof, have any subrogation rights with respect
thereto, it being expressly understood and agreed that no
insurer or any other third party shall be entitled to a
"windfall" (i.e., a benefit they would not be entitled to
receive in the absence of such indemnification provisions) by
virtue of the indemnification provisions hereof. Each
Indemnitee agrees that each Indemnifying Party shall be
subrogated to such Indemnitee under any insurance policy.
<PAGE>
(b) (i) If an Indemnitee receives a tax saving by
reason of having incurred an Indemnifiable Loss for which such
Indemnitee shall have received an Indemnity Payment from an
Indemnifying Party, then such Indemnitee shall pay to such
Indemnifying Party an amount equal to such tax saving. For
purposes of this Section 4.03(b), an Indemnitee shall be deemed
to have received a tax saving with respect to an Indemnifiable
Loss if, upon the filing of a federal, state or local income
tax return for a taxable year ending on or after the Transfer
Date (the "Indemnity Return"), an amount attributable to an
Indemnifiable Loss (the "Indemnifiable Loss Deduction") is
deductible by the Indemnitee or any of its wholly owned
Subsidiaries and an amount attributable to the Indemnity
Payment is not includible in gross income by the Indemnitee or
any of its wholly owned Subsidiaries. If the Indemnity Payment
is includible in gross income by the Indemnitee or if the
Indemnifying Party claims as a deductible expense or loss an
amount attributable to the Indemnity Payment, Indemnitee shall
be deemed to have not received a tax saving with respect to an
Indemnifiable Loss. Both Pathmark and Plainbridge shall act in
good faith to coordinate their tax return filing positions with
respect to Indemnity Payments for the periods that include an
Indemnity Payment.
(ii) In the event that an Indemnitee will receive a
tax saving by reason of an Indemnifiable Loss, such Indemnitee
shall pay the Indemnifying Party within 30 days after the
filing of an Indemnity Return, a sum equal to the Indemnifiable
Loss Deduction multiplied by an amount equal to A + [(1 - A) x
.05], where A equals the highest marginal corporate federal
income tax rate applicable to corporations taxable under
Subchapter C of the Code on the date the Indemnity Return is
filed (the "Tax Saving Amount").
(iii) In the event that an Indemnitee may receive a tax
saving by reason of an Indemnifiable Loss, such Indemnitee
shall adopt in good faith a reasonable tax return filing
position so as to report the Indemnifiable Loss Deduction on
such returns. The Indemnitee shall have the sole
responsibility for the preparation of its tax returns and
reporting thereon such Indemnifiable Loss Deduction. If a
dispute arises between the Indemnitee and the Indemnifying
Party as to the reasonableness of an Indemnity Return filing
position with respect to an Indemnifiable Loss Deduction, such
dispute shall be resolved by a nationally recognized public
accounting firm selected and approved by both the Indemnitee
and the Indemnifying Party. The cost of retaining such firm
shall be shared by the Indemnitee and the Indemnifying Party
equally, and the decision of the accounting firm shall be
binding on the parties.
<PAGE>
(iv) There shall be an adjustment to any Tax Saving
Amount calculated under Section 4.03(b)(ii) in the event of an
audit or other proceeding which results in a Final
Determination that increases or decreases the amount of the
Indemnifiable Loss Deduction reported on the Indemnity Tax
Return by the Indemnitee. The Indemnitee shall promptly inform
the Indemnifying Party of any such audit or proceeding and
shall attempt in good faith to sustain the tax saving at issue.
Upon receiving a written notice of a Final Determination in
respect of an Indemnitee Loss Deduction, the Indemnitee shall
redetermine the Tax Saving Amount attributable to the
Indemnifiable Loss Deduction under the tax saving calculation
of Section 4.03(b)(ii), taking into account the Final
Determination (the "Restated Tax Saving Amount"). If the
Restated Tax Saving Amount is greater than the Tax Saving
Amount, the Indemnitee shall pay the Indemnifying Party a sum
equal to the difference between such amounts, within 30 days
after receiving written notice of the Final Determination. If
the Restated Tax Saving Amount is less than the Tax Saving
Amount, then the Indemnifying Party shall pay the Indemnitee,
within 30 days of receiving written notice from the Indemnitee
of the Final Determination, an amount equal to the sum of (A)
the difference between such amounts, and (B) any interest or
penalty assessed against the Indemnitee by a tax authority
which is attributable to any tax assessed as a result of a
reduction in the Indemnifiable Loss Deduction effected by the
Final Determination.
SECTION 4.04. Procedures for Indemnification of Third
Party Claims. The procedures for Indemnification of Third
Party Claims (as defined below) shall be as follows:
(a) If an Indemnitee shall receive notice or
otherwise learn of the assertion by a Person (including,
without limitation, any Governmental Authority) who is not a
party to this Agreement of any claim or of the commencement
by any such Person of any Action (a "Third Party Claim")
with respect to which an Indemnifying Party may be
obligated to provide indemnification pursuant to this
Agreement, such Indemnitee shall give such Indemnifying
Party written notice thereof promptly after becoming aware
of such Third Party Claim; provided, however, that the
failure of an Indemnitee to give notice as provided in this
Section 4.04(a) shall not relieve the related Indemnifying
Party of its obligations under this Article IV, except to
the extent that such Indemnifying Party is prejudiced by
such failure to give notice. Such notice shall describe
the Third Party Claim in reasonable detail and, if
ascertainable, shall indicate the amount (estimated if
necessary) of the Loss that has been or may be sustained.
<PAGE>
(b) An Indemnifying Party may elect to defend or to
seek to settle or compromise, at such Indemnifying Party's
own expense and by such Indemnifying Party's own counsel,
any Third Party Claim. Within 30 days of the receipt of
notice from an Indemnitee in accordance with Section
4.04(a) (or sooner, if the nature of such Third Party Claim
so requires), the Indemnifying Party shall notify the
Indemnitee of its election whether the Indemnifying Party
will assume responsibility for defending such Third Party
Claim, which election shall specify any reservations or
exceptions. After notice from an Indemnifying Party to an
Indemnitee of its election to assume the defense of a Third
Party Claim, such Indemnifying Party shall not be liable to
such Indemnitee under this Article IV for any legal or
other expenses (except expenses approved in advance by the
Indemnifying Party) subsequently incurred by such
Indemnitee in connection with the defense thereof;
provided, however, that if the defendants in any such claim
include both the Indemnifying Party and one or more
Indemnitees and in any Indemnitee's reasonable judgment a
conflict of interest between one or more of such
Indemnitees and such Indemnifying Party exists in respect
of such claim or if the Indemnifying Party shall have
assumed responsibility for such claim with any reservations
or exceptions, such Indemnitees shall have the right to
employ separate counsel to represent such Indemnitees and
in that event the reasonable fees and expenses of such
separate counsel (but not more than one separate counsel,
other than local counsel, reasonably satisfactory to the
Indemnifying Party) shall be paid by such Indemnifying
Party. If an Indemnifying Party elects not to assume
responsibility for defending a Third Party Claim, or fails
to notify an Indemnitee of its election as provided in this
Section 4.04(b), such Indemnitee may defend or (subject to
the remainder of this Section 4.04(b)) seek to compromise
or settle such Third Party Claim. Notwithstanding the
foregoing, neither an Indemnifying Party nor an Indemnitee
may settle or compromise any claim over the objection of
the other; provided, however, that consent to settlement or
compromise shall not be unreasonably withheld. Neither an
Indemnifying Party nor an Indemnitee shall consent to entry
of any judgment or enter into any settlement of any Third
Party Claim which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
Indemnitee, in the case of a consent or settlement by an
Indemnifying Party, or the Indemnifying Party, in the case
of a consent or settlement by the Indemnitee, of a written
release from all liability in respect of such Third Party
Claim.
<PAGE>
(c) If an Indemnifying Party chooses to defend or to
seek to compromise or settle any Third Party Claim, the
related Indemnitee shall make available to such
Indemnifying Party all personnel and all books, records or
other documents within its control or which it otherwise
has the ability to make available that are necessary or
appropriate for such defense, settlement or compromise, and
shall otherwise cooperate in the defense, settlement or
compromise of such Third Party Claims.
(d) Notwithstanding anything else in this Section
4.04 to the contrary, if an Indemnifying Party notifies the
related Indemnitee in writing of such Indemnifying Party's
desire to settle or compromise a Third Party Claim on the
basis set forth in such notice (provided that such
settlement or compromise includes as an unconditional term
thereof the giving by the claimant or plaintiff of a
written release of the Indemnitee from all liability in
respect thereof) and the Indemnitee shall notify the
Indemnifying Party in writing that such Indemnitee declines
to accept any such settlement or compromise, such
Indemnitee may continue to contest such Third Party Claim,
free of any participation by such Indemnifying Party, at
such Indemnitee's sole expense. In such event, the
obligation of such Indemnifying Party to such Indemnitee
with respect to such Third Party Claim shall be equal to
the sum of (i) the costs and expenses of such Indemnitee
prior to the date such Indemnifying Party notifies such
Indemnitee of the offer to settle or compromise (to the
extent such costs and expenses are otherwise indemnifiable
hereunder) and (ii) the lesser of (A) the amount of any
offer of settlement or compromise which such Indemnitee
declined to accept and (B) the actual out-of-pocket amount
such Indemnitee is obligated to pay subsequent to such date
as a result of such Indemnitee's continuing to pursue such
Third Party Claim.
(e) Any claim on account of a Loss that does not
result from a Third Party Claim shall be asserted by
written notice given by the Indemnitee to the related
Indemnifying Party. Such Indemnifying Party shall have a
period of 30 days after the receipt of such notice within
which to respond thereto. If such Indemnifying Party does
not respond within such 30-day period, such Indemnifying
Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party
does not respond within such 30-day period or rejects such
claim in whole or in part, such Indemnitee shall be free to
pursue such remedies as may be available to such party
under this Agreement or under applicable law.
<PAGE>
(f) In addition to any adjustments required pursuant
to Section 4.03, if the amount of any Loss shall, at any
time subsequent to the payment required by this Agreement,
be reduced by recovery, settlement or otherwise, the amount
of such reduction, less any expenses incurred in connection
therewith, shall promptly be repaid by the Indemnitee to
the Indemnifying Party.
(g) In the event of payment by an Indemnifying Party
to any Indemnitee in connection with any Third Party Claim,
such Indemnifying Party shall be subrogated to and shall
stand in the place of such Indemnitee as to any events or
circumstances in respect of which such Indemnitee may have
any right or claim relating to such Third Party Claim
against any claimant or plaintiff asserting such Third
Party Claim or against any other Person. Such Indemnitee
shall cooperate with such Indemnifying Party in a
reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or
claim.
Section 4.05. Remedies Cumulative. The remedies
provided in this Article IV shall be cumulative and shall not
preclude assertion by any Indemnitee of any other rights or the
seeking of any and all other remedies against any Indemnifying
Party.
SECTION 4.06. Survival of Indemnities. The
obligations of Pathmark and Plainbridge under this Article IV
shall survive the sale or other transfer by either of them of
any assets or businesses or the assignment by either of them of
any Liabilities, with respect to any Loss of the other related
to such assets, businesses or Liabilities.
ARTICLE V
ACCESS TO INFORMATION
SECTION 5.01. Provision of Books and Records. As
soon as practicable after the Transfer Date, Pathmark shall
deliver to Plainbridge all books and records that relate
exclusively to the Transferred Businesses and the Transferred
Assets or are necessary for Plainbridge to operate the
Transferred Businesses and the Transferred Assets, including,
without limitation, all such books and records relating to
transferred employees, the purchase of materials, supplies, and
services, and dealings with customers and suppliers of the
Transferred Businesses and all files relating to any Action
being assumed by Plainbridge as part of the Assumed
Liabilities; provided, however, that Pathmark shall retain such
books and records as may be reasonably needed by it for the
provision of services by Pathmark to Plainbridge under the
Services Agreements.
<PAGE>
SECTION 5.02. Access to Information. From and after
the Transfer Date, Pathmark shall afford to Plainbridge and its
authorized agents, representatives, Affiliates, employees,
officers, directors, accountants, counsel and other designated
representatives (collectively, "Representatives") reasonable
access and duplicating rights during normal business hours to
all records, books, contracts, instruments, computer data and
other data and information (collectively, "Information") within
Pathmark's possession relating to Plainbridge or any
Plainbridge Subsidiary, insofar as such access is reasonably
required by Plainbridge or any Plainbridge Subsidiary.
Similarly, Plainbridge shall afford to Pathmark and its
Representatives reasonable access and duplicating rights during
normal business hours to Information within Plainbridge's
possession relating to Pathmark or any Pathmark Subsidiary and
insofar as such access is reasonably required by Pathmark or
any Pathmark Subsidiary. Information may be requested under
this Article V for, without limitation, audit, accounting,
claims, litigation and tax purposes, as well as for purposes of
fulfilling disclosure and reporting obligations and for
performing this Agreement and the Related Agreements and the
transactions contemplated hereby and thereby.
SECTION 5.03. Production of Witnesses. After the
Transfer Date, each of Pathmark and Plainbridge and their
respective Subsidiaries shall use all reasonable efforts to
make available to the other party and its Subsidiaries, upon
written request, its directors, officers, employees and agents
as witnesses to the extent that any such Person may reasonably
be required (giving consideration to the business demands on
such Persons) in connection with any legal, administrative or
other proceedings in which the requesting party may from time
to time be involved.
SECTION 5.04. Retention of Records. Except as
otherwise required by Law or agreed to in writing, each of
Pathmark and Plainbridge shall retain, and shall cause its
Subsidiaries (in the case of Plainbridge, the Plainbridge
Subsidiaries), if any, to retain, following the Transfer Date
for a period consistent with the document retention policies in
effect at Pathmark and Plainbridge, respectively, all
significant Information relating to the business of the other
and the other's Subsidiaries. In addition, after the
expiration of the applicable periods, such Information shall
not be destroyed or otherwise disposed of at any time unless,
prior to such destruction or disposal, (a) the party proposing
to destroy or otherwise dispose of such Information shall
provide no less than 30 days' prior written notice to the
other, specifying in reasonable detail the Information
<PAGE>
proposed to be destroyed or disposed of and (b) if a recipient
of such notice shall request in writing prior to the scheduled
date for such destruction or disposal that any of the
Information proposed to be destroyed or disposed of be
delivered to such requesting party, the party proposing the
destruction or disposal shall promptly arrange for the delivery
of such of the Information as was requested at the expense of
the party requesting such Information.
SECTION 5.05. Confidentiality. Each of Pathmark and
the Pathmark Subsidiaries on the one hand, and Plainbridge and
the Plainbridge Subsidiaries on the other hand, agree to and
will cause their respective Representatives to: (i) treat and
hold as confidential (and not disclose or provide access to any
Person to) all Information concerning the other in its
possession or furnished by the other or the other's
Representatives pursuant to either this Agreement or any
Related Agreement, (ii) in the event that either party or its
Representatives become legally compelled to disclose any such
Information, provide the other party with prompt written notice
of such requirement so that such other party may seek a
protective order or other remedy or waive compliance with this
Section 5.05 and (iii) in the event that such protective order
or other remedy is not obtained, or the other party waives
compliance with this Section 5.05, furnish only that portion of
such Information which is legally required to be provided and
exercise its best efforts to obtain assurances that
confidential treatment will be accorded such Information;
provided, however, that this sentence shall not apply to any
Information that, at the time of disclosure, is available
publicly and was not disclosed in breach of this Agreement by
such party or its Representatives. Each of Pathmark and
Plainbridge agrees and acknowledges that remedies at law for
any breach of its obligations under this Section 5.05 are
inadequate and that in addition thereto Plainbridge or
Pathmark, as the case may be, shall be entitled to seek
equitable relief, including injunction and specific
performance, in the event of any such breach, without the
necessity of demonstrating the inadequacy of monetary damages.
SECTION 5.06. Privileged Matters. (a) Pathmark and
Plainbridge agree that Plainbridge shall maintain, preserve and
assert all privileges arising under or relating to the
attorney-client relationship, including but not limited to the
attorney-client and work product privileges, that relate
directly or indirectly to the Transferred Businesses or the
Transferred Assets for any period prior to the Transfer Date
("Privilege" or "Privileges"). Pathmark shall be entitled to
control the assertion or waiver of any
<PAGE>
and all Privileges in perpetuity. Plainbridge shall not waive
any Privilege that could be asserted under applicable law
without the prior written consent of Pathmark. The rights and
obligations created by this paragraph shall apply to all
Information as to which, but for the Asset and Liability
Transfer, Pathmark would have been entitled to assert or did
assert the protection of a Privilege ("Privileged
Information"), including but not limited to (i) any and all
Information generated prior to the Transfer Date but which,
after the Transfer Date, is in the possession of Plainbridge;
(ii) all communications subject to a Privilege occurring prior
to the Transfer Date between counsel for Pathmark and any
Person who, at the time of the communication, was an employee
of Pathmark, regardless of whether such employee is or becomes a
Plainbridge employee; and (iii) all Information generated,
received or arising after the Transfer Date that refers or
relates to Privileged Information generated, received or
arising prior to the Transfer Date.
(b) Upon receipt by Plainbridge of any subpoena,
discovery or other request that arguably calls for the
production or disclosure of Privileged Information or if
Plainbridge obtains knowledge that any current or former
employee of Plainbridge has received any subpoena, discovery or
other request that arguably calls for the production or
disclosure of Privileged Information, Plainbridge shall
promptly notify Pathmark of the existence of the request and
shall provide Pathmark a reasonable opportunity to review the
Privileged Information and to assert any rights it may have
under this Section 5.06 or otherwise to prevent the production
or disclosure of Privileged Information. Plainbridge will not
produce or disclose any Information arguably covered by a
Privilege under this Section 5.06 unless (i) Pathmark has
provided its express written consent to such production or
disclosure, or (ii) a court of competent jurisdiction has
entered a final, non-appealable order finding that the
Information is not entitled to protection under any applicable
privilege.
(c) Pathmark's transfer of Books and Records and
other Information to Plainbridge, and Pathmark's agreement to
permit Plainbridge to possess Privileged Information occurring
or generated prior to the formation of Plainbridge, are made in
reliance on Plainbridge's agreement, as set forth in this
Section 5.06, to maintain the confidentiality of Privileged
Information and to assert and maintain all applicable
Privileges. The access to information being granted pursuant
to Section 5.02, the agreement to provide witnesses and
individuals pursuant to Section 5.03 and
<PAGE>
transfer of Privileged Information to Plainbridge pursuant to
this Agreement shall not be deemed a waiver of any Privilege
that has been or may be asserted under this Section 5.06 or
otherwise. Nothing in this Agreement shall operate to reduce,
minimize or condition the rights granted to Pathmark in, or the
obligations imposed upon Plainbridge by, this Section 5.06.
ARTICLE VI
DISPUTE RESOLUTION
SECTION 6.01. Mediation and Binding Arbitration.
Except with respect to matters involving Section 5.06, if a
dispute arises between Pathmark and Plainbridge as to the
interpretation of this Agreement, including, without
limitation, any matter involving an Indemnifiable Loss,
Pathmark and Plainbridge agree to use the following procedures,
in lieu of either of Pathmark or Plainbridge pursuing other
available remedies and as the sole remedy, to resolve the
dispute.
SECTION 6.02. Initiation. If either of Pathmark or
Plainbridge seeks to initiate the procedures described in this
Article VI, it shall give written notice to Plainbridge or
Pathmark, as the case may be, describing briefly the nature of
the dispute. A meeting shall be held between Pathmark and
Plainbridge within 10 days of the receipt of such notice,
attended by individuals with decision-making authority
regarding the dispute, to attempt in good faith to negotiate a
resolution of the dispute.
SECTION 6.03. Submission to Mediation. If, within 30
days after such meeting, Pathmark and Plainbridge have not
succeeded in negotiating a resolution of the dispute, they
agree to submit the dispute to mediation in accordance with the
Center for Public Resources Model ADR Procedure - Mediation of
Business Disputes or the procedure of another mutually
agreed-upon organization, as modified herein, and to bear
equally the costs of the mediation.
SECTION 6.04. Selection of Mediator. Pathmark and
Plainbridge shall jointly appoint a mutually acceptable
mediator, seeking assistance in such regard from the Center for
Public Resources or another mutually agreed-upon organization
if they have been unable to agree upon such appointment within
20 days from the conclusion of the negotiation period.
<PAGE>
SECTION 6.05. Mediation. Pathmark and Plainbridge
agree to participate in good faith in the mediation and
negotiations related thereto for a period of 30 days following
the initial mediation session. If Pathmark and Plainbridge are
not successful in resolving the dispute through the mediation
by the end of such 30-day period, then Pathmark and Plainbridge
agree to submit the matter to binding arbitration in accordance
with the Center for Public Resources Rules for Non-Administered
Arbitration of Business Disputes, as modified herein, by a sole
arbitrator, in New York, New York, selected in accordance with
the provisions of Section 6.06. The arbitration shall be
governed by the United States Arbitration Act, 9 U.S.C.
Secs. 1-16, and judgment upon the award rendered by the arbitrator
may be entered by any court having jurisdiction thereof.
SECTION 6.06. Selection of Arbitrator. Pathmark and
Plainbridge shall have 10 days from the end of the mediation
period to agree upon a mutually acceptable neutral person not
affiliated with either Pathmark or Plainbridge to act as
arbitrator. If no arbitrator has been selected within such
time, Pathmark and Plainbridge agree jointly to request the
Center for Public Resources or another mutually agreed-upon
organization to supply within 10 days a list of potential
arbitrators with qualifications as specified by Pathmark and
Plainbridge in the joint request. Within five days of receipt
of the list, Pathmark and Plainbridge shall independently rank
the proposed candidates, shall simultaneously exchange
rankings, and shall select as the arbitrator the individual
receiving the highest combined ranking who is available to
serve.
SECTION 6.07. Cost of Arbitration. The costs of
arbitration shall be apportioned between Pathmark and
Plainbridge as determined by the arbitrator in such manner as
the arbitrator deems reasonable taking into account the
circumstances of the case, the conduct of Pathmark and
Plainbridge during the proceeding, and the result of the
arbitration.
ARTICLE VII
GENERAL PROVISIONS
SECTION 7.01. Complete Agreement; Construction. This
Agreement and the Related Agreements, including any schedules
and exhibits hereto or thereto, and other agreements and
documents referred to herein, shall constitute the entire
agreement between the parties with respect to the
<PAGE>
subject matter hereof and shall supersede all previous
agreements and undertakings, both written and oral, with
respect to such subject matter. Notwithstanding any other
provisions of this Agreement to the contrary, in the event
and to the extent that there shall be a conflict between the
provisions of this Agreement and the provisions of the Tax
Indemnity Agreement, the provisions of the Tax Indemnity Agreement
shall control.
SECTION 7.02. Survival of Agreements. Except as
otherwise contemplated by this Agreement, all covenants and
agreements of the parties contained in this Agreement shall
survive the Transfer Date.
SECTION 7.03. Expenses. Except as otherwise set
forth in this Agreement or the Tax Indemnity Agreement, all
costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors, and accountants,
arising on or prior to the Transfer Date, as the case may be
(whether or not then payable), in connection with the Reorganization
(other than (i) costs incurred in connection with any financing arrangements
entered into by Plainbridge or any Plainbridge Subsidiary, (ii)
the fees and expenses of any outside consultant or counsel
retained by Plainbridge, (iii) costs (including attorneys'
fees) of establishing any new employee benefit or compensation
plans of Plainbridge, and (iv) expenses, including any lenders'
or agents' fees, incurred in connection with a bank credit
facility or other financing for Plainbridge incurred in
connection with the Reorganization, which shall be paid by
Plainbridge, and other than costs and expenses properly
attributable to Holdings, which shall be paid by Holdings)
shall be paid by Pathmark to the extent that appropriate
documentation concerning such costs and expenses shall be
provided to Pathmark.
SECTION 7.04. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New Jersey, without regard to the principles of
conflicts of laws thereof.
SECTION 7.05. Notices. All notices, requests,
claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by
courier service, by cable, by telecopy, by telegram, by telex,
or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section
7.05):
<PAGE>
(a) If to Holdings:
PTK Holdings, Inc.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-0915
Telecopier: (908) 499-3460
Attention: Chief Executive Officer
With a copy to: Corporate Secretary
(b) If to Pathmark:
Pathmark Stores, Inc.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-0915
Telecopier: (908) 499-3460
Attention: Chief Executive Officer
With a copy to: Corporate Secretary
(c) If to Plainbridge:
Plainbridge, Inc.
P.O. Box 5021
Woodbridge, New Jersey 07095-
Telecopier: (908) 499-3460
Attention: President
With a copy to: Corporate Secretary
SECTION 7.06. Amendments. This Agreement may not be
modified or amended except by an agreement in writing signed by
the parties.
SECTION 7.07. Successors and Assigns. This Agreement
and all of the provisions hereof shall be binding upon and
inure to the benefit of the parties and their respective
successors and permitted assigns.
SECTION 7.08. Termination. This Agreement may be
terminated and the Reorganization abandoned at any time prior
to the Distribution Date, by and in the sole discretion of the
Board of Directors of Pathmark without the approval of Holdings
or Plainbridge. In the event of such termination, no party
shall have any liability of any kind to any other party on
account of such termination except that expenses incurred in
connection with the transactions contemplated hereby shall be
paid as provided in Section 7.03.
<PAGE>
SECTION 7.09. No Third-Party Beneficiaries. Except
for the provisions of Article IV relating to Indemnitees, this
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon
any other Person, including, without limitation, any union or
any employee or former employee of Holdings, Pathmark or
Plainbridge or of any Pathmark or Plainbridge Subsidiary, any
legal or equitable right, benefit or remedy of any nature
whatsoever, including, without limitation, any rights of
employment for any specified period, under or by reason of this
Agreement.
SECTION 7.10. Headings. The descriptive headings
contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 7.11. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated
to the greatest extent possible.
SECTION 7.12. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
PTK HOLDINGS, INC.
By /s/ Marc A. Strassler
Name: Marc A. Strassler
Title: Vice President
<PAGE>
PATHMARK STORES, INC.
By /s/ John Henry
Name: John Henry
Title: Vice President
PLAINBRIDGE, INC.
By /s/ Marc Strassler
Name: Marc A. Strassler
Title: Vice President
<PAGE>
SCHEDULE I
TRANSFERRED ASSETS
Transferred Assets includes, without limitation, the
following assets and properties as of the Transfer Date:
(i) the Transferred Businesses as going concerns;
(ii) all the real property used in the Transferred
Businesses (a) owned by Pathmark or any of its Subsidiaries
and (b) leased by Pathmark or any of its Subsidiaries, as
tenant, as listed on Schedule I-A hereto; together with, to
the extent owned or leased by Pathmark or any of its
Subsidiaries, all buildings and other structures,
facilities and improvements currently or hereafter located
thereon, all fixtures, systems, equipment and items of
personal property of Pathmark or any of its Subsidiaries
attached or appurtenant thereto, and all easements,
licenses, rights and appurtenances relating to the
foregoing;
(iii) all furniture, fixtures, equipment, machinery and
other tangible personal property used or held for use by
Pathmark, excluding assets used in the ordering of
merchandise and other assets necessary for Pathmark to
fulfill its obligations under the Services Agreements, at
the locations at which the Transferred Businesses are
conducted, or otherwise owned or held by Pathmark at the
Transfer Date for use in the conduct of the Transferred
Businesses and not otherwise included in clause (ii) above;
(iv) all vehicles used in the Transferred Businesses;
(v) all inventories, merchandise, goods, packaging,
supplies, and other personal property relating to the
Transferred Businesses, excluding merchandise located in
Pathmark stores and assets used in the ordering of
merchandise and other assets necessary for Pathmark to
fulfill its obligations under the Services Agreements;
(vi) all books of account, general, financial, tax and
personnel records, invoices, shipping records, supplier
lists, correspondence and other documents, records and
files owned by Pathmark and used primarily in the
Transferred Businesses at the Transfer Date, excluding
assets used in the ordering of merchandise and
AI-1
<PAGE>
other assets necessary for Pathmark to fulfill its
obligations under the Services Agreements;
(vii) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind
(including rights to insurance proceeds and rights under
and pursuant to all warranties, representations and
guarantees made by suppliers of products, materials or
equipment, or components thereof), pertaining to and
arising out of the Transferred Businesses and enuring to
the benefit of Pathmark;
(viii) all sales and promotional literature, customer
lists and other sales-related materials owned by Pathmark
and used exclusively in connection with the Transferred
Businesses;
(ix) all rights of Pathmark under all contracts,
licenses, sublicenses, agreements, leases, commitments, and
sales and purchase orders relating exclusively to the
Transferred Businesses;
(x) all municipal, state and federal franchises,
permits, licenses, agreements, waivers and authorizations
held or used by Pathmark in connection with, or required
for, the Transferred Businesses, to the extent
transferable, excluding those items necessary for Pathmark
to fulfill its obligations under the Services Agreements;
(xi) all rights and interests of Pathmark in, to and
with respect to the marks and trademark registrations
listed on Schedule I-B hereto;
(xii) all the capital stock of (a) Pauls Trucking Corp.,
a New Jersey corporation and wholly owned subsidiary of
Pathmark, (b) Trauts-South Plainfield, Inc., a New Jersey
corporation and a wholly owned subsidiary of Pathmark and
(c) Eatontown Stuart, Inc., a New Jersey corporation and a
wholly owned subsidiary of Pathmark; and
(xiii) all Pathmark's right, title and interest on the
Transfer Date in, to and under all other assets, rights and
claims of every kind and nature used or intended to be used
in the operation of, or residing with, the Transferred
Businesses, excluding those items necessary for Pathmark to
fulfill its obligations under the Services Agreements.
AI-2
<PAGE>
SCHEDULE I-A
Real Property Leases of Pathmark That Are Included in
Transferred Assets
Bay Plaza (Rickel store)
Bay Plaza
2264 Bartow Avenue
Bronx, NY 10475
Bergenfield (Rickel store)
25 W. Central Ave.
Bergenfield, NJ 07621
Bethlehem (Rickel store)
2120 W. Union Blvd.
Bethlehem, PA 19464
Bloomfield (Rickel store)
Bloomfield Ave. & Grove St.
Bloomfield, NJ 07003
Broomall (Rickel store)
Lawrence Park Shopping Center
Broomall, PA 19008
Glen Burnie (former Rickel store)
7321 Ritchie Highway
Glen Burnie, MD 21061
Hamden (former Rickel store)
1019 Dixwell Ave.
Parkway Plaza II
Hamden, CT 06514
Hazlet (Rickel store)
Rte. 35 & Hazlet Ave.
Hazlet, NJ 07730
Holbrook (former Rickel store)
5801 Sunrise Highway
Sun Vet Mall
Holbrook, NY 11741
Howell (Rickel store)
2230 Rte. 9
Friendship Plaza
Howell, NJ 07731
AIA-1
<PAGE>
SCHEDULE I-A
(continued)
Real Property Leases of Pathmark That Are Included in
Transferred Assets
Huntington (former Rickel store)
5020 Jericho Turnpike
Commack, NY 11725
Jersey City (Rickel store)
Rte. 440 & Danforth Ave.
Jersey City, NJ 07305
Ledgewood (Rickel store)
Ledgewood Mall
Route 10
Ledgewood, NJ 07852
Levittown (former Rickel store)
3675 Hempstead Turnpike
Levittown, NY 11714
Manchester (former Rickel store)
1026 Tolland Turnpike
Manchester, CT 06040
Menlo Park (Rickel store)
90 Parsonage Road
Menlo Park, NJ 08837
Meriden (former Rickel store)
Town Line Square
455 S. Broad St., Bldg. A
Meriden, CT 06450
Middletown (Rickel store)
Route 211 East
Middletown, NY 10940
Newark (Rickel store)
400 College Square
Newark, Del. 19713
Newington (former Rickel store)
3090 Berlin Turnpike
Newington, CT 06111
AIA-2
<PAGE>
SCHEDULE I-A
(continued)
Real Property Leases of Pathmark That Are Included in
Transferred Assets
Norwalk (former Rickel store)
330 Connecticut Avenue
Norwalk, CT 08654
Parsippany (Rickel store)
Arlington Plaza
Route 46
Parsippany, NJ 07054
Pleasantville (Rickel store)
1230 Blackhorse Pike
Pleasantville, NJ 08232
Pottstown (Rickel store)
N. Charlotte St.
Route 663
Pottstown, PA 19464
Selden (former Rickel store)
323 Middle Country Road
Selden, NY 11784
Stony Brook (former Rickel store)
2200 Nesconset Highway
Stony Brook, NY 11790
Toms River (Rickel store)
Indian Head Plaza
1334 Lakewood Road
Toms River, NJ 08755
Totowa (Rickel store)
Rte. 46 & Union Blvd.
Totowa, NJ 07512
Union (Rickel store)
Union Plaza Shopping Center
Rte. 22 & Springfield Road
Union, NJ 07083
Warminster (Rickel store)
Warminster Plaza
654 York Road
Warminster, PA 18974
AIA-3
<PAGE>
SCHEDULE I-A
(continued)
Real Property Leases of Pathmark That Are Included in
Transferred Assets
Watchung (Rickel store)
Rte. 22 & Terrill Road
Watchung, NJ 07060
Wayne (Rickel store)
Preakness Shopping Center
Hamburg Turnpike
Wayne, NJ 07470
West Babylon (former Rickel store)
501 Montauk Highway
West Babylon, NY 11704
West Orange (Rickel store)
Essex Green Mall
46 Prospect Ave.
West Orange, NJ 07052
- - - - - - - - - - - - - - - -
Dartmouth (former Purity Supreme store)
Faunce Corner Road
Dartmouth, MA 02714
Edison (Pathmark GMDC warehouse)
B Court South
Sutton Kilmer Industrial Park
Edison, NJ 08817
Rockaway (Pathmark freezer warehouse)
92 Greenpond Road
Rockaway, NJ 07866
AIA-4
<PAGE>
SCHEDULE I-A
(continued)
Real Property Owned by Pathmark That Is Included in
Transferred Assets
Aramingo (Pathmark store)
3500 Aramingo Ave.
Philadelphia, PA 19134
Baldwin (Pathmark store)
1764 Grand Avenue
Baldwin, NY 11510
Bricktown (Rickel store)
51 Chambers Bridge Road
Bricktown, NJ 08723
Copiague (Pathmark store and gas station)
1255 Sunrise Highway
Copiague, NY 11726
Eatontown (Pathmark and Rickel stores)*
50 & 70 Highway 36
Eatontown, NJ 07724
Greenvale (former Rickel store)
90 Northern Blvd.
Greenvale, NY 11548
Lawnside (Pathmark and Rickel stores and gas station)
130 & 200 White Horse Pike
Lawnside, NJ 08045
Madison Township (former Pathmark store)
Ernston Road and Highway 9
Sayreville, NJ 08872
Marple (Pathmark store)
50 Lawrence Road
Broomall, PA 19008
Medford (CVS drug store)
85 High Street
Medford, MA 02155
* Pursuant to the transfer of stock in Eatontown Stuart,
Inc., a New Jersey corporation.
AIA-5
<PAGE>
SCHEDULE I-A
(continued)
Real Property Owned by Pathmark That Is Included
in Transferred Assets
Ozone Park (Pathmark store)
92-10 Atlantic Avenue
Ozone Park, NY 11417
Poughkeepsie (vacant land)
Rte. 9 & Sheafe Road
Poughkeepsie, NY 12601
Rickel Office and Distribution Center*
200 Helen Street
South Plainfield, NJ 07080
Seaford (Pathmark store)
4055 Merrick Road
Seaford, NY 11783
Warminster (Pathmark store)
700 York Road
Warminster, PA 18974
Woburn (closed Distribution Center)
479-481 Wildwood Avenue
Woburn, MA 01801
Woodbridge Office and Distribution Center
301 Blair Road
P.O. Box 5301
Woodbridge, NJ 07095-0915
* Pursuant to the transfer of stock in Trauts-South
Plainfield, Inc., a New Jersey corporation.
AIA-6
<PAGE>
SCHEDULE I-B
TRADEMARKS AND SERVICE MARKS
Mark Registration No. Registration Date
RICKEY RICKEL 660,693 April 22, 1958
and design
(trademark)
PTC and arrow 1,258,869 November 22, 1983
design
(service mark)
RICKEL 1,315,158 January 15, 1985
(service mark)
AIB-1
<PAGE>
SCHEDULE II
ASSUMED LIABILITIES
Assumed Liabilities: All Liabilities and obligations
relating to or arising from the operation of the Transferred
Businesses, whether accrued or arising before, on or after the
Transfer Date, including but not limited to:
(a) all Liabilities and obligations of Pathmark
pursuant to, under or relating to all agreements, contracts
and leases of Pathmark constituting Transferred Assets,
excluding any accounts payable incurred in the purchase of
inventory transferred to Plainbridge as of the date hereof;
(b) all warranty, performance and similar obligations
entered into or made in the course of business of the
Transferred Businesses;
(c) all Liabilities and obligations of Pathmark
pursuant to and under all collective bargaining agreements
(including each collectively bargained pension agreement,
supplemental agreement, and letter of understanding) to the
extent such agreements cover employees of Pathmark who are
assigned to the Transferred Businesses as of the Transfer
Date (each, a "Transferred Employee");
(d) the Liabilities and obligations of Pathmark to or
with respect to the Transferred Employees and to former
employees of Pathmark who were employed prior to the date
hereof exclusively in connection with the Transferred
Businesses ("Former Employees"), including, but not limited
to, (i) compensation and benefits provided by Pathmark to
Transferred Employees and Former Employees, including,
without limitation, all benefits payable to Transferred
Employees and Former Employees and their respective
beneficiaries pursuant to pension, medical, dental, life,
accident, health, disability, prescription, vision, salary
continuation or supplemental employment plans, and programs
or arrangements of Pathmark applicable to such Transferred
Employees or Former Employees, (ii) the Retirement
Agreement, dated July 16, 1990, between Jules Borshadel and
Pathmark, and
AII-1
<PAGE>
the Supplemental Retirement Agreement, dated March 9, 1987,
between Jules Borshadel and Pathmark and (iii) withholding,
payroll and employment taxes;
(e) the Liabilities and obligations being assumed by
or agreed to be performed by Plainbridge pursuant to any
other agreement being entered into in connection with the
Agreement, including, without limitation, the Related
Agreements; and
(f) the Liabilities and obligations relating to all
Actions related to or arising out of the operations of the
Transferred Businesses.
AII-2
EXHIBIT A
SUPERMARKETS GENERAL HOLDINGS CORPORATION,
Issuer,
and
WILMINGTON TRUST COMPANY,
Trustee
INDENTURE
Dated as of May 1, 1992
As Amended and Restated as of October 5, 1993
11-5/8% Subordinated Notes
due 2002
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of May l, l992, as
amended and restated as of October 5, 1993*
Trust Indenture Indenture
Act Section Section
Sec. 310(a)(1) ............................. 608
(a)(2) ............................. 608
(b) ............................. 607, 609
Sec. 312(c) ............................. 701
Sec. 314(a) ............................. 703
(a)(4) ............................. 1019
(c)(1) ............................. 103
(c)(2) ............................. 103
(e) ............................. 103
Sec. 315(b) ............................. 601
Sec. 316(a)(last
sentence) ............................. 101 ("Out-
standing")
(a)(1)(A) ............................. 502, 512
(a)(1)(B) ............................. 513
(b) ............................. 508
(c) ............................. 105
Sec. 317(a)(1) ............................. 503
(a)(2) ............................. 504
Sec. 318(a) ............................. 108
* This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 101. Definitions ............................ 1
Affiliate .............................. 2
Average Life to Stated Maturity ........ 2
Board of Directors ..................... 2
Board Resolution ....................... 2
Business Day ........................... 2
Capital Lease Obligation ............... 3
Capital Stock .......................... 3
Change in Control ...................... 3
Commission ............................. 4
Company ................................ 4
Company Request or Company Order ....... 4
Corporate Trust Office ................. 4
corporation ............................ 4
Default ................................ 4
Equitable Investors .................... 4
Event of Default ....................... 4
Exchange Act ........................... 4
Exchange Debentures .................... 5
Exchange Offer ......................... 5
Fair Market Value ...................... 5
Federal Bankruptcy Code ................ 5
First Supplemental Indenture ........... 5
Generally Accepted Accounting
Principles or GAAP ................... 5
Guaranteed Debt ........................ 5
Holder ................................. 6
Indebtedness ........................... 6
Indenture .............................. 7
Interest Payment Date .................. 7
Interest Rate Hedge Arrangement ........ 7
Lien ................................... 7
Majority-owned Subsidiary .............. 7
Management Investors ................... 7
Maturity ............................... 7
ML Funds ............................... 7
Officers' Certificate .................. 8
Opinion of Counsel ..................... 8
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Outstanding............................. 8
Pathmark................................ 9
Paying Agent............................ 9
Permitted Holders....................... 9
Permitted Senior Subordinated
Indebtedness.......................... 9
Person.................................. 10
Predecessor Security ................... 10
Redeemable Capital Stock ............... 10
Redemption Date ........................ 10
Redemption Price ....................... 10
Regular Record Date .................... 10
Representative ......................... 10
Responsible Officer .................... 10
Security and Securities ................ 11
Senior Indebtedness .................... 11
Senior Subordinated Notes .............. 11
SMG-II ................................. 12
Special Record Date .................... 12
Specified Senior Indebtedness .......... 12
Stated Maturity ........................ 12
Subsidiary ............................. 12
Trust Indenture Act .................... 12
Trustee ................................ 12
Voting Stock ........................... 12
Working Capital Facility ............... 13
Section 102. Other Definitions ...................... 13
Section l03. Compliance Certificates and Opinions ... 13
Section l04. Form of Documents Delivered to Trustee . 14
Section l05. Acts of Holders ........................ 15
Section 106. Notices, etc., to Trustee
and Company .......................... 16
Section l07. Notice to Holders; Waiver .............. 16
Section l08. Conflict of any Provision of
Indenture with Trust Indenture Act ... 17
Section 109. Effect of Headings and Table of
Contents ............................. 17
Section l10. Successors and Assigns ................. 17
Section 111. Separability Clause .................... 18
Section 112. Benefits of Indenture .................. 18
Section 113. Governing Law .......................... 18
Section 114. Legal Holidays ......................... 18
Section 115. No Recourse Against Others ............. 18
-ii-
<PAGE>
PAGE
ARTICLE TWO
Security Forms
Section 201. Forms Generally ........................ 19
Section 202. Form of Face of Security ............... 19
Section 203. Form of Reverse of Security ............ 21
Section 204. Form of Trustee's Certificate of
Authentication ....................... 25
ARTICLE THREE
The Securities
Section 301. Title and Terms ........................ 26
Section 302. Denominations .......................... 26
Section 303. Execution, Authentication, Delivery and
Dating ............................... 27
Section 304. Temporary Securities ................... 28
Section 305. Registration, Registration of Transfer
and Exchange ......................... 29
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities ........................... 30
Section 307. Payment of Interest; Interest Rights
Preserved ............................ 31
Section 308. Persons Deemed Owners .................. 32
Section 309. Cancellation ........................... 32
Section 310. Computation of Interest ................ 33
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge
of Indenture ......................... 33
Section 402. Application of Trust Money ............. 34
ARTICLE FIVE
Remedies
Section 501. Events of Default ...................... 35
Section 502. Acceleration of Maturity; Rescission ... 37
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee ........... 38
-iii-
<PAGE>
PAGE
Section 504. Trustee May File Proofs of Claim ....... 39
Section 505. Trustee May Enforce Claims Without
Possession of Securities ............. 40
Section 506. Application of Money Collected ......... 40
Section 507. Limitation on Suits .................... 41
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest ............................. 41
Section 509. Restoration of Rights and Remedies ..... 42
Section 510. Rights and Remedies Cumulative ......... 42
Section 511. Delay or Omission Not Waiver ........... 42
Section 512. Control by Holders ..................... 42
Section 513. Waiver of Past Defaults ................ 43
Section 514. Undertaking for Costs .................. 43
Section 515. Waiver of Stay, Extension or
Usury Laws ........................... 44
Section 516. Unconditional Right of Holders
to Institute Certain Suits ........... 44
ARTICLE SIX
The Trustee
Section 601. Notice of Defaults ..................... 44
Section 602. Certain Rights of Trustee .............. 45
Section 603. Not Responsible for Recitals or
Issuance of Securities ............... 47
Section 604. Trustee and Agents May Hold
Securities; Collections; Etc. ........ 47
Section 605. Money Held in Trust .................... 47
Section 606. Compensation and Reimbursement ......... 47
Section 607. Conflicting Interests .................. 48
Section 608. Corporate Trustee Required;
Eligibility .......................... 49
Section 609. Resignation and Removal; Appointment
of Successor ......................... 49
Section 610. Acceptance of Appointment by
Successor ............................ 51
Section 611. Merger, Conversion, Consolidation or
Succession to Business ............... 52
Section 612. Preferential Collection of Claims
Against Company ....................... 52
-iv-
<PAGE>
PAGE
ARTICLE SEVEN
Holders' Lists and Reports by
Trustee and Company
Section 701. Disclosure of Names and Addresses
of Holders ........................... 52
Section 702. Reports by Trustee ..................... 53
Section 703. Reports by Company ..................... 53
ARTICLE EIGHT
[Intentionally Omitted]
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures
Without Consent of Holders ........... 54
Section 902. Supplemental Indentures
With Consent of Holders .............. 55
Section 903. Execution of Supplemental Indentures ... 56
Section 904. Effect of Supplemental Indentures ...... 56
Section 905. Conformity with Trust Indenture Act .... 56
Section 906. Reference in Securities to Supplemental
Indentures ........................... 56
Section 907. Effect on Senior Indebtedness .......... 56
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest ............................. 57
Section 1002. Maintenance of Office or Agency ........ 57
Section 1003. Money for Security Payments to Be
Held in Trust ........................ 57
Section 1004. [Intentionally Omitted] ................ 59
Section 1005. [Intentionally Omitted] ................ 59
Section 1006. [Intentionally Omitted] ................ 59
Section 1007. [Intentionally Omitted] ................ 59
Section 1008. [Intentionally Omitted] ................ 59
Section 1009. [Intentionally Omitted] ................ 59
Section 1010. [Intentionally Omitted] ................ 59
-v-
<PAGE>
PAGE
Section 1011. [Intentionally Omitted] ................ 59
Section 1012. [Intentionally Omitted] ................ 59
Section 1013. [Intentionally Omitted] ................ 59
Section 1014. [Intentionally Omitted] ................ 59
Section 1015. Purchase of Securities Upon
Change in Control .................... 60
Section 1016. [Intentionally Omitted] ................ 63
Section 1017. [Intentionally Omitted] ................ 63
Section 1018. [Intentionally Omitted] ................ 64
Section l019. Statement as to Compliance ............. 64
Section l020. Waiver of Certain Covenants ............ 64
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption .................... 64
Section l102. Applicability of Article ............... 64
Section 1103. Election to Redeem; Notice to Trustee .. 65
Section 1104. Selection by Trustee of Securities to
Be Redeemed .......................... 65
Section 1105. Notice of Redemption ................... 65
Section 1106. Deposit of Redemption Price ............ 66
Section 1107. Securities Payable on Redemption Date .. 67
Section 1108. Securities Redeemed in Part ............ 67
ARTICLE TWELVE
Sinking Fund
Section 1201. Mandatory Sinking Fund Payments ........ 67
Section 1202. Satisfaction of Sinking Fund
Payments with Securities ............. 68
Section 1203. Redemption of Securities for
Sinking Fund ......................... 68
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior
Indebtedness ......................... 69
-vi-
<PAGE>
PAGE
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc. .................... 69
Section 1303. No Payment When Specified Senior
Indebtedness in Default .............. 71
Section 1304. Payment Permitted if No Default ........ 72
Section 1305. Subrogation to Rights of Holders
of Senior Indebtedness ............... 73
Section 1306. Provisions Solely to Define
Relative Rights ...................... 73
Section 1307. Trustee to Effectuate Subordination .... 74
Section l308. No Waiver of Subordination Provisions .. 74
Section l309. Notice to Trustee ...................... 74
Section 1310. Reliance on Judicial Order or
Certificate of Liquidating Agent ..... 75
Section l311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights ..................... 76
Section l312. Article Applicable to Paying Agents .... 76
ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section l401. Option to Effect Defeasance
or Covenant Defeasance ............... 76
Section l402. Defeasance and Discharge ............... 77
Section l403. Covenant Defeasance..................... 77
Section l404. Conditions to Defeasance or
Covenant Defeasance .................. 78
Section l405. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ....... 81
Section l406. Reinstatement .......................... 81
TESTIMONIUM........................................... 82
SIGNATURES AND SEALS.................................. 82
ACKNOWLEDGMENTS
-vii-
<PAGE>
INDENTURE, dated as of May l, 1992, as amended and
restated as of October 5, 1993, between SUPERMARKETS GENERAL
HOLDINGS CORPORATION, a Delaware corporation (hereinafter called
the "Company"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue
of its 11-5/8% Subordinated Notes due 2002 (hereinafter called
the "Securities"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture;
This Indenture is subject to, and shall be governed by,
the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust
Indenture Act;
All acts and things necessary have been done to make the
Securities, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid,
binding and legal obligations of the Company, and to make this
Indenture a valid agreement of the Company in accordance with its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
<PAGE>
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United
States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Articles Five, Six,
Ten, Thirteen and Fourteen are defined in those Articles.
"Affiliate" means, with respect to any specified Person,
any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct
the management and policies of such Person, directly or
indirectly, whether through the ownership of Voting Stock, by
contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Average Life to Stated Maturity" means, as of the date
of determination, with respect to any Indebtedness, the quotient
obtained by dividing (i) the sum of the products of (a) the
number of years from the date of determination to the date or
dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Board of Directors" means the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking
- 2-
<PAGE>
institutions in The City of New York or the State of Delaware are
authorized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated
basis under any capital lease of real or personal property which,
in accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated) of such Person's capital stock whether now
outstanding or issued after the date of this Indenture.
"Change in Control" means an event as a result of which:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Permitted Holders is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and
l3d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 30% of such total Voting
Stock of the Company, provided that the Permitted Holders
"beneficially own" (as so defined) a lesser percentage of such
Voting Stock than such other Person and do not have the right or
ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of
the Company; (ii) the Company consolidates with or merges with or
into any Person or conveys, transfers or leases all or
substantially all of its assets to any Person, or any corporation
consolidates with or merges with or into the Company, in any such
event pursuant to a transaction in which the outstanding Voting
Stock of the Company is changed into or exchanged for cash,
securities or other property, other than any such transaction
where the outstanding Voting Stock of the Company is not changed
or exchanged at all, or where (a) the outstanding Voting Stock of
the Company is changed into or exchanged for (1) Voting Stock of
the surviving corporation which is not Redeemable Capital Stock
or (2) cash, securities and other property (other than Capital
Stock of the surviving corporation) in an amount which could be
paid by the Company as a Restricted Payment as permitted under
Section 1008 of the Indenture in effect prior to the execution of
the First Supplemental Indenture and (b) Permitted Holders own,
directly or indirectly, not less than 50% of the Voting Stock of
the surviving corporation immediately after such transaction;
(iii) the Company is liquidated or dissolved; or (iv) Pathmark
ceases to be a Majority-owned Subsidiary.
- 3-
<PAGE>
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act Sections
3l0 through 317 as they are applicable to the Company, the term
"Company" shall include any other obligor with respect to the
Securities for the purposes of complying with such provisions.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company (i) by its
Chairman, a Vice Chairman, its President or a Vice President and
(ii) by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any
two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business
shall be principally administered, which office at the date of
execution of this Indenture is located at Rodney Square North,
Wilmington, Delaware 19890.
"corporation" includes corporations, associations,
partnerships, companies and business trusts.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Equitable Investors" means The Equitable Life Assurance
Society of the United States and any of its Affiliates that
beneficially own, directly or indirectly, shares of Capital Stock
of SMG-II.
"Event of Default" has the meaning specified in Article
Five.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
- 4-
<PAGE>
"Exchange Debentures" means, if and when issued, the
Company's 14-1/8% Junior Subordinated Exchange Debentures Due
2007.
"Exchange Offer" means an offer commenced on ,
1993 by Pathmark to exchange $1,000 principal amounts of its
11-5/8% Subordinated Notes due 2002 for each $1,000 principal
amount of the Securities.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's
length transaction between an informed and willing seller under
no compulsion to sell and an informed and willing buyer.
"Federal Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time.
"First Supplemental Indenture" means the First
Supplemental Indenture dated as of , 1993, to the
Indenture dated as of May 1, 1993, between the Company and the
Trustee.
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to
time; provided, however, that with respect to the obligations of
any Person under Article Ten and the definitions applicable
thereto, "GAAP" means generally accepted accounting principles in
the United States as in effect on the date hereof.
"Guaranteed Debt" of any Person means, without
duplication, all Indebtedness of any other Person referred to in
the definition of Indebtedness contained in this Section 101
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for
the purpose of enabling the debtor to make payment of such
Indebtedness or to assure the holder of such Indebtedness against
loss, (iii) to supply funds to, or in any other manner invest in,
the debtor (including any agreement to pay for property or
services to be acquired by such debtor irrespective of whether
such property is received or such services are rendered) or (iv)
to maintain working capital or equity capital of the debtor, or
otherwise to maintain the net worth, solvency or other financial
condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not
include endorsements for collection or deposit, in either case in
the ordinary course of business, or
- 5-
<PAGE>
any obligation or liability of such Person in respect of
leasehold interests assigned by such Person to any other Person.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Indebtedness" means with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money or for the deferred purchase price of property or services,
excluding any trade payables and other accrued current
liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or
otherwise, of such Person in connection with any letters of
credit and acceptances issued under letter of credit facilities,
acceptance facilities or other similar facilities, (ii) all
obligations of such Person evidenced by bonds, notes, debentures
or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even
if the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or
sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (iv) all Capital
Lease Obligations of such Person, (v) all Indebtedness referred
to in (but not excluded from) clause (i), (ii), (iii) or (iv)
above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien, upon or in property (including, without
limitation, accounts and contract rights) owned by such Person,
even though such Person has not assumed or become liable for the
payment of such Indebtedness, (vi) all Guaranteed Debt of such
Person, (vii) all Redeemable Capital Stock issued by such Person
valued at the greater of its voluntary or involuntary maximum
fixed repurchase price plus accrued and unpaid dividends, (viii)
all obligations under interest rate contracts of such Person, and
(ix) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to
in clauses (i) through (viii) above. For purposes hereof, the
"maximum fixed repurchase price" of any Redeemable Capital Stock
which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Redeemable Capital Stock as
if such Redeemable Capital Stock were purchased on any date on
which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by,
the fair market value of such Redeemable Capital Stock, such fair
market value to be determined in good faith by the board of
directors of the issuer of such Redeemable Capital Stock.
- 6-
<PAGE>
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Hedge Arrangement" means any rate swap
transaction under a rate swap agreement to which the Company is a
party or becomes a party, and any interest rate protection
agreement, interest rate future, interest rate option or other
interest rate hedge arrangement to or under which the Company is a
party or a beneficiary, or becomes a party or a beneficiary, or
to or under which any Subsidiary of the Company is or becomes
such a party or beneficiary if the obligations of such Subsidiary
thereunder are guaranteed by the Company.
"Lien" means any mortgage, charge, pledge, lien,
privilege, security interest or encumbrance of any kind.
"Majority-owned Subsidiary" means a Subsidiary at least
80% of the equity ownership or the Voting Stock of which is at
the time owned, directly or indirectly, by the Company or by one
or more of the Subsidiaries, or the Company and one or more of
the Subsidiaries, provided that Majority-owned Subsidiary shall
not include any such Subsidiary if the equity ownership or the
Voting Stock of such Subsidiary not owned by the Company and/or
one or more of the Subsidiaries, is owned by SMG-II and/or one or
more Affiliates of SMG-II.
"Management Investors" means the officers and other
members of the management of the Company who at any particular
date shall beneficially own, directly or indirectly, Voting Stock
of the Company.
"Maturity" when used with respect to any Security means
the date on which the principal of (and premium, if any) and
interest on such Security becomes due and payable as therein or
herein provided, whether at Stated Maturity, Change in Control
Purchase Date or Redemption Date and whether by declaration of
acceleration, Change in Control, call for redemption or
otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation
Partnership No. IX, L.P., a Delaware partnership, ML Offshore LBO
Partnership No. IX, a Cayman Islands partnership, ML Employees
LBO Partnership No. I, L.P., a Delaware partnership, Merrill
Lynch Interfunding Inc., a Delaware corporation, Merchant Banking
L.P. No. I, a Delaware partnership, Merrill Lynch KECALP L.P., a
Delaware partnership, Merrill Lynch
- 7-
<PAGE>
Capital Appreciation Partnership No. B-X, L.P., a Delaware
partnership, ML Offshore LBO Partnership No. B-X, a Cayman
Islands partnership, MLCP Associates, L.P. No. II, a Delaware
partnership, Merrill Lynch Venture Capital, Inc., a Delaware
corporation and any Affiliates of the foregoing that beneficially
own, directly or indirectly, shares of Capital Stock of SMG-II.
"Officers' Certificate" means a certificate signed by
(i) the Chairman, a Vice Chairman, the President, a Vice
President or the Treasurer of the Company and (ii) the Secretary
or an Assistant Secretary of the Company and delivered to the
Trustee; provided, however, that such certificate may be signed
by two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable
to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent
applicable.
"Outstanding" when used with respect to Securities
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment,
redemption or purchase money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and the
Trustee or such Paying Agent is not prohibited from paying
such money to the Holders on that date pursuant to the terms
of Article Thirteen of this Indenture; provided that, if such
Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Fourteen; and
- 8-
<PAGE>
(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
provided, however, that, in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, notice, direction,
consent or waiver hereunder, Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the
Company, or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, notice, direction, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor.
"Pathmark" means Pathmark Stores, Inc., a Delaware
corporation, and any successor thereto.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (or premium, if any) or interest
on any Securities on behalf of the Company.
"Permitted Holders" means ML Funds, the Management
Investors and the Equitable Investors, provided that the
Equitable Investors shall not be a Permitted Holder if they are a
member of a "group" (as such term is used in Section 13(d) of the
Exchange Act) in respect of the Company which does not include
the Management Investors and the ML Funds.
"Permitted Senior Subordinated Indebtedness" means
(i) the Senior Subordinated Notes, (ii) Indebtedness of the
Company not to exceed $200,000,000 outstanding at any one time in
the aggregate, and (iii) any renewals, extensions, substitutions,
refinancings or replacements of any Indebtedness described in the
foregoing clauses (i) and (ii), including any successive
extensions, renewals, substitutions, refinancings or
replacements, so long as the aggregate amount of Indebtedness
represented thereby is not increased by such renewal, extension,
substitution, refinancing or replacement and such renewal,
extension, substitution, refinancing or replacement does not
reduce the Average Life to Stated Maturity or the Stated Maturity
of such Indebtedness.
- 9-
<PAGE>
"Person" means any individual, corporation, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for a mutilated Security
or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms, by the terms of any security into which it
is convertible or exchangeable or otherwise, is or upon the
happening of an event or passage of time would be required to be
redeemed prior to the final Stated Maturity of the Securities or
is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final
Stated Maturity.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 1 or December 1 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Responsible Officer", when used with respect to the
Trustee, means any officer assigned to the Corporate Trust
Administration of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers or assigned by the Trustee
to administer corporate trust matters at its Corporate Trust
Office 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.
- 10-
<PAGE>
"Security" and "Securities" have the meaning set forth
in the second paragraph of this Indenture.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on (such interest on Senior Indebtedness,
wherever referred to in this Indenture, being deemed to include
interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or
event of default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law) any Indebtedness of the
Company (other than as otherwise provided in this definition),
whether outstanding on the date hereof or thereafter created,
incurred or assumed in accordance with the provisions of this
Indenture, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if
any, and interest (including interest accruing after the
occurrence of an event of default) on all obligations of every
nature of the Company from time to time owed under Permitted
Senior Subordinated Indebtedness and to the lenders under the
Working Capital Facility, including, without limitation,
principal of and interest on, and all fees, expenses,
indemnities, payments for early termination and reimbursement
obligations under letters of credit payable under the Working
Capital Facility. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) Indebtedness evidenced by the
Securities and, if and when issued, the Exchange Debentures,
(ii) Indebtedness that is subordinate or junior in right of
payment to any Indebtedness of the Company (other than Permitted
Senior Subordinated Indebtedness), (iii) Indebtedness that when
incurred, and without respect to any election under Section
1111(b) of Title II, United States Code, is without recourse to
the Company, (iv) Indebtedness that is represented by Redeemable
Capital Stock, (v) any liability for federal, state, provincial,
local or other taxes owed or owing by the Company,
(vi) Indebtedness of the Company to a Subsidiary of the Company
or any other Affiliate of the Company or any of such Affiliate's
subsidiaries, (vii) that portion of any Indebtedness which at the
time of issuance is issued in violation of this Indenture, and
(viii) amounts owing under leases (other than Capital Lease
Obligations). The Securities will rank senior in right of
payment to, if and when issued, the Exchange Debentures.
"Senior Subordinated Notes" means the Company's 14-1/2%
Senior Subordinated Notes Due 1997.
- 11-
<PAGE>
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation.
"Special Record Date" means a date fixed by the Trustee
for the payment of any Defaulted Interest pursuant to Section
307.
"Specified Senior Indebtedness" means (i) all Senior
Indebtedness under the Working Capital Facility and (ii) any
other issue of Senior Indebtedness or refinancings thereof
permitted by said definition having a principal amount of at
least $100,000,000. For purposes of this definition: (a) the
amount of the Indebtedness of the Company with respect to any
Interest Rate Hedge Arrangement shall be deemed to be the lesser
of (x) 25% of the notional amount of such Interest Rate Hedge
Arrangement, or (y) the maximum amount the Company could be
required to pay under such Interest Rate Hedge Arrangement; and
(b) a refinancing of any such Indebtedness shall be treated as
such only if it ranks or would rank pari passu with the
Indebtedness refinanced.
"Stated Maturity", when used with respect to any
Indebtedness or any installment of interest thereon, means the
date specified in such Indebtedness as the fixed date on which
the principal of such Indebtedness or such installment of
interest is due and payable.
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this
instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason
of the happening of any contingency).
- 12-
<PAGE>
"Working Capital Facility" means the Working Capital
Agreement dated as of June 15, 1987 among SMG Acquisition
Corporation and the lenders party thereto, for the express
purpose of financing working capital and other general corporate
purposes consistent with the past practices of the Company and
its Subsidiaries, as in effect on the date hereof and as such
agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise
modified from time to time. For purposes of this Indenture the
Working Capital Facility shall be deemed to include the Bank
Credit Agreement (as defined in the Prospectus relating to the
Exchange Offer) which replaced the Working Capital Facility
described above.
Section 102. Other Definitions.
Defined in
Term Section
"Act"............................................. 105
"Change in Control Notice" ....................... 1015
"Change in Control Offer" ........................ 1015
"Change in Control Purchase Date" ................ 1015
"Change in Control Purchase Notice" .............. 1015
"Change in Control Purchase Price" ............... 10l5
"covenant defeasance" ............................ 1403
"Defaulted Interest" ............................. 307
"defeasance" ..................................... 1402
"incorporated provision" ......................... 108
"Notice of Default" .............................. 501
"Security Register" .............................. 305
"Security Registrar" ............................. 305
"U.S. Government Obligations" .................... 1404
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
- 13-
<PAGE>
Every certificate or opinion (other than the
certificates required by Section 1019(a)) with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
- 14-
<PAGE>
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not more than 30
days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation
is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
- 15-
<PAGE>
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for this purpose the Securities then
Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six
months after the record date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such
Security.
Section 106. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder, any Representative or
the Company shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or
with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
delivered in writing or mailed, first-class postage prepaid,
to the Company addressed to it c/o Pathmark Stores, Inc., 301
Blair Road, Woodbridge, New Jersey 07095, Attention:
President, or at ay other address furnished in writing to the
Trustee by the Company.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register,
- 16-
<PAGE>
not later that the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice when mailed to a
Holder in the aforesaid manner shall be conclusively deemed to
have been received by such Holder whether or not actually
received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to
be a sufficient giving of such notice.
Section 108. Conflict of any Provision of Indenture
with Trust Indenture Act.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 318, inclusive, of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by
operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its respective successors and assigns, whether
so expressed or not.
- 17-
<PAGE>
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the
Holders and the holders of Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles
thereof.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to Section
307, or any Maturity with respect to any Security shall not be a
Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal
(and premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, or date
established for payment of Defaulted Interest pursuant to Section
307, or Maturity, and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment
Date, or date established for payment of Defaulted Interest
pursuant to Section 307, or Maturity, as the case may be, to the
next succeeding Business Day.
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations
of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
- 18-
<PAGE>
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as
evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
The form of the face of the Securities shall be
substantially as follows:
SUPERMARKETS GENERAL HOLDINGS CORPORATION
11-5/8% Subordinated Note
due 2002
No. $
Supermarkets General Holdings Corporation, a Delaware
corporation (herein called the "Company", which term includes any
successor entity under the Indenture hereinafter referred to),
for value received, hereby promises to pay to or
registered assigns, the principal sum of Dollars on
June 15, 2002, at the office or agency of the Company referred to
below, and to pay interest thereon on June l5, 1992 and
semiannually thereafter, on June 15 and December 15 in each year
and at Stated Maturity, from May 28, 1992 or from the most recent
Interest Payment Date to which interest has been paid or
- 19-
<PAGE>
duly provided for, at the rate of 11-5/8% per annum, until the
principal hereof is paid or duly provided for.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided for, and interest on such defaulted interest at the then
applicable interest rate borne by the Securities, to the extent
lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any
purpose.
- 20-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: SUPERMARKETS GENERAL HOLDINGS
CORPORATION
By
Attest:
By
[SEAL]
Authorized Signature
Section 203. Form of Reverse of Security.
The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
securities of the Company designated as its 11-5/8% Subordinated
Notes due 2002 (herein called the "Securities"), limited (except
as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $200,000,000, which may be issued
under an indenture dated as of May 1, 1992 as amended and
restated as of , 1993 (herein, as so amended and
restated, called the "Indenture") between the Company and
Wilmington Trust Company, as trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the Holders
of the Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered.
The Securities are subject to redemption otherwise than
through the operation of the sinking fund (as described below)
upon not less than 30 nor more than 60 days' notice, in amounts
of $1,000 or an integral multiple of $1,000, at any time on or
after June 15, 1997, as a whole or in part, at the election of
the Company, at a Redemption Price equal to the percentage of the
principal amount set forth below if redeemed
- 21-
<PAGE>
during the 12-month period beginning June 15 of the years
indicated below:
Year Redemption Price
1997 105.8125%
1998 103.8750%
1999 101.9375%
and thereafter at 100% of the principal amount, together in the
case of any such redemption with accrued interest, if any, to the
Redemption Date (subject to the right of Holders of record on
relevant Regular Record Dates to receive interest due on a
Interest Payment Date), all as provided in the Indenture.
In the event that a Change in Control occurs, each
Holder shall have the right to require that the Company
repurchase such Holder's Securities in whole or in part in
integral multiples of $1,000 at a purchase price in cash in an
amount equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase; provided
that the Company shall have first either (i) repaid in full all
Indebtedness under the Working Capital Facility and permanently
reduced the commitments of the lenders thereunder or offered to
repay in full all such Indebtedness and permanently reduce such
commitments and repaid the Indebtedness and permanently reduced
the commitment of each lender that accepted such offer or
(ii) obtained the requisite consent under the Working Capital
Facility to permit the repurchase of the Securities.
The Securities are also subject to redemption on June 15
in each of the years 2000 and 2001 through the operation of a
sinking fund, at a Redemption Price equal to 100% of the
principal amount, together with accrued interest, if any, to the
Redemption Date, all as provided in the Indenture. The Company
may, at its option, receive a credit against the sinking fund
obligation equal to the aggregate principal amount of Securities
acquired by the Company and surrendered to the Trustee for
cancellation and of Securities redeemed or called for redemption
otherwise than through operation of the sinking fund that have
not previously been so credited for such purpose by the Trustee.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on
the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the
- 22-
<PAGE>
Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default shall occur and be continuing,
the principal of all the Securities may be declared due and
payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on this
Security and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply
to this Security.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security
shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The indebtedness evidenced by the Securities is
subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be
bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary
or appropriate to effectuate the subordination provided for in
the Indenture and appoints the Trustee his attorney-in-fact for
such purpose; provided that the indebtedness evidenced by this
Security shall cease to be
- 23-
<PAGE>
so subordinate and subject in right of payment upon any
defeasance of this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges payable in connection with any registration of transfer
or exchange.
Prior to the time of due presentment of this Security
for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
- 24-
<PAGE>
Customary abbreviations may be used in the name of a
Holder or a assignee, such as: TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
I/We assign and transfer this Security to
Insert assignee's soc. sec. or tax ID no. ........
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to
transfer this Security on the books of the Company. The agent
may substitute another to act for him.
Dated: Signed:
(Sign exactly as your name appears on the other side of this Security.)
Section 204. Form of Trustee's Certificate of
Authentication.
TRUSTEEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY
as Trustee
By
Authorized Signatory
- 25-
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited to
$200,000,000, except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 906
or 1108.
The Securities shall be known and designated as the
"11-5/8% Subordinated Notes due 2002" of the Company. Their
Stated Maturity shall be June 15, 2002, and they shall bear
interest at the rate of 11-5/8% per annum from May 28, 1992, or
the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable on June
15, 1992 and semi-annually thereafter on June 15 and December 15
in each year and at said Stated Maturity, until the principal
thereof is paid or duly provided for. Subject to Article
Thirteen, interest on any overdue amount of principal, interest
(to the extent lawful) or premium, if any, shall be payable on
demand.
The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the
Company maintained for such purpose in The City of New York, or
at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall
appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
The Securities shall be entitled to the benefits, and
shall be redeemable through the operation, of the sinking fund as
provided in Article Twelve.
The Indebtedness evidenced by the Securities shall be
subordinated in right of payment to Senior Indebtedness as
provided in Article Thirteen.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any
integral multiple thereof.
- 26-
<PAGE>
Section 303. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the
Company by any two of the following: its Chairman, one of its
Vice Chairmen, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal
amount of up to $200,000,000. At any time and from time to time
after the execution and delivery of this Indenture, the Company
may deliver Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee
in accordance with such Company Order shall authenticate and
deliver such Securities as provided in this Indenture and not
otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee by manual signature of one of its duly authorized
signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of substantially all
of its properties and assets to any Person, and the successor
Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance,
transfer, lease or other disposition as
- 27-
<PAGE>
aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities
authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time
to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person
with such changes in phraseology and form as may be appropriate,
but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and
the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any
time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any
Securities, such successor Person, at the option of any Holder
but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such
Holder for Securities authenticated and delivered in such new
name.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
- 28-
<PAGE>
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities.
The Trustee (and any other office or agency so designated) is
hereby initially appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 1002 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations and of
a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denomination or
denominations of a like aggregate principal amount upon surrender
of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all
- 29-
<PAGE>
documentary, stamp or similar issue or transfer taxes or other
governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 306, 906, l0ll, 1015 or
1108 not involving any transfer.
The Company shall not be required (a) to issue, register
the transfer of or exchange any Security during a period
beginning at the opening of business (i) 15 days before the
mailing of a notice of redemption of the Securities selected for
redemption under Section 1104 or l203 and ending at the close of
business on the day of such mailing or (ii) 15 days before an
Interest Payment Date and ending on the close of business on the
Interest Payment Date, or (b) to register the transfer of or
exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of Securities being redeemed
in part.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save
each of them and any agent of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a replacement
Security of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under
this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute a contractual obligation of the Company, whether or
- 30-
<PAGE>
not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the applicable
interest rate borne by the Securities, to the extent lawful (such
defaulted interest (and such interest thereon) herein
collectively called "Defaulted Interest"), shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder; and such Defaulted Interest
may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Subsection provided. Thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the
- 31-
<PAGE>
date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of
such Special Record Date. In the name and at the expense of
the Company, the Trustee shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record
Date therefor to be mailed, first-class postage prepaid, to
each Holder at his address as it appears in the Security
Register, not less than 10 days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of
business on such Special Record Date and shall no longer be
payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
- 32-
<PAGE>
sinking fund payment pursuant to Section l202 shall, if
surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly cancelled by it. The Company
shall deliver to the Trustee for cancellation any Securities
previously authenticated and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on demand of and at the expense of the
Company shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(l) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
- 33-
<PAGE>
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the
Stated Maturity or Redemption Date, as the case may be;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that (i) all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company or
Pathmark is a party or by which the Company or Pathmark is
bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 607
and, if money shall have been deposited with the Trustee pursuant
to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section l003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of
- 34-
<PAGE>
the principal (and premium, if any) and interest for whose
payment such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the
provisions of Article Thirteen of this Indenture. If the Trustee
or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under
this Indenture and the Securities shall be revived and reinstated
as though no deposit had occurred pursuant to Section 401;
provided that if the Company has made any payment of principal
of, premium, if any, or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether or not it shall be occasioned or prohibited
by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by the operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body):
(a) default in the payment of interest on any Security
when the same becomes due and payable and continuance of such
default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(c) default in the deposit of any sinking fund payment,
when and as due by the terms of Article Twelve hereof or the
Securities; or
(d) default in the performance, or breach, of any
covenant or agreement of the Company hereunder in any
material respect (other than a default in the performance, or
breach, of a covenant or agreement that is specifically dealt
with elsewhere in this Section), and continuance of
- 35-
<PAGE>
such default or breach for a period of 60 days after there
has been given, by registered or certified mail, to the
Company by the Trustee or to the Company and the Trustee by
the Holders of at least a majority in principal amount of the
Outstanding Securities a written notice specifying such
default or breach and stating that such notice is a "Notice
of Default" hereunder; or
(e) the entry of a decree or order by a court having
jurisdiction in the premises (i) for relief in respect of the
Company in an involuntary case or proceeding under the
Federal Bankruptcy Code or any other federal or state
bankruptcy, insolvency, reorganization or similar law or (ii)
adjudging the Company a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company under the Federal Bankruptcy Code
or any other applicable federal or state law, or appointing a
custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company or of
any substantial part of any of its properties, or ordering
the winding up or liquidation of any of its affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(f) the institution by the Company of a voluntary case
or proceeding under the Federal Bankruptcy Code or any other
applicable federal or state law or any other case or
proceedings to be adjudicated a bankrupt or insolvent, or the
consent by the Company to the entry of a decree or order for
relief in respect of the Company in any involuntary case or
proceeding under the Federal Bankruptcy Code or any other
applicable federal or state law or to the institution of
bankruptcy or insolvency proceedings against the Company, or
the filing by the Company of a petition or answer or consent
seeking reorganization or relief under the Federal Bankruptcy
Code or any other applicable federal or state law, or the
consent by it to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of any of the Company or of any substantial part of
its property, or the making by it of an assignment for the
benefit of creditors, or the admission by it in writing of
its inability to pay its debts generally as they become due
or taking of corporate action by the Company in furtherance
of any such action.
- 36-
<PAGE>
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than an Event of Default
specified in Section 50l(e) or 501(f)) occurs and is continuing,
the Trustee or the Holders of at least a majority of the
principal amount of the Securities then Outstanding, by written
notice to the Company (and to the Trustee if such notice is given
by the Holders), may, and the Trustee at the request of such
Holders shall, declare all unpaid principal of, premium, if any,
and accrued interest on all the Securities to be due and payable
immediately, by a notice in writing to the Company (and to the
Trustee if given by the Holders) and, if the Working Capital
Facility is in effect, to the agent under the Working Capital
Facility, and upon any such declaration such principal shall
become due and payable, except as provided below, (a) if the
Working Capital Facility is not in effect, immediately, or (b) if
the Working Capital Facility is in effect, upon the first to
occur of (l) an acceleration under the Working Capital Facility
(written notice of which the Company shall give to the Trustee as
promptly as practicable upon the occurrence thereof; provided,
however, that the Trustee shall not be deemed to have knowledge
of such acceleration unless and until it receives such written
notice thereof), or (2) the fifth Business Day after receipt by
the Company and by such agent under the Working Capital Facility
of such written notice given hereunder, unless (in the absence of
an acceleration under the Working Capital Facility) on or prior
to such fifth Business Day the Company shall have discharged the
Indebtedness, if any, that is the subject of such Event of
Default or otherwise cured the default relating to such Event of
Default and shall have given written notice of such discharge or
cure to the Trustee. If an Event of Default specified in Section
501(e) or 501(f) occurs and is continuing, the amounts described
above shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any Holder.
After a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in aggregate
principal amount of the Securities outstanding, by written notice
to the Company and the Trustee, may annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, (ii) all overdue interest on all Securities, (iii) the
principal of and premium, if any, on any Securities which have
become due otherwise than by such declaration of acceleration and
interest thereon at the rate
- 37-
<PAGE>
borne by the Securities, and (iv) to the extent that payment of
such interest is lawful, interest upon overdue interest at the
rate borne by the Securities; and (b) all Events of Default,
other than the non-payment of principal of the Securities which
have become due solely by the declaration of acceleration, have
been waived as provided in Section 513 or cured. No such
rescission shall affect any subsequent default or impair any
right consequent thereon.
Upon a determination by the Company that the Working
Capital Facility is no longer in effect, the Company shall
promptly give to the Trustee written notice thereof, which notice
shall be countersigned by an agent under the Working Capital
Facility. Unless and until the Trustee shall have received such
written notice with respect to the Working Capital Facility, the
Trustee, subject to the provisions of Section 601, shall be
entitled in all respects to assume that the Working Capital
Facility is in effect (unless a Responsible Officer of the
Trustee shall have actual knowledge to the contrary).
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if
any) and interest, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute
- 38-
<PAGE>
such proceeding to judgment or final decree, and may enforce the
same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel) and of
the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances
- 39-
<PAGE>
of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 606.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any proposal, plan of reorganization,
arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money, securities or
other property collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest,
upon presentation of the Securities and the notation thereon of
the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 606;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal (and premium, if
any) and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts
due and payable on such Securities for principal (and
premium, if any) and interest; and
THIRD: The balance, if any, to the Company.
- 40-
<PAGE>
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by
the Holders of a majority in principal amount of the
Outstanding Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture except in the manner
provided in this Indenture and for the equal and ratable benefit
of all the Holders.
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest on
such Security on the respective due dates expressed in such
Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
- 41-
<PAGE>
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in principal
amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to
personal liability, and
- 42-
<PAGE>
(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed proper
by the Trustee which is not inconsistent with such direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal
amount of the Outstanding Securities may on behalf of the Holders
of all the Securities waive any past Default or Event of Default
hereunder and its consequences, except a Default or Event of
Default
(a) in the payment of the principal of (or premium, if
any) or interest on any Security, or
(b) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or,
in the case of redemption, on or after the Redemption Date).
- 43-
<PAGE>
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 516. Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any Holder
of any Security to receive payment of the principal of, premium,
if any, and interest on such Security on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 60 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, notice of such Default
hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of (or premium, if
any) or interest on any Security or in the payment of any sinking
fund installment, the Trustee shall be protected in withholding
such notice if and so long as the board of directors, the
executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders;
and provided further that, in the case of any default or breach
of the character specified in Section 501(d), no such notice to
Holders shall be given until at least 30 days after the
occurrence thereof.
- 44-
<PAGE>
Section 602. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no
covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; provided that the Trustee shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this subsection (c) does not limit the effect
of subsection (b) of this Section 602;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing,
and does believe, that repayment of such funds
- 45-
<PAGE>
or adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 602.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense,
including such reasonable advances as may be requested by the
Trustee.
(f) Subject to the foregoing subsections (a) through
(e) of this Section 602:
(i) The Trustee may rely and shall be protected in
acting or in refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or a
Company Order and any resolution by the board of
directors of the Company may be sufficiently evidenced by
a Board Resolution.
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of
Counsel. In addition, in determining the Company's
compliance with the financial covenants set forth herein,
the Trustee may rely on the certificate delivered to the
Trustee pursuant to Section 1019(a).
(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iv) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers.
(v) The Trustee may consult with counsel,
accountants or other experts and any advice of such
counsel, accountants or other experts shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
- 46-
<PAGE>
hereunder in good faith and in accordance with such
advice.
Section 603. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of
Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-l supplied
to the Company are true and accurate, subject to the
qualifications set forth therein.
Section 604. Trustee and Agents May Hold Securities;
Collections; Etc.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310(b) and 31l, may otherwise deal
with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the
purposes for which they were received and need not be segregated
from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the
Company.
Section 606. Compensation and Reimbursement.
The Company covenants and agrees:
- 47-
<PAGE>
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and each of its officers,
directors, employees, agents and counsel for, and to hold
them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligation of the Company under this Section 606 to
compensate the Trustee and to pay and reimburse the Trustee for
such expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Securities upon all money, securities or other
property held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular
Securities, and the Securities are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(g) or 501(h) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under the Federal
Bankruptcy Code and any other applicable federal or state
bankruptcy Law.
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of Section
3l0(b) of the Trust Indenture Act.
- 48-
<PAGE>
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Section 310(a)(1) and which shall have a combined capital and
surplus of at least $100,000,000 and have its Corporate Trust
Office located in The City of New York (or, if its Corporate
Trust Office shall not be located in The City of New York, the
Company shall, pursuant to Section 1002, maintain an office or
agency in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be
made or served) to the extent there is such an institution
eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 610, at which time the retiring
Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper,
appoint a successor Trustee.
- 49-
<PAGE>
(c) The Trustee may be removed at any time by an Act of
the Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company.
(d) If at any time:
(l) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written
request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, the Holder of
any Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with Section 610,
become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders of the Securities
and so accepted appointment, the Holder of any Security who has
been a bona
- 50-
<PAGE>
fide Holder for at least six months may on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
provided, however, that the retiring Trustee shall continue to be
entitled to the benefit of Section 606(c); but, on request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
Upon acceptance of appointment by any successor Trustee
as provided in this Section 610, the Company shall give notice
thereof to the Holders of the Securities, by mailing such notice
to such Holders at their addresses as they shall appear on the
Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with
the notice called for by Section 609. If the Company fails to
give such notice within 10 days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
- 51-
<PAGE>
Section 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor under the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any other such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND
REPORTS BY TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of
Holders.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be
held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Trust Indenture Act Section 312.
- 52-
<PAGE>
Section 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with
the first May 15 after the first issuance of Securities, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May
l5 if required by Trust Indenture Act Section 313(a).
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section l3
or Section 15(d) of the Securities Exchange Act of 1934; or,
if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it shall
file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic
information, documents and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of 1934
in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in
such rules and regulations; and
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information,
documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and
regulations.
- 53-
<PAGE>
ARTICLE EIGHT
[Intentionally Omitted]
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures Without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto in form satisfactory to the Trustee, for any
of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein or in the Securities conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions
with respect to matters or questions arising under this
Indenture; provided that, in each case, such provisions shall
not adversely affect the interests of the Holders;
(d) to comply with the requirements of the Commission
in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, as contemplated by
Section 905 or otherwise;
(e) to evidence and provide the acceptance of the
appointment of a successor Trustee hereunder; or
(f) to make any other change that does not adversely
affect the rights of any Holder.
- 54-
<PAGE>
Section 902. Supplemental Indentures With Consent of
Holders.
With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by
Act of such Holders delivered to the Company and the Trustee,
each when authorized by a Board Resolution, and the Trustee may
enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving
or modifying in any manner the rights of the Holders under this
Indenture; provided, however, that no such supplemental
indenture, amendment or waiver shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date) or modify the
obligation of the Company to make and consummate a Change in
Control Offer; or
(b) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture; or
(c) modify any of the provisions of this Section or
Section 513 or Section 1020, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(d) modify any of the provisions of Article Thirteen
hereof in a manner adverse to the Holders of the Securities.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
- 55-
<PAGE>
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Section 315(a) through 315(d) and Section 602
hereof) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's
own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article
may, and shall if required by the Company, bear a notation in
form approved by the Company as to any matter provided for in
such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and
executed by the Company and shall be authenticated and delivered
by the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the
rights of any holders of Senior Indebtedness under Article
Thirteen unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such
supplemental indenture.
- 56-
<PAGE>
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in
accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby
appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
recission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or recission and
any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
- 57-
<PAGE>
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any
Securities, deposit with a Paying Agent a sum in same day funds
(or New York Clearing House funds if such deposit is made prior
to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal (and premium, if any) or
interest;
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to the
duties, rights and obligations of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the
- 58-
<PAGE>
Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication,
any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 1004. [Intentionally Omitted]
Section 1005. [Intentionally Omitted]
Section l006. [Intentionally Omitted]
Section 1007. [Intentionally Omitted]
Section 1008. [Intentionally Omitted]
Section 1009. [Intentionally Omitted]
Section 1010. [Intentionally Omitted]
Section 1011. [Intentionally Omitted]
Section 1012. [Intentionally Omitted]
Section 1013. [Intentionally Omitted]
Section 1014. [Intentionally Omitted]
- 59-
<PAGE>
Section l0l5. Purchase of Securities Upon Change in
Control.
(a) If there shall have occurred a Change in Control,
Securities shall be purchased by the Company, at the option of
the Holder thereof, in whole or in part in integral multiples of
$1,000, on a date that is not earlier than 45 days nor later than
60 days from the date the Change in Control Notice referred to
below is given to Holders or such later date as may be necessary
for the Company to comply with requirements under the Exchange
Act (such date, or such later date, being the "Change in
Control Purchase Date"), at a purchase price in cash (the
"Change in Control Purchase Price") equal to an amount equal
to 101% of the principal amount of such Securities, plus accrued
and unpaid interest (including any Defaulted Interest), if any,
to the Change in Control Purchase Date, subject to satisfaction
by or on behalf of the Holder of the requirements set forth in
Section 1015(c).
(b) Within 30 days following a Change in Control and
prior to the mailing of the Change in Control Notice to Holders
provided for in paragraph (c) below, the Company covenants to
either (1) repay in full all Indebtedness under the Working
Capital Facility and permanently reduce the commitments of the
lenders thereunder or offer to repay in full all such
Indebtedness and permanently reduce such commitments and repay
the Indebtedness and permanently reduce the commitment of each
lender who has accepted such offer or (2) obtain the requisite
consent under the Working Capital Facility to permit the
repurchase of the Securities as provided for in this Section
1015. The Company shall first comply with this subsection (b)
before it shall be required to repurchase the Securities pursuant
to this Section 1015, and any failure to comply with this
subsection (b) shall constitute a default of a covenant for
purposes of Section 501(d).
(c) Within 30 days after the occurrence of a Change in
Control, the Company shall give written notice of such Change in
Control (a "Change in Control Notice") and of its offer (the
"Change in Control Offer") to purchase Securities as specified
herein to the Trustee, and to each Holder of the Securities at
his address appearing on the Security Register, by first-class
mail, postage prepaid. The Trustee shall be under no obligation
to ascertain the occurrence of a Change in Control. The Change
in Control Notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities, shall
include a form of Change in Control Purchase Notice to be
completed by the Holder and shall state:
- 60-
<PAGE>
(i) the events causing the Change in Control and the
date such Change in Control is deemed to have occurred
for purposes of this Section 1015;
(ii) the date by which a Holder must give a Change in
Control Purchase Notice;
(iii) the Change in Control Purchase Price;
(iv) the Change in Control Purchase Date;
(v) that any Security not purchased will continue to
accrue interest;
(vi) that Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable
at the Change in Control Purchase Price and from and
after such date (unless the Company shall default in the
payment of the Change in Control Purchase Price) such
Securities shall cease to bear interest; and
(vii) the procedures a holder must follow to exercise
rights under this Section 1015 and a brief description
of those rights and the procedures for withdrawing a
Change in Control Purchase Notice.
(d) A Holder may exercise its rights specified in
Section l015(a) upon (i) delivery to any Paying Agent a written
notice (a "Change in Control Purchase Notice") at any time prior
to the close of business on the Change in Control Purchase Date,
stating (A) the certificate number of the Security that the
Holder will deliver to be purchased and (B) the portion of the
principal amount of the Security that the holder will deliver to
be purchased, which portion must be $1,000 or an integral
multiple thereof and (ii) delivery of such Security to such
Paying Agent at such office prior to, on or after the Change in
Control Purchase Date (together with all necessary endorsements),
such delivery being a condition to receipt by the Holder of the
Change in Control Purchase Price therefor. If a Holder has
elected to deliver to the Company for purchase a portion of a
Security, and if the principal amount of such portion is $1,000
or an integral multiple of $1,000, the Company shall purchase
such portion from the Holder thereof pursuant to this Section
1015. Provisions of this
- 61-
<PAGE>
Indenture that apply to the purchase of all of a Security also
apply to the purchase of a portion of such Security. Each Paying
Agent shall promptly notify the Company of the receipt by the
former of any and all Change in Control Purchase Notices and any
and all written notices of withdrawal thereof.
(e) Upon receipt by any Paying Agent of a Change in
Control Purchase Notice, the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall
(unless such Change in Control Purchase Notice is withdrawn
pursuant to Section 1015(i)) thereafter be entitled to receive
solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of the Business Day
following the Change in Control Purchase Date (provided the
conditions in Section l0l5(d) have been satisfied) and the time
of delivery of such Security to the relevant Paying Agent at the
office of such Paying Agent by the Holder thereof in the manner
required by Section 1015(d).
(f) On or prior to the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
in same day funds (or New York Clearing House funds if such
deposit is made prior to the Change in Control Purchase Date)
sufficient to pay the Change in Control Purchase Price of, and
(except if the Change in Control Purchase Date shall be an
Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be purchased on that date.
(g) Upon a Change in Control Purchase Notice having
been given as aforesaid, Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable at the
Change in Control Purchase Price and from and after such date
(unless the Company shall default in the payment of the Change in
Control Purchase Price) such Securities shall cease to bear
interest. Upon surrender of any such Security for purchase in
accordance with the foregoing provisions, such Security shall be
paid by the Company at the Change in Control Purchase Price;
provided, however, that installments of interest whose Stated
Maturity is on or prior to the Change in Control Purchase Date
shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant
Regular Record Dates according to the terms and the provisions of
Section 307. If any Security tendered for purchase shall not be
so paid upon surrender thereof, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from
the Change in Control Purchase Date at the rate borne by such
Security.
- 62-
<PAGE>
(h) Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such
Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate
principal amount equal to, and in exchange for, the portion of
the principal amount of the Security so surrendered that is not
purchased.
(i) The Company shall comply with the applicable tender
offer rules, including Rule l4e-l under the Exchange Act, in
connection with a Change in Control Offer.
(j) A Change in Control Purchase Notice may be
withdrawn before or after delivery by the Holder to the relevant
Paying Agent at the office of such Paying Agent of the Security
to which such Change in Control Purchase Notice relates, by means
of a written notice of withdrawal (by facsimile transmission or
letter) received by such Paying Agent at such office not later
than three Business Days prior to the Change in Control Purchase
Date, specifying, as applicable:
(i) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(ii) the principal amount of the Security with
respect to which such notice of withdrawal is being
submitted; and
(iii) the principal amount, if any, of the Security
that remains subject to the original Change in Control
Purchase Notice and that has been or will be delivered
for purchase by the Company.
A written notice of withdrawal may be in the form set
forth in the preceding paragraph. Each Paying Agent will
promptly return to the prospective Holders thereof any Securities
with respect to which a Change in Control Purchase Notice has
been withdrawn in compliance with this Indenture.
Section 1016. [Intentionally Omitted]
Section 1017. [Intentionally Omitted]
- 63-
<PAGE>
Section 1018. [Intentionally Omitted]
Section 1019. Statement as to Compliance.
The Company will deliver to the Trustee, within 120 days
after the end of each fiscal year ending after the date hereof, a
brief certificate of its principal executive officer, principal
financial officer or principal accounting officer stating
whether, to such officer's knowledge, the Company is in
compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1019,
such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
Section 1020. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any covenant or condition set forth in Section 1015
if, before or after the time for such compliance, the Holders of
not less than a majority in aggregate principal amount of the
Securities at the time Outstanding shall, by Act of such Holders,
waive such compliance in such instance with such covenant or
condition, but no such waiver shall extend to or affect such
covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of
the Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed, otherwise than through
the operation of the sinking fund provided for in Article Twelve,
at the election of the Company, on or after June 15, 1997, as a
whole or from time to time in part subject to the conditions and
at the Redemption Prices specified in the form of Security,
together with accrued interest to the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company
or otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
- 64-
<PAGE>
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board
Resolution. In case of any redemption at the election of the
Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities to be
redeemed.
Section 1104. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be
selected not more than 60 days and not less than 30 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, either pro rata,
by lot or, by any other method the Trustee shall deem fair and
reasonable, and the amounts to be redeemed may be equal to $1,000
or any integral multiple thereof.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed or
to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
Section ll05. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 30 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a
- 65-
<PAGE>
Security to be redeemed in part, the principal amount) of the
particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or
portion thereof, and that (unless the Company shall default
in payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) if applicable, that such redemption is for the
sinking fund provided in Article Twelve;
(g) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(h) the CUSIP number, if any, relating to such
Securities; and
(i) in the case of a Security to be redeemed in part,
the principal amount of such Security to be redeemed and that
after the Redemption Date upon surrender of such Security,
new Security or Securities in the aggregate principal amount
equal to the unredeemed portion thereof will be issued.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at its
request, by the Trustee in the name and at the expense of the
Company.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in same day
funds (or New York Clearing House funds if such deposit is made
prior to the applicable Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be
an Interest Payment Date) accrued interest on, all the Securities
or portions thereof which are to be redeemed on that date.
- 66-
<PAGE>
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be so paid
upon surrender thereof for redemption, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from
the Redemption Date at the rate borne by such Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Company maintained for
such purpose pursuant to Section 1002 (with, if the Company, the
Security Registrar or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to
the Company, the Security Registrar or the Trustee duly executed
by, the Holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without
service charge, a new Security or Securities, of any authorized
denomination as requested by such Holder in aggregate principal
amount equal to and in exchange for the unredeemed portion of the
principal of the Security so surrendered.
ARTICLE TWELVE
SINKING FUND
Section 1201. Mandatory Sinking Fund Payments.
As a mandatory sinking fund for the retirement of the
Securities, the Company will, until all of the Securities shall
have been paid, or payment thereof duly provided for, pay to
- 67-
<PAGE>
the Trustee, on or prior to June 15, 2000 and on or prior to
June 15, 2001, an amount in same day funds (or New York Clearing
House funds if such payment is made prior to the applicable June
15) sufficient to redeem $50,000,000 of the original aggregate
principal amount of Securities at the Redemption Price specified
in the form of Security hereinbefore set forth. The cash amount
of any sinking fund payment is subject to reduction as provided
in Section 1202. Each sinking fund payment shall be applied to
the redemption of Securities on such June 15 as herein provided.
Section 1202. Satisfaction of Sinking Fund Payments
with Securities.
The Company (a) may deliver Outstanding Securities
(other than any previously called for redemption pursuant to this
Article Twelve) theretofore purchased or otherwise acquired by
the Company and (b) may apply as a credit Securities which have
been redeemed at the election of the Company pursuant to Section
1101, in each case in satisfaction of all or any part of any
sinking fund payment required to be made pursuant to Section
1201; provided that such Securities have not been previously so
credited. Each such Security shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in
the form of Security set forth in Article Two for redemption
through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
Section 1203. Redemption of Securities for Sinking
Fund.
On or before April l5, 2000 and April 15, 2001, the
Company will deliver to the Trustee an Officers' Certificate
specifying the portion of the mandatory sinking fund payment in
Section 1201, if any, which is to be satisfied by payment of cash
and the portion thereof, if any, which is to be satisfied by
delivering or crediting Securities pursuant to Section l202 and
will also deliver, if not previously delivered, to the Trustee
any Securities to be so delivered. Such certificate shall be
irrevocable and upon its delivery the Company shall be obligated
to make the cash payment or payments therein referred to, if any,
on or before the next succeeding sinking fund payment date. In
the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding
sinking fund payment date for the Securities shall be paid
entirely in cash and shall be sufficient to redeem the principal
amount of such Securities subject to a mandatory sinking fund
payment without the option to deliver or
- 68-
<PAGE>
credit Securities as provided in Section 1202. Before May 1 in
each such year the Trustee shall select the Securities to be
redeemed upon the next ensuing June 15 in the manner specified in
Section 1104 and cause notice of the redemption thereof to be
given in the name of and at the expense of the Company in the
manner provided in Section 1105. Such notice having been duly
given, the redemption of such Securities shall be made upon the
terms and in the manner stated in Sections 1107 and 1108.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if
any, and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness (including any
interest accruing after the occurrence of an Event of Default
under Section 501(e) or (f)).
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event:
(1) the holders of Senior Indebtedness shall be
entitled to receive payment in full of all amounts due
or to become due on or in respect of all Senior
Indebtedness, or provision shall be made for such
payment in cash or cash equivalents, before the Holders
of the Securities are entitled to receive any payment on
account of principal of (or premium, if any) or interest
on the Securities; and
- 69-
<PAGE>
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but
for the provisions of this Article Thirteen, including
any such payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of the Securities (except, so long as the effect
of this parenthetical clause is not to cause the
Securities to be treated in any case or proceeding
or similar event described in Subsection (a), (b) or (c)
of this Section 1302 as part of the same class of claims
as the Senior Indebtedness or any class of claims on a
parity with or senior to the Senior Indebtedness, for
any such payment or distribution (x) authorized by an
order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of
the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law, or
(y) of securities which are subordinated, to at least
the same extent as the Securities, to the payment of all
Senior Indebtedness then outstanding), shall be paid by
the liquidating trustee or agent or other person making
such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior
Indebtedness or their Representative or Representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the
principal of, and premium, if any, and interest on, and
other amounts due or in connection with, the Senior
Indebtedness held or represented by each, to the extent
necessary to make payment in full of all Senior
Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of
such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of
any Security shall have received any such payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities,
including any such payment or distribution which may be
payable or deliverable by reason of the payment of any
other indebtedness of the Company being
- 70-
<PAGE>
subordinated to the payment of the Securities, before
all Senior Indebtedness is paid in full or payment
thereof provided for, then and in such event such
payment or distribution shall be paid over or delivered
forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other
Person making payment or distribution of assets of the
Company for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or
for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another corporation upon the terms and conditions set forth in
Article Eight of the Indenture in effect prior to the execution
of the First Supplemental Indenture shall not be deemed a
dissolution, winding up, liquidation, reorganization, assignment
for the benefit of creditors or marshalling of assets and
liabilities of the Company for the purposes of this Section if
the corporation formed by such consolidation or into which the
Company is merged or the corporation which acquires by
conveyance, transfer or lease such properties and assets
substantially as an entirety, as the case may be, shall, as a
part of such consolidation, merger, conveyance, transfer or
lease, comply with the conditions set forth in Article Eight of
the Indenture in effect prior to the execution of the First
Supplemental Indenture.
Section 1303. No Payment When Specified Senior
Indebtedness in Default.
(a) (i) In the event of and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Specified Senior Indebtedness beyond any
applicable grace period with respect thereto, or (ii) in the
event that any other event of default with respect to any
Specified Senior Indebtedness shall have occurred and be
continuing and shall have resulted in such Specified Senior
Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
or (b) in the event that any event of default (other than a
default described in clause (a)) with respect to any Specified
Senior Indebtedness shall have occurred and be continuing
permitting the holders of such Specified Senior Indebtedness (or a
trustee on behalf of such holders) to
- 71-
<PAGE>
declare such Specified Senior Indebtedness due and payable prior
to the date on which it would otherwise have become due and
payable, then no payment shall be made by the Company on account
of the principal of (or premium, if any) or interest on the
Securities or on account of the purchase or redemption or other
acquisition of Securities (x) in case of any event of default
described in subclause (i) of clause (a), or an event of default
described in subclause (ii) of clause (a) resulting in an
acceleration as specified in clause (a), unless and until such
payment event of default shall have been cured or waived or shall
have ceased to exist or such acceleration shall have been
rescinded or annulled or the holders of such Specified Senior
Indebtedness or their agents have waived the benefits of this
Section, or (y) in case of any event of default specified in
clause (b), from the earlier of the date the Company or the
Trustee receives written notice of such event of default from the
agent or any other Representative of a holder of Specified Senior
Indebtedness until the earlier of (1) 179 days after such date
and (2) the date, if any, on which the Specified Senior
Indebtedness to which such event of default relates is discharged
or such event of default is waived by the holders of such
Specified Senior Indebtedness or otherwise cured (provided that
further written notice relating to the same or any other event of
default specified in clause (b) above with respect to any
Specified Senior Indebtedness received by the Company or the
Trustee within 12 months after such receipt shall not be
effective for purposes of this clause (y)).
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over
and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company,
at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under
the conditions described in Section 1303, from making payments at
any time of principal of (and premium, if any) or interest on the
Securities.
- 72-
<PAGE>
Section 1305. Subrogation to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full of all Senior
Indebtedness, the Holders of the Securities shall be subrogated
(equally and ratably with the holders of all indebtedness of the
Company which by its express terms is subordinated to Senior
Indebtedness of the Company to the same extent as the Securities
are subordinated and which is entitled to like rights of
subrogation) to the rights of the holders of such Senior
Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness
until the principal of (and premium, if any) and interest on the
Securities shall be paid in full. For purposes of such
subrogation, no payments or distributions to the holders of
Senior Indebtedness of any cash, property or securities to which
the Holders of the Securities or the Trustee would be entitled
except for the provisions of this Article, and no payments over
pursuant to the provisions of this Article to the holders of
Senior Indebtedness by Holders of the Securities or the Trustee,
shall, as among the Company, its creditors other than holders of
Senior Indebtedness, and the Holders of the Securities, be deemed
to be a payment or distribution by the Company to or on account
of the Senior Indebtedness.
Section 1306. Provisions Solely to Define Relative
Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the
Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
express limitations set forth in Article Five and to the rights,
if any, under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up,
- 73-
<PAGE>
assignment for the benefit of creditors or other marshalling of
assets and liabilities of the Company referred to in Section
1302, to receive, pursuant to and in accordance with such
Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment
prohibited by such Section.
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or
more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of
- 74-
<PAGE>
the Securities. Notwithstanding the provisions of this Article
or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any facts which
would prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice,
the Trustee, subject to the provisions of Section 601, shall be
entitled in all respects to assume that no such facts exist;
provided, however, that if the Trustee shall not have received
the notice provided for in this Section at least three Business
Days prior to the date upon which by the terms hereof any money
may become payable for any purpose (including, without
limitation, the payment of the principal of (and premium, if any)
or interest on any Security), then, anything herein contained to
the contrary notwithstanding, the Trustee shall have full power
and authority to receive such money and to apply the same to the
purpose for which such money was received and shall not be
affected by any notice to the contrary which may be received by
it within three Business Days prior to such date.
Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the
event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of
such Person to receive such payment.
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 601, and the Holders of the Securities
shall be entitled to rely upon any order or decree
- 75-
<PAGE>
entered by any court of competent jurisdiction in which such
insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or
proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee
for the benefit of creditors, agent or other Person making such
payment or distribution, delivered to the Trustee or to the
Holders of Securities, for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution,
the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article.
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
Section 1312. Article Applicable to Paying Agents.
In case at any time Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 1311 shall not apply to
the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401. Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
- 76-
<PAGE>
Section 1402 or Section 1403 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in
this Article Fourteen.
Section 1402. Defeasance and Discharge.
Upon the Company's exercise under Section l401 of the
option applicable to this Section 1402, the Company shall be
deemed to have been discharged from its obligations with respect
to all Outstanding Securities on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented
by the Outstanding Securities, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such
Securities and this Indenture (and the Trustee, on demand of and
at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder:
(A) the rights of Holders of Outstanding Securities to receive
solely from the trust fund described in Section 1404 and as more
fully set forth in such Section, payments in respect of the
principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the
Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section
1403 with respect to the Securities.
Section 1403. Covenant Defeasance.
Upon the Company's exercise under Section 1401 of the
option applicable to this Section 1403, the Company shall be
released from its obligations under the covenants contained in
Article Thirteen and in Section 1015 with respect to the
Outstanding Securities on and after the date the conditions set
forth below are satisfied (hereinafter, "covenant defeasance"),
and the Securities shall thereafter be deemed to be not
"Outstanding" for the purposes of any direction, waiver, consent
or declaration or Act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to
be deemed "Outstanding" for all other purposes hereunder (it
being understood that such Securities shall not
- 77-
<PAGE>
be deemed Outstanding for financial accounting purposes). For
this purpose, such covenant defeasance means that, with respect
to the Outstanding Securities, the Company may omit to comply
with and shall have no liability in respect of any term,
condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any
such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a
default or an Event of Default under Section 501(d), but, except
as specified above, the remainder of this Indenture and such
Securities shall be unaffected thereby. In addition, upon the
Company's exercise under Section 1401 of the option applicable to
Section 1403, Section 501(d) shall not constitute Events of
Default.
Section 1404. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of
either Section 1402 or Section 1403 to the Outstanding
Securities:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such
Securities, (A) cash in U.S. Dollars in an amount, or
(B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not
later than one day before the due date of any payment,
cash in U.S. Dollars in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to
pay and discharge, (i) the principal of (and premium, if
any) and interest on the Outstanding Securities on the
Stated Maturity of such principal or installment of
principal (and premium, if any) or interest and (ii) any
mandatory sinking fund payments or analogous payments
applicable to the Outstanding Securities on
- 78-
<PAGE>
the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such
Securities; provided that the Trustee shall have been
irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this
purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of
America for the timely payment of which its full faith
and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America,
which, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include
a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act of 1933, as
amended), as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal
of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of
such depository receipt; provided that (except as
required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder
of such depository receipt from any amount received by
the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by
such depository receipt;
(2) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since May 1, 1992, there has been a change in the
applicable federal income tax law, in either case to the
effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Securities
will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such defeasance had not
occurred;
- 79-
<PAGE>
(3) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect
that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had
not occurred;
(4) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Subsection
501(e) or 501(f) is concerned, at any time during the
period ending on the 91st day after the date of such
deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such
period);
(5) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other material
agreement or instrument to which the Company is a party
or by which the Company is bound;
(6) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Opinion of Counsel to the effect that
after the 91st day following the deposit, the trust
funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally;
(7) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Officers' Certificate stating that the
deposit made by the Company pursuant to its election
under Section 1402 or 1403 was not made by the Company
with the intent of preferring the Holders over other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(8) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that all
conditions precedent provided for relating to either the
defeasance under Section 1402 or the covenant
- 80-
<PAGE>
defeasance under Section 1403 (as the case may be) have
been complied with as contemplated by this Section 1404.
On and after the date the conditions set forth above are
satisfied, the United States dollars or U.S. Government
Obligations so deposited shall not be subject to the rights of
the holders of Senior Indebtedness pursuant to the provisions of
Article Thirteen.
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Section 1404 in respect
of the Outstanding Securities shall be held in trust and applied
by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to Article Thirteen.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
cash or U.S. Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 1404(l)), are in excess of the
amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 1406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or U.S. Government Obligations in
accordance with Section 1402 or 1403, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the
case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 1402
or 1403, as the case may be; provided, however, that, if the
Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money
held by the Trustee or Paying Agent.
* * * * *
- 81-
<PAGE>
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
SUPERMARKETS GENERAL
HOLDINGS CORPORATION
By:
Title:
Attest:
Title:
WILMINGTON TRUST COMPANY
By:
Title:
Attest:
Title:
- 82-
<PAGE>
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
SUPERMARKETS GENERAL
HOLDINGS CORPORATION
By:
Title:
Attest:
Title:
WILMINGTON TRUST COMPANY
By:
Title:
Attest:
Title:
- 83-
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1993, before me personally
came and
, respectively, to me known, who, being by me
duly sworn, did acknowledge before me that they reside at
and at
and , respectively; that they are
and
, respectively, of Wilmington Trust Company, one of the
corporations described in and which executed the above
instrument; that they know the corporate seal of such
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed pursuant to authority of
the Board of Directors of such corporation; and that they signed
their names thereto as and
, respectively, of such corporation pursuant to
like authority.
(NOTARIAL SEAL)
- 84-
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the day of , 1993, before me
personally came and
, respectively, to me known, who, being
by me duly sworn, did acknowledge before me that they reside at
and
, respectively; that they are
and , respectively,
of Supermarkets General Holdings Corporation, one of the
corporations described in and which executed the above
instrument; that they know the corporate seal of such
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed pursuant to authority of
the Board of Directors of such corporation; and that they signed
their names thereto as and
, respectively, of such corporation
pursuant to like authority.
(NOTARIAL SEAL)
- 85-
FIRST SUPPLEMENTAL INDENTURE
Dated as of October 5, 1993
FIRST SUPPLEMENTAL INDENTURE dated as of , 1993
(the "First Supplemental Indenture"), between SUPERMARKETS
GENERAL HOLDINGS CORPORATION, a Delaware corporation (hereinafter
called the "Company"), and WILMINGTON TRUST COMPANY, a Delaware
banking corporation, as trustee under the Indenture referred to
below (hereinafter called the "Trustee").
WHEREAS, the Company and the Trustee are parties to an
Indenture, dated as of May 1, 1992 (hereinafter called the
"Existing Indenture", all capitalized terms used in this
Supplemental Indenture and not otherwise defined being used as
defined in the Existing Indenture), pursuant to which the Company
issued its 11-5/8% Subordinated Notes due 2002 (hereinafter
called the "Securities");
WHEREAS, on May 26, 1993, Supermarkets General
Corporation (to be renamed as Pathmark Stores, Inc.), a Delaware
corporation and a wholly owned subsidiary of the Company
("Pathmark"), made an offer (the "Exchange Offer") to exchange
$1,000 principal amount of Pathmark's 11-5/8% Subordinated Notes
due 2002 for each $1,000 principal amount of the Securities
issued by the Company, and, concurrently with the Exchange Offer,
the Company solicited (the "Solicitation") consents to amend
certain provisions of the Existing Indenture;
WHEREAS, the Existing Indenture provides that, when
authorized by a Board Resolution, indentures supplemental thereto
may be executed and delivered by the Company and the Trustee with
the consent of the Holders of not less than a majority in
principal amount of the Outstanding Securities (or in certain
cases the consent of the Holder of each Outstanding Security
affected thereby), such consent to be by Act of said Holders
delivered to the Company and the Trustee;
WHEREAS, pursuant to the Exchange Offer and the
Solicitation, the Holders of at least a majority in principal
amount of the Outstanding Securities have so consented to the
execution and delivery of this First Supplemental Indenture; and
WHEREAS, all things necessary have been done to make
this First Supplemental Indenture, when executed and delivered by
the Company, the legal, valid and binding agreement of the
Company, in accordance with its terms.
<PAGE>
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
The parties hereto mutually covenant and agree as follows:
PART ONE
The Existing Indenture is hereby supplemented, modified
and restated to read as set forth in Exhibit A to this First
Supplemental Indenture.
PART TWO
Sec. 1. This First Supplemental Indenture shall be
construed as supplemental to the Indenture and shall form a part
thereof, and the Indenture is hereby incorporated by reference
herein and, as supplemented, modified and restated hereby, is
hereby ratified, approved and confirmed.
Sec. 2. This First Supplemental Indenture shall be
governed and construed in accordance with the laws of the State
of New York.
Sec. 3. This First Supplemental Indenture may be signed
in any number of counterparts with the same effect as if the
signatures to each counterpart were upon a single instrument, and
all such counterparts together shall be deemed an original of
this First Supplemental Indenture.
Sec. 4. It is the intention of the parties hereto that
this First Supplemental Indenture be deemed to be delivered in
the State of New York, and that such delivery by the Company be
deemed to occur only upon delivery by the Trustee in the State of
New York.
Sec. 5. This First Supplemental Indenture shall be
effective on the date and time hereof; provided, however, that
this First Supplemental Indenture shall not become operative, and
the Existing Indenture shall remain in effect, until the date the
Exchange Offer expires; and provided, further, that if the
Exchange Offer is terminated, this First Supplemental Indenture
shall be rescinded automatically and shall not have further force
and effect.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
First Supplemental Indenture to be duly executed, and their
respective corporate seals to be hereunto affixed and attested,
all as of the day and year first above written.
SUPERMARKETS GENERAL HOLDINGS
CORPORATION
By: /s/ Anthony Cuti
Name:
Title: President
Attest: /s/ Myron D. Waxberg
Name: Myron D. Waxberg
Title: Assistant Secretary
WILMINGTON TRUST COMPANY
By:
Name:
Title:
Attest:
Name:
Title:
-3-
<PAGE>
STATE OF Delaware )
) ss.:
COUNTY OF New Castle )
On the 4th day of October, 1993, before me personally
came James T. Skelly, III and Emmett R. Harmon, respectively, to
me known, who, being by me duly sworn, did acknowledge before
me that they reside at Wilmington, DE and at Wilmington, DE
and ,
respectively; that they are Vice President and Vice President,
respectively, of Wilmington Trust Company, one of the
corporations described in and which executed the above
instrument; that they know the corporate seal of such
corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed pursuant to authority of
the Board of Directors of such corporation; and that they signed
their names thereto as James T. Skelly, III and Emmett R. Harmon
, respectively, of such corporation pursuant to
like authority.
(NOTARIAL SEAL)
/s/ Sonja F. Allen
---------------
Notary Public
<PAGE>
STATE OF New York )
) ss.:
COUNTY OF New York )
On the 5th day of October, 1993, before me
personally came Anthony Cuti and
, respectively, to me known, who, being
by me duly sworn, did acknowledge before me that they reside at
36 E. Saddle River Rd. and Saddle River, New Jersey,
respectively; that they are
Vice President and Vice President
, respectively, of Supermarkets General Holdings
Corporation, one of the corporations described in and which
executed the above instrument; that they know the corporate seal
of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that they
signed their names thereto as
and , respectively, of such
corporation pursuant to like authority.
(NOTARIAL SEAL)
PLAINBRIDGE, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of October 26,
1993 and entered into by and among PLAINBRIDGE, INC., a
Delaware corporation ("Company"), THE FINANCIAL INSTITUTIONS
LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "Lender" and collectively as
"Lenders"), and BANKERS TRUST COMPANY ("Bankers"), as agent
for Lenders (in such capacity, "Agent").
R E C I T A L S
- - - - - - - -
WHEREAS, in connection with the Spin-Off (this and
other capitalized terms used in these recitals without
definition being used as defined in subsection 1.1), Company
proposes to acquire certain assets, and assume certain
liabilities, of Pathmark and to enter into the Spin-Off
Agreements and certain other arrangements with SMG-II,
Holdings, PTKH, Pathmark and Chefmark;
WHEREAS, Company desires that Lenders extend certain
credit facilities to Company for working capital purposes of
Company and its Subsidiaries;
WHEREAS, concurrently with the execution of this
Agreement, Pathmark is entering into the Pathmark Credit
Agreement; and
WHEREAS, Company desires to secure all of the
Obligations hereunder and under the other Loan Documents by
granting to Agent, on behalf of Lenders, a first priority Lien
on certain unencumbered real, personal and mixed property of
Company;
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Company, Lenders and Agent agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
------- ------- -----
The following terms used in this Agreement shall
have the following meanings:
"Adjusted Eurodollar Rate" means, for any Interest
Rate Determination Date with respect to a Eurodollar Rate
Loan, the rate obtained by dividing (i) the offered quotation
--------
(rounded upward to the nearest 1/16 of one percent) to first
class banks in the interbank Eurodollar market by Bankers for
U.S. dollar deposits of amounts in same day funds comparable
to the principal amount of the Eurodollar Rate Loan of Bankers
for which the Adjusted Eurodollar Rate is then being
determined with maturities comparable to the Interest Period
for which such Adjusted Eurodollar Rate will apply as of
approximately 10:00 A.M. (New York time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus
-- -----
the stated maximum rate of all reserve requirements
(including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any
member bank of the Federal Reserve System in respect of
"Eurocurrency liabilities" as defined in Regulation D (or any
successor category of liabilities under Regulation D).
"Affected Lender" has the meaning assigned to that
term in subsection 2.6C.
<PAGE>
"Affiliate", as applied to any Person, means any
other Person directly or indirectly controlling, controlled
by, or under common control with, that Person. For the
purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by"
and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies
of that Person, whether through the ownership of voting
securities or by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any
successor Agent appointed pursuant to subsection 9.6A, and the
term "Agent" shall include Agent acting in its capacity as
secured party under the Collateral Documents unless the
context otherwise requires.
"Agreement" means this Credit Agreement dated as of
October 26, 1993, as it may be amended, supplemented or
otherwise modified from time to time.
"Asset Sale" means (i) the sale by Company or any of
its Subsidiaries to any Person other than Company or any of
its wholly-owned Subsidiaries of (a) any of the stock of any
of Company's Subsidiaries or (b) any other assets (whether
tangible or intangible) of Company or any of its Subsidiaries
other than (1) inventory sold in the ordinary course of
business and (2) any other assets to the extent that the
aggregate fair market value of such assets sold in any single
transaction or related series of transactions is equal to
$1,000 or less, (ii) the assignment by Company or any of its
Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of any lease, whether a Capital
Lease or an Operating Lease, to which it is a party as lessee,
(iii) the taking of any assets of Company or any of its
Subsidiaries, or any part thereof or interest therein, for
public or quasi-public use under the power of eminent domain,
condemnation or otherwise, other than any such taking to the
extent that the aggregate net cash proceeds received by
Company and its Subsidiaries in connection with such taking
and all other takings related to such taking are equal to or
less than $100,000, or (iv) the occurrence of any loss, damage
or destruction of any assets of Company or any of its
Subsidiaries giving rise to insurance proceeds, other than any
such occurrence to the extent that the aggregate insurance
proceeds received by Company and its Subsidiaries in
connection with such occurrence are equal to or less than
$5,000,000.
"Assignment and Acceptance" means an Assignment and
Acceptance entered into by a Lender and an Eligible Assignee,
and accepted by Agent, in substantially the form of
Exhibit XII annexed hereto.
------- ---
"Bankers" has the meaning assigned to that term in
the introduction to this Agreement.
"Bankruptcy Code" means Title 11 of the United
States Code entitled "Bankruptcy", as now and hereafter in
effect, or any successor statute.
"Base Rate" means, at any time, the higher of
(x) the Prime Rate or (y) the rate which is 1/2 of 1% in
excess of the Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at
rates determined by reference to the Base Rate as provided in
subsection 2.2A.
<PAGE>
"Borrowing Base" means, as at any date of
determination, an aggregate amount equal to up to fifty
percent (50%) of Eligible Inventory.
"Borrowing Base Certificate" means a certificate
substantially in the form annexed hereto as Exhibit VII
------- ---
delivered to Lenders by Company pursuant to subsection 4.1M or
subsection 6.1(v).
"Business Day" means (i) for all purposes other than
as covered by clause (ii) below, any day excluding Saturday,
Sunday and any day which is a legal holiday under the laws of
the State of New York or is a day on which banking institu-
tions located in such state are authorized or required by law
or other governmental action to close, and (ii) with respect
to all notices, determinations, fundings and payments in
connection with the Adjusted Eurodollar Rate or any Eurodollar
Rate Loans, any day that is a Business Day described in
clause (i) above and that is also a day for trading by and
between banks in Dollar deposits in the applicable interbank
Eurodollar market.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by
that Person as lessee that, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of that
Person.
"Cash" means money, currency or a credit balance in
a Deposit Account.
"Cash Equivalents" means (i) marketable securities
issued or directly and unconditionally guaranteed by the
United States Government or issued by any agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within one year from the date of
acquisition thereof; (ii) marketable direct obligations issued
by any state of the United States of America or any political
subdivision of any such state or any public instrumentality
thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the highest
rating obtainable from either Standard & Poor's Corporation
("S&P") or Moody's Investors Service, Inc. ("Moody's");
(iii) commercial paper maturing no more than six months from
the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof
issued by any Lender or any commercial bank organized under
the laws of the United States of America or any state thereof
or the District of Columbia having unimpaired capital and
surplus of not less than $250,000,000 (each Lender and each
such commercial bank herein called a "Cash Equivalent Bank");
and (v) Eurodollar time deposits having a maturity of less
than one year purchased directly from any Cash Equivalent Bank
(whether such deposit is with such Cash Equivalent Bank or any
other Cash Equivalent Bank).
"Chefmark" means Chefmark, Inc., a Delaware
corporation.
"Closing Date" means the date on or before October
29, 1993, on which (i) the initial Loans are made or (ii) in
the event the initial Loans have not yet been made, the
initial Letters of Credit are issued.
"CO-AGENT" has the meaning assigned to that term in
--------
subsection 9.1B.
"Collateral" means, collectively, all real, personal
and mixed property collateral securing the Obligations
pursuant to the Collateral Documents.
<PAGE>
"Collateral Account" has the meaning assigned to
that term in the Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral
Account Agreement executed and delivered by Company and Agent
on the Closing Date, substantially in the form of Exhibit XIV
------- ---
annexed hereto, as such Collateral Account Agreement may
hereafter be amended, supplemented or otherwise modified from
time to time.
"Collateral Agent" has the meaning assigned to that
term in subsection 9.1C.
"Collateral Documents" means the Company Pledge
Agreement, the Company Security Agreement, the Company
Trademark Security Agreement, the Collateral Account
Agreement, the Subsidiary Pledge Agreements, the Subsidiary
Security Agreements, the Subsidiary Trademark Security
Agreements, the Mortgages and all other instruments or
documents delivered by any Loan Party pursuant to this
Agreement or any of the other Loan Documents in order to grant
to Agent, on behalf of Lenders, Liens in real, personal or
mixed property of that Loan Party as security for the
Obligations.
"Commercial Letter of Credit" means any letter of
credit or similar instrument issued for the purpose of
providing the primary payment mechanism in connection with the
purchase of any materials, goods or services by Company or any
of its Subsidiaries in the ordinary course of business of
Company or such Subsidiary.
"Commitments" means the commitments of Lenders to
make Loans as set forth in subsection 2.1A.
"Company" has the meaning assigned to that term in
the introduction to this Agreement.
"Company Pledge Agreement" means the Pledge
Agreement executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XV annexed hereto,
------- --
as such Pledge Agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"Company Security Agreement" means the Security
Agreement executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XVI annexed hereto,
------- ---
as such Security Agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"Company Trademark Security Agreement" means the
Trademark Collateral Security Agreement and Conditional
Assignment executed and delivered by Company on the Closing
Date, substantially in the form of Exhibit XVII annexed
------- ----
hereto, as such Trademark Collateral Security Agreement and
Conditional Assignment may hereafter be amended, supplemented
or otherwise modified from time to time.
"Compliance Certificate" means a certificate
substantially in the form annexed hereto as Exhibit VIII
------- ----
delivered to Lenders by Company pursuant to subsection
6.1(iv).
"Consolidated Adjusted EBITDA" means, for any
period, the sum of the amounts for such period of
(i) Consolidated Net Income, (ii) Consolidated Interest
Expense, (iii) provisions for taxes based on income,
(iv) total depreciation and amortization expense,
(v) provisions for expenses related to the Restructuring, and
(vi) other non-cash items (including without limitation LIFO
charges) reducing Consolidated Net Income less other non-cash
----
items increasing Consolidated Net Income, all of the foregoing
<PAGE>
as determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" means, for any
period, an amount equal to (i) the sum of (a) the aggregate of
all expenditures (whether paid in cash or other consideration
or accrued as a liability and including that portion of
Capital Leases which is capitalized on the consolidated
balance sheet of Company and its Subsidiaries) by Company and
its Subsidiaries during that period that, in conformity with
GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated
statement of cash flows of Company and its Subsidiaries plus
----
(b) to the extent not covered by clause (a) hereof, the
aggregate of all expenditures by Company and its Subsidiaries
during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person minus (ii) the
-----
aggregate amount of all Net Cash Proceeds of Asset Sale
received by Company and its Subsidiaries during that period in
connection with Sale and Lease-backs of Equipment all or a
portion of the purchase price of which was included in the
calculation of Consolidated Capital Expenditures for that
period or any prior period. For purposes of this definition
(1) the purchase price of any Equipment that is purchased
simultaneously with the trade-in or other disposition in the
ordinary course of business of existing Equipment or with
insurance proceeds received by Company and its Subsidiaries in
respect of the actual or constructive total loss of any
Equipment shall be included in Consolidated Capital
Expenditures only to the extent of the gross amount of such
purchase price less the credit granted by the seller of such
----
Equipment for the Equipment being traded in at such time or
the amount of proceeds from such other disposition or the
amount of such insurance proceeds, as the case may be, and
(2) the amount of any expenditure for any Equipment (the "New
Equipment") that replaces existing leased Equipment (the
"Leased Equipment") that was purchased at the end of the
applicable lease term and then subsequently sold for a greater
amount shall be included in Consolidated Capital Expenditures
only to the extent of the gross amount of the expenditure for
the New Equipment less the excess of the proceeds received by
----
Company or any of its Subsidiaries from the sale of the Leased
Equipment over the gross amount of the purchase price of the
Leased Equipment.
"Consolidated Interest Expense" means, for any
period, total interest expense (including that portion
attributable to Capital Leases in accordance with GAAP and
capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding
Indebtedness of Company and its Subsidiaries, including,
without limitation, all commissions, discounts and other fees
and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Interest
Rate Agreements, but excluding, however, (i) any amounts
referred to in subsection 2.3 payable to Agent and Lenders on
or before the Closing Date and (ii) any deferred financing
expenses amortized by Company and its Subsidiaries during such
period.
"Consolidated Net Income" means, for any period, the
net income (or loss) of Company and its Subsidiaries on a
consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any
Person (other than a Subsidiary of Company) in which any other
Person (other than Company or any of its Subsidiaries) has a
joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or
any of its Subsidiaries by such Person during such period,
(ii) the income (or loss) of any Person accrued prior to the
<PAGE>
date it becomes a Subsidiary of Company or is merged into or
consolidated with Company or any of its Subsidiaries or that
Person's assets are acquired by Company or any of its
Subsidiaries, (iii) the income of any Subsidiary of Company to
the extent that the declaration or payment of dividends or
similar distributions by that Subsidiary of that income is not
at the time permitted by operation of the terms of its charter
or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that
Subsidiary, (iv) any after-tax gains or losses attributable to
Asset Sales or returned surplus assets of any Pension Plan,
and (v) (to the extent not included in clauses (i) through
(iv) above) any net extraordinary gains or net non-cash
extraordinary losses.
"Consolidated Net Worth" means, as at any date of
determination, the sum of the capital stock and additional
paid-in capital plus retained earnings (or minus accumulated
deficits) of Company and its Subsidiaries on a consolidated
basis determined in conformity with GAAP.
"Consolidated Rental Payments" means, for any
period, the aggregate amount of all rents paid or payable by
Company and its Subsidiaries on a consolidated basis during
that period under all Capital Leases and Operating Leases to
which Company or any of its Subsidiaries is a party as lessee
(in each case net of any sublease income received or
receivable by Company and its Subsidiaries on a consolidated
basis during that period with respect thereto), excluding,
---------
however, (i) any amount of rent for which Company or any
-------
Subsidiary of Company is contingently liable under any lease
as a result of the assignment thereof by Company or such
Subsidiary to any Person and (ii) any tax, insurance,
maintenance and similar expenses that Company or any
Subsidiary of Company is obligated to pay as lessee under the
terms of the applicable lease.
"Consolidated Tangible Net Worth" means, as at any
date of determination, an amount equal to (i) Consolidated Net
Worth minus (ii) the total amount of all assets of Company and
-----
its Subsidiaries, on a consolidated basis determined in
conformity with GAAP, consisting of goodwill, patents, trade
names, trademarks, copyrights, franchises, unamortized
research and development expense, unamortized organization
expense, unamortized debt discount and expense, deferred
assets (other than prepaid insurance, workers' compensation
insurance and prepaid Taxes), the excess of cost of shares
acquired over book value of related assets, and such other
assets as are properly classified as "intangible assets" in
accordance with GAAP.
"Consolidated Total Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of
all Indebtedness of Company and its Subsidiaries, determined
on a consolidated basis in accordance with GAAP.
"Contingent Obligation", as applied to any Person,
means any direct or indirect liability, contingent or
otherwise, of that Person (i) with respect to any
Indebtedness, lease, dividend or other obligation of another
if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance to
the obligee of such obligation of another that such obligation
of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of
such obligation will be protected (in whole or in part)
against loss in respect thereof, (ii) with respect to any
letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of
drawings, or (iii) under Interest Rate Agreements and Currency
Agreements. Contingent Obligations shall include, without
limitation, (a) the direct or indirect guaranty, endorsement
<PAGE>
(otherwise than for collection or deposit in the ordinary
course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of
another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability
of such Person for the obligation of another through any
agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any
security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise)
or (Y) to maintain the solvency or any balance sheet item,
level of income or financial condition of another if, in the
case of any agreement described under subclauses (X) or (Y) of
this sentence, the primary purpose or intent thereof is as de-
scribed in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the
obligation so guaranteed or otherwise supported or, if less,
the amount to which such Contingent Obligation is specifically
limited.
"Contractual Obligation", as applied to any Person,
means any provision of any Security issued by that Person or
of any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that
Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"Covered Real Property" means, at any time, any Real
Property Asset now owned or hereafter acquired by Company or
any of its Subsidiaries other than (i) any Real Property Asset
listed in Schedule 7.2 annexed hereto that is, at such time,
-------- ---
subject to Liens permitted under subsection 7.2 securing
Indebtedness (other than the Obligations) of Company or any of
its Subsidiaries permitted under subsection 7.1 and (ii) any
Real Property Asset located in the State of New York.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement, futures contract, option
contract, synthetic cap or other similar agreement or
arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in currency values.
"Default Period" has the meaning assigned to that
term in subsection 2.10.
"Defaulting Lender" has the meaning assigned to that
term in subsection 2.10.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
"Dollars" and the sign "$" mean the lawful money of
the United States of America.
"Eligible Assignee" means (A) (i) a commercial bank
organized under the laws of the United States or any state
thereof; (ii) a savings and loan association or savings bank
organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of
any other country, or a political subdivision thereof;
provided that (x) such bank is acting through a branch or
--------
agency located in the United States or (y) such bank is
organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) any other
entity which is an "accredited investor" (as defined in
Regulation D under the Securities Act) which extends credit or
buys loans as one of its businesses including, but not limited
<PAGE>
to, insurance companies, mutual funds and lease financing
companies, in each case (under clauses (i) through (iv) above)
that is reasonably acceptable to Agent; and (B) any Lender and
any Affiliate of any Lender; provided that no Affiliate of
--------
Company shall be an Eligible Assignee.
"Eligible Inventory" means, as at any date of
determination, the Dollar value for Company, using a first-in,
first-out method of accounting, all in conformity with GAAP,
and increased to reflect the amount of any discounts granted
by suppliers to Company for payment in advance of normal trade
terms, of all Inventory which:
(i) does not constitute perishable items,
including without limitation (A) perishable fruit,
vegetables and other produce, (B) refrigerated
items, including dairy, delicatessen and meat
products, (C) frozen items, and (D) fresh baked
goods;
(ii) is owned by Company, is subject to a valid
and perfected first priority security interest in
favor of Agent on behalf of Lenders, and is free and
clear of all other Liens (other than Permitted
Encumbrances);
(iii) (A) is located on Company's premises
in the United States of America and is not in
transit or (B) is located in any warehouse (a "Third
Party Warehouse") owned and operated by any Person
other than Company (a "Third Party Warehouseman"),
is not in transit, and either is not covered by any
negotiable document of title issued by such Third
Party Warehouseman or is covered by a negotiable
document of title issued by such Third Party
Warehouseman that is in Agent's or Collateral
Agent's possession, so long as, in each case
described in this clause (iii)(B), (1) the only
goods, merchandise or other personal property stored
or warehoused in such Third Party Warehouse are
Inventory or, if goods, merchandise or other
personal property other than Inventory are stored or
warehoused in such Third Party Warehouse, all
Inventory stored or warehoused therein is at all
times segregated, pursuant to arrangements
satisfactory to Agent and CO-AGENT, from all other
--------
goods, merchandise or other personal property stored
or warehoused therein and (2) such Third Party
Warehouseman has executed an acknowledgement and
consent, in form and substance satisfactory to Agent
and CO-AGENT, acknowledging Agent's security
--------
interest in the Inventory located in such Third
Party Warehouse, waiving any rights in or claims
against such Inventory, and consenting to Agent's or
Collateral Agent's entering into and remaining in
such Third Party Warehouse and/or removing such
Inventory from such Third Party Warehouse, in either
case in connection with the enforcement of Agent's
security interest in such Inventory and addressing
such other matters as may be reasonably required by
Agent or Collateral Agent (any such Inventory that
is in compliance with all of the requirements set
forth in this clause (iii)(B) being referred to
herein as the "Qualified Third Party Warehouse
Inventory");
(iv) is not on lease or consignment from any
Person to Company;
(v) is not on lease or consignment to any
Person from Company;
<PAGE>
(vi) is not (except in the case of Qualified
Third Party Warehouse Inventory) stored with a
bailee, warehouseman or similar party;
(vii) is not packaging or shipping
material, raw materials, components or work-in-
progress;
(viii) is not obsolete, damaged, unsalable
or otherwise unfit for use or sale; provided that
--------
salvage Inventory shall not be excluded to the
extent it may be returned to the vendor or
manufacturer thereof for a full refund; and
(ix) is not, in Agent's or Collateral Agent's
opinion, unacceptable in the exercise of its sole
discretion.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is, or was at
any time, maintained or contributed to by Company or any of
its ERISA Affiliates.
"Environmental Claim" means any written notice of
material violation, claim, demand or abatement order by any
governmental authority or any Person for any damage,
including, without limitation, personal injury (including
sickness, disease or death), tangible or intangible property
damage, contribution, indemnity, indirect or consequential
damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or
for fines, penalties or restrictions, in each case relating
to, resulting from or in connection with Hazardous Materials
and relating to Company, any of its Subsidiaries, or any of
their respective Affiliates.
"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, plans, policies or decrees and the
like relating to (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of
Hazardous Materials, or (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, in any
manner applicable to Company or any of its Subsidiaries or any
of the Facilities.
"Equipment" means all equipment (including without
limitation all distribution, retailing, data processing,
office and motor vehicle equipment) owned or leased by Company
or any of its Subsidiaries.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, and any
successor statute.
"ERISA Affiliate", as applied to any Person, means
(i) any corporation which is, or was at any time, a member of
a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that
Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any
time, a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Internal
Revenue Code of which that Person is, or was at any time, a
member; and (iii) any member of an affiliated service group
within the meaning of Section 414(m) or (o) of the Internal
Revenue Code of which that Person, any corporation described
in clause (i) above or any trade or business described in
clause (ii) above is, or was at any time, a member.
<PAGE>
"ERISA Event" means (i) a "reportable event" within
the meaning of Section 4043 of ERISA and the regulations
issued thereunder with respect to any Pension Plan (excluding
those for which the provision for 30-day notice to the PBGC
has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal
Revenue Code with respect to any Pension Plan (whether or not
waived in accordance with Section 412(d) of the Internal
Revenue Code) or the failure to make by its due date a
required installment under Section 412(m) of the Internal
Revenue Code with respect to any Pension Plan or the failure
to make any required contribution to a Multiemployer Plan;
(iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent
to terminate such plan in a distress termination described in
Section 4041(c) of ERISA; (iv) the withdrawal by Company or
any of its ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such
Pension Plan resulting in liability pursuant to Sections 4063
or 4064 of ERISA; (v) the institution by the PBGC of
proceedings to terminate any Pension Plan, or the occurrence
of any event or condition which might constitute grounds under
ERISA for the termination of, or the appointment of a trustee
to administer, any Pension Plan; (vi) the imposition of
liability on Company or any of its ERISA Affiliates pursuant
to Section 4062(e) or 4069 of ERISA or by reason of the
application of Section 4212(c) of ERISA; (vii) the withdrawal
by Company or any of its ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and
4205 of ERISA) from any Multiemployer Plan if there is any
potential liability therefor, or the receipt by Company or any
of its ERISA Affiliates of notice from any Multiemployer Plan
that it is in reorganization or insolvency pursuant to Section
4241 or 4245 of ERISA, or that it intends to terminate or has
terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or
omission which could reasonably be expected to give rise to
the imposition on Company or any of its ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of
the Internal Revenue Code or under Section 409 or 502(c),
(i) or (l) or 4071 of ERISA in respect of any Employee Benefit
Plan; (ix) the assertion of a material claim (other than
routine claims for benefits) against any Employee Benefit Plan
other than a Multiemployer Plan or the assets thereof, or
against Company or any of its ERISA Affiliates in connection
with any such Employee Benefit Plan; (x) receipt from the
Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to
be qualified under Section 401(a) of the Internal Revenue
Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension
Plan to qualify for exemption from taxation under Section
501(a) of the Internal Revenue Code; or (xi) the imposition of
a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any
Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest
at rates determined by reference to the Adjusted Eurodollar
Rate as provided in subsection 2.2A.
"Event of Default" means each of the events set
forth in Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Extension Assignment and Acceptance" has the
meaning assigned to that term in subsection 2.1E.
<PAGE>
"Facilities" means any and all real property
(including, without limitation, all buildings, fixtures or
other improvements located thereon) now or
hereafter during the term of this Agreement owned, leased or
operated or heretofore owned by (i) Company or any of its
Subsidiaries, (ii) any of Company's or any such Subsidiary's
predecessors by merger or consolidation, or (iii) any of
Company's Affiliates that are directly or indirectly
controlled by Company.
"Federal Funds Effective Rate" means, for any
period, a fluctuating interest rate equal for each day during
such period to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day
on such transactions received by Agent from three Federal
funds brokers of recognized standing selected by Agent.
"Fiscal Year" means the fiscal year of Company and
its Subsidiaries ending on the Saturday closest to January 31
of each calendar year. For purposes of this Agreement, any
particular Fiscal Year shall be designated by reference to the
calendar year in which such Fiscal Year commences.
"Funding Date" means the date of the funding of a
Loan.
"GAAP" means, subject to the limitations on the
application thereof set forth in subsection 1.2, generally
accepted accounting principles set forth in opinions and
pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other
entity as may be approved by a significant segment of the
accounting profession, in each case as the same are applicable
to the circumstances as of the date of determination.
"Governmental Authorization" means any permit,
license, authorization, plan, directive, consent order or
consent decree of or from any federal, state or local
governmental authority, agency or court.
"Hazardous Materials" means (i) any chemical,
material or substance at any time defined as or included in
the definition of "hazardous substances", "hazardous wastes",
"hazardous materials", "extremely hazardous waste",
"restricted hazardous waste", "infectious waste", "toxic
substances" or any other terms intended to define, list or
classify substances by reason of deleterious properties such
as ignitability, corrosivity, reactivity, carcinogenicity,
toxicity, reproductive toxicity, "TCLP toxicity" or "EP
toxicity" or words of similar import under any applicable
Environmental Laws or publications promulgated pursuant
thereto; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids,
produced waters and other wastes associated with the
exploration, development or production of crude oil, natural
gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in
any form that is or may become friable; (vii) urea
formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing levels
of polychlorinated biphenyls in excess of fifty parts per
million; (ix) pesticides; and (x) any other chemical, material
or substance, exposure to which is prohibited, limited or
regulated by any governmental authority.
<PAGE>
"Heller" means Heller Financial, Inc., a Delaware
corporation.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation.
"Indebtedness", as applied to any Person, means
(i) all indebtedness for borrowed money, (ii) that portion of
obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity
with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing
obligations for borrowed money, (iv) any obligation owed for
all or any part of the deferred purchase price of property or
services (excluding any such obligations incurred under
ERISA), which purchase price is (A) due more than six months
(or a longer period up to one year, if such terms are
available from suppliers in the ordinary course of business)
from the date of incurrence of the obligation in respect
thereof or (B) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any Lien on
any property or asset owned or held by that Person regardless
of whether the indebtedness secured thereby shall have been
assumed by that Person or is nonrecourse to the credit of that
Person. Obligations under Interest Rate Agreements and
Currency Agreements constitute Contingent Obligations and not
Indebtedness.
"Indemnitee" has the meaning assigned to that term
in subsection 10.3.
"Intellectual Property" means all patents,
trademarks, tradenames, copyrights, technology, know-how and
processes used in or necessary for the conduct of the business
of Company and its Subsidiaries as currently conducted that
are material to the condition (financial or otherwise),
business or operations of Company and its Subsidiaries, taken
as a whole.
"Interest Payment Date" means (i) with respect to
any Base Rate Loan, each January 15, April 15, July 15 and
October 15 of each year, commencing on the first such date to
occur after the Closing Date, and (ii) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan; provided that in the case of each
--------
Interest Period of six months, "Interest Payment Date" shall
also include the date that is three months after the
commencement of such Interest Period.
"Interest Period" has the meaning assigned to that
term in subsection 2.2B.
"Interest Rate Agreement" means any interest rate
swap agreement, interest rate cap agreement, interest rate
collar agreement or other similar agreement or arrangement.
"Interest Rate Determination Date" means, in respect
of an Interest Period, the second Business Day prior to the
first day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended to the date hereof and from time to
time hereafter.
"Inventory" means all goods, merchandise and other
personal property which are held by Company for sale or lease,
including those held for display or demonstration.
"Investment" means (i) any direct or indirect
purchase or other acquisition by Company or any of its
Subsidiaries of, or of a beneficial interest in, stock or
other Securities of any other Person, or (ii) any direct or
<PAGE>
indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts
and similar expenditures in the ordinary course of business)
or capital contribution by Company or any of its Subsidiaries
to any other Person, including all indebtedness and accounts
receivable from that other Person that are not current assets
or did not arise from sales to that other Person in the ordi-
nary course of business. The amount of any Investment shall be
the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment.
"Issuing Lender" means, with respect to any Letter
of Credit, the Lender which agrees or is otherwise obligated
to issue such Letter of Credit, determined as provided in
subsection 3.1B(ii).
"Joint Venture" means a joint venture, partnership
or other similar arrangement, whether in corporate,
partnership or other legal form; provided that in no event
--------
shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"Lender" and "Lenders" means the persons identified
as "Lenders" and listed on the signature pages of this Agree-
ment, together with their successors and permitted assigns
pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise
requires; provided that the term "Lenders", when used in the
--------
context of a particular Commitment, shall mean Lenders having
that Commitment.
"Letter of Credit" or "Letters of Credit" means
Commercial Letters of Credit and Standby Letters of Credit
issued or to be issued by Issuing Lenders for the account of
Company pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount
which is or at any time thereafter may, pursuant to the terms
thereof, become available for drawing under all Letters of
Credit then outstanding plus (ii) the aggregate amount of all
----
drawings under Letters of Credit honored by Issuing Lenders
and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant
to subsection 3.3B).
"Lien" means any lien, mortgage, pledge, assignment
(to the extent such assignment is intended to secure an
obligation of any Person), security interest, charge or
encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature
thereof, and any agreement to give any security interest) and
any option, trust or other preferential arrangement having the
practical effect of any of the foregoing.
"Loan" or "Loans" means one or more of the Revolving
Loans or Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes,
the Letters of Credit (and any applications for, or
reimbursement agreements or other documents or certificates
executed by Company in favor of an Issuing Lender relating to,
the Letters of Credit), the Subsidiary Guaranty and the
Collateral Documents.
"Loan Party" means each of Company and any of
Company's Subsidiaries from time to time executing a Loan
Document, and "Loan Parties" means all such Persons,
collectively.
<PAGE>
"Margin Stock" has the meaning assigned to that term
in Regulation U of the Board of Governors of the Federal
Reserve System as in effect from time to time.
"Material Adverse Effect" means (i) a material
adverse effect upon the business, operations, properties,
assets, condition (financial or otherwise) or prospects of
Company and its Subsidiaries, taken as a whole, (ii) the
impairment of the ability of any Loan Party to perform any
Obligations of a monetary nature, or (iii) the impairment of
the rights of Agent or Lenders to enforce any Obligations of a
monetary nature.
"Mortgage" means an instrument (whether designated
as a deed of trust, a trust deed or a mortgage or by any
similar title) executed and delivered by Company or any of its
Subsidiaries substantially in the form of Exhibit XXII annexed
------- ----
hereto encumbering a fee or leasehold interest in Real
Property Assets, as such instrument may be amended,
supplemented or otherwise modified from time to time, and
"Mortgages" means all such instruments, including the Closing
Date Mortgages (as defined in subsection 4.1B) and any
Additional Mortgages (as defined in subsection 6.9),
collectively.
"Multiemployer Plan" means a "multiemployer plan",
as defined in Section 3(37) of ERISA, to which Company or any
of its ERISA Affiliates is contributing, or ever has
contributed, or to which Company or any of its ERISA
Affiliates has, or ever has had, an obligation to contribute.
"Net Cash Proceeds of Asset Sale" means, with
respect to any Asset Sale, Cash payments (including any Cash
received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise, but only as
and when so received) actually received from such Asset Sale
net of bona fide direct costs incurred in connection with such
Asset Sale, including without limitation (i) reasonable
brokerage commissions, underwriting fees and discounts, legal
fees and expenses, finder's fees and other similar fees,
expenses and commissions, (ii) taxes reasonably estimated to
be actually payable as a result of such Asset Sale within two
years of the date of such Asset Sale, (iii) payment of the
outstanding principal amount of, premium or penalty, if any,
and interest on any Indebtedness (other than the Loans)
secured by a Lien on the assets in question that is required
to be repaid under the terms thereof as a result of such Asset
Sale, and (iv) the costs and expenses of any repairs,
alterations or improvements made to the property sold in
connection with such Asset Sale to the extent such repairs,
alterations or improvements are required pursuant to the terms
of such Asset Sale.
"Non-Recourse Indebtedness" means, as applied to any
Person, all Indebtedness of that Person secured by Liens on
specified assets of that Person under the terms of which
(i) no recourse may be had against that or any other Person
for the payment of the principal of or interest or premium on
such Indebtedness or for any claim based thereon and (ii) the
enforcement of all obligations relating to such Indebtedness
is limited to foreclosure or other actions with respect to
such specified assets.
"Notes" means one or more of the Revolving Notes or
Swing Line Note or any combination thereof.
"Notice of Borrowing" means a notice substantially
in the form of Exhibit I annexed hereto delivered by Company
------- -
to Agent pursuant to subsection 2.1B with respect to a
proposed borrowing.
<PAGE>
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto
------- --
delivered by Company to Agent pursuant to subsection 2.2D with
respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with
respect to the Loans specified therein.
"Notice of Issuance of Letter of Credit" means a
notice substantially in the form of Exhibit III annexed hereto
------- ---
delivered by Company to the proposed Issuing Lender pursuant
to subsection 3.1B(i) with respect to the proposed issuance of
a Letter of Credit.
"Obligations" means all obligations of every nature
of each Loan Party from time to time owed to Agent, Lenders or
any of them under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of
Credit, fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such
corporation by its chairman of the board (if an officer) or
its president or one of its vice presidents and by its chief
financial officer or its treasurer or its controller; provided
--------
that every Officers' Certificate with respect to the
compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer
or officers making or giving such Officers' Certificate have
read such condition and any definitions or other provisions
contained in this Agreement relating thereto, (ii) a statement
that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to
whether or not such condition has been complied with, and
(iii) a statement as to whether, in the opinion of the
signers, such condition has been complied with.
"Operating Lease" means, as applied to any Person,
any lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property (whether
real, personal or mixed) that is not a Capital Lease other
than any such lease under which that Person is the lessor.
"Pathmark" means Pathmark Stores, Inc., a Delaware
corporation.
"Pathmark Credit Agreement" means that certain
Credit Agreement dated as of even date herewith among
Pathmark, the lenders party thereto and Bankers, as agent for
such lenders, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
"Pathmark Loan Documents" means the "Loan Documents"
as defined in the Pathmark Credit Agreement.
"PBGC" means the Pension Benefit Guaranty
Corporation (or any successor thereto).
"Pension Plan" means any Employee Benefit Plan,
other than a Multiemployer Plan, which is subject to Section
412 of the Internal Revenue Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types
of Liens (other than any such Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the
time, required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of
carriers, workmen, repairmen, warehousemen, mechanics and
<PAGE>
materialmen and other Liens imposed by law, in each case
incurred in the ordinary course of business and securing
obligations that are not overdue for a period of more
than 30 days or securing obligations that are overdue for
a period of more than 30 days that are being contested in
good faith, if (with respect to any such obligations that
are overdue for a period of more than 30 days) such
reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or securing liability to insurance
carriers under insurance or self-insurance arrangements,
or obtaining utility service, or to secure the perfor-
mance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, trade
contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for
the payment of borrowed money);
(iv) any attachment or judgment Lien not consti-
tuting an Event of Default under subsection 8.8;
(v) leases or subleases granted to others not
interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidi-
aries;
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and
other similar charges or encumbrances not interfering in
any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or
sublessor under any lease permitted by subsection 7.9,
(b) restriction or encumbrance that the interest or title
of such lessor or sublessor may be subject to, or
(c) subordination of the interest of the lessee or
sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b);
(viii) Liens arising from filing UCC financing
statements relating solely to leases permitted by this
Agreement; and
(ix) Liens in favor of customs and revenue author-
ities arising as a matter of law to secure payment of
customs duties in connection with the importation of
goods.
"Person" means and includes natural persons,
corporations, limited partnerships, general partnerships,
joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal
entities, and governments and agencies and political
subdivisions thereof.
"Potential Event of Default" means a condition or
event that, after notice or lapse of time or both, would
constitute an Event of Default.
"Prime Rate" means the rate that Bankers announces
from time to time as its prime lending rate, as in effect from
time to time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged
to any customer. Bankers or any other Lender may make
commercial loans or other loans at rates of interest at, above
or below the Prime Rate.
<PAGE>
"Pro Rata Share" means, with respect to each Lender,
the percentage obtained by dividing (x) the Revolving Loan
--------
Exposure of that Lender by (y) the aggregate Revolving Loan
--
Exposure of all Lenders, as such percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The
initial Pro Rata Share of each Lender is set forth opposite
the name of that Lender in Schedule 2.1 annexed hereto.
-------- ---
"PTKH" means PTK Holdings, Inc., a Delaware
corporation.
"Qualified Sale and Lease-back" means the sale,
pursuant to a Sale and Lease-back, of any Equipment within 180
days after the acquisition of such Equipment by Company or any
of its Subsidiaries.
"Real Property Assets" means interests in land,
buildings, improvements, and fixtures attached thereto or used
in the operation thereof, in each case owned or leased (as
lessee) by Company or any of its Subsidiaries.
"Refunded Swing Line Loans" has the meaning given to
that term in subsection 2.1A(ii).
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from
time to time.
"Reimbursement Date" has the meaning assigned to
that term in subsection 3.3B.
"Release" means any release, spill, emission,
leaking, pumping, pouring, injection, escaping, deposit,
disposal, discharge or dumping of Hazardous Materials into the
environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed
receptacles containing any Hazardous Materials).
"Requisite Lenders" means Lenders having or holding
51% or more of the aggregate Revolving Loan Exposure of all
Lenders.
"Restricted Junior Payment" means (i) any dividend
or other distribution, direct or indirect, on account of any
shares of any class of stock of Company now or hereafter
outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class, (ii) any
redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of Company now or
hereafter outstanding, and (iii) any payment made to retire,
or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
stock of Company now or hereafter outstanding.
"Revolving Loan Commitment" or "Revolving Loan
Commitments" means the commitment or commitments of a Lender
or Lenders to make Revolving Loans pursuant to subsection
2.1A(i).
"Revolving Loan Commitment Termination Date" means
October 31, 1996, or such later date as shall be determined
from time to time pursuant to subsection 2.1E.
"Revolving Loan Exposure" means, with respect to any
Lender as of any date of determination (i) prior to the
termination of the Revolving Loan Commitments, that Lender's
Revolving Loan Commitment and (ii) after the termination of
the Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender,
----
the aggregate amount of all drawings under Letters of Credit
<PAGE>
honored by that Lender and not theretofore reimbursed by
Company (in each case net of any participations purchased by
other Lenders in the applicable Letters of Credit) plus
----
(c) the aggregate amount of all participations purchased by
that Lender in any drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company plus
----
(d) the aggregate amount of all participations purchased by
that Lender in any outstanding Swing Line Loans plus (e) in
----
the case of Swing Line Lender, the aggregate outstanding
principal amount of all Swing Line Loans (net of any
participations therein purchased by other Lenders).
"Revolving Loans" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(i).
"Revolving Notes" means the promissory notes of
Company issued pursuant to subsection 2.1D on the Closing Date
or issued pursuant to subsection 2.1E or the last sentence of
subsection 10.1B(i) from time to time after the Closing Date,
in each case substantially in the form of Exhibit V annexed
------- -
hereto, as they may be amended, supplemented or otherwise
modified from time to time.
"Sale and Lease-back" means any arrangement between
Company or any of its Subsidiaries and any other Person
providing for the leasing by Company or such Subsidiary of
personal property which has been or is to be sold or
transferred by Company or such Subsidiary to such other
Person.
"Securities" means any stock, shares, partnership
interests, voting trust certificates, certificates of interest
or participation in any profit-sharing agreement or
arrangement, options, warrants, bonds, debentures, notes, or
other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or in general any
instruments commonly known as "securities" or any certificates
of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right
to subscribe to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933,
as amended from time to time, and any successor statute.
"SMG-II" means SMG-II Holdings Corporation, a
Delaware corporation.
"Solvent" means, with respect to any Person, that as
of the date of determination both (A) (i) the then fair
saleable value of the property of such Person is (y) greater
than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount
that will be required to pay the probable liabilities on such
Person's then existing debts as they become absolute and
matured considering all financing alternatives and potential
asset sales reasonably available to such Person; (ii) such
Person's capital is not unreasonably small in relation to its
business or any contemplated or undertaken transaction; and
(iii) such Person does not intend to incur, or believe that it
will incur, debts beyond its ability to pay such debts as they
become due; and (B) such Person is "solvent" within the
meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For
purposes of this definition, the amount of any contingent
liability at any time shall be computed as the amount that, in
light of all of the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Spin-Off" means, collectively, (i) the contribution
by Pathmark to Company of the Rickel home center business of
Pathmark, certain warehouse, distribution and transportation
<PAGE>
operations and facilities, and certain other real and personal
property assets of Pathmark on or prior to the Closing Date,
(ii) the distribution by Pathmark to PTKH of the capital stock
of Company after the contributions of assets described in
clause (i) above but on or prior to the Closing Date, and
(iii) to the extent not covered by clauses (i) and (ii) above,
the entering into of the Spin-Off Agreements by the parties
thereto and the consummation of the transactions contemplated
thereby.
"Spin-Off Agreements" means (i) that certain
Distribution and Transfer Agreement dated as of October 26,
1993, among Company, PTKH and Pathmark, (ii) that certain Tax
Indemnity Agreement dated as of October 26, 1993, between
Company and Pathmark, (iii) that certain Rickel Services
Agreement dated as of October 26, 1993, between Company and
Pathmark, (iv) that certain Logistical Services Agreement
dated as of October 26, 1993, between Company and Pathmark,
and (v) that certain Blair Services Agreement dated as of
October 26, 1993, between Company and Pathmark, in each case
in the form approved by Agent, CO-AGENT and Requisite Lenders
--------
pursuant to subsection 4.1P, and in each case as such
agreement may be amended from time to time after the Closing
Date to the extent permitted under subsection 7.15.
"Standby Letter of Credit" means any standby letter
of credit or similar instrument issued for the purpose of
supporting (i) Indebtedness of Company or any of its
Subsidiaries in respect of industrial revenue or development
bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of
third party insurers of Company or any of its Subsidiaries
arising by virtue of the laws of any jurisdiction requiring
third party insurers, (iv) obligations with respect to Capital
Leases or Operating Leases of Company or any of its
Subsidiaries, (v) performance, payment, deposit or surety
obligations of Company or any of its Subsidiaries, in any case
if required by law or governmental rule or regulation or in
accordance with custom and practice in the industry, and
(vi) other obligations of Company and its Subsidiaries to the
extent consistent with past practices of Company and its
Subsidiaries or otherwise consistent with custom and practice
in the industry; provided that Standby Letters of Credit
--------
(other than Standby Letters of Credit with face amounts that
in the aggregate do not exceed $5,000,000 that are issued to
support Indebtedness in respect of Capital Leases that were
assigned by Pathmark to Company) may not be issued for the
purpose of supporting (a) trade payables or (b) Indebtedness
existing on the Closing Date that is not supported by a
previously issued Standby Letter of Credit.
"Stuart" means Eatontown Stuart, Inc., a New Jersey
corporation.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or other
business entity of which more than 50% of the total voting
power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote
in the election of the Person or Persons (whether directors,
managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction
of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or
more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Guaranty" means the Subsidiary Guaranty
executed and delivered by Subsidiaries of Company on the
Closing Date and to be executed and delivered by Subsidiaries
of Company from time to time in accordance with subsection
6.8, substantially in the form of Exhibit XVIII annexed
------- -----
<PAGE>
hereto, as such Subsidiary Guaranty may be amended,
supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary
Pledge Agreement executed and delivered by Subsidiaries of
Company on the Closing Date or to be executed and delivered by
Subsidiaries of Company from time to time in accordance with
subsection 6.8, in each case substantially in the form of
Exhibit XIX annexed hereto, as such Subsidiary Pledge
------- ---
Agreement may be amended, supplemented or otherwise modified
from time to time, and "Subsidiary Pledge Agreements" means
all such Subsidiary Pledge Agreements, collectively.
"Subsidiary Security Agreement" means each
Subsidiary Security Agreement executed and delivered by
Subsidiaries of Company on the Closing Date or to be executed
and delivered by Subsidiaries of Company from time to time in
accordance with subsection 6.8, in each case substantially in
the form of Exhibit XX annexed hereto, as such Subsidiary
------- --
Security Agreement may be amended, supplemented or otherwise
modified from time to time, and "Subsidiary Security
Agreements" means all such Subsidiary Security Agreements,
collectively.
"Subsidiary Trademark Security Agreement" means each
Subsidiary Trademark Collateral Security Agreement and
Conditional Assignment executed and delivered by Subsidiaries
of Company on the Closing Date or to be executed and delivered
by Subsidiaries of Company from time to time in accordance
with subsection 6.8, in each case substantially in the form of
Exhibit XXI annexed hereto, as such Subsidiary Trademark
------- ---
Collateral Security Agreement and Conditional Assignment may
be amended, supplemented or otherwise modified from time to
time, and "Subsidiary Trademark Security Agreements" means all
such Subsidiary Trademark Collateral Security Agreements and
Conditional Assignments, collectively.
"Supplemental Collateral Agent" has the meaning
assigned to that term in subsection 9.1D.
"Swing Line Lender" means Bankers, or any Person
serving as a successor Agent hereunder, in its capacity as
Swing Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of
Swing Line Lender to make Swing Line Loans pursuant to
subsection 2.1A(ii).
"Swing Line Loans" means the Swing Line Loans made
by Swing Line Lender to Company pursuant to subsection
2.1A(ii).
"Swing Line Note" means (i) the promissory note of
Company issued pursuant to subsection 2.1D on the Closing Date
and (ii) any promissory note issued by Company to any
successor Agent and Swing Line Lender pursuant to subsection
2.1E or the last sentence of subsection 9.6B, in each case
substantially in the form of Exhibit VI annexed hereto, as it
------- --
may be amended, supplemented or otherwise modified from time
to time.
"Tax" or "Taxes" means any present or future tax,
levy, impost, duty, charge, fee, deduction or withholding of
any nature and whatever called, by whomsoever, on whomsoever
and wherever imposed, levied, collected, withheld or assessed;
provided that "Tax on the overall net income" of a Person
--------
shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person's principal office (and/or,
in the case of a Lender, its lending office) is located or in
which that Person is deemed to be doing business on all or
part of the net income, profits or gains of that Person
(whether worldwide, or only insofar as such income, profits or
<PAGE>
gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise).
"Total Utilization of Revolving Loan Commitments"
means, as at any date of determination, the sum of (i) the
aggregate principal amount of all outstanding Revolving Loans
plus (ii) the aggregate principal amount of all outstanding
----
Swing Line Loans plus (iii) the Letter of Credit Usage.
----
1.2 Accounting Terms; Utilization of GAAP for Purposes of
---------- ------ ----------- -- ---- --- -------- --
Calculations Under Agreement.
------------ ----- ---------
Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with
GAAP. Financial statements and other information required to
be delivered by Company to Lenders pursuant to clauses (i),
(ii), (iii) and (xiv) of subsection 6.1 shall be prepared in
accordance with GAAP as in effect at the time of such
preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(vi)). Calculations
in connection with the definitions, covenants and other
provisions of this Agreement shall utilize accounting
principles and policies in conformity with those used to
prepare the financial statements referred to in subsection
5.3.
1.3 Other Definitional Provisions.
----- ------------ ----------
References to "Sections" and "subsections" shall be
to Sections and subsections, respectively, of this Agreement
unless otherwise specifically provided. Any of the terms
defined in subsection 1.1 may, unless the context otherwise
requires, be used in the singular or the plural, depending on
the reference.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans.
------------ -----
A. Commitments. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and
warranties of Company herein set forth, each Lender hereby
severally agrees to make the Revolving Loans described in
subsection 2.1A(i) and Swing Line Lender hereby agrees to make
the Swing Line Loans described in subsection 2.1A(ii).
(i) Revolving Loans. Each Lender severally agrees,
--------- -----
subject to the limitations set forth below with respect
to the maximum amount of Revolving Loans permitted to be
outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to
but excluding the Revolving Loan Commitment Termination
Date an aggregate amount not exceeding its Pro Rata Share
of the aggregate amount of the Revolving Loan Commitments
to be used for the purposes identified in subsection
2.5A. The original amount of each Lender's Revolving
Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate original
-------- ---
amount of the Revolving Loan Commitments is $50,000,000;
provided that the Revolving Loan Commitments of Lenders
--------
shall be adjusted to give effect to any assignments of
the Revolving Loan Commitments pursuant to subsection
10.1B; and provided, further that the amount of the
-------- -------
Revolving Loan Commitments shall be reduced from time to
time by the amount of any reductions thereto made
pursuant to subsections 2.4A(ii) and 2.4A(iii). Each
Lender's Revolving Loan Commitment shall expire on the
Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with
respect to the Revolving Loans and the Revolving Loan
<PAGE>
Commitments shall be paid in full no later than that
date; provided that each Lender's Revolving Loan
--------
Commitment shall expire immediately and without further
action on October 29, 1993 if the Closing Date has not
occurred on or before that date. Amounts borrowed under
this subsection 2.1A(i) may be repaid and reborrowed to
but excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving
Loan Commitments shall be subject to the following
limitations in the amounts and during the periods
indicated:
(a) the amount otherwise available to be
borrowed or maintained as Revolving Loans under the
Revolving Loan Commitments as of any time of
determination (other than to repay Swing Line Loans
or to reimburse any Issuing Lender for the amount of
any drawings under any Letters of Credit honored by
such Issuing Lender and not theretofore reimbursed
by Company) shall be reduced by (1) the aggregate
principal amount of Swing Line Loans outstanding as
of such time of determination plus (2) the Letter of
----
Credit Usage as of such time of determination;
(b) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the
Borrowing Base then in effect; and
(c) for 30 consecutive days during each
consecutive twelve-month period, there shall be no
Revolving Loans or Swing Line Loans outstanding.
(ii) Swing Line Loans. Swing Line Lender hereby
----- ---- -----
agrees, subject to the limitations set forth below with
respect to the maximum amount of Swing Line Loans
permitted to be outstanding from time to time, to make a
portion of the Revolving Loan Commitments available to
Company from time to time during the period from the
Closing Date to but excluding the Revolving Loan Commit-
ment Termination Date by making Swing Line Loans to
Company in an aggregate amount not exceeding the amount
of the Swing Line Loan Commitment to be used for the
purposes identified in subsection 2.5A, notwithstanding
the fact that such Swing Line Loans, when aggregated with
Swing Line Lender's outstanding Revolving Loans and Swing
Line Lender's Pro Rata Share of the Letter of Credit
Usage then in effect, may exceed Swing Line Lender's
Revolving Loan Commitment. The original amount of the
Swing Line Loan Commitment is $10,000,000; provided that
--------
the amount of the Swing Line Loan Commitment is subject
to reduction as provided in clause (c) of the next
paragraph. The Swing Line Loan Commitment shall expire
on the Revolving Loan Commitment Termination Date and all
Swing Line Loans and all other amounts owed hereunder
with respect to the Swing Line Loans shall be paid in
full no later than that date; provided that the Swing
--------
Line Loan Commitment shall expire immediately and without
further action on October 29, 1993 if the Closing Date
has not occurred on or before that date. Amounts
borrowed under this subsection 2.1A(ii) may be repaid and
reborrowed to but excluding the Revolving Loan Commitment
Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line
Loan Commitment shall be subject to the following
limitations in the amounts and during the periods
indicated:
<PAGE>
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the
lesser of (1) the Revolving Loan Commitments then in
effect and (2) the Borrowing Base then in effect;
(b) for 30 consecutive days during each
consecutive twelve-month period, there shall be no
Revolving Loans or Swing Line Loans outstanding; and
(c) any reduction of the Revolving Loan
Commitments made pursuant to subsection 2.4A which
reduces the aggregate Revolving Loan Commitments to
an amount less than the then current amount of the
Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line
Loan Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further
action on the part of Agent or Swing Line Lender.
With respect to any Swing Line Loans which have not
been voluntarily prepaid by Company pursuant to
subsection 2.4A(i), Swing Line Lender (i) shall, so long
as any Swing Line Loans are outstanding as of 1:00 P.M.
(New York time) on the first Business Day of any week,
deliver to Agent (with a copy to Company), no later than
2:00 P.M. (New York time) on the first Business Day in
advance of the second Business Day of such week (which
shall be the proposed Funding Date), and (ii) may, at any
other time in its sole and absolute discretion, deliver
to Agent (with a copy to Company), no later than 12:00
Noon (New York time) on the first Business Day in advance
of the proposed Funding Date, a notice (which shall be
deemed to be a Notice of Borrowing given by Company)
requesting Lenders to make Revolving Loans that are Base
Rate Loans on such Funding Date in an amount equal to the
amount of such Swing Line Loans (the "Refunded Swing Line
Loans") (a) in the case of clause (i) above, outstanding
as of 1:00 P.M. (New York time) on the date such notice
is given and (b) in the case of clause (ii) above,
outstanding on the date such notice is given which Swing
Line Lender requests Lenders to prepay. Anything
contained in this Agreement to the contrary
notwithstanding, (i) the proceeds of such Revolving Loans
made by Lenders other than Swing Line Lender shall be
immediately delivered by Agent to Swing Line Lender (and
not to Company) and applied to repay a corresponding
portion of the Refunded Swing Line Loans and (ii) on the
day such Revolving Loans are made, Swing Line Lender's
Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan
made by Swing Line Lender and such portion of the Swing
Line Loans deemed to be so paid shall no longer be
outstanding as Swing Line Loans, shall no longer be due
under the Swing Line Note of Swing Line Lender and shall
be due under the Revolving Note of Swing Line Lender.
Company hereby authorizes Agent and Swing Line Lender to
charge Company's accounts with Agent and Swing Line
Lender (up to the amount available in each such account)
in order to immediately pay Swing Line Lender the amount
of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Loans made by Lenders,
including the Revolving Loan deemed to be made by Swing
Line Lender, are not sufficient to repay in full the
Refunded Swing Line Loans. If any portion of any such
amount paid (or deemed to be paid) to Swing Line Lender
should be recovered by or on behalf of Company from Swing
Line Lender in bankruptcy, by assignment for the benefit
of creditors or otherwise, the loss of the amount so
recovered shall be ratably shared among all Lenders in
the manner contemplated by subsection 10.5.
<PAGE>
If, as a result of any bankruptcy or similar
proceeding with respect to Company, Revolving Loans are
not made pursuant to this subsection 2.1A(ii) in an
amount sufficient to repay any amounts owed to Swing Line
Lender in respect of any outstanding Swing Line Loans,
each Lender shall be deemed to, and hereby agrees to,
have purchased a participation in such outstanding Swing
Line Loans in an amount equal to its Pro Rata Share of
the unpaid amount together with accrued interest thereon.
Upon one Business Day's notice from Swing Line Lender,
each Lender shall deliver to Swing Line Lender an amount
equal to its respective participation in same day funds
at the office of Swing Line Lender located at One Bankers
Trust Plaza, New York, New York. In order to evidence
such participation each Lender agrees to enter into a
participation agreement at the request of Swing Line
Lender in form and substance reasonably satisfactory to
all parties. In the event any Lender fails to make
available to Swing Line Lender the amount of such
Lender's participation as provided in this paragraph,
Swing Line Lender shall be entitled to recover such
amount on demand from such Lender together with interest
thereon at the rate customarily used by Swing Line Lender
for the correction of errors among banks for three
Business Days and thereafter at the Base Rate.
Anything contained herein to the contrary
notwithstanding, (i) each Lender's obligation to make
Revolving Loans for the purpose of repaying any Refunded
Swing Line Loans pursuant to the second preceding
paragraph and each Lender's obligation to purchase a
participation in any unpaid Swing Line Loans pursuant to
the immediately preceding paragraph shall be absolute and
unconditional and shall not be affected by any
circumstance, including without limitation (a) any set-
off, counterclaim, recoupment, defense or other right
which such Lender may have against Swing Line Lender,
Company or any other Person for any reason whatsoever;
(b) the occurrence or continuance of an Event of Default
or a Potential Event of Default; (c) any adverse change
in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries; (d) any breach of
this Agreement or any other Loan Document by any party
thereto; or (e) any other circumstance, happening or
event whatsoever, whether or not similar to any of the
foregoing; provided that such obligations of each Lender
--------
are subject to the condition that (X) Swing Line Lender
believed in good faith that all conditions under
Section 4 to the making of the applicable Refunded Swing
Line Loans or other unpaid Swing Line Loans, as the case
may be, were satisfied at the time such Refunded Swing
Line Loans or unpaid Swing Line Loans were made, (Y) such
Lender had actual knowledge, by receipt of any notices
required to be delivered to Lenders pursuant to
subsection 6.1(x) or otherwise, that any such condition
had not been satisfied and such Lender failed to notify
Swing Line Lender and Agent in writing that it had no
obligation to make Revolving Loans until such condition
was satisfied (any such notice to be effective as of the
date of receipt thereof by Swing Line Lender and Agent),
or (Z) the satisfaction of any such condition not
satisfied had been waived by Requisite Lenders prior to
or at the time such Refunded Swing Line Loans or other
unpaid Swing Line Loans were made; and (ii) Swing Line
Lender shall not be obligated to make any Swing Line
Loans if it has elected not to do so after the occurrence
and during the continuation of a Potential Event of
Default or Event of Default.
B. Borrowing Mechanics. Revolving Loans made on any
Funding Date (other than Revolving Loans made pursuant to a
<PAGE>
request by Swing Line Lender pursuant to subsection 2.1A(ii)
for the purpose of repaying any Refunded Swing Line Loans or
Revolving Loans made pursuant to subsection 3.3B for the
purpose of reimbursing any Issuing Lender for the amount of a
drawing under a Letter of Credit issued by it) shall be in an
aggregate minimum amount of $5,000,000 and integral multiples
of $1,000,000 in excess of that amount; provided that
--------
Revolving Loans made on any Funding Date as Eurodollar Rate
Loans with a particular Interest Period shall be in an
aggregate minimum amount of $5,000,000 and integral multiples
of $1,000,000 in excess of that amount. Swing Line Loans made
on any Funding Date shall be in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of
that amount. Whenever Company desires that Lenders make
Revolving Loans under subsection 2.1A(i), it shall deliver to
Agent a Notice of Borrowing no later than 12:00 Noon (New York
time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at
least one Business Day in advance of the proposed Funding Date
(in the case of a Base Rate Loan). Whenever Company desires
that Swing Line Lender make a Swing Line Loan under subsection
2.1A(ii), it shall deliver to Agent a Notice of Borrowing no
later than 12:00 Noon (New York time) on the proposed Funding
Date. The Notice of Borrowing shall specify (i) the proposed
Funding Date (which shall be a Business Day), (ii) the amount
and type of Loans requested, (iii) in the case of Swing Line
Loans, that such Loans shall be Base Rate Loans, (iv) in the
case of Revolving Loans, whether such Loans shall be Base Rate
Loans or Eurodollar Rate Loans, (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial
Interest Period requested therefor, and (vi) that the amount
of the proposed borrowing will not cause the Total Utilization
of Revolving Loan Commitments to exceed the Borrowing Base
then in effect. Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in
the manner provided in subsection 2.2D. In lieu of delivering
the above-described Notice of Borrowing, Company may give
Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such
--------
notice shall be promptly confirmed in writing by delivery of a
Notice of Borrowing to Agent on or before the applicable
Funding Date.
Neither Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice
referred to above that Agent believes in good faith to have
been given by a duly authorized officer or other person
authorized to borrow on behalf of Company or for otherwise
acting in good faith under this subsection 2.1B, and upon
receipt by Company of the proceeds of Loans made by Lenders in
accordance with this Agreement pursuant to any such telephonic
notice Company shall have effected Loans hereunder.
Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Borrowing for a Eurodollar Rate
Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a
borrowing in accordance therewith.
C. Disbursement of Funds. All Revolving Loans under
this Agreement shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares of the
Revolving Loan Commitments, it being understood that no Lender
shall be responsible for any default by any other Lender in
that other Lender's obligation to make a Loan requested
hereunder nor shall the Revolving Loan Commitment of any
Lender be increased or decreased as a result of a default by
any other Lender in that other Lender's obligation to make a
Loan requested hereunder. Promptly after receipt by Agent of
a Notice of Borrowing pursuant to subsection 2.1B (or tele-
phonic notice in lieu thereof), Agent shall notify each Lender
<PAGE>
or Swing Line Lender, as the case may be, of the proposed
borrowing. Each Lender shall make the amount of its Loan
available to Agent not later than 12:00 Noon (New York time)
on the applicable Funding Date and Swing Line Lender shall
make the amount of its Swing Line Loan available to Agent not
later than 2:00 P.M. (New York time) on the applicable Funding
Date, in each case in same day funds, at the office of Agent
located at One Bankers Trust Plaza, New York, New York.
Except as provided in subsection 2.1A(ii) or subsection 3.3B
with respect to Revolving Loans used to repay Swing Line Loans
or to reimburse any Issuing Lender for the amount of a drawing
under a Letter of Credit issued by it, upon satisfaction or
waiver of the conditions precedent specified in subsections
4.1 (in the case of Loans made on the Closing Date) and 4.2
(in the case of all Loans), Agent shall make the proceeds of
such Loans available to Company on the applicable Funding Date
by causing an amount of same day funds equal to the proceeds
of all such Loans received by Agent from Lenders or Swing Line
Lender, as the case may be, to be credited to the account of
Company at the office of Agent specified in the preceding
sentence.
Unless Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does
not intend to make available to Agent the amount of such
Lender's Loan requested on such Funding Date, Agent may assume
that such Lender has made such amount available to Agent on
such Funding Date and Agent may, in its sole discretion, but
shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corre-
sponding amount is not in fact made available to Agent by such
Lender, Agent shall be entitled to recover such corresponding
amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date
such amount is paid to Agent, at the customary rate set by
Agent for the correction of errors among banks for three
Business Days and thereafter at the Base Rate. If such Lender
does not pay such corresponding amount forthwith upon Agent's
demand therefor, Agent shall promptly notify Company and
Company shall immediately pay such corresponding amount to
Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at
the rate payable under this Agreement for Base Rate Loans.
Nothing in this subsection 2.1C shall be deemed to relieve any
Lender from its obligation to fulfill its Commitments
hereunder or to prejudice any rights that Company may have
against any Lender as a result of any default by such Lender
hereunder.
D. Notes. Company shall execute and deliver on the
Closing Date (i) to each Lender (or to Agent for that Lender)
a Revolving Note substantially in the form of Exhibit V
------- -
annexed hereto to evidence that Lender's Revolving Loans, in
the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions, and (ii) to
Swing Line Lender (or to Agent for Swing Line Lender) a Swing
Line Note substantially in the form of Exhibit VI annexed
------- --
hereto to evidence Swing Line Lender's Swing Line Loans, in
the principal amount of the Swing Line Loan Commitment and
with other appropriate insertions.
E. Extension of Revolving Loan Commitment Termination
Date. On or before the 90th day prior to each anniversary of
the Closing Date (the "Current Anniversary Date"), commencing
on the 90th day prior to the first anniversary of the Closing
Date, and prior to the termination of each Lender's
Commitment, Company may, at its option, deliver to Agent a
signed copy of an extension request (an "Extension Request"),
substantially in the form of Exhibit IV annexed hereto,
------- --
requesting an extension of the Revolving Loan Commitment
Termination Date for a period (each an "Extension Period") of
one year from the current Revolving Loan Commitment
<PAGE>
Termination Date (or, in the case of an Extension Request
requesting an extension of the Revolving Loan Commitment
Termination Date beyond the fourth anniversary of the Closing
Date, for a period commencing on the date immediately
following such fourth anniversary and ending on July 31,
1998); provided that in no event shall the Revolving Loan
--------
Commitment Termination Date be extended beyond July 31, 1998.
Agent shall promptly notify each Lender of its receipt of such
Extension Request.
On or before the 60th day prior to the Current
Anniversary Date (the "First Determination Date"), each Lender
shall have the right, in its sole discretion, subject to the
provisions of this subsection 2.1E, to (i) consent to the
extension of the Revolving Loan Commitment Termination Date
with respect to all of such Lender's Revolving Loan Commitment
(and, in the case of Swing Line Lender, the Swing Line Loan
Commitment) for the Extension Period or (ii) reject the
extension of the Revolving Loan Commitment Termination Date
with respect to all of such Lender's Revolving Loan Commitment
(and, in the case of Swing Line Lender, the Swing Line Loan
Commitment) for the Extension Period. If a Lender has replied
in writing to Company consenting to the Extension Request,
such Lender may not withdraw such consent for the Extension
Period. If a Lender has not replied in writing to Company
with respect to the Extension Request by the First
Determination Date, such Lender shall be deemed to have
rejected the extension of the Revolving Loan Commitment
Termination Date for the Extension Period.
If one or more Lenders (each a "Rejecting Lender")
shall have rejected or shall be deemed to have rejected such
extension for the Extension Period, then Company may request
that the Loans, Commitments, participations in Letters of
Credit and all other rights and obligations of each Rejecting
Lender be assumed, as of the Current Anniversary Date, by
(i) one or more Lenders (each a "Remaining Lender") consenting
to such extension for the Extension Period and/or (ii) one or
more other Eligible Assignees (each a "New Lender")
satisfactory to Company and Agent (or, if Agent is a Rejecting
Lender, the successor Agent). Each Remaining Lender notified
in writing of such request shall have the right to accept or
reject such request on or before the earlier of (a) the 30th
day prior to the Current Anniversary Date (the "Second
Determination Date") and (b) the date that Company notifies
such Remaining Lender that such request has been withdrawn
because one or more New Lenders have accepted such request.
If a Remaining Lender has not replied in writing to Company
with respect to such request by the Second Determination Date,
such Remaining Lender shall be deemed to have rejected such
request.
Anything contained in this subsection 2.1E to the
contrary notwithstanding, in no event shall the Revolving Loan
Commitment Termination Date be extended pursuant to this
subsection 2.1E for any proposed Extension Period unless
(i) all Lenders shall have consented to such extension in
accordance with the provisions of this subsection 2.1E or
(ii) if there shall be one or more Rejecting Lenders, then on
or before the Second Determination Date (a) one or more
Remaining Lenders and/or New Lenders shall have agreed to
assume and/or purchase, as of the Current Anniversary Date,
all of the Revolving Loans, Revolving Loan Commitments,
participations in Letters of Credit and other rights and
obligations of all Rejecting Lenders with respect to the
Revolving Loan Commitments by executing and delivering to
Agent a counterpart of an Extension Assignment and Acceptance
(the "Extension Assignment and Acceptance") substantially in
the form of Exhibit XIII annexed hereto and (b) if Agent is a
------- ----
Rejecting Lender, then a Remaining Lender or a New Lender
satisfactory to Requisite Lenders (determined as if the
transactions contemplated by the Extension Assignment and
<PAGE>
Acceptance had been consummated) shall have agreed to
(1) become a successor Agent under the Loan Documents as of
the Current Anniversary Date pursuant to subsection 9.6A and
(2) become a successor Swing Line Lender under the Loan
Documents as of the Current Anniversary Date pursuant to
subsection 9.6B. If the Revolving Loan Commitment Termination
Date is extended in accordance with clause (ii) set forth in
the immediately preceding sentence, within 15 days after the
Second Determination Date, Company and each Rejecting Lender
shall execute and deliver to Agent a counterpart of the
Extension Assignment and Acceptance and upon receipt thereof
and any certificates, documents or other evidence with respect
to United States federal income tax withholding matters that
any New Lender may be required to deliver pursuant to
subsection 2.7B(iii), Agent shall, if such Extension
Assignment and Acceptance has been completed and is in
substantially the form of Exhibit XIII annexed hereto, accept
------- ----
such Extension Assignment and Acceptance by executing a
counterpart thereof as provided therein.
Anything contained in this Agreement to the contrary
notwithstanding, if an Extension Assignment and Acceptance
shall have been executed and delivered by each party thereto
as contemplated by the provisions of the immediately preceding
paragraph, in order to effect the transactions contemplated by
such Extension Assignment and Assignment, (i) during the
period commencing on the third Business Day immediately
preceding the Current Anniversary Date and ending on the
Current Anniversary Date, (a) no Loans shall be made or
prepaid, (b) no Letters of Credit shall be issued, and (c) no
Commitments shall be reduced or terminated by Company, and
(ii) during the period commencing on the date of execution and
delivery by each party thereto of such Extension Assignment
and Acceptance and ending on the Current Anniversary Date,
none of the Loans, Commitments, Letters of Credit or
participations therein or other Obligations may be assigned by
any Lender except pursuant to an assignment or a pledge
permitted under subsection 10.1D.
Unless the Revolving Loan Commitment Termination
Date is extended in accordance with the immediately preceding
paragraph, the Commitments of all Lenders shall terminate on
the current Revolving Loan Commitment Termination Date.
Subject to the immediately following paragraph, if
the Revolving Loan Commitment Termination Date is extended in
accordance with the provisions of this subsection 2.1E, then
the maturity date of the Note or Notes held by each Remaining
Lender shall be automatically extended for the applicable
Extension Period without any further action by Company, Agent
or Lenders.
In the event the Commitments of some or all of the
Rejecting Lenders are reallocated among one or more Remaining
Lenders pursuant to this subsection 2.1E, Company shall, on or
before the Current Anniversary Date, deliver to Agent, on
behalf of each such Remaining Lender, (i) a new Revolving Note
of such Remaining Lender evidencing the increased total
Revolving Loan Commitment of such Remaining Lender and (ii) if
such Remaining Lender shall be a successor Swing Line Lender,
a Swing Line Note evidencing the Swing Line Loan Commitment of
such Remaining Lender. Upon receipt by each Remaining Lender
of a new Revolving Note as provided in this paragraph, such
Remaining Lender shall promptly cancel and return to Company
the Revolving Note evidencing its former allocation of the
Revolving Commitments.
In the event one or more New Lenders become parties
to this Agreement pursuant to this subsection 2.1E, Company
shall, on or before the Current Anniversary Date, deliver to
Agent, on behalf of each such New Lender, (i) a Revolving Note
evidencing the Revolving Loan Commitment of such New Lender
<PAGE>
and (ii) if such New Lender shall be a successor Swing Line
Lender, a Swing Line Note evidencing the total Swing Line Loan
Commitment of such New Lender.
Upon receipt by each Rejecting Lender of all amounts
payable to such Rejecting Lender under any applicable
Extension Assignment and Acceptance, such Rejecting Lender
shall promptly cancel and return to Company the Revolving Note
evidencing its former allocation of the Revolving Loan
Commitments.
2.2 Interest on the Loans.
-------- -- --- -----
A. Rate of Interest. Subject to the provisions of
subsections 2.6 and 2.7, each Revolving Loan shall bear
interest on the unpaid principal amount thereof from the date
made through maturity (whether by acceleration or otherwise)
at a rate determined by reference to the Base Rate or the
Adjusted Eurodollar Rate, as the case may be. Subject to the
provisions of subsection 2.7, each Swing Line Loan shall bear
interest on the unpaid principal amount thereof from the date
made through maturity (whether by acceleration or otherwise)
at a rate determined by reference to the Base Rate. The
applicable basis for determining the rate of interest with
respect to any Revolving Loan shall be selected by Company
initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B. The basis
for determining the interest rate with respect to any
Revolving Loan may be changed from time to time pursuant to
subsection 2.2D. If on any day a Revolving Loan is outstanding
with respect to which notice has not been delivered to Agent
in accordance with the terms of this Agreement specifying the
applicable basis for determining the rate of interest, then
for that day that Loan shall bear interest determined by
reference to the Base Rate.
Subject to the provisions of subsections 2.2E and
2.7, the Revolving Loans shall bear interest through maturity
as follows:
(i) if a Base Rate Loan, then at the sum of the
Base Rate plus 1.50% per annum; or
----
(ii) if a Eurodollar Rate Loan, then at the sum of
the Adjusted Eurodollar Rate plus 2.50% per annum.
----
Subject to the provisions of subsections 2.2E and
2.7, the Swing Line Loans shall bear interest through maturity
at the sum of the Base Rate plus 1.00% per annum.
----
B. Interest Periods. In connection with each
Eurodollar Rate Loan, Company may, pursuant to the applicable
Notice of Borrowing or Notice of Conversion/Continuation, as
the case may be, select an interest period (each an "Interest
Period") to be applicable to such Loan, which Interest Period
shall be, at Company's option, a one, two, three or six month
period; provided that:
--------
(i) the initial Interest Period for any Eurodollar
Rate Loan shall commence on the Funding Date in respect
of such Loan, in the case of a Loan initially made as a
Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case
of a Loan converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest
Periods applicable to a Eurodollar Rate Loan continued as
such pursuant to a Notice of Conversion/Continuation,
each successive Interest Period shall commence on the day
on which the next preceding Interest Period expires;
<PAGE>
(iii) if an Interest Period would otherwise
expire on a day that is not a Business Day, such Interest
Period shall expire on the next succeeding Business Day;
provided that if any Interest Period would otherwise
--------
expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs
in such month, such Interest Period shall expire on the
next preceding Business Day;
(iv) any Interest Period that begins on the last
Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall, subject
to clause (v) of this subsection 2.2B, end on the last
Business Day of a calendar month;
(v) no Interest Period shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) there shall be no more than 5 Interest Periods
outstanding at any time; and
(vii) in the event Company fails to specify an
Interest Period for any Eurodollar Rate Loan in the
applicable Notice of Borrowing or Notice of Conversion/
Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. Interest Payments. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in
arrears on and to each Interest Payment Date applicable to
that Loan, upon any prepayment of that Loan (to the extent
accrued on the amount being prepaid) and at maturity
(including final maturity).
D. Conversion or Continuation. Subject to the
provisions of subsection 2.6, Company shall have the option
(i) to convert at any time after the Closing Date all or any
part of its outstanding Revolving Loans equal to $5,000,000
and integral multiples of $1,000,000 in excess of that amount
from Loans bearing interest at a rate determined by reference
to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis, or (ii) upon the expiration
of any Interest Period applicable to a Eurodollar Rate Loan,
to continue all or any portion of such Loan equal to
$5,000,000 and integral multiples of $1,000,000 in excess of
that amount as a Eurodollar Rate Loan; provided, however, that
-------- -------
a Eurodollar Rate Loan may only be converted into a Loan
bearing interest at a rate determined by reference to an
alternative basis on the expiration date of an Interest Period
applicable thereto; and provided, further that no Loan may be
-------- -------
made as or converted into a Base Rate Loan during the period
from December 24 of any year to and including January 7 of the
immediately succeeding year for the purpose of investing in
securities bearing interest at a rate determined by reference
to any other basis for the purpose of arbitrage or
speculation.
Company shall deliver a Notice of Conversion/
Continuation to Agent no later than 12:00 Noon (New York time)
at least one Business Day in advance of the proposed
conversion date (in the case of a conversion to a Base Rate
Loan) and at least three Business Days in advance of the
proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a Eurodollar Rate Loan).
A Notice of Conversion/Continuation shall specify (i) the
proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the Loan to be converted/
continued, (iii) the nature of the proposed conversion/
continuation, (iv) in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan, the requested
Interest Period, and (v) in the case of a conversion to, or a
<PAGE>
continuation of, a Eurodollar Rate Loan, that no Potential
Event of Default or Event of Default has occurred and is
continuing. In lieu of delivering the above-described Notice
of Conversion/Continuation, Company may give Agent telephonic
notice by the required time of any proposed conversion/
continuation under this subsection 2.2D; provided that such
--------
notice shall be promptly confirmed in writing by delivery of a
Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice
referred to above that Agent believes in good faith to have
been given by a duly authorized officer or other person
authorized to act on behalf of Company or for otherwise acting
in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the
interest rate with respect to any Loans in accordance with
this Agreement pursuant to any such telephonic notice Company
shall have effected a conversion or continuation, as the case
may be, hereunder.
Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Conversion/Continuation for
conversion to, or continuation of, a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and
Company shall be bound to effect a conversion or continuation
in accordance therewith.
E. Post-Maturity Interest. Any principal payments on
the Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Loans or any fees
or other amounts owed hereunder not paid when due, in each
case whether at stated maturity, by notice of prepayment, by
acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable
on demand at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement with
respect to the applicable Loans (or, in the case of any such
fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this
Agreement for Base Rate Loans); provided that, in the case of
--------
Eurodollar Rate Loans, upon the expiration of the Interest
Period in effect at the time any such increase in interest
rate is effective such Eurodollar Rate Loans shall thereupon
become Base Rate Loans and shall thereafter bear interest
payable upon demand at a rate which is 2% per annum in excess
of the interest rate otherwise payable under this Agreement
for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not
a permitted alternative to timely payment and shall not
constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of Agent or any
Lender.
F. Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year, in each case
for the actual number of days elapsed in the period during
which it accrues. In computing interest on any Loan, the date
of the making of such Loan or the first day of an Interest
Period applicable to such Loan or, with respect to a Base Rate
Loan being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of
payment of such Loan or the expiration date of an Interest
Period applicable to such Loan or, with respect to a Base Rate
Loan being converted to a Eurodollar Rate Loan, the date of
conversion of such Base Rate Loan to such Eurodollar Rate
Loan, as the case may be, shall be excluded; provided that if
--------
<PAGE>
a Loan is repaid on the same day on which it is made, one
day's interest shall be paid on that Loan.
2.3 Fees.
----
A. Commitment Fees. (i) Company agrees to pay to
Agent, for distribution to each Lender, a commitment fee for
the period commencing on the earlier of the date of delivery
to Agent of an executed commitment letter of such Lender with
respect to the Revolving Loan Commitment of such Lender
hereunder and August 23, 1993 to and excluding the Closing
Date, equal to the aggregate amount of the Revolving Loan
Commitment of such Lender as set forth in Schedule 2.1 annexed
-------- ---
hereto multiplied by 1/2 of 1% per annum, such commitment fees
---------- --
to be calculated on the basis of a 360-day year and the actual
number of days elapsed and to be payable in arrears on the
earlier of the Closing Date or the termination of the
Commitments; and (ii) Company agrees to pay to Agent, for
distribution to each Lender in proportion to that Lender's Pro
Rata Share, commitment fees for the period from and including
the Closing Date to and excluding the Revolving Loan
Commitment Termination Date equal to the average of the daily
excess of the Revolving Loan Commitments over the sum of the
aggregate principal amount of Revolving Loans outstanding (but
not any Swing Line Loans outstanding) plus the Letter of
----
Credit Usage (other than the Letter of Credit Usage in respect
of Standby Letters of Credit) multiplied by 1/2 of 1% per annum,
---------- --
such commitment fees to be calculated on the basis of a 360-
day year and the actual number of days elapsed and to be
payable quarterly in arrears on January 15, April 15, July 15
and October 15 of each year, commencing on January 15, 1994,
and on the Revolving Loan Commitment Termination Date.
B. Other Fees. Company agrees to pay to Agent such
other fees in the amounts and at the times separately agreed
upon between Company and Agent, as set forth in that certain
letter dated August 19, 1993 from Agent to Company.
2.4 Prepayments and Reductions in Commitments; General
----------- --- ---------- -- ------------ -------
Provisions Regarding Payments.
---------- --------- --------
A. Prepayments and Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon
--------- -----------
written or telephonic notice to Agent on or prior to
12:00 Noon (New York time) on the date of prepayment,
which notice, if telephonic, shall be promptly confirmed
in writing, at any time and from time to time prepay any
Swing Line Loan in whole or in part on any Business Day
in an aggregate minimum amount of $1,000,000 and integral
multiples of $500,000 in excess of that amount (or such
lesser amount as shall constitute the aggregate amount of
all outstanding Swing Line Loans). Company may, upon not
less than one Business Day's prior written or telephonic
notice, in the case of Base Rate Loans, and three
Business Days' prior written or telephonic notice, in the
case of Eurodollar Rate Loans, in each case confirmed in
writing to Agent (which notice Agent will promptly
transmit by telecopy or telephone to each Lender), at any
time and from time to time prepay any Revolving Loans in
whole or in part on any Business Day in an aggregate
minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount (or, in each such
case, such lesser amount as shall constitute the
aggregate amount of all outstanding Revolving Loans);
provided, however, that a Eurodollar Rate Loan may only
-------- -------
be prepaid on the expiration of the Interest Period
applicable thereto. Notice of prepayment having been
given as aforesaid, the principal amount of the Loans
specified in such notice shall become due and payable on
the prepayment date specified therein. Any such
<PAGE>
voluntary prepayment shall be applied as specified in
subsection 2.4A(iv).
(ii) Voluntary Reductions of Revolving Loan
--------- ---------- -- --------- ----
Commitments. Company may, upon not less than three
-----------
Business Days' prior written or telephonic notice
confirmed in writing to Agent (which notice Agent will
promptly transmit by telecopy or telephone to each
Lender), at any time and from time to time terminate in
whole or permanently reduce in part, without premium or
penalty, the Revolving Loan Commitments in an amount up
to the amount by which the Revolving Loan Commitments
exceed the Total Utilization of Revolving Loan
Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of
--------
the Revolving Loan Commitments shall be in an aggregate
minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount. Company's notice to
Agent shall designate the date (which shall be a Business
Day) of such termination or reduction and the amount of
any partial reduction, and such termination or reduction
of the Revolving Loan Commitments shall be effective on
the date specified in Company's notice and shall reduce
the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments of Loans and
--------- ----------- -- ----- ---
Mandatory Reductions of Revolving Loan Commitments.
--------- ---------- -- --------- ---- -----------
(a) Prepayments and Reductions from Asset
----------- --- ---------- ---- -----
Sales. No later than the second Business Day
-----
following the date of receipt by Company or any of
its Subsidiaries or, in the case of insurance
proceeds paid to Agent pursuant to subsection 6.4,
Agent of any Net Cash Proceeds of Asset Sale (other
than any Net Cash Proceeds of Asset Sale from any
Qualified Sale and Lease-back), (1) Company shall
prepay first the Swing Line Loans to the full extent
thereof and second the Revolving Loans to the full
extent thereof in an amount equal to such Net Cash
Proceeds of Asset Sale minus any such Net Cash
-----
Proceeds of Asset Sale (the "Proposed Reinvestment
Amount") received by Company or such Subsidiary or,
in the case of insurance proceeds paid to Agent
pursuant to subsection 6.4, Agent in connection with
(X) any taking of assets described in clause (iii)
of the definition of the term "Asset Sale" or
(Y) any loss, damage or destruction of assets
described in clause (iv) of the definition of the
term "Asset Sale," in either case that Company or
such Subsidiary intends to use within 180 days of
such date of receipt to repair or restore the
portion of the assets so taken, lost, damaged or
destroyed that is remaining after such taking, loss,
damage or destruction or to replace the assets so
taken, lost, damaged or destroyed; provided that
--------
Company shall have delivered to Agent on or before
such second Business Day an Officers' Certificate
setting forth the proposed use of the Proposed
Reinvestment Amount and such other information with
respect to such proposed use as Agent may reasonably
request, and (2) to the extent such Net Cash
Proceeds of Asset Sale minus the Proposed
-----
Reinvestment Amount, if any, exceed the aggregate
outstanding principal amount of the Loans, Company
shall cash collateralize outstanding Letters of
Credit pursuant to the Collateral Account Agreement
in an amount equal to the lesser of (y) such excess
and (z) (I) if no Event of Default or Potential
Event of Default shall have occurred and be
continuing on the date of such cash
collateralization, then the amount by which the
<PAGE>
Letter of Credit Usage then in effect exceeds the
Revolving Loan Commitments then in effect (after
giving effect to the permanent reduction in the
Revolving Loan Commitments in an amount equal to
such Net Cash Proceeds of Asset Sale as provided
below) or (II) if an Event of Default or Potential
Event of Default shall have occurred and be
continuing on the date of such cash
collateralization, then the Letter of Credit Usage
then in effect, and, in any event, the Revolving
Loan Commitments shall be permanently reduced in an
amount equal to such Net Cash Proceeds of Asset
Sale; provided, however, that the first $10,000,000
-------- -------
of Net Cash Proceeds of Asset Sale (other than any
Net Cash Proceeds of Asset Sale from any Qualified
Sale and Lease-back and other than any Proposed
Reinvestment Amount to the extent such Proposed
Reinvestment Amount is used to repair, restore or
replace assets of Company or any of its Subsidiaries
as provided above) received by Company or any of its
Subsidiaries in any Fiscal Year shall not be
required to be applied to prepay any Loans or cash
collateralize any outstanding Letters of Credit or
reduce the Revolving Loan Commitments pursuant to
this subsection 2.4A(iii)(a). With respect to any
Proposed Reinvestment Amount, on the one hundred and
eighty-first day after receipt thereof by Company or
any of its Subsidiaries, subject to the last proviso
in the immediately preceding sentence, (1) Company
shall prepay first the Swing Line Loans to the full
-----
extent thereof and second the Revolving Loans to the
------
full extent thereof in an amount (the "Unused
Reinvestment Amount") equal to 100% of any portion
of such Proposed Reinvestment Amount that has not
been used to repair, restore or replace the assets
of Company or such Subsidiary as provided above and
(2) to the extent the Unused Reinvestment Amount
exceeds the aggregate outstanding principal amount
of the Loans, Company shall cash collateralize
outstanding Letters of Credit pursuant to the
Collateral Account Agreement in an amount equal to
the lesser of (y) such excess and (z) (I) if no
Event of Default or Potential Event of Default shall
have occurred and be continuing on the date of such
cash collateralization, then the amount by which the
Letter of Credit Usage then in effect exceeds the
Revolving Loan Commitments then in effect (after
giving effect to the permanent reduction in the
Revolving Loan Commitments in an amount equal to the
Unused Reinvestment Amount as provided below) or
(II) if an Event of Default or a Potential Event of
Default shall have occurred and be continuing on the
date of such cash collateralization, then the Letter
of Credit Usage then in effect, and, in any event,
the Revolving Loan Commitments shall be permanently
reduced in an amount equal to the Unused
Reinvestment Amount. Concurrently with any
prepayment of the Loans, cash collateralization of
outstanding Letters of Credit and/or reduction of
the Revolving Loan Commitments pursuant to this
subsection 2.4A(iii)(a), Company shall deliver to
Agent an Officers' Certificate demonstrating the
derivation of the Net Cash Proceeds of Asset Sale of
the correlative Asset Sale from the gross sales
price thereof. In the event that Company shall, at
any time after receipt of any Net Cash Proceeds of
Asset Sale in connection with any Asset Sale,
determine that the prepayments, cash
collateralization of Letters of Credit and/or
reductions of the Revolving Loan Commitments, if
any, previously made in respect of such Asset Sale
were in an aggregate amount less than that required
<PAGE>
by the terms of this subsection 2.4A(iii)(a),
Company shall promptly make an additional prepayment
of the Swing Line Loans or Revolving Loans or cash
collateralize outstanding Letters of Credit pursuant
to the Collateral Account Agreement, as the case may
be (and the Revolving Loan Commitments shall be
permanently reduced), in the manner described above
in an amount equal to the amount of any such
deficit, and Company shall concurrently therewith
deliver to Agent an Officers' Certificate
demonstrating the derivation of the additional Net
Cash Proceeds of Asset Sale resulting in such
deficit. Any mandatory prepayments pursuant to this
subsection 2.4A(iii)(a) shall be applied as
specified in subsection 2.4A(iv).
(b) Prepayments and Reductions Due to
----------- --- ---------- --- --
Reversion of Surplus Assets of Pension Plans. No
--------- -- ------- ------ -- ------- -----
later than the second Business Day following the
date of return to Company or any of its Subsidiaries
of any surplus assets of any pension plan of Company
or any of its Subsidiaries, (1) Company shall prepay
in an amount (the "Net Reversion Amount") equal to
100% of such returned surplus assets, net of
transaction costs and expenses incurred in obtaining
such return, including incremental taxes payable as
a result thereof, first the Swing Line Loans to the
-----
full extent thereof and second the Revolving Loans
------
to the full extent thereof and (2) to the extent
such Net Reversion Amount exceeds the aggregate
outstanding principal amount of the Loans, Company
shall cash collateralize outstanding Letters of
Credit pursuant to the Collateral Account Agreement
in an amount equal to the lesser of (y) such excess
and (z) (I) if no Event of Default or Potential
Event of Default shall have occurred and be
continuing on the date of such cash
collateralization, then the amount by which the
Letter of Credit Usage then in effect exceeds the
Revolving Loan Commitments then in effect (after
giving effect to the permanent reduction in the
Revolving Loan Commitments in an amount equal to
such Net Reversion Amount as provided below) or
(II) if an Event of Default or Potential Event of
Default shall have occurred and be continuing on the
date of such cash collateralization, then the Letter
of Credit Usage then in effect, and, in any event,
the Revolving Loan Commitments shall be permanently
reduced in an amount equal to such Net Reversion
Amount. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(c) Prepayments Due to Reductions or
----------- --- -- ---------- --
Restrictions of Revolving Loan Commitments or Due to
------------ -- --------- ---- ----------- -- --- --
Insufficient Borrowing Base. Company shall from
------------ --------- ----
time to time first prepay the Swing Line Loans,
-----
second prepay the Revolving Loans and third cash
------ -----
collateralize outstanding Letters of Credit to the
extent necessary (1) so that the Total Utilization
of Revolving Loan Commitments then in effect minus
-----
the aggregate amount of cash collateral then on
deposit pursuant to the Collateral Account Agreement
as collateral for outstanding Letters of Credit
shall not at any time exceed the lesser of (X) the
Revolving Loan Commitments then in effect and
(Y) the Borrowing Base then in effect and (2) to
give effect to the limitations set forth in clause
(c) of the second paragraph of subsection 2.1A(i)
and in clause (b) of the second paragraph of
subsection 2.1A(ii). Any such mandatory prepayments
shall be applied as specified in subsection
2.4A(iv).
<PAGE>
(iv) Application of Prepayments.
----------- -- -----------
(a) Application of Voluntary Prepayments by
----------- -- --------- ----------- --
Type of Loans and Order of Maturity. Any voluntary
---- -- ----- --- ----- -- --------
prepayments pursuant to subsection 2.4A(i) shall be
applied as specified by Company in the applicable
notice of prepayment; provided that in the event
--------
Company fails to specify the Loans to which any such
prepayment shall be applied, such prepayment shall
be applied first to repay outstanding Swing Line
-----
Loans to the full extent thereof, second to repay
------
outstanding Revolving Loans to the full extent
thereof, and third to cash collateralize outstanding
-----
Letters of Credit to the full extent thereof
pursuant to the Collateral Account Agreement.
(b) Application of Prepayments to Base Rate
----------- -- ----------- -- ---- ----
Loans and Eurodollar Rate Loans. Considering
----- --- ---------- ---- -----
Revolving Loans and Swing Line Loans being prepaid
separately, any prepayment shall be applied first to
Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case
in a manner which minimizes the amount of any
payments required to be made by Company pursuant to
subsection 2.6D.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by
------ --- ---- -- -------
Company of principal, interest, fees and other
Obligations hereunder, under the Notes and under the
other Loan Documents shall be made in same day funds and
without defense, set-off or counterclaim, free of any
restriction or condition, and delivered to Agent not
later than 1:00 P.M. (New York time) on the date due at
its office located at One Bankers Trust Plaza, New York,
New York, for the account of Lenders; funds received by
Agent after that time on such due date shall be deemed to
have been paid by Company on the next succeeding Business
Day. Company hereby authorizes Agent to charge its
accounts with Agent in order to cause timely payment to
be made to Agent of all principal, interest, fees and
expenses due hereunder (subject to sufficient funds being
available in its accounts for that purpose).
(ii) Application of Payments to Principal and
----------- -- -------- -- --------- ---
Interest. All payments in respect of the principal
--------
amount of any Loan shall include payment of accrued
interest on the principal amount being repaid or prepaid,
and all such payments shall be applied to the payment of
interest before application to principal.
(iii) Apportionment of Payments. Aggregate
------------- -- --------
principal and interest payments shall be apportioned
among all outstanding Loans to which such payments
relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly
distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page
hereof or at such other address as such Lender may
request, its Pro Rata Share of all such payments received
by Agent and the commitment fees of such Lender when
received by Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this
subsection 2.4B(iii), if, pursuant to the provisions of
subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected
Lender makes Base Rate Loans in lieu of its Pro Rata
Share of any Eurodollar Rate Loans, Agent shall give
effect thereto in apportioning payments received
thereafter.
<PAGE>
(iv) Payments on Business Days. Whenever any
-------- -- -------- ----
payment to be made hereunder shall be stated to be due on
a day that is not a Business Day, such payment shall be
made on the next succeeding Business Day and such
extension of time shall be included in the computation of
the payment of interest hereunder or of the commitment
fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that
-------- -- -------
before disposing of any Note held by it, or any part
thereof (other than by granting participations therein),
that Lender will make a notation thereon of all Loans
evidenced by that Note and all principal payments
previously made thereon and of the date to which interest
thereon has been paid; provided that the failure to make
--------
(or any error in the making of) a notation of any Loan
made under such Note shall not limit or otherwise affect
the obligations of Company hereunder or under such Note
with respect to any Loan or any payments of principal or
interest on such Note.
2.5 Use of Proceeds.
--- -- --------
A. Loans. The proceeds of any Loans shall be applied
by Company for working capital purposes, which may include the
repayment of the Swing Line Loans pursuant to subsection
2.1A(ii), the reimbursement to any Issuing Lender of any
amounts drawn under any Letters of Credit issued by such
Issuing Lender as provided in subsection 3.3 and the making of
intercompany loans to any of Company's wholly-owned
Subsidiaries, in accordance with subsection 7.1(iv), for their
own working capital purposes.
B. Margin Regulations. No portion of the proceeds of
any borrowing under this Agreement shall be used by Company or
any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of
the Board of Governors of the Federal Reserve System or any
other regulation of such Board or to violate the Exchange Act,
in each case as in effect on the date or dates of such
borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
------- ---------- --------- ---------- ---- -----
Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall
govern with respect to Eurodollar Rate Loans as to the matters
covered:
A. Determination of Applicable Interest Rate. As soon
as practicable after 10:00 A.M. (New York time) on each Inter-
est Rate Determination Date, Agent shall determine (which
determination shall, absent manifest error (including
arithmetical error), be final, conclusive and binding upon all
parties) the interest rate that shall apply to the Eurodollar
Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in
writing) to Company and each Lender.
B. Inability to Determine Applicable Interest Rate. In
the event that Agent shall have determined (which
determination shall be final and conclusive and binding upon
all parties hereto), on any Interest Rate Determination Date
with respect to any Eurodollar Rate Loans, that by reason of
circumstances affecting the interbank Eurodollar market,
adequate and fair means do not exist for ascertaining the
interest rate applicable to such Loans on the basis provided
for in the definition of Adjusted Eurodollar Rate, Agent shall
on such date give notice (by telecopy or by telephone
confirmed in writing) to Company and each Lender of such
<PAGE>
determination, whereupon (i) no Loans may be made as, or
converted to, Eurodollar Rate Loans until such time as Agent
notifies Company and Lenders that the circumstances giving
rise to such notice no longer exist and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Loans in respect of which such
determination was made shall be deemed to be rescinded by
Company.
C. Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive
and binding upon all parties hereto but shall be made only
after consultation with Company and Agent) that the making,
maintaining or continuation of its Eurodollar Rate Loans
(i) has become unlawful as a result of compliance by such
Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any
such treaty, governmental rule, regulation, guideline or order
not having the force of law even though the failure to comply
therewith would not be unlawful) or (ii) has become
impracticable, or would cause such Lender material hardship,
as a result of contingencies occurring after the date of this
Agreement which materially and adversely affect the interbank
Eurodollar market or the position of such Lender in that
market, then, and in any such event, such Lender shall be an
"Affected Lender" and it shall on that day give notice (by
telecopy or by telephone confirmed in writing) to Company and
Agent of such determination (which notice Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation
of the Affected Lender to make Loans as, or to convert Loans
to, Eurodollar Rate Loans shall be suspended until such notice
shall be withdrawn by the Affected Lender, (b) to the extent
such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant
to a Notice of Borrowing or a Notice of Conversion/
Continuation, the Affected Lender shall make such Loan as (or
convert such Loan to, as the case may be) a Base Rate Loan,
(c) the Affected Lender's obligation to maintain its
outstanding Eurodollar Rate Loans (the "Affected Loans"),
shall be terminated at the earlier to occur of the expiration
of the Interest Period then in effect with respect to the
Affected Loans or when required by law, and (d) the Affected
Loans shall automatically convert into Base Rate Loans on the
date of such termination. Notwithstanding the foregoing, to
the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested
by Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option,
subject to the provisions of subsection 2.6D, to rescind such
Notice of Borrowing or Notice of Conversion/Continuation as to
all Lenders by giving notice (by telecopy or by telephone
confirmed in writing) to Agent of such rescission on the date
on which the Affected Lender gives notice of its determination
as described above (which notice of rescission Agent shall
promptly transmit to each other Lender). Except as provided
in the immediately preceding sentence, nothing in this
subsection 2.6C shall affect the obligation of any Lender
other than an Affected Lender to make or maintain Loans as, or
to convert Loans to, Eurodollar Rate Loans in accordance with
the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of
Interest Periods. Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth
the basis for requesting such amounts), for all reasonable
losses, expenses and liabilities (including, without
limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate
Loans and any loss, expense or liability sustained by that
Lender in connection with the liquidation or re-employment of
such funds) which that Lender may sustain: (i) if for any
<PAGE>
reason (other than a default by that Lender) a borrowing of
any Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Borrowing or a telephonic request for
borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified
therefor in a Notice of Conversion/Continuation or a tele-
phonic request for conversion or continuation, (ii) if any
prepayment or conversion of any of its Eurodollar Rate Loans
occurs on a date that is not the last day of an Interest
Period applicable to that Loan, (iii) if any prepayment of any
of its Eurodollar Rate Loans is not made on any date specified
in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company to repay its
Eurodollar Rate Loans when required by the terms of this
Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for
the account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under
this subsection 2.6 and under subsection 2.7A shall be made as
though that Lender had actually funded each of its relevant
Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to
clause (i) of the definition of Adjusted Eurodollar Rate in an
amount equal to the amount of such Eurodollar Rate Loan and
having a maturity comparable to the relevant Interest Period
and through the transfer of such Eurodollar deposit from an
offshore office of that Lender to a domestic office of that
Lender in the United States of America; provided, however,
-------- -------
that each Lender may fund each of its Eurodollar Rate Loans in
any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable
under this subsection 2.6 and under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the
occurrence of and during the continuation of a Potential Event
of Default or an Event of Default, (i) Company may not elect
to have a Loan be made or maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest
Period then in effect for that Loan and (ii) subject to the
provisions of subsection 2.6D, any Notice of Borrowing or
Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation
that has not yet occurred shall be deemed to be rescinded by
Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
--------- ------ ------ ------- --------
A. Compensation for Increased Costs and Taxes. Subject
to the provisions of subsection 2.7B(iii), in the event that
any Lender shall determine (which determination shall, absent
manifest error (including arithmetical error), be final and
conclusive and binding upon all parties hereto) that any law,
treaty or governmental rule, regulation or order, or any
change therein or in the interpretation, administration or
application thereof (including the introduction of any new
law, treaty or governmental rule, regulation or order), or any
determination of a court or governmental authority, in each
case that becomes effective after the date hereof, or
compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central
bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Lender (or its applicable lending
office) to any additional Tax (other than any Tax on the
overall net income of such Lender) with respect to this
<PAGE>
Agreement or any of the Loans or any of its obligations
hereunder;
(ii) imposes, modifies or holds applicable any
reserve (including without limitation any marginal,
emergency, supplemental, special or other reserve),
special deposit, compulsory loan, FDIC insurance or
similar requirement against assets held by, or deposits
or other liabilities in or for the account of, or
advances or loans by, or other credit extended by, or any
other acquisition of funds by, any office of such Lender
(other than any such reserve or other requirements with
respect to Eurodollar Rate Loans that are reflected in
the definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition (other than
with respect to a Tax matter) on or affecting such Lender
(or its applicable lending office) or its obligations
hereunder or the interbank Eurodollar market;
and the result of any of the foregoing is to increase the cost
to such Lender of agreeing to make, making or maintaining
Loans hereunder or to reduce any amount received or receivable
by such Lender (or its applicable lending office) with respect
thereto; then, in any such case, Company shall promptly pay to
such Lender, upon receipt of the statement referred to in the
immediately succeeding sentence, such additional amount or
amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Lender in
its sole discretion shall determine) as may be necessary to
compensate such Lender for any such increased cost or
reduction in amounts received or receivable hereunder. Such
Lender shall deliver to Company a written statement, setting
forth in reasonable detail the basis for calculating the
additional amounts owed to such Lender under this subsection
2.7A, which statement shall be conclusive and binding upon all
parties hereto absent manifest error (including arithmetical
error).
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums
-------- -- -- ---- --- -----
payable by Company under this Agreement and the other
Loan Documents shall be paid free and clear of and
(except to the extent required by law) without any
deduction or withholding on account of any Tax imposed,
levied, collected, withheld or assessed by or within the
United States of America or any political subdivision in
or of the United States of America or any other
jurisdiction from or to which a payment is made by or on
behalf of Company or by any federation or organization of
which the United States of America or any such
jurisdiction is a member at the time of payment (other
than a Tax on the overall net income of a Lender).
(ii) Grossing-up of Payments. If Company or any
----------- -- --------
other Person is required by law to make any deduction or
withholding on account of any such Tax from any sum paid
or payable by Company to Agent or any Lender under any of
the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement as
soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the
date on which penalties attach thereto, such payment
to be made (if the liability to pay is imposed on
Company) for its own account or (if that liability
is imposed on Agent or such Lender, as the case may
be) on behalf of and in the name of Agent or such
Lender;
<PAGE>
(c) the sum payable by Company in respect of
which the relevant deduction, withholding or payment
is required shall be increased to the extent
necessary to ensure that, after the making of that
deduction, withholding or payment, Agent or such
Lender, as the case may be, receives on the due date
a net sum equal to what it would have received had
no such deduction, withholding or payment been
required or made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction or
withholding, and within 30 days after the due date
of payment of any Tax which it is required by clause
(b) above to pay, Company shall deliver to Agent, to
the extent reasonably available, evidence reasonably
satisfactory to the other affected parties of such
deduction, withholding or payment and of the
remittance thereof to the relevant taxing or other
authority;
provided that no such additional amount shall be required
--------
to be paid to any Lender under clause (c) above except to
the extent that any change after the date hereof (in the
case of each Lender listed on the signature pages hereof)
or after the date of the Assignment and Acceptance
pursuant to which such Lender became a Lender (in the
case of each other Lender) in any such requirement for a
deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at
the date of this Agreement or at the date of such
Assignment and Acceptance, as the case may be, in respect
of payments to such Lender.
(iii) U.S. Tax Certificates. Each Lender that
---- --- ------------
is organized under the laws of any jurisdiction other
than the United States or any state or other political
subdivision thereof shall deliver to Agent for
transmission to Company, on or prior to the Closing Date
(in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment and Acceptance
pursuant to which it becomes a Lender (in the case of
each other Lender), and at such other times as may be
necessary in the determination of Company or Agent (each
in the reasonable exercise of its discretion), such
certificates, documents or other evidence, properly
completed and duly executed by such Lender (including,
without limitation, Internal Revenue Service Form 1001 or
Form 4224 or any other certificate or statement of
exemption required by Treasury Regulations Section
1.1441-4(a) or Section 1.1441-6(c) or any successor
thereto) to establish that such Lender is not subject to
deduction or withholding of United States federal income
tax under Section 1441 or 1442 of the Internal Revenue
Code or otherwise (or under any comparable provisions of
any successor statute) with respect to any payments to
such Lender of principal, interest, fees or other amounts
payable under any of the Loan Documents. Company shall
not be required to pay any additional amount to any such
Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of
the immediately preceding sentence; provided that if such
--------
Lender shall have satisfied such requirements on the
Closing Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the Assignment
and Acceptance pursuant to which it became a Lender (in
the case of each other Lender), nothing in this
subsection 2.7B(iii) shall relieve Company of its
obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that, as a
result of any change in applicable law, such Lender is no
<PAGE>
longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date
establishing the fact that such Lender is not subject to
withholding as described in the immediately preceding
sentence.
(iv) Notice of Assessment. In the event that any
------ -- ----------
Lender or Agent receives any written communication from
any taxing authority with respect to an assessment or
proposed assessment of any Taxes in respect of which
Company is obligated to make any payments pursuant to
this subsection 2.7B, such Lender or Agent, as the case
may be, shall promptly so notify Company in writing and
provide a copy of such communication to Company.
C. Capital Adequacy Adjustment. If any Lender shall
have determined that the adoption, effectiveness, phase-in or
applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital
adequacy, or any change therein or 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
applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having
the force of law) of any such governmental authority, central
bank or comparable agency, has or would have the effect of
reducing the rate of return on the capital of such Lender or
any corporation controlling such Lender as a consequence of,
or with reference to, such Lender's Loans or Commitments or
Letters of Credit or participations therein or other
obligations hereunder with respect to the Loans or the Letters
of Credit to a level below that which such Lender or such
controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such
Lender or such controlling corporation with regard to capital
adequacy), then from time to time, within five Business Days
after receipt by Company from such Lender of the statement
referred to in the immediately succeeding sentence, Company
shall pay to such Lender such additional amount or amounts as
will compensate such Lender or such controlling corporation on
an after-tax basis for such reduction. Each Lender, upon
determining in good faith that any additional amounts will be
payable pursuant to this subsection 2.7C, will give a written
statement thereof to Company (with a copy of such statement to
Agent), which statement shall set forth in reasonable detail
the basis of the calculation of such additional amounts.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
---------- -- ------- --- ------- ------- -- --------
Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or
Issuing Lender responsible for administering the Loans or
Letters of Credit of such Lender or Issuing Lender, as the
case may be, becomes aware of the occurrence of an event or
the existence of a condition that would cause such Lender to
become an Affected Lender or that would entitle such Lender or
Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with
the internal policies of such Lender or Issuing Lender and any
applicable legal or regulatory restrictions, use reasonable
efforts (i) to make, issue, fund or maintain the Commitments
of such Lender or the affected Loans or Letters of Credit of
such Lender or Issuing Lender through another lending or
letter of credit office of such Lender or Issuing Lender, or
(ii) take such other measures as such Lender or Issuing Lender
may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would
cease to exist or the additional amounts which would otherwise
be required to be paid to such Lender or Issuing Lender
pursuant to subsection 2.7 or subsection 3.6 would be
<PAGE>
materially reduced and if, as determined by such Lender or
Issuing Lender in its sole discretion, the making, issuing,
funding or maintaining of such Commitments or Loans or Letters
of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case
may be, would not otherwise materially adversely affect such
Commitments or Loans or Letters of Credit or the interests of
such Lender or Issuing Lender; provided that such Lender or
--------
Issuing Lender will not be obligated to utilize such other
lending or letter of credit office pursuant to this subsection
2.8 unless Company agrees to pay all incremental expenses
incurred by such Lender or Issuing Lenders as a result of
utilizing such other lending or letter of credit office as
described in clause (i) above. A certificate as to the amount
of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis
for requesting such amount) submitted by such Lender or
Issuing Lender to Company shall be conclusive absent manifest
error (including arithmetical error).
2.9 Removal of a Lender.
------- -- - ------
A. In the event that any Lender shall give notice to
Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7 or
subsection 3.6, and unless the circumstances which have caused
such Lender to be an Affected Lender or which entitle such
Lender to receive such payments are no longer in effect,
Company may, if such Lender is not then an Issuing Lender and
such Lender shall fail to withdraw such notice within 5
Business Days after Company's request for such withdrawal,
upon thirty days' prior written notice by Company to Agent and
such Lender, elect (i) to terminate the Commitments of such
Lender upon receipt by such Lender of such notice and prepay
on the date of such termination any outstanding Loans made by
such Lender, together with accrued and unpaid interest thereon
and any other amounts payable to such Lender hereunder
pursuant to subsection 2.7 or subsection 3.6 or otherwise;
provided that if there are any Loans of such Lender
--------
outstanding at the time of such termination, the written
consent of Agent and Requisite Lenders, which consent shall
not be unreasonably withheld, shall be required in order for
Company to make the foregoing election; or (ii) to cause such
Lender to assign its Loans and Commitments in full to an
Eligible Assignee in accordance with the provisions of
subsection 10.1B.
B. In the event that any Lender is a Defaulting Lender,
and unless the Default Period for such Defaulting Lender is no
longer continuing, Company may, if such Lender is not then an
Issuing Lender and such Lender shall fail to cure the default
as a result of which it has become a Defaulting Lender within
five Business Days after Company's request that it cure such
default, elect to cause such Lender to assign its Loans and
Commitments in full to an Eligible Assignee in accordance with
the provisions of subsection 10.1B.
2.10 Defaulting Lenders.
---------- -------
Anything contained herein to the contrary
notwithstanding, in the event that any Lender (a "Defaulting
Lender") defaults (a "Funding Default") in its obligation to
fund any Revolving Loan (a "Defaulted Revolving Loan") in
accordance with subsection 2.1, then (i) during any Default
Period (as defined below) with respect to such Defaulting
Lender, such Defaulting Lender shall be deemed not to be a
"Lender" for purposes of voting on any matters (including
without limitation the granting of any consents or waivers)
with respect to any of the Loan Documents; (ii) to the extent
permitted by applicable law, until such time as the Default
Excess (as defined below) with respect to such Defaulting
Lender shall have been reduced to zero (a) any voluntary
<PAGE>
prepayment of the Revolving Loans pursuant to subsection
2.4A(i) shall, if Company so directs at the time of making
such voluntary prepayment, be applied to the Revolving Loans
of other Lenders as if such Defaulting Lender had no Revolving
Loans outstanding and the Revolving Loan Exposure of such
Defaulting Lender were zero and (b) any mandatory prepayment
of the Revolving Loans pursuant to subsection 2.4A(iii) shall,
if Company so directs at the time of making such mandatory
prepayment, be applied to the Revolving Loans of other Lenders
(but not to the Revolving Loans of such Defaulting Lender) as
if such Defaulting Lender had funded all Defaulted Revolving
Loans of such Defaulting Lender, it being understood and
agreed that Company shall be entitled to retain any portion of
any mandatory prepayment of the Revolving Loans that is not
paid to such Defaulting Lender solely as a result of the
operation of the provisions of this clause (b); provided that
--------
the provisions of this clause (b) shall not affect any
mandatory reductions of the Revolving Loan Commitment of such
Defaulting Lender pursuant to subsection 2.4A(iii); (iii) such
Defaulting Lender's Revolving Loan Commitment and outstanding
Revolving Loans and such Defaulting Lender's Pro Rata Share of
the Letter of Credit Usage in respect of Commercial Letters of
Credit shall be excluded for purposes of calculating the
commitment fee payable to Lenders pursuant to subsection 2.3A
in respect of any day during any Default Period with respect
to such Defaulting Lender, and such Defaulting Lender shall
not be entitled to receive any commitment fee pursuant to
subsection 2.3A with respect to such Defaulting Lender's
Revolving Loan Commitment in respect of any Default Period
with respect to such Defaulting Lender; and (iv) the Total
Utilization of Revolving Loan Commitments as at any date of
determination shall be calculated as if such Defaulting Lender
had funded all Defaulted Revolving Loans of such Defaulting
Lender.
For purposes of this Agreement (A) "Default Period"
means, with respect to any Defaulting Lender, the period
commencing on the date of the applicable Funding Default and
ending on the earliest of the following dates: (a) the date
on which all Revolving Loan Commitments are cancelled or
terminated and/or the Obligations are declared or become
immediately due and payable, (b) the date on which (1) the
Default Excess with respect to such Defaulting Lender shall
have been reduced to zero (whether by the funding by such
Defaulting Lender of any Defaulted Revolving Loans of such
Defaulting Lender or by the non-pro rata application of any
voluntary or mandatory prepayments of the Revolving Loans in
accordance with the terms of this subsection 2.10 or by a
combination thereof) and (2) such Defaulting Lender shall have
delivered to Company and Agent a written reaffirmation of its
intention to honor its obligations under this Agreement with
respect to its Revolving Loan Commitment, and (c) the date on
which Company, Agent and Requisite Lenders waive all Funding
Defaults of such Defaulting Lender in writing, and
(B) "Default Excess" means, with respect to any Defaulting
Lender, the excess, if any, of such Defaulting Lender's Pro
Rata Share of the aggregate outstanding principal amount of
Revolving Loans of all Lenders (calculated as if all
Defaulting Lenders (other than such Defaulting Lender) had
funded all of their respective Defaulted Revolving Loans) over
the aggregate outstanding principal amount of Revolving Loans
of such Defaulting Lender.
No Commitment of any Lender shall be increased or
otherwise affected, and, except as otherwise expressly
provided in this subsection 2.10, performance by Company of
its obligations under this Agreement and the other Loan
Documents shall not be excused or otherwise modified, as a
result of any Funding Default or the operation of this
subsection 2.10. The rights and remedies against a Defaulting
Lender under this subsection 2.10 are in addition to other
rights and remedies which Company may have against such
<PAGE>
Defaulting Lender with respect to any Funding Default and
which Agent or any Lender may have against such Defaulting
Lender with respect to any Funding Default.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of
-------- -- ------- -- ------ --- -------- -------- --
Participations Therein.
-------------- -------
A. Letters of Credit. In addition to Company
requesting that Lenders make Revolving Loans pursuant to
subsection 2.1A(i) and that Swing Line Lender make Swing Line
Loans pursuant to subsection 2.1A(ii), Company may request, in
accordance with the provisions of this subsection 3.1, from
time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date, that
one or more Lenders issue Letters of Credit for the account of
Company for the purposes specified in the definitions of
Commercial Letters of Credit and Standby Letters of Credit.
Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company
herein set forth, any one or more Lenders may, but (except as
provided in subsection 3.1B(ii)) shall not be obligated to,
issue such Letters of Credit in accordance with the provisions
of this subsection 3.1; provided that Company shall not
--------
request that any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to
such issuance, the Total Utilization of Revolving Loan
Commitments would exceed the lesser of (a) the Revolving
Loan Commitments then in effect and (b) the Borrowing
Base then in effect;
(ii) any Letter of Credit if, after giving effect to
such issuance, (a) the Letter of Credit Usage would
exceed $35,000,000 or (b) the Letter of Credit Usage in
respect of Commercial Letters of Credit would exceed
$10,000,000;
(iii) any Standby Letter of Credit having an
expiration date later than the earlier of (a) the
Revolving Loan Commitment Termination Date and (b) the
date which is one year from the date of issuance of such
Standby Letter of Credit; provided that the immediately
--------
preceding clause (b) shall not prevent any Issuing Lender
from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive
periods not to exceed one year each unless such Issuing
Lender elects not to extend for any such additional
period; provided, further that such Issuing Lender shall
-------- -------
deliver a written notice to Agent setting forth the last
day on which such Issuing Lender may give notice that it
will not extend such Standby Letter of Credit (the
"Notification Date" with respect to such Standby Letter
of Credit) at least ten Business Days prior to such
Notification Date; and provided, further that, unless
-------- -------
Requisite Lenders otherwise consent, such Issuing Lender
shall give notice that it will not extend such Standby
Letter of Credit if it has knowledge that an Event of
Default has occurred and is continuing on such
Notification Date;
(iv) any Commercial Letter of Credit having an
expiration date (a) later than the earlier of (X) the
Revolving Loan Commitment Termination Date and (Y) the
date which is 180 days from the date of issuance of such
Commercial Letter of Credit or (b) that is otherwise
unacceptable to the applicable Issuing Lender in its
reasonable discretion; or
<PAGE>
(v) any Letter of Credit denominated in a currency
other than Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company desires
------ -- --------
the issuance of a Letter of Credit, it shall deliver to
the proposed Issuing Lender (with a copy to Agent if
Agent is not the proposed Issuing Lender) a Notice of
Issuance of Letter of Credit no later than 12:00 Noon
(New York time) at least five Business Days (or such
shorter period as may be agreed to by the Issuing Lender
in any particular instance) in advance of the proposed
date of issuance. The Notice of Issuance of Letter of
Credit shall specify (a) the Lender requested to issue
the Letter of Credit, (b) the proposed date of issuance
(which shall be a Business Day), (c) the face amount of
the Letter of Credit, (d) the expiration date of the
Letter of Credit, (e) the name and address of the
beneficiary, (f) that the proposed issuance will not
cause the Total Utilization of Revolving Loan Commitments
to exceed the Borrowing Base then in effect, and (g) the
verbatim text of the proposed Letter of Credit or the
proposed terms and conditions, including a precise
description of any documents and the verbatim text of any
certificates to be presented by the beneficiary which, if
presented by the beneficiary prior to the expiration date
of the Letter of Credit, would require the Issuing Lender
to make payment under the Letter of Credit; provided that
--------
the Issuing Lender, in its reasonable discretion, may
require changes in the text of the proposed Letter of
Credit or any such documents or certificates; and
provided, further that no Letter of Credit shall require
-------- -------
payment against a conforming draft to be made thereunder
on the same business day (under the laws of the
jurisdiction in which the office of the Issuing Lender to
which such draft is required to be presented is located)
that such draft is presented if such presentation is made
after 10:00 A.M. (in the time zone of such office of the
Issuing Lender) on such business day.
(ii) Determination of Issuing Lender. Upon receipt
------------- -- ------- ------
by a proposed Issuing Lender of a Notice of Issuance of
Letter of Credit pursuant to subsection 3.1B(i)
requesting the issuance of a Letter of Credit, (a) in the
event Agent is the proposed Issuing Lender, Agent shall
be the Issuing Lender with respect to such Letter of
Credit, notwithstanding the fact that the Letter of
Credit Usage with respect to such Letter of Credit and
with respect to all other Letters of Credit issued by
Agent, when aggregated with Agent's outstanding Revolving
Loans and Swing Line Loans, may exceed Agent's Revolving
Loan Commitment then in effect, and (b) in the event any
other Lender is the proposed Issuing Lender, such Lender
shall promptly notify Company and Agent whether or not,
in its sole discretion, it has elected to issue such
Letter of Credit, and (1) if such Lender so elects to
issue such Letter of Credit it shall be the Issuing
Lender with respect thereto and (2) if such Lender fails
to so promptly notify Company and Agent or declines to
issue such Letter of Credit, Company may request Agent or
another Lender to be the Issuing Lender with respect to
such Letter of Credit in accordance with the provisions
of this subsection 3.1B.
(iii) Notification to Lenders. Promptly after
------------ -- -------
receipt of a Notice of Issuance of Letter of Credit and
the determination of the Issuing Lender with respect to
the proposed Letter of Credit, (a) Agent shall notify
each Lender of the proposed issuance of such Letter of
Credit, the Issuing Lender and the amount of such
Lender's respective participation therein, determined in
<PAGE>
accordance with subsection 3.1C, and (b) the Issuing
Lender shall deliver to each other Lender a copy of such
Notice of Issuance of Letter of Credit.
(iv) Issuance of Letter of Credit. Upon
-------- -- ------ -- ------
satisfaction or waiver (in accordance with subsection
10.6) of the conditions set forth in subsection 4.3, the
Issuing Lender shall issue the requested Letter of Credit
in accordance with the Issuing Lender's standard
operating procedures, and upon its issuance of such
Letter of Credit the Issuing Lender shall promptly notify
Agent and each Lender of such issuance, which notice
shall be accompanied by a copy of such Letter of Credit.
(v) Report to Lenders. Within 15 days after the
------ -- -------
end of each calendar quarter ending after the Closing
Date, so long as any Letter of Credit shall have been
outstanding during such calendar quarter, each Issuing
Lender shall deliver to each other Lender a report
setting forth the average for such calendar quarter of
the daily maximum amount available to be drawn under the
Letters of Credit issued by such Issuing Lender that were
outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of
Credit, each Lender shall be deemed to, and hereby agrees to,
have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and drawings thereunder
in an amount equal to such Lender's Pro Rata Share of the
maximum amount which is or at any time may become available to
be drawn thereunder.
3.2 Letter of Credit Fees.
------ -- ------ ----
Company agrees to pay the following amounts to each
Issuing Lender with respect to Letters of Credit issued by it:
(i) with respect to each Standby Letter of Credit,
(a) a fronting fee equal to 0.25% per annum of the
average daily maximum amount available to be drawn under
such Standby Letter of Credit; provided that in any event
--------
the minimum fronting fee for any Standby Letter of Credit
shall be $500 (it being agreed that, at the time of any
cancellation or expiration of a Standby Letter of Credit,
if $500 exceeds the amount of fronting fees theretofore
paid or then accrued with respect to such Standby Letter
of Credit, the amount of such excess shall be payable on
the next date upon which accrued fronting fees in respect
of Standby Letters of Credit are otherwise payable as
provided in this sentence); and (b) a letter of credit
fee equal to 1.75% per annum multiplied by the average
---------- --
daily maximum amount available to be drawn under such
Standby Letter of Credit, in each case payable in arrears
on and through each January 15, April 15, July 15 and
October 15 of each year and computed on the basis of a
360-day year for the actual number of days elapsed;
(ii) with respect to each Commercial Letter of
Credit, (a) a fronting fee equal to 0.25% per annum of
the average daily maximum amount available to be drawn
under such Commercial Letter of Credit and (b) a letter
of credit fee equal to 0.25% per annum of the average
daily maximum amount available to be drawn under such
Commercial Letter of Credit, in each case payable in
arrears on and through each January 15, April 15, July 15
and October 15 of each year and computed on the basis of
a 360-day year for the actual number of days elapsed; and
(iii) with respect to the issuance, amendment or
transfer of each Letter of Credit and each drawing made
thereunder (without duplication of the fees payable under
<PAGE>
clauses (i) and (ii) above), documentary and processing
charges in accordance with such Issuing Lender's standard
schedule for such charges in effect at the time of such
issuance, amendment, transfer or drawing, as the case may
be.
Promptly upon receipt by such Issuing Lender of any amount
described in clause (i)(b) or (ii)(b) of this subsection 3.2,
such Issuing Lender shall distribute to each other Lender its
Pro Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under Letters
-------- --- ------------- -- ------- ----- ----- -------
of Credit.
-- ------
A. Responsibility of Issuing Lender With Respect to
Requests For Drawings. In determining whether to honor any
request for drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible
only to determine that the documents and certificates required
to be delivered under such Letter of Credit have been
delivered and that they strictly comply on their face with the
requirements of such Letter of Credit.
B. Reimbursement by Company of Amounts Drawn Under
Letters of Credit. In the event an Issuing Lender has
determined to honor a request for drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately
notify Company and Agent, and Company shall reimburse such
Issuing Lender on or before the Business Day immediately
following the date on which such drawing is honored (the
"Reimbursement Date") in an amount in Dollars in same day
funds equal to the amount of such drawing; provided that,
--------
anything contained in this Agreement to the contrary
notwithstanding, (i) unless Company shall have notified Agent
and such Issuing Lender prior to 12:00 Noon (New York time) on
the date of such drawing that Company intends to reimburse
such Issuing Lender for the amount of such drawing with funds
other than the proceeds of Revolving Loans, Company shall be
deemed to have given a timely Notice of Borrowing to Agent
requesting Lenders to make Revolving Loans that are Base Rate
Loans on the Reimbursement Date in an amount in Dollars equal
to the amount of such drawing and (ii) subject to satisfaction
or waiver of the conditions specified in subsection 4.2B,
Lenders shall, on the Reimbursement Date, make Revolving Loans
that are Base Rate Loans in the amount of such drawing, the
proceeds of which shall be applied directly by Agent to
reimburse such Issuing Lender for the amount of such drawing;
and provided, further that if for any reason proceeds of
-------- -------
Revolving Loans are not received by such Issuing Lender on the
Reimbursement Date in an amount equal to the amount of such
drawing, Company shall reimburse such Issuing Lender, on
demand, in an amount in same day funds equal to the excess of
the amount of such drawing over the aggregate amount of such
Revolving Loans, if any, which are so received. Nothing in
this subsection 3.3B shall be deemed to relieve any Lender
from its obligation to make Revolving Loans on the terms and
conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such
Revolving Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under
Letters of Credit.
(i) Payment by Lenders. In the event that Company
------- -- -------
shall fail for any reason to reimburse any Issuing Lender
as provided in subsection 3.3B in an amount equal to the
amount of any drawing honored by such Issuing Lender
under a Letter of Credit issued by it, such Issuing
Lender shall promptly notify each other Lender of the
unreimbursed amount of such drawing and of such other
Lender's respective participation therein based on such
<PAGE>
Lender's Pro Rata Share. Each Lender shall make
available to such Issuing Lender an amount equal to its
respective participation, in Dollars and in same day
funds, at the office of such Issuing Lender specified in
such notice, not later than 12:00 Noon (New York time) on
the first business day (under the laws of the
jurisdiction in which such office of such Issuing Lender
is located) after the date notified by such Issuing
Lender. In the event that any Lender fails to make
available to such Issuing Lender on such business day the
amount of such Lender's participation in such Letter of
Credit as provided in this subsection 3.3C, such Issuing
Lender shall be entitled to recover such amount on demand
from such Lender together with interest thereon at the
rate customarily used by such Issuing Lender for the
correction of errors among banks for three Business Days
and thereafter at the Base Rate. Nothing in this
subsection 3.3C shall be deemed to prejudice the right of
any Lender to recover from any Issuing Lender any amounts
made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is
determined by the final judgment of a court of competent
jurisdiction that the payment with respect to a Letter of
Credit by such Issuing Lender in respect of which payment
was made by such Lender constituted gross negligence or
willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements
------------ -- ------- -- --------------
Received From Company. In the event any Issuing Lender
-------- ---- -------
shall have been reimbursed by other Lenders pursuant to
subsection 3.3C(i) for all or any portion of any drawing
honored by such Issuing Lender under a Letter of Credit
issued by it, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by
it under subsection 3.3C(i) with respect to such drawing
such other Lender's Pro Rata Share of all payments
subsequently received by such Issuing Lender from Company
in reimbursement of such drawing when such payments are
received. Any such distribution shall be made to a
Lender at its primary address set forth below its name on
the appropriate signature page hereof or at such other
address as such Lender may request.
D. Interest on Amounts Drawn Under Letters of Credit.
(i) Payment of Interest by Company. Company agrees
------- -- -------- -- -------
to pay to each Issuing Lender, with respect to drawings
made under any Letters of Credit issued by it, interest
on the amount paid by such Issuing Lender in respect of
each such drawing from the date of such drawing to but
excluding the date such amount is reimbursed by Company
(including any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B) at a rate
equal to (a) for the period from the date of such drawing
to but excluding the Reimbursement Date, the rate then in
effect under this Agreement with respect to Revolving
Loans that are Base Rate Loans and (b) thereafter, a rate
which is 2% per annum in excess of the rate of interest
otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans. Interest
payable pursuant to this subsection 3.3D(i) shall be
computed on the basis of a 360-day year for the actual
number of days elapsed in the period during which it
accrues and shall be payable on demand or, if no demand
is made, on the date on which the related drawing under a
Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing
------------ -- -------- -------- -- -------
Lender. Promptly upon receipt by any Issuing Lender of
------
any payment of interest pursuant to subsection 3.3D(i),
(a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing
<PAGE>
Lender in respect of the period from the date of the
applicable drawing under a Letter of Credit issued by
such Issuing Lender to but excluding the date on which
such Issuing Lender is reimbursed for the amount of such
drawing (including any such reimbursement out of the
proceeds of Revolving Loans pursuant to subsection 3.3B),
the amount that such other Lender would have been
entitled to receive in respect of the letter of credit
fee that would have been payable in respect of such
Letter of Credit for such period pursuant to subsection
3.2 if no drawing had been made under such Letter of
Credit, and (b) in the event such Issuing Lender shall
have been reimbursed by other Lenders pursuant to
subsection 3.3C(i) for all or any portion of such
drawing, such Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it
under subsection 3.3C(i) with respect to such drawing
such other Lender's Pro Rata Share of any interest
received by such Issuing Lender in respect of that
portion of such drawing so reimbursed by other Lenders
for the period from the date on which such Issuing Lender
was so reimbursed by other Lenders to and including the
date on which such portion of such drawing is reimbursed
by Company. Any such distribution shall be made to a
Lender at its primary address set forth below its name on
the appropriate signature page hereof or at such other
address as such Lender may request.
3.4 Obligations Absolute.
----------- --------
The obligation of Company to reimburse each Issuing
Lender for drawings made under the Letters of Credit issued by
it and to repay any Revolving Loans made by Lenders pursuant
to subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without
limitation, the following circumstances:
(i) any lack of validity or enforceability of any
Letter of Credit;
(ii) the existence of any claim, set-off, defense or
other right which Company or any Lender may have at any
time against a beneficiary or any transferee of any
Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other
Lender or any other Person or, in the case of a Lender,
against Company, whether in connection with this
Agreement, the transactions contemplated herein or any
unrelated transaction (including any underlying
transaction between Company or one of its Subsidiaries
and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft, demand, certificate or other
document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
inaccurate in any respect;
(iv) payment by the applicable Issuing Lender under
any Letter of Credit against presentation of a demand,
draft or certificate or other document which does not
strictly comply with the terms of such Letter of Credit;
(v) any adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of Company or any of its Subsidiaries;
(vi) any breach of this Agreement or any other Loan
Document by any party thereto;
<PAGE>
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing; or
(viii) the fact that an Event of Default or a
Potential Event of Default shall have occurred and be
continuing;
provided, in each case, that payment by the applicable Issuing
--------
Lender under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of such
Issuing Lender under the circumstances in question (as deter-
mined by a final judgment of a court of competent
jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
---------------- ------ -- ------- -------- ------
A. Indemnification. In addition to amounts payable as
provided in subsection 3.6, Company hereby agrees to protect,
indemnify, pay and save harmless each Issuing Lender from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated
costs of internal counsel) which such Issuing Lender may incur
or be subject to as a consequence, direct or indirect, of
(i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or
willful misconduct of such Issuing Lender as determined by a
final judgment of a court of competent jurisdiction or
(b) subject to the following clause (ii), the wrongful
dishonor by such Issuing Lender of a proper demand for payment
made under any Letter of Credit issued by it; or (ii) the
failure of such Issuing Lender to honor a drawing under any
such Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure
or de facto government or governmental authority (all such
acts or omissions herein called "Governmental Acts").
B. Nature of Issuing Lenders' Duties. As between
Company and any Issuing Lender, Company assumes all risks of
the acts and omissions of, or misuse of the Letters of Credit
issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in
limitation of the foregoing, such Issuing Lender shall not be
responsible for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for
and issuance of any such Letter of Credit, even if it should
in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign any such Letter
of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) failure of the beneficiary
of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of
Credit; (iv) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex or otherwise, whether or not they be in
cipher; (v) errors in interpretation of technical terms;
(vi) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under any such
Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or
(viii) any consequences arising from causes beyond the control
of such Issuing Lender, including without limitation any
Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
<PAGE>
In furtherance and extension and not in limitation
of the specific provisions set forth in the first paragraph of
this subsection 3.5B, any action taken or omitted by any
Issuing Lender under or in connection with the Letters of
Credit issued by it or any documents and certificates
delivered thereunder, if taken or omitted in good faith, shall
not put such Issuing Lender under any resulting liability to
Company.
Notwithstanding anything to the contrary contained
in this subsection 3.5 (including without limitation the last
sentence of the second preceding paragraph), Company shall
retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross
negligence or willful misconduct of such Issuing Lender, as
determined by a final judgment of a court of competent
jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of Credit.
--------- ----- --- ----- -------- -- ------- -- ------
In the event that any Issuing Lender or Lender shall
determine (which determination shall, absent manifest error
(including arithmetical error), be final and conclusive and
binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein
or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination
of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or
directive issued or made after the date hereof by any central
bank or other governmental or quasi-governmental authority
(whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its
applicable lending or letter of credit office) to any
additional Tax (other than any Tax on the overall net
income of such Issuing Lender or Lender) with respect to
the issuing or maintaining of any Letters of Credit or
the purchasing or maintaining of any participations
therein or any other obligations under this Section 3,
whether directly or by such being imposed on or suffered
by any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any
reserve (including without limitation any marginal,
emergency, supplemental, special or other reserve),
special deposit, compulsory loan, FDIC insurance or
similar requirement in respect of any Letters of Credit
issued by any Issuing Lender or participations therein
purchased by any Lender; or
(iii) imposes any other condition (other than
with respect to a Tax matter) on or affecting such
Issuing Lender or Lender (or its applicable lending or
letter of credit office) regarding this Section 3 or any
Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost
to such Issuing Lender or Lender of agreeing to issue, issuing
or maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to
reduce any amount received or receivable by such Issuing
Lender or Lender (or its applicable lending or letter of
credit office) with respect thereto; then, in any case,
Company shall promptly pay to such Issuing Lender or Lender,
upon receipt of the statement referred to in the immediately
succeeding sentence, such additional amount or amounts as may
be necessary to compensate such Issuing Lender or Lender for
any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall
<PAGE>
deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating the additional
amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and
binding upon all parties hereto absent manifest error
(including arithmetical error).
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the
issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions.
4.1 Conditions to Initial Revolving Loans and Swing Line
---------- -- ------- --------- ----- --- ----- ----
Loans.
-----
The obligations of Lenders to make the Revolving
Loans and Swing Line Loans to be made on the Closing Date are,
in addition to the conditions precedent specified in
subsection 4.2, subject to prior or concurrent satisfaction of
the following conditions:
A. Company Documents. On or before the Closing Date,
Company shall deliver or cause to be delivered to Lenders (or
to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel)
the following, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of its Certificate of
Incorporation, together with a good standing certificate
from the Secretary of State of the State of Delaware and
each other state in which it is qualified as a foreign
corporation to do business, each dated a recent date
prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the
Closing Date by its corporate secretary or an assistant
secretary;
(iii) Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement, the other Loan Documents
and the Spin-Off Agreements and authorizing the
consummation of the transactions contemplated hereby and
thereby, certified as of the Closing Date by its
corporate secretary or an assistant secretary as being in
full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of its
officers executing this Agreement and the other Loan
Documents; and
(v) Executed originals of this Agreement, the Notes
(duly executed in accordance with subsection 2.1D, drawn
to the order of each Lender and the Swing Line Lender and
with appropriate insertions), the Company Security
Agreement, the Company Trademark Security Agreement, the
Company Pledge Agreement, the Collateral Account
Agreement and the other Loan Documents to which it is a
party.
B. Subsidiary Documents. On or before the Closing
Date, Company shall cause each of its Subsidiaries (other than
Stuart) to deliver to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for
each Lender and its counsel) the following, each, unless
otherwise noted, dated the Closing Date:
(i) Certified copies of such Subsidiary's
Certificate of Incorporation, together with a good
<PAGE>
standing certificate from the Secretary of State of the
state of such Subsidiary's incorporation and each other
state in which such Subsidiary is qualified as a foreign
corporation to do business, each dated a recent date
prior to the Closing Date;
(ii) Copies of such Subsidiary's Bylaws, certified
as of the Closing Date by such Subsidiary's corporate
secretary or an assistant secretary;
(iii) Resolutions of such Subsidiary's Board of
Directors approving and authorizing the execution,
delivery and performance of the Loan Documents to which
such Subsidiary is a party, certified as of the Closing
Date by such Subsidiary's corporate secretary or an
assistant secretary as being in full force and effect
without modification or amendment;
(iv) Signature and incumbency certificates of such
Subsidiary's officers executing the Loan Documents to
which such Subsidiary is a party; and
(v) Executed originals of the Subsidiary Guaranty,
the Subsidiary Security Agreement, the Subsidiary
Trademark Security Agreement, the Subsidiary Pledge
Agreement and other Loan Documents to which such
Subsidiary is a party.
C. Delivery of Closing Date Mortgages; Closing Date
Mortgage Policies. Agent shall have received from Company and
its Subsidiaries (i) fully executed and notarized Mortgages
(each a "Closing Date Mortgage" and collectively the "Closing
Date Mortgages") encumbering the fee interest and/or leasehold
interest of Company and its Subsidiaries in each Real Property
Asset designated in Part I of Schedule 4.1C annexed hereto
-------- ----
(each a "Closing Date Mortgaged Property" and collectively the
"Closing Date Mortgaged Properties"); (ii) a title report
obtained by Company in respect of any Closing Date Mortgaged
Property consisting of fee interests in Real Property Assets
and a title report obtained by Company in respect of any
Closing Date Mortgaged Property consisting of leasehold
interests in Real Property Assets and designated in Part II of
Schedule 4.1C annexed hereto; (iii) an opinion of counsel
-------- ----
(which counsel shall be reasonably satisfactory to Agent and
CO-AGENT) in the state in which each Closing Date Mortgaged
--------
Property is located with respect to the enforceability of the
form of Closing Date Mortgage to be recorded in such state and
such other matters as Agent or CO-AGENT may reasonably
--------
request, in form and substance reasonably satisfactory to
Agent and CO-AGENT; (iv) in the case of each real property
--------
leasehold interest of Company or any of its Subsidiaries
constituting Closing Date Mortgaged Property, (a) such
estoppel letters, consents and waivers from the landlords on
such real property as may be required by Agent or CO-AGENT,
--------
which estoppel letters shall be in form and substance
reasonably satisfactory to Agent and CO-AGENT and which
--------
consents and waivers shall consent to the Closing Date
Mortgage relating to such leasehold interest and to the
assignment of such leasehold interest to the successful bidder
at a foreclosure or similar sale (and to a subsequent third
party assignee by Agent or any Lender to the extent Agent or
such Lender is the successful bidder at such sale) in the
event of a foreclosure or similar action pursuant to such
Closing Date Mortgage and (b) evidence that the applicable
lease, a memorandum of lease with respect thereto, or other
evidence of such lease in form and substance reasonably
satisfactory to Agent, has been or will be recorded in all
places to the extent necessary or desirable, in the reasonable
judgment of Agent, so as to enable the Closing Date Mortgage
encumbering such leasehold interest to effectively create a
valid and enforceable first priority lien (subject to
Permitted Encumbrances) on such leasehold interest in favor of
<PAGE>
Agent (or such other Person as may be required or desired
under local law) for the benefit of Lenders; (v) ALTA
mortgagee title insurance policies issued by First American
Title Insurance Company of New York or other title insurers
reasonably satisfactory to Agent (the "Closing Date Mortgage
Policies"), in amounts not less than the respective amounts
designated in Schedule 4.1C annexed hereto with respect to any
-------- ----
particular Closing Date Mortgaged Properties, assuring Agent
that the applicable Closing Date Mortgages create valid and
enforceable first priority mortgage liens on the respective
Closing Date Mortgaged Properties, free and clear of all
defects and encumbrances except Permitted Encumbrances and
subject to a standard survey exception, which Closing Date
Mortgage Policies shall be in form and substance reasonably
satisfactory to Agent and CO-AGENT and shall include an
--------
endorsement for mechanics' liens, for future advances under
this Agreement, the Notes and the other Loan Documents, and
for any other matters that Agent or CO-AGENT may reasonably
--------
request, and shall provide for affirmative insurance and such
reinsurance as Agent or CO-AGENT may reasonably request, all
--------
of the foregoing in form and substance reasonably satisfactory
to Agent and CO-AGENT; (vi) evidence, which may be in the form
--------
of a letter from an insurance broker, a municipal engineer,
Charles Jones, Inc. or Transamerica Flood Hazard
Certification, as to whether (a) any Closing Date Mortgaged
Property (``Closing Date Flood Hazard Property'') is in an
area designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards and (b) the
community in which such Closing Date Flood Hazard Property is
located is participating in the National Flood Insurance
Program; and (vii) if there are any Closing Date Flood Hazard
Properties, Company's written acknowledgement of receipt of
written notification from Agent (a) as to the existence of
each such Closing Date Flood Hazard Property and (b) as to
whether the community in which each such Closing Date Flood
Hazard Property is located is participating in the National
Flood Insurance Program.
D. Security Interests. To the extent not otherwise
satisfied pursuant to subsection 4.1C, Company and its
Subsidiaries shall have taken or caused to be taken (and Agent
shall have received satisfactory evidence thereof) such
actions (other than the filing or recording of items described
in clauses (ii), (iii) and (iv) below) in such a manner so
that Agent has a valid and perfected first priority security
interest as of such date in the entire Collateral (except to
the extent any such security interest cannot be granted under
applicable laws). Such actions shall include, without
limitation, (i) delivery to Agent of certificates (which
certificates shall be registered in the name of Agent or
properly endorsed in blank for transfer or accompanied by
irrevocable undated stock powers duly endorsed in blank, all
in form and substance satisfactory to Agent and CO-AGENT)
--------
representing the capital stock pledged pursuant to the Company
Pledge Agreement and the Subsidiary Pledge Agreements and
delivery to Agent of all other instruments (duly endorsed
where appropriate) evidencing the Collateral, (ii) delivery to
Agent of Uniform Commercial Code financing statements as to
the Collateral for all jurisdictions as may be necessary or
desirable to perfect the security interests in the Collateral,
(iii) delivery to Agent of the Company Trademark Security
Agreement and the Subsidiary Trademark Security Agreements
together with the cover sheets required for filing with the
United States Patent and Trademark Office and (iv) delivery to
Agent of such other documents and instruments that Agent or
CO-AGENT reasonably deems necessary or advisable to establish,
--------
preserve and perfect the first priority Liens granted to Agent
on behalf of Lenders under the Collateral Documents.
E. Arrangements with SMG-II, Holdings, PTKH and
Pathmark. On or prior to the Closing Date, (i) each of
Company, SMG-II, Holdings, PTKH, Pathmark and Chefmark shall
<PAGE>
have entered into each of the Spin-Off Agreements to which
such Person is a party, in each case in form and substance
satisfactory to Agent and Lenders, (ii) Agent shall have
received evidence satisfactory to Agent and CO-AGENT that the
--------
transfer of assets contemplated by the agreement described in
clause (i) of the definition of the term "Spin-Off Agreements"
has been consummated, and (iii) all other arrangements among
Company, SMG-II, Holdings, PTKH and Pathmark shall be
satisfactory in form and substance to Agent, CO-AGENT and
--------
Requisite Lenders.
F. Appraisals. Agent shall have received appraisals,
in form, scope and substance satisfactory to Agent and
satisfying the requirements of any applicable laws and
regulations, concerning any real property fee interests of
Company or any of its Subsidiaries constituting Closing Date
Mortgaged Properties (in each case to the extent required
under such laws and regulations as determined by Agent in its
discretion).
G. Environmental Matters. Agent shall have received
reports and other information, in form, scope and substance
satisfactory to Agent, concerning environmental liabilities of
Company and its Subsidiaries with respect to the Facilities
listed on Schedule 4.1G annexed hereto.
-------- ----
H. Pathmark Credit Agreement. On or prior to the
Closing Date, Pathmark shall have entered into the Pathmark
Credit Agreement with the other parties thereto and all
conditions precedent to the funding of the initial loans
thereunder shall have been satisfied or waived with the
consent of Agent, CO-AGENT and Requisite Lenders.
--------
I. Opinions of Company's Counsel. Lenders and their
respective counsel shall have received (i) originally executed
copies of one or more favorable written opinions of Shearman &
Sterling, counsel for Company and its Subsidiaries, in form
and substance reasonably satisfactory to Agent and its counsel
and CO-AGENT, dated as of the Closing Date and setting forth
--------
substantially the matters in the opinions designated in
Exhibit IX annexed hereto and as to such other matters as
------- --
Agent acting on behalf of Lenders may reasonably request,
together with evidence satisfactory to Agent that Company and
such Subsidiaries requested such counsel to deliver such
opinions to Lenders, (ii) originally executed copies of one or
more favorable written opinions of Marc A. Strassler, vice
president and general counsel of Company and its Subsidiaries,
in form and substance reasonably satisfactory to Agent and its
counsel and CO-AGENT, dated as of the Closing Date and setting
--------
forth substantially the matters in the opinions designated in
Exhibit X annexed hereto and as to such other matters as Agent
------- -
acting on behalf of Lenders may reasonably request, and (iii)
copies of all opinions (other than the opinions described in
the immediately preceding clauses (i) and (ii)) required to be
delivered by Shearman & Sterling, counsel for SMG-II,
Holdings, PTKH, Pathmark, Company, Company's Subsidiaries and
Chefmark, and Marc A. Strassler, vice president and general
counsel of SMG-II, Holdings, PTKH, Pathmark, Company,
Company's Subsidiaries and Chefmark, to the lenders party to
the Pathmark Credit Agreement pursuant to clauses (i), (ii)
and (iii) of subsection 4.1M of the Pathmark Credit Agreement.
J. Opinions of Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable
written opinions of O'Melveny & Myers, counsel to Agent, dated
as of the Closing Date, substantially in the form of
Exhibit XI annexed hereto and as to such other matters as
------- --
Agent acting on behalf of Lenders may reasonably request.
K. Audit of Inventory and Accounts Receivable. On or
prior to the Closing Date, Agent and Lenders shall have
received reports and other information, in form, scope and
<PAGE>
substance satisfactory to Agent and Lenders, resulting from an
audit of all Inventory and all accounts receivable of Company.
L. Estimate of Stand-Alone Expenses. On or prior to
the Closing Date, Agent and Lenders shall have received a
certificate from Pathmark executed by its chief financial
officer, in form and substance satisfactory to Agent and
Lenders, setting forth an estimate of stand-alone expenses
that would be incurred by Company and its Subsidiaries with
respect to certain items designated by Agent and Lenders,
including without limitation legal, tax, accounting and cash
management services and the information systems supporting
such items, if such items were provided by a third party other
than Pathmark (on an arms-length basis), and an explanation of
the assumptions on which such estimate is based.
M. Borrowing Base Certificate. Company shall have
delivered to Agent and Lenders a Borrowing Base Certificate
substantially in the form of Exhibit VII annexed hereto,
------- ---
prepared as of a recent date prior to the Closing Date.
N. Fees. Company shall have paid to Agent, for
distribution (as appropriate) to Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
O. No Material Adverse Effect. Since January 30, 1993,
no material adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole,
or in the Transferred Businesses, Transferred Assets or
Assumed Liabilities (as each such term is defined in the Spin-
Off Agreement described in clause (i) of the definition of
Spin-Off Agreements), shall have occurred.
P. Certain Related Documents. On the Closing Date,
(i) Agent shall have received executed or conformed copies of
the Spin-Off Agreements (in each case as amended through and
including the Closing Date), the terms and conditions of which
shall be in all respects satisfactory to Agent, CO-AGENT and
--------
Requisite Lenders, (ii) except as otherwise disclosed to and
agreed to in writing by Agent, CO-AGENT and Requisite Lenders,
--------
(a) the Spin-Off Agreements shall be in full force and effect
and no term or condition thereof shall have been amended,
modified or waived after the execution thereof, (b) Company
shall not have failed in any material respect to perform any
material obligation or covenant required by the Spin-Off
Agreements to be performed or complied with by it on or before
the Closing Date, and (c) all conditions to the Spin-Off
(including, without limitation, any necessary third party
consents and approvals) shall have been satisfied or waived
pursuant to all applicable terms and proceedings and by Agent
and CO-AGENT, and (iii) Agent shall have received an Officers'
--------
Certificate from Company, in form and substance satisfactory
to Agent and CO-AGENT, to the effect set forth in clause (ii)
--------
above.
Q. Representations and Warranties; Performance of
Agreements. Company shall have delivered to Agent an
Officers' Certificate, in form and substance satisfactory to
Agent and CO-AGENT, to the effect that the representations and
--------
warranties in Section 5 hereof are true, correct and complete
in all material respects on and as of the Closing Date to the
same extent as though made on and as of that date, except to
the extent such representations and warranties specifically
relate to an earlier date, in which case such representations
and warranties shall have been true, correct and complete in
all material respects on and as of such earlier date, and that
Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement
provides shall be performed or satisfied by it on or before
the Closing Date except as otherwise disclosed to and agreed
to in writing by Agent and Requisite Lenders.
<PAGE>
R. Completion of Proceedings. All corporate and other
proceedings taken or to be taken in connection with the
transactions contemplated hereby, by the other Loan Documents
and by the Spin-Off Agreements and all documents incidental
thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel or CO-AGENT shall be
--------
satisfactory in form and substance to Agent and such counsel
and CO-AGENT, and Agent and such counsel shall have received
--------
all such counterpart originals or certified copies of such
documents as Agent or CO-AGENT may reasonably request.
--------
S. Pro Forma Unaudited Consolidated Balance Sheet.
Company shall have delivered to Agent, CO-AGENT and Lenders a
--------
pro forma unaudited consolidated balance sheet of Company and
its Subsidiaries as at the Closing Date prepared on the basis
that the Spin-Off had been consummated.
4.2 Conditions to All Loans.
---------- -- --- -----
The obligations of Lenders to make Loans on each
Funding Date are subject to the following further conditions
precedent:
A. Agent shall have received before that Funding Date,
in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed
by the chief executive officer, the chief financial officer,
the treasurer or the controller of Company or by any other
officer or cash management personnel of Company designated by
any of the above-described officers on behalf of Company in a
writing delivered to Agent.
B. As of that Funding Date the following statements
shall be true (and each of the giving of the applicable Notice
of Borrowing and the acceptance by Company of the proceeds of
such Loan shall constitute a representation and warranty by
Company that such statements (other than statements as to
matters of opinion of Agent or of Requisite Lenders) are true
as of that Funding Date):
(i) The representations and warranties contained
herein and in the other Loan Documents are true, correct
and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as
of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in
which case such representations and warranties were true,
correct and complete in all material respects on and as
of such earlier date;
(ii) No event has occurred and is continuing or
would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party has performed in all
material respects all agreements and satisfied all
conditions which this Agreement provides shall be
performed or satisfied by it on or before that Funding
Date;
(iv) The amount of the proposed borrowing of Loans
contemplated by such Notice of Borrowing does not cause
the Total Utilization of Revolving Loan Commitments to
exceed the Borrowing Base in effect on that Funding Date;
(v) No order, judgment or decree of any court,
arbitrator or governmental authority has purported to
enjoin or restrain any Lender from making the Loans to be
made by it on that Funding Date;
<PAGE>
(vi) The making of the Loans requested on such
Funding Date does not violate any law including, without
limitation, Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal
Reserve System; and
(vii) There is not pending or, to the knowledge
of Company, threatened, any action, suit, proceeding,
governmental investigation or arbitration against or
affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that has
not been disclosed by Company in writing pursuant to
subsection 5.6 or 6.1(xi) prior to the making of the last
preceding Loans (or, in the case of the initial Loans,
prior to the execution of this Agreement), and there has
occurred no development not so disclosed in any such
action, suit, proceeding, governmental investigation or
arbitration so disclosed, that, in either event, in the
opinion of Agent, of CO-AGENT or of Requisite Lenders,
--------
could reasonably be expected to have a Material Adverse
Effect; and no injunction or other restraining order has
been issued and no hearing to cause an injunction or
other restraining order to be issued is pending or
noticed with respect to any action, suit or proceeding
seeking to enjoin or otherwise prevent the consummation
of, or to recover any damages or obtain relief as a
result of, the Spin-Off, the transactions contemplated by
this Agreement or any of the other Loan Documents or the
making of Loans hereunder.
4.3 Conditions to Letters of Credit.
---------- -- ------- -- ------
The issuance of any Letter of Credit hereunder
(whether or not the applicable Issuing Bank is obligated to
issue such Letter of Credit) is subject to the following
conditions precedent:
A. On or before the date of issuance of the initial
Letter of Credit pursuant to this Agreement, the initial Loans
shall have been made.
B. On or before the date of issuance of such Letter of
Credit, Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed
Notice of Issuance of Letter of Credit, in each case signed by
the chief executive officer, the chief financial officer, the
treasurer or the controller of Company or by any other officer
or cash management personnel of Company designated by any of
the above-described officers on behalf of Company in a writing
delivered to Agent, together with all other information
specified in subsection 3.1B(i) and such other documents or
information as the applicable Issuing Lender may reasonably
require in connection with the issuance of such Letter of
Credit.
C. On the date of issuance of such Letter of Credit,
all conditions precedent described in subsection 4.2B shall be
satisfied to the same extent as if the issuance of such Letter
of Credit were the making of a Loan and the date of issuance
of such Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agree-
ment and to make the Loans, to induce Issuing Lenders to issue
Letters of Credit and to induce other Lenders to purchase
participations therein, Company represents and warrants to
each Lender, on the date of this Agreement, on each Funding
Date and on the date of issuance of each Letter of Credit,
that the following statements are true, correct and complete
(it being agreed that each such statement which expressly
<PAGE>
refers to a particular date shall be understood to continue to
refer to such particular date each time that the
representation and warranty of Company set forth in this
paragraph is made):
5.1 Organization, Powers, Qualification, Good Standing,
------------- ------- -------------- ---- ---------
Business and Subsidiaries.
-------- --- ------------
A. Organization and Powers. Each Loan Party is a
corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation.
Each Loan Party has all requisite corporate power and
authority to own and operate its properties, to carry on its
business as now conducted and as proposed to be conducted, to
enter into the Loan Documents and the Spin-Off Agreements, to
carry out the transactions contemplated thereby and to issue
and pay the Notes, in each case to the extent it is a party
thereto.
B. Qualification and Good Standing. Each Loan Party is
qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever
necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good
standing has not had and could not reasonably be expected to
have a Material Adverse Effect.
C. Conduct of Business. Company and its Subsidiaries
are engaged only in the businesses permitted to be engaged in
pursuant to subsection 7.14.
D. Subsidiaries. All of the Subsidiaries of Company as
of the Closing Date are identified in Schedule 5.1 annexed
-------- ---
hereto. The capital stock of each of the Subsidiaries of
Company identified in Schedule 5.1 annexed hereto is duly
-------- ---
authorized, validly issued, fully paid and nonassessable and
none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed
-------- ---
hereto is validly existing and in good standing under the laws
of its respective jurisdiction of incorporation set forth
therein, has full corporate power and authority to own its
assets and properties and to operate its business as presently
owned and conducted, and is qualified to do business and in
good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and
operations, in each case except where failure to be so
qualified or in good standing or a lack of such corporate
power and authority has not had and could not reasonably be
expected to have a Material Adverse Effect. Schedule 5.1
-------- ---
annexed hereto correctly sets forth, as of the Closing Date,
the ownership interest of Company in each of its Subsidiaries
identified therein.
5.2 Authorization of Borrowing, etc.
------------- -- ---------- ----
A. Authorization of Borrowing. The execution, delivery
and performance of the Loan Documents and the Spin-Off
Agreements and the issuance, delivery and payment of the Notes
have been duly authorized by all necessary corporate action on
the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and perfor-
mance by Company and its Subsidiaries of the Loan Documents
and the Spin-Off Agreements, the issuance, delivery and
payment of the Notes and the consummation of the Spin-Off and
the other transactions contemplated by the Loan Documents and
the Spin-Off Agreements do not and will not (i) violate any
provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the
Certificate or Articles of Incorporation or Bylaws of Company
or any of its Subsidiaries or any order, judgment or decree of
any court or other agency of government binding on Company or
<PAGE>
any of its Subsidiaries, (ii) conflict with, result in a
breach of or constitute (with due notice or lapse of time or
both) a default under any Contractual Obligation of Company or
any of its Subsidiaries, (iii) result in or require the
creation or imposition of any Lien upon any of the properties
or assets of Company or any of its Subsidiaries (other than
any Liens created under any of the Loan Documents in favor of
Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under
any Contractual Obligation of Company or any of its
Subsidiaries, except for such approvals or consents which will
be obtained on or before the Closing Date and those set forth
on Schedule 5.2B annexed hereto.
-------- ----
C. Governmental Consents. The execution, delivery and
performance by Company and its Subsidiaries of the Loan
Documents and the Spin-Off Agreements, the issuance, delivery
and payment of the Notes and the consummation of the Spin-Off
and the transactions contemplated by the Loan Documents and
the Spin-Off Agreements do not and will not require any
registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other
governmental authority or regulatory body, except for
------
(i) filings and recordings required in connection with the
perfection of the security interests granted pursuant to the
Loan Documents, (ii) registrations, consents, approvals,
notices or other actions set forth on Schedule 5.2C annexed
-------- ----
hereto, and (iii) registrations, consents, approvals, notices
or other actions the absence of which could not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
D. Binding Obligation. Each of the Loan Documents and
the Spin-Off Agreements has been duly executed and delivered
by each Loan Party that is a party thereto and is the legal,
valid and binding obligation of such Loan Party, enforceable
against such Loan Party in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors'
rights generally or by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
5.3 Financial Condition.
--------- ---------
Company has heretofore (or, in the case of the
balance sheet described in clause (ii) below, Company has as
of the Closing Date) delivered to Lenders, at Lenders'
request, the following financial statements and information:
(i) the pro forma unaudited consolidated balance sheet of
Company and its Subsidiaries as at January 30, 1993 and the
related pro forma unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its
Subsidiaries for the Fiscal Year then ended and (ii) the pro
forma unaudited consolidated balance sheet of Company and its
Subsidiaries described in subsection 4.1S, each prepared on
the basis that the Spin-Off had been consummated at the
beginning of such Fiscal Year. All such statements were
prepared on a pro forma basis in conformity with GAAP and
fairly present, on a pro forma basis as described above, the
financial position (on a consolidated basis) of the entities
described in such financial statements as at the respective
dates thereof and the results of operations and cash flows (on
a consolidated basis) of the entities described therein for
the Fiscal Year then ended, subject to changes resulting from
audit and year-end adjustments. Company does not (and will
not following the funding of the initial Loans) have any
Contingent Obligation, contingent liability or liability for
taxes, long-term lease or unusual forward or long-term
commitment that is not (but should in conformity with GAAP be)
reflected in the foregoing financial statements or the notes
thereto and which in any such case is material in relation to
<PAGE>
the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company or any of its
Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior Payments.
-- -------- ------- ------- -- ---------- ------ --------
As of the Closing Date, no material adverse change
in the business, operations, properties, assets, condition
(financial or otherwise) or prospects of Company and its
Subsidiaries, taken as a whole, or in the Transferred
Businesses, Transferred Assets or Assumed Liabilities (as each
such term is defined in the Spin-Off Agreement described in
clause (i) of the definition of Spin-Off Agreements), has
occurred since January 30, 1993. As of any time after the
Closing Date, no event or change has occurred since the
Closing Date that has caused or evidences, either in any case
or in the aggregate, a Material Adverse Effect. Neither
Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or
property for, any Restricted Junior Payment or agreed to do so
except as permitted by subsection 7.5.
5.5 Title to Properties; Liens.
----- -- ----------- -----
Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case
of leasehold interests in real or personal property), or
(iii) good title to (in the case of all other personal
property), all of their respective properties and assets
reflected in the financial statements referred to in
subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for
assets disposed of since the date of such financial statements
in the ordinary course of business or as otherwise permitted
under subsection 7.7. Except as permitted by this Agreement,
all such properties and assets are free and clear of Liens.
5.6 Litigation; Adverse Facts.
----------- ------- -----
Except as set forth in Schedule 5.6 annexed hereto,
-------- ---
there is no action, suit, proceeding, arbitration or
governmental investigation (whether or not purportedly on
behalf of Company or any of its Subsidiaries) at law or in
equity or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, pending or, to the
knowledge of Company, threatened against or affecting Company
or any of its Subsidiaries or any property of Company or any
of its Subsidiaries that has had, or could reasonably be
expected to result in, a Material Adverse Effect. Neither
Company nor any of its Subsidiaries is (i) in violation of any
applicable law that has had, or could reasonably be expected
to result in, a Material Adverse Effect or (ii) subject to or
in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic
or foreign, that has had, or could reasonably be expected to
result in, a Material Adverse Effect.
5.7 Payment of Taxes.
------- -- -----
Except to the extent permitted by subsection 6.3,
all tax returns and reports of Company and its Subsidiaries
required to be filed by any of them have been timely filed,
and all taxes, assessments, fees and other governmental
charges upon Company and its Subsidiaries and upon their
respective properties, assets, income, businesses and fran-
chises which are shown thereon to be due and payable have been
paid when due and payable. Company knows of no proposed tax
assessment against Company or any of its Subsidiaries which is
<PAGE>
not being contested by Company or such Subsidiary in good
faith and by appropriate proceedings; provided that such
--------
reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP shall have been made or
provided therefor.
5.8 Performance of Agreements; Materially Adverse Agreements.
----------- -- ----------- ---------- ------- ----------
A. Neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any
of the obligations, covenants or conditions contained in any
of its Contractual Obligations, and no condition exists that,
with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences,
direct or indirect, of such default or defaults, if any, could
not reasonably be expected to result in a Material Adverse
Effect.
B. Neither Company nor any of its Subsidiaries is a
party to or is otherwise subject to any agreement or
instrument or any charter or other internal restriction which
has had, or could reasonably be expected to result in,
individually or in the aggregate, a Material Adverse Effect.
5.9 Governmental Regulation.
------------ ----------
Neither Company nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce
Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render
all or any portion of the Obligations unenforceable, except
that Pauls Trucking Corp. is licensed by the Interstate
Commerce
Commission as a "common carrier."
5.10 Securities Activities.
---------- ----------
Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing
or carrying any Margin Stock.
5.11 Employee Benefit Plans.
-------- ------- -----
A. Company and each of its ERISA Affiliates are in
compliance in all material respects with all applicable
provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their
obligations under each Employee Benefit Plan.
B. No ERISA Event has occurred with respect to which
Company or any of its ERISA Affiliates is subject to any
unsatisfied liability in excess of $1,000,000 or with respect
to which Company or any of its ERISA Affiliates could
reasonably be expected to incur liability in excess of
$1,000,000, and no ERISA Event is reasonably expected to occur
after the date hereof which could reasonably be expected to
result in a liability to Company or any of its ERISA
Affiliates in excess of $500,000.
C. Except as set forth on Schedule 5.11 annexed hereto,
as of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit
liabilities), does not exceed $0.
5.12 Certain Fees.
------- ----
<PAGE>
No broker's or finder's fee or commission (other
than any such fees or commissions that may be payable to
Persons engaged by Agent or any Lender in connection with such
engagement by Agent or such Lender) will be payable with
respect to this Agreement or the Spin-Off, and Company hereby
indemnifies Lenders against, and agrees that it will hold
Lenders harmless from, any claim, demand or liability for any
such broker's or finder's fees alleged to have been incurred
in connection herewith or therewith and any expenses
(including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or
liability.
5.13 Environmental Protection.
------------- ----------
Except as set forth in Schedule 5.13 annexed hereto:
-------- ----
(i) the operations of Company and each of its
Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities that
are presently owned, leased or operated by Company or any
of its Subsidiaries) comply with all Environmental Laws
except where the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect;
(ii) Company and each of its Subsidiaries have
obtained all Governmental Authorizations under
Environmental Laws necessary to their respective
operations, and all such Governmental Authorizations are
in effect, and Company and each of its Subsidiaries are
in compliance with such Governmental Authorizations
except where the failure to obtain or comply with any
such Governmental Authorization individually or in the
aggregate could not reasonably be expected to have a
Material Adverse Effect;
(iii) neither Company nor any of its
Subsidiaries has received (a) any notice or claim to the
effect that it is or may be liable to any Person as a
result of or in connection with any Hazardous Materials
or (b) any letter or request for information under
Section 104 of the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Sec. 9604) or
comparable state laws, and, to the best of Company's
knowledge, none of the operations of Company or any of
its Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any
Hazardous Materials at any Facility or at any other
location;
(iv) none of the operations of Company or any of its
Subsidiaries is subject to any judicial or administrative
proceeding alleging the violation of or liability under
any Environmental Laws which if adversely determined
could reasonably be expected to have a Material Adverse
Effect;
(v) other than provisions in leases entered into by
Company or any of its Subsidiaries in the ordinary course
of business which individually or in the aggregate would
not create a liability that could reasonably be expected
to have a Material Adverse Effect, neither Company nor
any of its Subsidiaries nor any of their respective
Facilities that are presently owned, leased or operated
by Company or any of its Subsidiaries nor any of their
respective operations are subject to any outstanding
written order or agreement with any governmental
authority or private party relating to (a) any Environ-
mental Laws or (b) any Environmental Claims which, in the
case of clause (a) or (b), individually or in the
aggregate could reasonably be expected to have a Material
Adverse Effect;
<PAGE>
(vi) neither Company nor any of its Subsidiaries
nor, to the best knowledge of Company, any of their
respective predecessors by merger or consolidation has
filed any notice under any Environmental Law indicating
past or present treatment or Release of Hazardous
Materials at any Facility, and none of Company's or any
of its Subsidiaries' operations involves the generation,
transportation, treatment, storage or disposal of
hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent;
(vii) no Hazardous Materials exist on, under or
about any Facility in a manner that could reasonably be
expected to give rise to an Environmental Claim having a
Material Adverse Effect;
(viii) neither Company nor any of its
Subsidiaries nor, to the best knowledge of Company, any
of their respective predecessors by merger or
consolidation has disposed of any Hazardous Materials in
a manner that could reasonably be expected to give rise
to an Environmental Claim having a Material Adverse
Effect;
(ix) to the best knowledge of Company, no
underground storage tanks are on or at any Facility that
is presently owned, leased or operated by Company or any
of its Subsidiaries;
(x) neither Company nor any of its Subsidiaries
bears any liability in connection with underground
storage tanks on or at Facilities heretofore owned,
leased or operated by Company or any of its Subsidiaries
that individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect; and
(xi) to the best knowledge of Company, no Lien in
favor of any Person relating to or in connection with any
Environmental Claim involving in the aggregate at any
time an amount in excess of $500,000 has been filed or
has been attached to one or more Facilities that are
presently owned, leased or operated by Company or any of
its Subsidiaries.
5.14 Employee Matters.
-------- -------
There is no strike or work stoppage in existence or
threatened involving Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse
Effect.
5.15 Solvency.
--------
Company and each of its Subsidiaries is and, upon
the incurrence of any Obligations by Company on any date on
which this representation is made, will be, Solvent.
5.16 Disclosure.
----------
No representation or warranty of Company or any of
its Subsidiaries contained in any Loan Document, in any Spin-
Off Agreement or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or
any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document
not furnished by it) necessary in order to make the statements
contained herein or therein not misleading in light of the
circumstances in which the same were made. Any projections
and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions
<PAGE>
believed by Company to be reasonable at the time made, it
being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results
during the period or periods covered by any such projections
may differ from the projected results. There is no fact known
(or which should upon the reasonable exercise of diligence be
known) to Company (other than matters of a general economic
nature) that has had, or could reasonably be expected to
result in, a Material Adverse Effect and that has not been
disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
5.17 Intellectual Property.
------------ --------
A. Company and its Subsidiaries own, or are licensed
(to the extent required to be so licensed) to use, the
Intellectual Property and all such Intellectual Property is
fully protected and duly and properly registered, filed or
issued in the appropriate office and jurisdictions for such
registrations, filing or issuances, and Company owns all of
the right, title and interest in and to the "Rickel" trademark
under the applicable laws of the United States free and clear
of any Lien (other than Permitted Encumbrances and Liens
created in favor of Agent on behalf of Lenders pursuant to the
Loan Documents).
B. Except as disclosed in Schedule 5.17, no material
-------- ----
claim has been asserted by any Person with respect to the use
of any such Intellectual Property, or challenging or
questioning the validity or effectiveness of any such
Intellectual Property. Except as disclosed in Schedule 5.17,
-------- ----
the use of such Intellectual Property by Company or any of its
Subsidiaries does not infringe on the rights of any Person,
subject to such claims and infringements as do not, in the
aggregate, give rise to any liabilities on the part of Company
or any of its Subsidiaries that are material to Company or any
of its Subsidiaries. The consummation of the transactions
contemplated by this Agreement or the Spin-Off will not in any
material manner or to any material extent impair the ownership
of (or the license to use, as the case may be) any of such
Intellectual Property by Company or any of its Subsidiaries.
5.18 Spin-Off Agreements.
-------- ----------
Company has delivered to Lenders complete and
correct copies of the Spin-Off Agreements and of all exhibits
and schedules thereto.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and
the cancellation or expiration of all Letters of Credit,
unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------- ---------- --- ----- -------
Company will maintain, and cause each of its
Subsidiaries to maintain, a system of accounting established
and administered in accordance with sound business practices
to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Lenders:
(i) Monthly Reports: as soon as available and in
------- -------
any event within 30 days after the end of each month
ending after the Closing Date, the weekly "EBIT" report
for such month for each of the Blair and Rickel divisions
<PAGE>
of Company and the corporate weekly reports for the weeks
ending during such month for each of such divisions, in
each case substantially in the form of the pro forma
"EBIT" report and corporate weekly reports delivered to
Lenders prior to the Closing Date;
(ii) Quarterly Financials: as soon as available and
--------- ----------
in any event within 45 days after the end of each of the
first three fiscal quarters of each Fiscal Year, (a) the
consolidated and consolidating balance sheets of Company
and its Subsidiaries as at the end of such fiscal quarter
and the related consolidated and consolidating statements
of income, stockholders' equity and cash flows of Company
and its Subsidiaries for such fiscal quarter and for the
period from the beginning of the then current Fiscal Year
to the end of such fiscal quarter, setting forth in each
case in comparative form the corresponding figures for
the corresponding periods of the previous Fiscal Year
(but only if such corresponding periods begin after the
Closing Date), and the corresponding figures from the
consolidated plan and financial forecast for the current
Fiscal Year delivered pursuant to subsection 6.1(xiv),
all in reasonable detail and certified by the chairman,
president, chief financial officer or controller of
Company that they fairly present the financial condition
of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows
for the periods indicated, subject to changes resulting
from audit and year-end adjustments, and (b) a narrative
report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to
senior management for such fiscal quarter and for the
period from the beginning of the then current Fiscal Year
to the end of such fiscal quarter;
(iii) Year-End Financials: as soon as available
-------- ----------
and in any event within 90 days after the end of each
Fiscal Year, (a) the consolidated and consolidating
balance sheets of Company and its Subsidiaries as at the
end of such Fiscal Year and the related consolidated and
consolidating statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such
Fiscal Year and for the fourth fiscal quarter of such
Fiscal Year, setting forth in each case in comparative
form the corresponding figures for the previous Fiscal
Year or the fourth fiscal quarter thereof, as the case
may be (but only if such previous Fiscal Year or the
fourth fiscal quarter thereof, as the case may be, begins
after the Closing Date), and the corresponding figures
from the consolidated plan and financial forecast
delivered pursuant to subsection 6.1(xiv) for the Fiscal
Year covered by such financial statements, all in
reasonable detail and certified by the chairman,
president, chief financial officer or controller of
Company that they fairly present the financial condition
of Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash flows
for the periods indicated, (b) a narrative report
describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior
management for such Fiscal Year, and (c) in the case of
such consolidated financial statements with respect to
such Fiscal Year, a report thereon of Deloitte & Touche
or other independent certified public accountants of
recognized national standing selected by Company and
satisfactory to Agent and CO-AGENT, which report shall be
--------
unqualified, shall express no doubts about the ability of
Company and its Subsidiaries to continue as a going
concern, and shall state that such consolidated financial
statements fairly present the consolidated financial
position of Company and its Subsidiaries as at the dates
indicated and the results of their operations and their
<PAGE>
cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial
statements) and that the examination by such accountants
in connection with such consolidated financial statements
has been made in accordance with generally accepted
auditing standards;
(iv) Officers' and Compliance Certificates:
--------- --- ---------- ------------
together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivisions
(ii) and (iii) above, (a) an Officers' Certificate of
Company stating that the signers have reviewed the terms
of this Agreement and have made, or caused to be made
under their supervision, a review in reasonable detail of
the transactions and condition of Company and its
Subsidiaries during the accounting period covered by such
financial statements and that such review has not
disclosed the existence during or at the end of such
accounting period, and that the signers do not have
knowledge of the existence as at the date of such
Officers' Certificate, of any condition or event that
constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence
thereof and what action Company has taken, is taking and
proposes to take with respect thereto; and (b) a
Compliance Certificate demonstrating in reasonable detail
compliance during and at the end of the applicable
accounting periods with the restrictions contained in
Section 7;
(v) Borrowing Base Certificates: as soon as
--------- ---- ------------
available and in any event within 20 days after the end
of each month ending after the Closing Date, a Borrowing
Base Certificate dated as of the last day of such month
together with an Inventory report substantially in the
form of Exhibit XXIII annexed hereto and such other
------- -----
information as Agent or CO-AGENT may reasonably request;
--------
(vi) Reconciliation Statements: if, as a result of
-------------- ----------
any change in accounting principles and policies from
those used in the preparation of the audited financial
statements referred to in subsection 5.3, the
consolidated financial statements of Company and its
Subsidiaries delivered pursuant to subdivisions (ii),
(iii) or (xiv) of this subsection 6.1 will differ in any
material respect from the consolidated financial
statements that would have been delivered pursuant to
such subdivisions had no such change in accounting
principles and policies been made, then (a) together with
the first delivery of financial statements pursuant to
subdivision (i), (ii), (iii) or (xiv) of this subsection
6.1 following such change, consolidated financial
statements of Company and its Subsidiaries for (y) the
current Fiscal Year to the effective date of such change
and (z) the one full Fiscal Year immediately preceding
the Fiscal Year in which such change is made, in each
case prepared on a pro forma basis as if such change had
been in effect during such periods, and (b) together with
each delivery of financial statements pursuant to
subdivision (ii), (iii) or (xiv) of this subsection 6.1
following such change, a written statement of the
chairman, president, chief financial officer or
controller of Company setting forth the differences which
would have resulted if such financial statements had been
prepared without giving effect to such change;
(vii) Accountants' Certification: together with
------------ -------------
each delivery of consolidated financial statements of
Company and its Subsidiaries pursuant to subdivision
(iii) above, a written statement by the independent
<PAGE>
certified public accountants giving the report thereon
(a) stating that their audit examination has included a
review of the terms of subsections 7.1, 7.2, 7.3, 7.6,
7.7, 7.8, 7.9 and 7.16 of this Agreement and any
definitions set forth in this Agreement relating thereto,
in each case as they relate to accounting matters, and
(b) stating whether, in connection with their audit
examination, any condition or event (including without
limitation any condition or event relating to the
subsections of this Agreement specified in the
immediately preceding clause (a) or relating to
subsection 7.4 of this Agreement) that constitutes an
Event of Default or Potential Event of Default has come
to their attention and, if such a condition or event has
come to their attention, specifying the nature and period
of existence thereof; provided that such accountants
--------
shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event
of Default that would not be disclosed in the course of
their audit examination;
(viii) Accountants' Reports: promptly upon
------------ -------
receipt thereof (unless restricted by applicable
professional standards), copies of all reports submitted
to Company by independent certified public accountants in
connection with each annual, interim or special audit of
the financial statements of Company and its Subsidiaries
made by such accountants, including, without limitation,
any comment letter submitted by such accountants to
management in connection with their annual audit;
(ix) SEC Filings and Press Releases: promptly upon
--- ------- --- ----- --------
their becoming available, copies of (a) all financial
statements, reports, notices and proxy statements sent or
made available generally by Company to its security
holders or by any Subsidiary of Company to its security
holders other than Company or another Subsidiary of
Company, (b) all regular and periodic reports and all
registration statements (other than on Form S-8 or a
similar form) containing initial preliminary and final
(but not, unless otherwise requested by Agent,
intermediate draft) prospectuses, if any, filed by
Company or any of its Subsidiaries with any securities
exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority, and
(c) all press releases and other statements made
available generally by Company or any of its Subsidiaries
to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(x) Events of Default, etc.: promptly upon any
------ -- -------- ----
officer of Company obtaining knowledge (a) of any
condition or event that constitutes an Event of Default
or Potential Event of Default, or becoming aware that any
Lender has given any notice (other than to Agent) or
taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any
Person has given any notice to Company or any of its
Subsidiaries or taken any other action with respect to a
claimed default or event or condition of the type
referred to in subsection 8.2, (c) of any condition or
event that would be required to be disclosed in a current
report filed by Company with the Securities and Exchange
Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such
Form as in effect on the date hereof) if Company were
required to file such reports under the Exchange Act, or
(d) of the occurrence of any event or change that has
caused or evidences, either in any case or in the
aggregate, a Material Adverse Effect, an Officers'
Certificate specifying the nature and period of existence
of such condition, event or change, or specifying the
notice given or action taken by any such Person and the
<PAGE>
nature of such claimed Event of Default, Potential Event
of Default, default, event or condition, and what action
Company has taken, is taking and proposes to take with
respect thereto;
(xi) Litigation or Other Proceedings: promptly upon
---------- -- ----- -----------
any officer of Company obtaining knowledge of (X) the
institution of, or non-frivolous threat of, any action,
suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration
against or affecting Company or any of its Subsidiaries
or any property of Company or any of its Subsidiaries
(collectively, "Proceedings") not previously disclosed in
writing by Company to Lenders or (Y) any material
development in any Proceeding that, in any case:
(1) after giving effect to coverage and policy
limits of insurance policies maintained by Company
and its Subsidiaries issued by unaffiliated
insurers, has a reasonable possibility of giving
rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or obtain
relief as a result of, the transactions contemplated
hereby or by the Spin-Off Agreements;
written notice thereof together with such other
information as may be reasonably available to Company to
enable Lenders and their counsel to evaluate such
matters;
(xii) ERISA Events: within 20 days of becoming
----- ------
aware of the occurrence of or forthcoming occurrence of
any ERISA Event, a written notice specifying the nature
thereof, what action Company or any of its ERISA
Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or
threatened by the Internal Revenue Service, the Depart-
ment of Labor or the PBGC with respect thereto;
(xiii) ERISA Notices: with reasonable
----- -------
promptness, copies of (a) if requested by any Lender,
each Schedule B (Actuarial Information) to the annual
-------- -
report (Form 5500 Series) filed by Company or any of its
ERISA Affiliates with the Internal Revenue Service with
respect to each Pension Plan; (b) all notices received by
Company or any of its ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and
(c) such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Agent
shall reasonably request;
(xiv) Financial Plans: as soon as practicable
--------- -----
and in any event no later than February 28 of each Fiscal
Year, a consolidated plan and financial forecast for such
Fiscal Year and the next four succeeding Fiscal Years,
including without limitation (a) forecasted consolidated
balance sheets and forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for
each of such five Fiscal Years, together with an
explanation of the assumptions on which such forecasts
are based, (b) forecasted consolidated balance sheets and
forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each fiscal
quarter of the first such Fiscal Year, together with an
explanation of the assumptions on which such forecasts
are based, and (c) such other information as any Lender
may reasonably request;
(xv) Insurance: as soon as practicable and in any
---------
event by the last day of each Fiscal Year, a report in
<PAGE>
form and substance reasonably satisfactory to Agent and
CO-AGENT outlining all material insurance coverage
--------
maintained as of the date of such report by Company and
its Subsidiaries and all material insurance coverage
planned to be maintained by Company and its Subsidiaries
in the immediately succeeding Fiscal Year;
(xvi) Environmental Audits and Reports: as soon
------------- ------ --- -------
as practicable following receipt thereof by Company,
copies of all environmental audits and reports, whether
prepared by personnel of Company or any of its
Subsidiaries or by independent consultants, with respect
to significant environmental matters at any Facility or
which relate to an Environmental Claim which has a
reasonable possibility of giving rise to a Material
Adverse Effect;
(xvii) Board of Directors: with reasonable
----- -- ---------
promptness, written notice of any change in the Board of
Directors of Company;
(xviii) Audited Consolidated Balance Sheet: as
------- ------------ ------- -----
soon as available and in any event within 90 days after
the Closing Date, the consolidated balance sheet of
Company and its Subsidiaries as at the Closing Date,
together with a report thereon of Deloitte & Touche,
which report shall state that such consolidated balance
sheet fairly presents the consolidated financial position
of Company and its Subsidiaries as at the Closing Date in
conformity with GAAP and that the examination by Deloitte
& Touche in connection with such consolidated balance
sheet has been made in accordance with generally accepted
auditing standards; and
(xix) Other Information: with reasonable
----- -----------
promptness, such other information and data with respect
to Company or any of its Subsidiaries as from time to
time may be reasonably requested by any Lender.
6.2 Corporate Existence, etc.
--------- ---------- ----
Except to the extent permitted under subsection 7.7,
Company will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to
its business; provided, however, that neither Company nor any
-------- -------
of its Subsidiaries shall be required to preserve any such
right or franchise if the Board of Directors of Company or
such Subsidiary shall determine that the preservation thereof
is no longer desirable in the conduct of the business of
Company or such Subsidiary, as the case may be, and that the
loss thereof is not disadvantageous in any material respect to
Company, such Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation.
------- -- ----- --- ------- --- -------------
A. Company will, and will cause each of its Subsidiar-
ies to, pay all taxes, assessments and other governmental
charges imposed upon it or any of its properties or assets or
in respect of any of its income, businesses or franchises
before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and
supplies) for sums that have become due and payable and that
by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided that no such charge or
--------
claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision,
if any, as shall be required in conformity with GAAP shall
have been made therefor.
<PAGE>
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than
SMG-II, Holdings or PTKH so long as the filing of such
consolidated income tax return is required by applicable law
and other than Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
----------- -- ----------- ---------
Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the
business of Company and its Subsidiaries (including, without
limitation, Intellectual Property) and from time to time will
make or cause to be made all appropriate repairs, renewals and
replacements thereof. Company will maintain or cause to be
maintained, with financially sound and reputable insurers,
insurance with respect to its properties and business and the
properties and businesses of its Subsidiaries against loss or
damage of the kinds customarily carried or maintained under
similar circumstances by corporations of established
reputation engaged in similar businesses, in such amounts
(giving effect to self-insurance), with such deductibles and
by such methods as shall be customary for corporations
similarly situated in the industry. Each such policy of
insurance that insures against loss or damage with respect to
any Collateral shall name Agent for the benefit of Lenders as
the loss payee thereunder for amounts in excess of $5,000,000
per occurrence and shall provide for at least 30 days prior
written notice to Agent of any modification or cancellation of
such policy. Upon receipt by Agent of any insurance proceeds
as loss payee, (i) to the extent that Company or any of its
Subsidiaries intends to use any such insurance proceeds that
are Net Cash Proceeds of Asset Sale to repair, restore or
replace assets of Company or any of its Subsidiaries as
provided in subsection 2.4A(iii)(a), Agent shall, subject to
the provisions of subsection 2.4A(iii)(a), deliver such
insurance proceeds to Company and (ii) otherwise, Agent shall,
and Company hereby authorizes Agent to, apply such insurance
proceeds that are Net Cash Proceeds of Asset Sale to prepay
the Loans in accordance with subsection 2.4A(iii)(a).
6.5 Inspection; Lender Meeting.
----------- ------ -------
Company shall, and shall cause each of its
Subsidiaries to, permit (i) any authorized representatives
designated by any Lender to visit and inspect any of the
properties of Company or any of its Subsidiaries, including
its and their financial and accounting records, and to make
copies and take extracts therefrom, and to discuss its and
their affairs, finances and accounts with its and their
officers and independent public accountants (provided that
Company may, if it so chooses, be present at or participate in
any such discussion), and (ii) any authorized representatives
designated by CO-AGENT to conduct (a) during the first twelve
--------
month period following the Closing Date, two audits of all
Inventory and all accounts receivable of Company in scope and
substance substantially similar to the audit of Inventory and
accounts receivable of Company that was conducted by
authorized representatives of Agent in April, 1993 and
(b) during each succeeding twelve month period thereafter, one
such audit of all Inventory and accounts receivable of
Company, all upon reasonable notice and at such reasonable
times during normal business hours and as often as may be
reasonably requested. Without in any way limiting the
foregoing, Company will, upon the request of Agent, CO-AGENT
--------
or Requisite Lenders, participate in a meeting of Agent and
Lenders once during each Fiscal Year to be held at Company's
corporate offices (or such other location as may be agreed to
by Company, CO-AGENT and Agent) at such time as may be agreed
--------
to by Company, CO-AGENT and Agent.
--------
<PAGE>
6.6 Compliance with Laws, etc.
---------- ---- ----- ----
Company shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all
applicable laws, rules, regulations and orders of any
governmental authority, noncompliance with which could
reasonably be expected to cause, individually or in the
aggregate at any one time, a Material Adverse Effect, in each
case except to the extent that Company's or such Subsidiary's
requirement to comply therewith is being contested in good
faith by Company or such Subsidiary, as the case may be, and
such reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made therefor.
6.7 Environmental Disclosure and Inspection.
------------- ---------- --- ----------
A. Company shall, and shall cause each of its
Subsidiaries to, exercise reasonable due diligence in order to
comply and cause (i) all tenants under any leases or occupancy
agreements affecting any portion of the Facilities that are
presently owned, leased or operated by Company or any of its
Subsidiaries and (ii) all other Persons on or occupying such
property, to comply in all material respects with all
Environmental Laws.
B. Company shall, promptly after obtaining knowledge
thereof, advise Lenders in writing and in reasonable detail of
(i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws,
(ii) any and all written communications with respect to any
Environmental Claims that could reasonably be expected to give
rise to a Material Adverse Effect or with respect to any
Release of Hazardous Materials required to be reported to any
federal, state or local governmental or regulatory agency that
could reasonably be expected to give rise to a Material
Adverse Effect, (iii) any remedial action taken by Company or
any other Person in response to (x) any Hazardous Materials
on, under or about any Facility, the existence of which could
reasonably be expected to result in an Environmental Claim
which could reasonably be expected to have a Material Adverse
Effect, or (y) any Environmental Claim that could reasonably
be expected to have a Material Adverse Effect, (iv) Company's
discovery of any occurrence or condition on any real property
adjoining or in the vicinity of any Facility that is presently
owned, leased or operated by Company or any of its
Subsidiaries that could reasonably be expected to cause such
Facility or any part thereof to be subject to any material
restrictions on the ownership, occupancy, transferability or
use thereof under any Environmental Laws, and (v) any request
for information from any governmental agency that suggests
such agency is investigating whether Company or any of its
Subsidiaries may be potentially responsible for a material
Release of Hazardous Materials.
C. Company shall promptly notify Lenders of any
proposed acquisition of stock, assets, or property by Company
or any of its Subsidiaries that could reasonably be expected
to expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that could have a reasonable possibility
of giving rise to a Material Adverse Effect.
D. Company shall, at its own expense, provide copies of
such documents or written information as Agent may reasonably
request in relation to any matters disclosed pursuant to this
subsection 6.7.
6.8 Execution of Subsidiary Guaranty and Collateral Documents
--------- -- ---------- -------- --- ---------- ---------
by Certain Subsidiaries and Future Subsidiaries.
-- ------- ------------ --- ------ ------------
In the event that any Subsidiary of Company existing
as of the date hereof (other than any such Subsidiary that has
<PAGE>
executed and delivered the Subsidiary Guaranty and, so long as
Stuart remains liable with respect to Indebtedness which
prohibits Stuart from entering into the Subsidiary Guaranty
and the Collateral Documents, other than Stuart) hereafter
owns or acquires assets with an aggregate fair market value
(without netting such fair market value against any liability
of such Subsidiary) exceeding $25,000 or in the event that any
Person becomes a Subsidiary of Company after the date hereof,
Company will promptly notify Agent and CO-AGENT of that fact
--------
and cause such Subsidiary to execute and deliver to Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary
Security Agreement, a Subsidiary Pledge Agreement, a
Subsidiary Trademark Security Agreement and Additional
Mortgages and to take all such further action and execute all
such further documents and instruments as may be reasonably
required to grant and perfect in favor of Agent, for the
benefit of Lenders, a first-priority security interest in all
of the Covered Real Property and all of the personal property
assets of such Subsidiary described in the applicable
Collateral Documents. Company shall deliver to Agent,
together with such Collateral Documents, (i) certified copies
of such Subsidiary's Articles or Certificate of Incorporation,
together with a good standing certificate from the Secretary
of State of the jurisdiction of its incorporation, each to be
dated a recent date prior to their delivery to Agent, (ii) a
copy of such Subsidiary's Bylaws, certified by its corporate
secretary or an assistant corporate secretary as of a recent
date prior to their delivery to Agent, (iii) a certificate
executed by the secretary or an assistant secretary of such
Subsidiary as to (a) the incumbency and signatures of the
officers of such Subsidiary executing the Subsidiary Guaranty
and the Collateral Documents to which such Subsidiary is a
party and (b) the fact that the attached resolutions of the
Board of Directors of such Subsidiary authorizing the
execution, delivery and performance of the Subsidiary Guaranty
and such Collateral Documents are in full force and effect and
have not been modified or rescinded, and (iv) a favorable
opinion of counsel to such Subsidiary, in form and substance
satisfactory to Agent and its counsel and CO-AGENT, as to
--------
(a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such
Subsidiary of the Subsidiary Guaranty and such Collateral
Documents, (c) the enforceability of the Subsidiary Guaranty
and such Collateral Documents against such Subsidiary, and
(d) such other matters as Agent may reasonably request, all of
the foregoing to be satisfactory in form and substance to
Agent and its counsel and CO-AGENT.
--------
6.9 Additional Mortgages; Release of Mortgages.
---------- ---------- ------- -- ---------
A. On and after the Closing Date, Company shall,
and shall cause its Subsidiaries to, (i) with respect to each
leasehold interest in Real Property Assets listed in Part I of
Schedule 6.9 annexed hereto or hereafter acquired by Company
-------- ---
or any of its Subsidiaries, use its best efforts (which shall
not be deemed to include, in the good faith judgment of
Company, the material modification of any rights or
obligations, or the incurrence of any material obligations,
under the applicable lease or the expenditure of money in
excess of nominal amounts or the payment of monetary
consideration other than nominal monetary consideration) until
the end of the applicable three month period described below
to obtain the consent of the lessor under each related lease
to the encumbrancing of Company's or such Subsidiary's
leasehold interest under such lease pursuant to an Additional
Mortgage (as defined below) and to the assignment of such
leasehold interest to the successful bidder at a foreclosure
or similar sale (and to a subsequent third party assignee by
Agent or any Lender to the extent Agent or such Lender is the
successful bidder at such sale) in the event of a foreclosure
or similar action pursuant to such Additional Mortgage as soon
as practicable but in any event within three months after the
<PAGE>
commencement of the lease term under the applicable lease (or,
in the case of Company's leasehold interests in Real Property
Assets listed in Part I of Schedule 6.9 annexed hereto, as
-------- ---
soon as practicable but in any event within three months after
the Closing Date) (ii) with respect to each leasehold interest
in Real Property Assets listed in Part II of Schedule 6.9
-------- ---
annexed hereto, use its best efforts (which shall not be
deemed to include, in the good faith judgment of Company, the
material modification of any rights or obligations, or the
incurrence of any material obligations, under the applicable
lease or the expenditure of money in excess of nominal amounts
or the payment of monetary consideration other than nominal
monetary consideration) until the end of the three month
period after the Closing Date to record the applicable lease,
or a memorandum of lease with respect thereto, or other
evidence of such lease in form and substance reasonably
satisfactory to Agent in all places to the extent necessary or
desirable, in the reasonable judgment of Agent, so as to
enable the Additional Mortgage encumbering such leasehold
interest to effectively create a valid and enforceable first
priority lien (subject to Permitted Encumbrances) on such
leasehold interest in favor of Agent (or such other Person as
may be required or desired under local law) for the benefit of
Lenders), and (iii) with respect to each Covered Real Property
(other than any leasehold interest for which Company or any of
its Subsidiaries was unable to obtain the applicable lessor's
consent pursuant to clause (i) above or to record the
applicable instrument pursuant to clause (ii) above), as soon
as practicable and in any event within three months after the
applicable Real Property Asset becomes Covered Real Property
(or, in the case of Company's leasehold interest in Real
Property Assets listed in Schedule 6.9 annexed hereto for
-------- ---
which Company was able to obtain the applicable lessor's
consent pursuant to clause (i) above or was able to record the
applicable instrument pursuant to clause (ii) above, as the
case may be, as soon as practicable but in any event within
three months after the Closing Date), deliver (a) fully
executed counterparts of Mortgages (each an "Additional
Mortgage" and collectively the "Additional Mortgages")
encumbering such Covered Real Property, together with evidence
that counterparts of such Additional Mortgages have been
recorded in all places to the extent necessary or desirable,
in the reasonable judgment of Agent and CO-AGENT, so as to
--------
effectively create a valid and enforceable first priority lien
(or such other priority lien as may be specified in the
applicable Additional Mortgage), subject to Permitted
Encumbrances, on such Covered Real Property in favor of Agent
(or such other trustee as may be required or desired under
local law) for the benefit of Lenders; (b) a title report
obtained by Company in respect of any such Covered Real
Property consisting of fee interests in Real Property Assets
and, if reasonably required by Agent or CO-AGENT, a title
--------
report obtained by Company in respect of any such Covered Real
Property consisting of material leasehold interests in Real
Property Assets; (c) if required by Agent or CO-AGENT, an
--------
opinion of counsel (which counsel shall be reasonably
satisfactory to Agent and CO-AGENT) in the state in which such
--------
Covered Real Property is located with respect to the
enforceability of the form of Additional Mortgage recorded in
such state and such other matters as Agent may reasonably
request, in form and substance reasonably satisfactory to
Agent and CO-AGENT; (d) in the case of each such Covered Real
--------
Property consisting of leasehold interests in Real Property
Assets, such estoppel letters from the landlords on such real
property as may be reasonably requested by Agent or CO-AGENT,
--------
in form and substance reasonably satisfactory to Agent and CO-
---
AGENT; (e) if required by Agent or CO-AGENT, in the case of
----- --------
each such Covered Real Property consisting of fee interests in
Real Property Assets, environmental audits prepared by
professional consultants mutually acceptable to Company, CO-
---
AGENT and Agent, in form, scope and substance satisfactory to
-----
Agent in its reasonable discretion; (f) if required by Agent
<PAGE>
or CO-AGENT, in the case of each such Covered Real Property
--------
consisting of fee interests in Real Property Assets, ALTA
mortgagee title insurance policies issued by title insurers
reasonably satisfactory to Agent and CO-AGENT (the "Additional
--------
Mortgage Policies"), in amounts reasonably satisfactory to
Agent and CO-AGENT, assuring Agent that the applicable
--------
Additional Mortgages create valid and enforceable first
priority mortgage liens (or such other priority liens as may
be specified in the applicable Additional Mortgage) on such
Covered Real Property, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a
standard survey exception, which Additional Mortgage Policies
shall be in form and substance reasonably satisfactory to
Agent and CO-AGENT and shall include an endorsement for
--------
mechanics' liens, for future advances under this Agreement,
the Notes and the other Loan Documents, and for any other
matters that Agent or CO-AGENT may reasonably request, and
--------
shall provide for affirmative insurance and such reinsurance
as Agent or CO-AGENT may reasonably request, all of the
--------
foregoing in form and substance reasonably satisfactory to
Agent and CO-AGENT; (g) evidence, which may be in the form of
--------
a letter from an insurance broker, a municipal engineer,
Charles Jones, Inc. or Transamerica Flood Hazard
Certification, as to whether (1) any such Covered Real
Property ("Additional Flood Hazard Property") is in an area
designated by the Federal Emergency Management Agency as
having special flood or mud slide hazards and (2) the
community in which each Additional Flood Hazard Property is
located is participating in the National Flood Insurance
Program; and (h) if there are any Additional Flood Hazard
Properties, Company's written acknowledgement of receipt of
written notification from Agent (1) as to the existence of
each such Additional Flood Hazard Property and (2) as to
whether the community in which each such Flood Hazard Property
is located is participating in the National Flood Insurance
Program.
Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives
designated by Agent and CO-AGENT, upon reasonable notice, to
--------
visit and inspect any fee interests in Real Property Assets
and, if reasonably required by Agent and CO-AGENT, any
--------
material leasehold interests in Real Property Assets, in each
case to be subject to the Lien of an Additional Mortgage, for
the purpose of obtaining an appraisal of value, conducted by
consultants retained by Agent and CO-AGENT in compliance with
--------
all applicable banking regulations, with respect to such real
property fee or leasehold interest.
B. At least 30 days prior to the making by Company
or any of its Subsidiaries of any sale or disposition of
assets permitted under clause (iv), (v), (vii), (viii) or (ix)
of subsection 7.7 of any assets of Company or any of its
Subsidiaries encumbered by any Collateral Document, Company
shall, to the extent necessary to make such sale or
disposition of assets, request that Agent execute and deliver
to Company reconveyance documents and/or releases (including
without limitation amendments to the UCC-1 financing
statements that have been filed or recorded in connection with
such Collateral Document) releasing any Liens on the assets
being sold pursuant to such sale or disposition of assets that
were granted in favor of Agent pursuant to such Collateral
Document. Upon receiving any such request, Agent shall, at
Company's expense, execute and deliver to Company such
reconveyance documents and/or releases, in recordable form, on
the date of such sale or disposition of assets; provided that,
--------
at the time of Agent's execution and delivery to Company of
such reconveyance documents and/or releases, (i) no Event of
Default or Potential Event of Default shall have occurred and
be continuing or shall be caused thereby, (ii) Agent shall
have received evidence satisfactory to it that such sale or
disposition of assets shall be permitted under clause (iv),
<PAGE>
(v), (vii), (viii) or (ix) of subsection 7.7, and (iii)
Company shall have (a) paid Agent, for application to the
prepayment of the Loans or to the cash collateralization of
the Letters of Credit pursuant to subsection 2.4A(iii)(a), an
amount (the "Required Prepayment Amount") equal to the Net
Cash Proceeds of Asset Sale of such sale or disposition of
assets that are required to be applied to the prepayment of
the Loans or to the cash collateralization of the Letters of
Credit pursuant to subsection 2.4A(iii)(a), or (b) provided
Agent with evidence satisfactory to it that irrevocable
arrangements, in form and substance satisfactory to Agent,
have been made to transfer the Required Prepayment Amount to
Agent.
6.10 Assignability of Lease Agreements.
------------- -- ----- ----------
Company shall, and shall cause each of its
Subsidiaries to, use its best efforts (which shall not be
deemed to include, in the good faith judgement of Company, the
material modification of any rights or obligations, or the
incurrence of any material obligations, under the applicable
lease or the expenditure of money in excess of nominal amounts
or the payment of monetary consideration other than nominal
monetary consideration) in entering into any lease as a
lessee, whether such lease is an Operating Lease or a Capital
Lease, to obtain lease terms permitting (or not expressly
prohibiting) the encumbrancing of the leasehold interest of
Company or such Subsidiary, as the case may be, in the
property that is the subject of such lease pursuant to an
Additional Mortgage and the assignment of such leasehold
interest to the successful bidder at a foreclosure or similar
sale (and to a subsequent third party assignee by Agent or any
Lender to the extent Agent or such Lender is the successful
bidder at such sale) in the event of a foreclosure or similar
action pursuant to such Additional Mortgage.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of
the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and
the cancellation or expiration of all Letters of Credit,
unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform, and shall cause each of its
Subsidiaries to perform, all covenants in this Section 7.
7.1 Indebtedness.
------------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create, incur, assume
or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:
(i) Company may become and remain liable with
respect to the Obligations;
(ii) Company and its Subsidiaries may become and
remain liable with respect to Contingent Obligations
permitted by subsection 7.4 and, upon any matured
obligations actually arising pursuant thereto, the
Indebtedness corresponding to the Contingent Obligations
so extinguished;
(iii) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness in respect
of Capital Leases; provided that such Capital Leases are
--------
permitted under the terms of subsection 7.9;
(iv) Company may become and remain liable with
respect to Indebtedness to any of its wholly-owned
Subsidiaries, and any wholly-owned Subsidiary of Company
<PAGE>
may become and remain liable with respect to Indebtedness
to Company or any other wholly-owned Subsidiary of
Company; provided that (a) all such intercompany
--------
Indebtedness shall be evidenced by promissory notes that
are pledged to Agent pursuant to the terms of the Company
Pledge Agreement or the applicable Subsidiary Pledge
Agreement, as the case may be, (b) all such intercompany
Indebtedness owed by Company to any of its Subsidiaries
shall be subordinated in right of payment to the payment
in full of the Obligations pursuant to the terms of the
applicable promissory notes or an intercompany
subordination agreement, and (c) any payment by any
Subsidiary of Company under the Subsidiary Guaranty shall
result in a pro tanto reduction of the amount of any
--- -----
intercompany Indebtedness owed by such Subsidiary to
Company or to any of its Subsidiaries for whose benefit
such payment is made;
(v) Company and its Subsidiaries, as applicable,
may remain liable with respect to Indebtedness described
in Schedule 7.1 annexed hereto;
-------- ---
(vi) Company and its Subsidiaries may become and
remain liable with respect to Indebtedness incurred to
refinance, in whole or in part, any outstanding
Indebtedness of Company or any of its Subsidiaries
permitted under subdivision (v) of this subsection 7.1;
provided, however, that in each case (a) the principal
-------- -------
amount of such refinancing Indebtedness does not exceed
the principal amount of the Indebtedness so refinanced
and (b) the interest rates, maturities, amortization
schedules, covenants, defaults, remedies, and other terms
of such refinancing Indebtedness are in each case (1) the
same as those in the Indebtedness being refinanced or
(2) otherwise satisfactory to Agent, CO-AGENT and
--------
Requisite Lenders; provided that interest rates that are
--------
less than, maturities that are longer than, and
amortization schedules that result in a longer average
life to maturity than, the comparable provisions of the
Indebtedness being refinanced shall be deemed
satisfactory to Agent and Requisite Lenders for purposes
of this clause (2); and
(vii) Company and its Subsidiaries may become
and remain liable with respect to other Indebtedness in
an aggregate principal amount not to exceed $5,000,000 at
any time outstanding.
7.2 Liens and Related Matters.
----- --- ------- -------
A. Prohibition on Liens. Company shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly,
create, incur, assume or permit to exist any Lien on or with
respect to any property or asset of any kind (including any
document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now
owned or hereafter acquired, or any income or profits
therefrom, or file or permit the filing of, or permit to
remain in effect, any financing statement or other similar
notice of any Lien with respect to any such property, asset,
income or profits under the Uniform Commercial Code of any
State or under any similar recording or notice statute,
except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral
Documents;
(iii) Liens described in Schedule 7.2 annexed
-------- ---
hereto;
<PAGE>
(iv) Liens securing Indebtedness of Company or any
of its Subsidiaries incurred to refinance any outstanding
Indebtedness of Company or such Subsidiary that is
secured by Liens on Real Property Assets permitted under
subdivision (iii) of this subsection 7.2; provided,
however, that in each case (a) such refinancing
Indebtedness is permitted under subsection 7.1(vi),
(b) the Liens securing such refinancing Indebtedness are
limited to the Real Property Assets that were subject to
the Liens securing the Indebtedness so refinanced,
(c) the Indebtedness secured by such Lien is Non-Recourse
Indebtedness to the extent that the Indebtedness so
refinanced was Non-Recourse Indebtedness, and (d) the
principal amount of such refinancing Indebtedness shall
not be (1) less than 60% of the fair market value of such
Real Property Assets as of the date of such refinancing
or (2) if such refinancing Indebtedness is not Non-
Recourse Indebtedness, greater than 80% of the fair
market value of such Real Property Assets as of the date
of such refinancing; and
(v) Other Liens (other than consensual Liens
encumbering any of the Collateral) securing Indebtedness
or other obligations in an aggregate amount not exceeding
$2,000,000 at any time outstanding.
B. Equitable Lien in Favor of Lenders. If Company or
any of its Subsidiaries shall create or assume any Lien upon
any of its properties or assets, whether now owned or here-
after acquired, other than Liens excepted by the provisions of
subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness
secured thereby as long as any such Indebtedness shall be so
secured; provided that, notwithstanding the foregoing, this
--------
covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not
permitted by the provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect to
specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement
with respect to an Asset Sale, neither Company nor any of its
Subsidiaries shall enter into any agreement prohibiting the
creation or assumption of any Lien upon any of its properties
or assets, whether now owned or hereafter acquired.
D. No Restrictions on Subsidiary Distributions to
Company or Other Subsidiaries. Except as provided herein,
Company will not, and will not permit any of its Subsidiaries
to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any
kind on the ability of any such Subsidiary to (i) pay
dividends or make any other distributions on any of such
Subsidiary's capital stock owned by Company or any other
Subsidiary of Company, (ii) repay or prepay any Indebtedness
owed by such Subsidiary to Company or any other Subsidiary of
Company, (iii) make loans or advances to Company or any other
Subsidiary of Company, or (iv) transfer any of its property or
assets to Company or any other Subsidiary of Company.
7.3 Investments; Joint Ventures.
------------ ----- --------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and own
Investments in Cash Equivalents;
<PAGE>
(ii) Company and its Subsidiaries may make inter-
company loans to the extent permitted under subsection
7.1(iv);
(iii) Company may continue to own its existing
Investments in its Subsidiaries as of the Closing Date;
(iv) Company and its Subsidiaries may continue to
own the Investments owned by them and described in
Schedule 7.3 annexed hereto;
-------- ---
(v) Company and its Subsidiaries may make loans and
advances to employees in the ordinary course of business
in an aggregate amount not to exceed at any time
outstanding $500,000;
(vi) Company and its Subsidiaries may make and own
Investments in an aggregate amount not to exceed at any
time outstanding $3,000,000 consisting of any deferred
portion of the sales price received by Company or any of
its Subsidiaries in connection with any Asset Sale
permitted under subsection 7.7(iv);
(vii) Company may make and own Investments in an
aggregate amount not to exceed $5,000,000 in a community
organization established for the purpose of developing a
single store in an urban area which is to be managed or
operated by Company and which engages exclusively in
businesses permitted under subsection 7.14; and
(viii) Company or any of its Subsidiaries may
make and own Investments in respect of Securities of
another Person received by Company or such Subsidiary in
connection with a plan of reorganization of such Person
or a readjustment of its debts.
7.4 Contingent Obligations.
---------- -----------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, create or become or
remain liable with respect to any Contingent Obligation,
except:
(i) Company may become and remain liable with
respect to Contingent Obligations in respect of Letters
of Credit;
(ii) Subsidiaries of Company may become and remain
liable with respect to Contingent Obligations under the
Subsidiary Guaranty;
(iii) Company and its Subsidiaries may become
and remain liable with respect to Contingent Obligations
in respect of indemnification and purchase price
adjustment obligations incurred in connection with Asset
Sales or other sales of assets so long as such
indemnification and purchase price adjustment obligations
are customary in light of the type of Asset Sales or
other sales of assets in connection with which they were
incurred;
(iv) Company and its Subsidiaries may become and
remain liable with respect to Contingent Obligations in
respect of any Indebtedness or other obligation (other
than any Non-Recourse Indebtedness) of Company or any of
its Subsidiaries not prohibited by the Loan Documents;
(v) Company and its Subsidiaries may become and
remain liable with respect to Contingent Obligations
under guarantees in the ordinary course of business of
the obligations of suppliers, customers, franchisees and
<PAGE>
licensees of Company and its Subsidiaries in an aggregate
amount not to exceed at any time $1,500,000;
(vi) Company or any of its Subsidiaries may become
and remain liable with respect to Contingent Obligations
in respect of leasehold interests assigned by Company or
such Subsidiary after the Closing Date to any Person
other than Company or any of its Subsidiaries;
(vii) Company and its Subsidiaries, as
applicable, may remain liable with respect to Contingent
Obligations described in Schedule 7.4 annexed hereto; and
-------- ---
(viii) Company and its Subsidiaries may become
and remain liable with respect to other Contingent
Obligations; provided that the maximum aggregate
--------
liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such other Contingent
Obligations permitted by this clause (viii) shall at no
time exceed $2,000,000.
7.5 Restricted Junior Payments.
---------- ------ --------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Junior Payment.
7.6 Financial Covenants.
--------- ---------
A. Minimum Interest Coverage Ratio. Company shall not
permit the ratio of (i) Consolidated Adjusted EBITDA to
(ii) Consolidated Interest Expense for any four-fiscal quarter
period ending as of the last day of any fiscal quarter of
Company ending as of the dates set forth below (or, in the
case of the fiscal quarter of Company ending on April 30, 1994
or July 30, 1994, for the two- or three-fiscal quarter period,
respectively, ending as of such date) to be less than the cor-
relative ratio indicated:
Minimum
Fiscal Quarter Ending Interest Coverage Ratio
------ ------- ------ -------- -------- -----
April 30, 1994 1.10:1.00
July 30, 1994 1.30:1.00
October 29, 1994 2.00:1.00
January 28, 1995 2.00:1.00
<PAGE>
Minimum
Fiscal Quarter Ending Interest Coverage Ratio
------ ------- ------ -------- -------- -----
April 29, 1995 2.00:1.00
July 29, 1995 2.25:1.00
October 28, 1995 2.25:1.00
February 3, 1996 2.25:1.00
May 4, 1996 2.25:1.00
August 3, 1996 2.25:1.00
November 2, 1996 2.50:1.00
February 1, 1997 2.50:1.00
May 3, 1997 2.50:1.00
August 2, 1997 2.50:1.00
November 4, 1997 2.50:1.00
January 31, 1998 2.50:1.00
May 2, 1998 2.50:1.00
August 1, 1998
and thereafter 2.50:1.00
B. Maximum Leverage Ratio. Company shall not permit
the ratio of (i) Consolidated Total Debt to (ii) Consolidated
Net Worth as of the last day of any fiscal quarter of Company
to exceed 0.50:1.00.
C. Minimum Consolidated Tangible Net Worth. Company
shall not permit Consolidated Tangible Net Worth at any time
during any of the periods set forth below to be less than the
correlative amount indicated:
Minimum Consolidated
Period Tangible Net Worth
------ -------- --- -----
Closing Date to the last day
of Fiscal Year 1993 $168,150,000
Fiscal Year 1994 $168,150,000
Fiscal Year 1995 $168,150,000
Fiscal Year 1996 $169,250,000
Fiscal Year 1997 $171,500,000
Fiscal Year 1998
and thereafter $175,000,000
7.7 Restriction on Fundamental Changes; Asset Sales.
----------- -- ----------- -------- ----- -----
Company shall not, and shall not permit any of its
Subsidiaries to, enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell,
lease, sub-lease, transfer or otherwise dispose of all or any
part of its business, property or fixed assets, whether now
owned or hereafter acquired, except:
(i) any Subsidiary of Company may be merged with or
into Company or any wholly-owned Subsidiary of Company,
or be liquidated, wound up or dissolved, or all or any
substantial part of its business, property or assets may
be conveyed, sold, leased, transferred or otherwise
disposed of, in one transaction or a series of
transactions, to Company or any wholly-owned Subsidiary
of Company; provided that, in the case of such a merger,
--------
Company or such wholly-owned Subsidiary shall be the
continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Con-
solidated Capital Expenditures permitted under subsection
7.8;
(iii) Company and its Subsidiaries may sell
inventory in the ordinary course of business;
<PAGE>
(iv) Company and its Subsidiaries may make Asset
Sales; provided that the aggregate assets sold pursuant
--------
to Asset Sales in any Fiscal Year shall not have
accounted for more than 20% of the consolidated revenues
of Company and its Subsidiaries for the immediately
preceding Fiscal Year as shown on the consolidated
financial statements of Company and its Subsidiaries for
such immediately preceding Fiscal Year; provided further
-------- -------
that (a) the consideration received for the related
assets (other than the related assets taken pursuant to
any taking of assets described in clause (iii) of the
definition of the term "Asset Sale") shall be in an
amount at least equal to (1) the fair market value
thereof or (2) a lower amount if the Board of Directors
of Company or the applicable Subsidiary, as the case may
be, shall determine that the sale of such related assets
for such lower amount is desirable in order to minimize
losses being incurred by Company or such Subsidiary, as
the case may be, with respect to such related assets and
that such sale for such lower amount is in the best
interest of Company or such Subsidiary, as the case may
be; (b) at least 50% of the consideration received
(excluding any consideration received in the form of the
assumption of liability under any lease pertaining to
such related assets by the purchaser thereof) for the
related assets (other than the related assets taken
pursuant to any taking of assets described in clause
(iii) of the definition of the term "Asset Sale") shall
be cash; and (c) the Net Cash Proceeds of Asset Sale of
such Asset Sales shall be applied in the manner and to
the extent required by subsection 2.4A(iii)(a);
(v) Company and its Subsidiaries may dispose of
obsolete, worn out or surplus property disposed of in the
ordinary course of business;
(vi) Company and its Subsidiaries may, as lessor or
sub-lessor, lease or sub-lease any Real Property Assets
in the ordinary course of business;
(vii) Company and its Subsidiaries may make
asset sales described in clause (i)(b)(2) of the
definition of the term "Asset Sale";
(viii) Company and its Subsidiaries may transfer
their respective assets pursuant to any taking of assets
described in clause (iii) of the definition of the term
"Asset Sale" to the extent that the aggregate net cash
proceeds received by Company and its Subsidiaries in
connection with such taking and all other takings related
to such taking are equal to or less than $100,000; and
(ix) Company or any Subsidiary of Company may, in
the ordinary course of business, terminate any lease to
which it is a party as lessee.
7.8 Consolidated Capital Expenditures.
------------ ------- ------------
Company shall not, and shall not permit its
Subsidiaries to, make or incur Consolidated Capital
Expenditures, in any Fiscal Year indicated below, in an
aggregate amount in excess of the corresponding amount (the
"Maximum Consolidated Capital Expenditures Amount") set forth
below opposite such Fiscal Year; provided that the Maximum
--------
Consolidated Capital Expenditures Amount for any Fiscal Year
shall be increased by an amount equal to the excess, if any
(but in no event more than $5,000,000), of the Maximum
Consolidated Capital Expenditures Amount for the previous
Fiscal Year (as adjusted in accordance with this proviso) over
the actual amount of Consolidated Capital Expenditures for
such previous Fiscal Year:
<PAGE>
Maximum Consolidated
Fiscal Year Capital Expenditures
------ ---- ------- ------------
Amount
------
1993 $25,000,000
1994 $30,000,000
1995 $25,000,000
1996 $21,000,000
1997 $22,000,000
1998 and thereafter $22,000,000
7.9 Restriction on Leases.
----------- -- ------
Company shall not, and shall not permit any of its
Subsidiaries to, become liable in any way, whether directly or
by assignment or as a guarantor or other surety, for the
obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany
leases between Company and its wholly-owned Subsidiaries),
unless, immediately after giving effect to the incurrence of
liability with respect to such lease, the Consolidated Rental
Payments at the time in effect during the then current Fiscal
Year shall not exceed the corresponding amount set forth below
opposite such Fiscal Year:
Maximum Consolidated
Fiscal Year Rental Payments
------ ---- ------ --------
1993 $17,296,000
1994 $18,833,000
1995 $23,478,000
1996 $28,364,000
1997 $32,082,000
1998 and thereafter $34,220,000
7.10 Sales and Lease-backs.
----- --- -----------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain
liable as lessee or as guarantor or other surety with respect
to any lease, whether an Operating Lease or a Capital Lease,
of any property (whether real, personal or mixed), whether now
owned or hereafter acquired, (i) which Company or any of its
Subsidiaries has sold or transferred or is to sell or transfer
to any other Person (other than Company or any of its
Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by
Company or any of its Subsidiaries to any Person (other than
Company or any of its Subsidiaries) in connection with such
lease; provided that Company and its Subsidiaries may enter
--------
into Sale and Lease-backs of Equipment so long as (a) the sale
or transfer by Company or any of its Subsidiaries of any
property in connection with such Sale and Lease-backs are
permitted under subsection 7.7 and (b) the leases entered into
in connection with such Sale and Lease-backs are permitted
under subsection 7.9.
7.11 Sale or Discount of Receivables.
---- -- -------- -- -----------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse,
or discount or otherwise sell for less than the face value
thereof, any of its notes or accounts receivable.
7.12 Transactions with Shareholders and Affiliates.
------------ ---- ------------ --- ----------
Company shall not, and shall not permit any of its Sub-
sidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the
<PAGE>
purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less
favorable to Company or that Subsidiary, as the case may be,
than those that might be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the
--------
foregoing restriction shall not apply to (i) any transaction
between Company and any of its wholly-owned Subsidiaries or
between any of its wholly-owned Subsidiaries,
(ii) transactions entered into or existing pursuant to and in
accordance with the Spin-Off Agreements, or (iii) reasonable
and customary fees paid to members of the Boards of Directors
of Company and its Subsidiaries.
7.13 Disposal of Subsidiary Stock.
-------- -- ---------- -----
Except for any sale of 100% of the capital stock or other
equity Securities of any of its Subsidiaries in compliance
with the provisions of subsection 7.7(iv) and except pursuant
to the Collateral Documents, Company shall not:
(i) directly or indirectly sell, assign, pledge or
otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidi-
aries, except to qualify directors if required by
applicable law; or
(ii) permit any of its Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity
Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of
Company, or to qualify directors if required by applica-
ble law.
7.14 Conduct of Business.
------- -- --------
From and after the Closing Date, Company shall not, and
shall not permit any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by Company
and its Subsidiaries on the Closing Date and similar or
related businesses and (ii) such other lines of business as
may be consented to by Requisite Lenders.
7.15 Amendments of Certain Documents.
---------- -- ------- ---------
A. Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any of
the Spin-Off Agreements in any material respect or waive any
of its material rights thereunder without the prior written
consent of the Requisite Lenders.
B. Company shall not, and shall not permit any of its
Subsidiaries to, amend or otherwise change the terms of any
Indebtedness of Company or any of its Subsidiaries permitted
to be incurred under subsection 7.1(vi) ("Specified
Refinancing Indebtedness"), or make any payment consistent
with an amendment thereof or change thereto, if the effect of
such amendment or change is to increase the interest rate on
such Specified Refinancing Indebtedness, change (to earlier
dates) any dates upon which payments of principal or interest
are due thereon, change any event of default or condition to
an event of default with respect thereto (other than to
eliminate any such event of default or to increase any grace
period with respect thereto), change the redemption,
prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof),
or change any collateral therefor (other than to release such
collateral), or if the effect of such amendment or change,
together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder
<PAGE>
or to confer any additional rights on the holders of such
Specified Refinancing Indebtedness which would be adverse to
Company or Lenders.
7.16 Fiscal Year.
------ ----
Company shall not change its Fiscal Year-end from
the Saturday closest to January 31.
Section 8. EVENTS OF DEFAULT
If any of the following conditions or events
("Events of Default") shall occur:
8.1 Failure to Make Payments When Due.
------- -- ---- -------- ---- ---
Failure to pay any installment of principal of any
Loan when due, whether at stated maturity, by acceleration, by
notice of prepayment or otherwise; failure to pay when due any
amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure to pay any
interest on any Loan or any fee or any other amount due under
this Agreement within five days after the date due; or
8.2 Default in Other Agreements.
------- -- ----- ----------
(i) Failure of Company or any of its Subsidiaries
to pay when due (a) any principal of or interest on any
Indebtedness (other than Indebtedness referred to in
subsection 8.1) in an individual principal amount of
$1,000,000 or more or any items of Indebtedness with an aggre-
gate principal amount of $5,000,000 or more or (b) any
Contingent Obligation in an individual principal amount of
$1,000,000 or more or any Contingent Obligations with an
aggregate principal amount of $5,000,000 or more, in each case
beyond the end of any grace period provided therefor; or
(ii) breach or default by Company or any of its Subsidiaries
with respect to any other material term of (a) any evidence of
any Indebtedness in an individual principal amount of
$1,000,000 or more or any items of Indebtedness with an aggre-
gate principal amount of $5,000,000 or more or any Contingent
Obligation in an individual principal amount of $1,000,000 or
more or any Contingent Obligations with an aggregate principal
amount of $5,000,000 or more or (b) any loan agreement,
mortgage, indenture or other agreement relating to such
Indebtedness or Contingent Obligation(s), if the effect of
such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be
declared due and payable prior to its stated maturity or the
stated maturity of any underlying obligation, as the case may
be, in each case after the end of any grace period provided
therefor; or
8.3 Breach of Certain Covenants.
------ -- ------- ---------
Failure of Company to perform or comply with any
term or condition contained in subsection 2.5 or 6.2 or
Section 7 of this Agreement or any other material term of any
Loan Document (other than this Agreement); or
8.4 Breach of Warranty.
------ -- --------
Any representation, warranty, certification or other
statement made by Company or any of its Subsidiaries in any
Loan Document or in any statement or certificate at any time
given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or
therewith shall be false in any material respect on the date
as of which made; or
<PAGE>
8.5 Other Defaults Under Loan Documents.
----- -------- ----- ---- ---------
Company or any of its Subsidiaries shall default in
the performance of or compliance with any term contained in
this Agreement or any of the other Loan Documents, other than
any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or
waived within 30 days after receipt by Company of notice from
Agent or any Lender of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
----------- ----------- ----------- -- --------- ----
(i) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of Company
or any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief
shall be granted under any applicable federal or state law; or
(ii) an involuntary case shall be commenced against Company or
any of its Subsidiaries under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or
hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a
receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its
Subsidiaries, or over all or a substantial part of its
property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its
Subsidiaries for all or a substantial part of its property; or
a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property
of Company or any of its Subsidiaries, and any such event
described in this clause (ii) shall continue for 60 days
unless dismissed, bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
--------- ----------- ----------- -- --------- ----
(i) Company or any of its Subsidiaries shall have
an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order
for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or
shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries
shall make any general assignment for the benefit of
creditors; or (ii) Company or any of its Subsidiaries shall be
unable, or shall fail generally, or shall admit in writing its
inability, to pay its debts as such debts become due; or the
Board of Directors of Company or any of its Subsidiaries (or
any committee thereof) shall adopt any resolution or otherwise
authorize any action to approve any of the actions referred to
in clause (i) above or this clause (ii); or
8.8 Judgments and Attachments.
--------- --- -----------
Any money judgment, writ or warrant of attachment or
similar process involving in the aggregate at any time an
amount in excess of $2,000,000 (to the extent not adequately
covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered
or filed against Company or any of its Subsidiaries or any of
their respective assets and shall remain 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); or
8.9 Dissolution.
-----------
<PAGE>
Any order, judgment or decree shall be entered
against Company or any of its Subsidiaries decreeing the
dissolution or split up of Company or that Subsidiary and such
order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
-------- ------- -----
There shall occur one or more ERISA Events which
individually or in the aggregate results in or might
reasonably be expected to result in liability of Company or
any of its ERISA Affiliates in excess of $2,000,000 during the
term of this Agreement; or there shall exist an amount of
unfunded benefit liabilities (as defined in Section
4001(a)(18) of ERISA), individually or in the aggregate for
all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit
liabilities), which exceeds $2,000,000; or
8.11 Change in Control.
------ -- -------
Merrill Lynch Capital Partners, Inc. ("MLCP") or its
Affiliates shall cease to beneficially own and control,
directly or indirectly, at least 51% of the issued and
outstanding shares of capital stock of Company entitled
(without regard to the occurrence of any contingency) to vote
for the election of members of the Board of Directors of
Company; or
8.12 Invalidity of Subsidiary Guaranty.
---------- -- ---------- --------
Upon execution and delivery thereof, the Subsidiary
Guaranty for any reason, other than the satisfaction in full
of all Obligations, ceases to be in full force and effect
(other than in accordance with its terms) or is declared to be
null and void, or any Loan Party denies in writing that it has
any further liability, including without limitation with
respect to future advances by Lenders, under any Loan Document
to which it is a party; or
8.13 Failure of Security.
------- -- --------
Upon execution and delivery thereof, any Collateral
Document shall, at any time, cease to be in full force and
effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other
termination of such Collateral Document in accordance with the
terms hereof or thereof) or shall be declared null and void,
or the validity or enforceability thereof shall be contested
in writing by any Loan Party, or the Agent shall not have or
shall cease to have a valid and perfected first priority
security interest (subject to Permitted Encumbrances) in any
Collateral purported to be covered thereby having a fair
market value individually or in the aggregate exceeding
$1,000,000, in each case for any reason other than the failure
of Agent or any Lender to take any action within its control;
or
8.14 Failure to Consummate Spin-Off.
------- -- ---------- --------
The Spin-Off shall not be consummated in accordance
with this Agreement concurrently with the making of the
initial Loans or the Spin-Off shall be unwound, reversed or
otherwise rescinded in whole or in part for any reason; or
8.15 Termination of Logistical Services Agreement.
----------- -- ---------- -------- ---------
The Spin-Off Agreement described in clause (iv) of
the definition thereof shall terminate as a result of any
reason whatsoever; or
<PAGE>
8.16 Incurrence of Liability Relating to Spin-Off.
---------- -- --------- -------- -- --------
Company shall incur any liability as a result of the
incurrence by Pathmark of any liability for any Tax for which
Company has agreed to indemnify Pathmark pursuant to the Spin-
Off Agreement described in clause (ii) of the definition of
the term "Spin-Off Agreements" and the incurrence of such
liability by Company would reasonably be expected to result in
a Material Adverse Effect; or
8.17 Material Difference in Closing Date Balance Sheets.
-------- ---------- -- ------- ---- ------- ------
The inventory line item set forth in the pro forma
unaudited consolidated balance sheet of Company and its
Subsidiaries as at the Closing Date delivered pursuant to
subsection 4.1S shall exceed the corresponding inventory line
item set forth in the consolidated balance sheet of Company
and its Subsidiaries as at the Closing Date delivered pursuant
to subsection 6.1(xviii) by more than $30,000,000:
THEN (i) upon the occurrence of any Event of Default described
in subsection 8.6 or 8.7, each of (a) the unpaid principal
amount of and accrued interest on the Loans, (b) an amount
equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not
any beneficiary under any such Letter of Credit shall have
presented, or shall be entitled at such time to present, the
drafts or other documents or certificates required to draw
under such Letter of Credit), and (c) all other Obligations
shall automatically become immediately due and payable,
without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by Company,
and the obligation of each Lender to make any Loan, the
obligation of Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder
shall thereupon terminate, and (ii) upon the occurrence and
during the continuation of any other Event of Default, Agent
shall, upon the written request of Requisite Lenders, by
written notice to Company, declare all or any portion of the
amounts described in clauses (a) through (c) above to be, and
the same shall forthwith become, immediately due and payable,
and the obligation of each Lender to make any Loan, the
obligation of Agent to issue any Letter of Credit and the
right of any Lender to issue any Letter of Credit hereunder
shall thereupon terminate; provided that the foregoing shall
--------
not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to repay
Swing Line Loans or purchase participations therein as
provided in subsection 2.1A(ii).
Any amounts described in clause (b) above, when
received by Agent, shall be held by Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied
as therein provided.
Notwithstanding anything contained in the second
preceding paragraph, if at any time within 60 days after an
acceleration of the Loans pursuant to such paragraph Company
shall pay all arrears of interest and all payments on account
of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and,
to the extent permitted by law, on overdue interest, at the
rates specified in this Agreement) and all Events of Default
and Potential Events of Default (other than non-payment of the
principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to subsection 10.6, then
Requisite Lenders, by written notice to Company, may at their
option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent
Event of Default or Potential Event of Default or impair any
right consequent thereon. The provisions of this paragraph
<PAGE>
are intended merely to bind Lenders to a decision which may be
made at the election of Requisite Lenders and are not intended
to benefit Company and do not grant Company the right to
require Lenders to rescind or annul any acceleration
hereunder, even if the conditions set forth herein are met.
Section 9. AGENT, CO-AGENT, COLLATERAL AGENT AND
--------
SUPPLEMENTAL COLLATERAL AGENTS
9.1 Appointment.
-----------
A. Agent. Bankers is hereby appointed Agent hereunder
and under the other Loan Documents and each Lender hereby
authorizes Agent to act as its agent in accordance with the
terms of this Agreement and the other Loan Documents. Agent
agrees to act upon the express conditions contained in this
Agreement and the other Loan Documents, as applicable.
B. CO-AGENT. Heller is hereby appointed as CO-AGENT
-------- --------
hereunder and under the other Loan Documents (in such
capacity, "CO-AGENT") and each Lender hereby authorizes CO-
-------- ---
AGENT to act as CO-AGENT in accordance with the terms of this
----- --------
Agreement and the other Loan Documents. CO-AGENT agrees to
--------
act upon the express conditions contained in this Agreement
and the other Loan Documents, as applicable.
C. Collateral Agent. Heller is hereby appointed as
collateral agent hereunder and under the other Loan Documents
(in such capacity, "Collateral Agent") and Agent and each
Lender hereby authorize Collateral Agent to act as collateral
agent in accordance with the terms of this Agreement and the
other Loan Documents. Collateral Agent agrees to act upon the
express conditions in this Agreement and the other Loan
Documents, as applicable.
Anything contained in any of the Loan Documents to
the contrary notwithstanding, each and every right, power,
privilege or duty expressed or intended by this Agreement or
any of the other Loan Documents to be exercised by or vested
in or conveyed to Agent with respect to any Collateral shall
be exercisable by and vest in Collateral Agent to the extent
necessary to enable Collateral Agent to exercise such rights,
powers and privileges with respect to such Collateral and to
perform such duties with respect to such Collateral, and every
covenant and obligation contained in the Loan Documents and
necessary to the exercise or performance thereof by Collateral
Agent shall run to and be enforceable by either of Collateral
Agent and Agent; provided that Agent and Collateral Agent
--------
shall consult with each other regarding the exercise by either
of such parties of any such right, power or privilege or the
performance by either of such parties of any such duty.
In furtherance of the foregoing, (i) Agent hereby
appoints Collateral Agent as Agent's attorney-in-fact, with
full authority in the place and stead of Agent and in the name
of Agent or Collateral Agent, to exercise such rights, powers
and privileges and to perform such duties, and (ii) should any
instrument in writing from Agent or Company be reasonably
required by Collateral Agent for more fully and certainly
vesting in and confirming to it such rights, powers,
privileges and duties, any and all such instruments in writing
shall, promptly upon request by Collateral Agent, be executed,
acknowledged and delivered by Agent or Company, as the case
may be. The power of attorney granted by Agent in the
immediately preceding sentence shall be irrevocable; provided
--------
that, in the event Collateral Agent shall resign or be removed
in accordance with subsection 9.6A, such power of attorney
shall immediately terminate and all the rights, powers,
privileges and duties of Collateral Agent shall thereafter be
exercisable solely by Agent.
<PAGE>
D. Supplemental Collateral Agents. It is the purpose
of this Agreement and the other Loan Documents that there
shall be no violation of any law of any jurisdiction denying
or restricting the right of banking corporations or
associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation
under this Agreement or any of the other Loan Documents, and
in particular in case of the enforcement of any of the Loan
Documents, or in case Agent or Collateral Agent deems that by
reason of any present or future law of any jurisdiction it may
not exercise any of the rights, powers or remedies granted
herein or in any of the other Loan Documents, or take any
other action which may be desirable or necessary in connection
therewith, it may be necessary that Agent or Collateral Agent
appoint an additional individual or institution (including
without limitation Bankers Trust Company New Jersey Limited)
as a separate trustee, co-trustee, separate collateral agent
or collateral CO-AGENT (any such additional individual or
--------
institution being referred to herein individually as a
"Supplemental Collateral Agent" and collectively as
"Supplemental Collateral Agents").
In the event that Agent or Collateral Agent appoints
a Supplemental Collateral Agent with respect to any
Collateral, each and every right, power, privilege or duty
expressed or intended by this Agreement or any of the other
Loan Documents to be exercised by or vested in or conveyed to
Agent with respect to such Collateral shall be exercisable by
and vest in such Supplemental Collateral Agent to the extent,
and only to the extent, necessary to enable such Supplemental
Collateral Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such
duties with respect to such Collateral, and every covenant and
obligation contained in the Loan Documents and necessary to
the exercise or performance thereof by such Supplemental
Collateral Agent shall run to and be enforceable by either
such Supplemental Collateral Agent or Agent or Collateral
Agent.
Should any instrument in writing from Company be
required by any Supplemental Collateral Agent so appointed by
Agent or Collateral Agent for more fully and certainly vesting
in and confirming to him or it such rights, powers, privileges
and duties, any and all such instruments in writing shall,
promptly upon request by Agent or Collateral Agent, be
executed, acknowledged and delivered by Company. In case any
Supplemental Collateral Agent, or a successor thereto, shall
die, become incapable of acting, resign or be removed, all the
rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest
in and be exercised by Agent and Collateral Agent until the
appointment of a new Supplemental Collateral Agent.
E. Generally. The provisions of this Section 9 are
solely for the benefit of Agent, CO-AGENT, Collateral Agent,
--------
Supplemental Collateral Agents and Lenders, and Company shall
have no rights as a third party beneficiary of any of the
provisions thereof. In performing their functions and duties
under this Agreement or any of the other Loan Documents,
Agent, CO-AGENT, Collateral Agent and Supplemental Collateral
--------
Agents shall act solely as agents of Lenders (and, in the case
of Collateral Agent and Supplemental Collateral Agents, as
agents of Agent) and do not assume and shall not be deemed to
have assumed any obligation towards or relationship of agency
or trust with or for Company or any of its Subsidiaries.
9.2 Powers; General Immunity.
------- ------- --------
A. Duties Specified. Each Lender irrevocably author-
izes Agent, CO-AGENT, Collateral Agent and each Supplemental
--------
Collateral Agent to take such action on such Lender's behalf
and to exercise such powers hereunder and under the other Loan
<PAGE>
Documents as are specifically delegated to Agent, CO-AGENT,
--------
Collateral Agent or such Supplemental Collateral Agent by the
terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Agent, CO-AGENT, Collateral
--------
Agent and each Supplemental Collateral Agent shall have only
those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents and they may
perform such duties by or through their respective agents or
employees. Neither Agent nor CO-AGENT nor Collateral Agent
--------
nor any Supplemental Collateral Agent shall have, by reason of
this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this
Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose
upon Agent, CO-AGENT, Collateral Agent or any Supplemental
--------
Collateral Agent any obligations in respect of this Agreement
or any of the other Loan Documents except as expressly set
forth herein or therein.
B. No Responsibility for Certain Matters. Neither
Agent nor CO-AGENT nor Collateral Agent nor any Supplemental
--------
Collateral Agent shall be responsible to any Lender for the
execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this
Agreement or any other Loan Document or for any
representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or
in any financial or other statements, instruments, reports or
certificates or any other documents furnished or made by
Agent, CO-AGENT, Collateral Agent or any Supplemental
--------
Collateral Agent to Lenders or by or on behalf of Company to
Agent, CO-AGENT, Collateral Agent or any Supplemental
--------
Collateral Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any
other Person liable for the payment of any Obligations, nor
shall Agent nor CO-AGENT nor Collateral Agent nor any
--------
Supplemental Collateral Agent be required to ascertain or
inquire as to the performance or observance of any of the
terms, conditions, provisions, covenants or agreements
contained in any of the Loan Documents or as to the use of the
proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of
Default or Potential Event of Default. Anything contained in
this Agreement to the contrary notwithstanding, Agent shall
not have any liability arising from confirmations of the
amount of outstanding Loans or the Letter of Credit Usage or
the component amounts thereof.
C. Exculpatory Provisions. Neither Agent nor CO-AGENT
--------
nor Collateral Agent nor any Supplemental Collateral Agent nor
any of their respective officers, directors, employees or
agents shall be liable to Lenders for any action taken or
omitted by Agent, CO-AGENT, Collateral Agent or such
--------
Supplemental Collateral Agent hereunder or under any of the
other Loan Documents or in connection herewith or therewith
except to the extent caused by Agent's or CO-AGENT's or
--------
Collateral Agent's or such Supplemental Collateral Agent's
gross negligence or willful misconduct. If Agent or CO-AGENT
--------
or Collateral Agent or any Supplemental Collateral Agent shall
request instructions from Lenders with respect to any act or
action (including the failure to take an action) in connection
with this Agreement or any of the other Loan Documents, Agent
or CO-AGENT or Collateral Agent or such Supplemental
--------
Collateral Agent shall be entitled to refrain from such act or
taking such action unless and until Agent or CO-AGENT or
--------
Collateral Agent or such Supplemental Collateral Agent shall
have received instructions from Requisite Lenders. Without
prejudice to the generality of the foregoing, (i) each of
Agent, CO-AGENT, Collateral Agent and Supplemental Collateral
--------
Agents shall be entitled to rely, and shall be fully protected
in relying, upon any communication, instrument or document
<PAGE>
believed by it to be genuine and correct and to have been
signed or sent by the proper person or persons, and shall be
entitled to rely and shall be protected in relying on opinions
and judgments of attorneys (who may be attorneys for Company
and its Subsidiaries), accountants, experts and other profes-
sional advisors selected by it; and (ii) no Lender shall have
any right of action whatsoever against Agent or CO-AGENT or
--------
Collateral Agent or any Supplemental Collateral Agent as a
result of Agent or CO-AGENT or Collateral Agent or such
--------
Supplemental Collateral Agent acting or (where so instructed)
refraining from acting under this Agreement or any of the
other Loan Documents in accordance with the instructions of
Requisite Lenders. Each of Agent, CO-AGENT, Collateral Agent
--------
and Supplemental Collateral Agents shall be entitled to
refrain from exercising any power, discretion or authority
vested in it under this Agreement or any of the other Loan
Documents unless and until it has obtained the instructions of
Requisite Lenders.
D. Agent, CO-AGENT, Collateral Agent and Supplemental
--------
Collateral Agents Entitled to Act as Lenders. The agency
hereby created shall in no way impair or affect any of the
rights and powers of, or impose any duties or obligations
upon, Agent or CO-AGENT or Collateral Agent or, if any
--------
Supplemental Collateral Agent is or becomes a Lender, such
Supplemental Collateral Agent, in its individual capacity as a
Lender hereunder. With respect to its participation in the
Loans and the Letters of Credit, Agent, CO-AGENT, Collateral
--------
Agent and, if any Supplemental Collateral Agent is or becomes
a Lender, such Supplemental Collateral Agent, shall have the
same rights and powers hereunder as any other Lender and may
exercise the same as though it were not performing the duties
and functions delegated to it hereunder, and the term "Lender"
or "Lenders" or any similar term shall, unless the context
clearly otherwise indicates, include Agent, CO-AGENT,
--------
Collateral Agent and, if any Supplemental Collateral Agent is
or becomes a Lender, such Supplemental Collateral Agent, in
its individual capacity. Agent, CO-AGENT, Collateral Agent
--------
and, if any Supplemental Collateral Agent is or becomes a
Lender, such Supplemental Collateral Agent, and their
respective Affiliates may accept deposits from, lend money to
and generally engage in any kind of banking, trust, financial
advisory or other business with Company or any of its
Affiliates as if it were not performing the duties specified
herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
9.3 Representations and Warranties; No Responsibility For
--------------- --- ----------- -- -------------- ---
Appraisal of Creditworthiness.
--------- -- ----------------
Each Lender represents and warrants that it has made
its own independent investigation of the financial condition
and affairs of Company and its Subsidiaries in connection with
the making of the Loans and the issuance of Letters of Credit
hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company. Neither
Agent nor CO-AGENT nor Collateral Agent nor any Supplemental
--------
Collateral Agent shall have any duty or responsibility, either
initially or on a continuing basis, to make any such investi-
gation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and
neither Agent nor CO-AGENT nor Collateral Agent nor any
--------
Supplemental Collateral Agent shall have any responsibility
with respect to the accuracy of or the completeness of any
information provided to Lenders.
9.4 Right to Indemnity.
----- -- ---------
<PAGE>
Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify Agent, CO-AGENT, Collateral
--------
Agent and each Supplemental Collateral Agent, to the extent
that Agent, CO-AGENT, Collateral Agent and such Supplemental
--------
Collateral Agent shall not have been reimbursed by Company,
for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and
disbursements) or disbursements of any kind or nature what-
soever which may be imposed on, incurred by or asserted
against Agent, CO-AGENT, Collateral Agent or such Supplemental
--------
Collateral Agent in performing its duties hereunder or under
the other Loan Documents or otherwise in their respective
capacities as Agent, CO-AGENT, Collateral Agent and
--------
Supplemental Collateral Agent in any way relating to or
arising out of this Agreement or the other Loan Documents;
provided that no Lender shall be liable for any portion of
--------
such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's or CO-AGENT's or Collateral Agent's or
--------
such Supplemental Collateral Agent's gross negligence or
willful misconduct. If any indemnity furnished to Agent, CO-
---
AGENT, Collateral Agent or any Supplemental Collateral Agent
-----
for any purpose shall, in the opinion of Agent, CO-AGENT,
--------
Collateral Agent or such Supplemental Collateral Agent, be
insufficient or become impaired, Agent, CO-AGENT, Collateral
--------
Agent or such Supplemental Collateral Agent may call for addi-
tional indemnity and cease, or not commence, to do the acts
indemnified against until such additional indemnity is
furnished.
9.5 Payee of Note Treated as Owner.
----- -- ---- ------- -- -----
Agent, CO-AGENT, Collateral Agent and Supplemental
--------
Collateral Agents may deem and treat the payee of any Note as
the owner thereof for all purposes hereof unless and until a
written notice of the assignment or transfer thereof shall
have been filed with Agent. Any request, authority or consent
of any person or entity who, at the time of making such
request or giving such authority or consent, is the holder of
any Note shall be conclusive and binding on any subsequent
holder, transferee or assignee of that Note or of any Note or
Notes issued in exchange therefor.
9.6 Successor Agent and Swing Line Lender.
--------- ----- --- ----- ---- ------
A. Successor Agent, etc. Agent, CO-AGENT,
--------
Collateral Agent or any Supplemental Collateral Agent may
resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and Agent, CO-AGENT,
--------
Collateral Agent or any Supplemental Collateral Agent may be
removed at any time with or without cause by an instrument or
concurrent instruments in writing delivered to Company and
Agent, CO-AGENT, Collateral Agent or such Supplemental
--------
Collateral Agent, as the case may be, and signed by Requisite
Lenders. Upon any such notice of resignation or any such
removal (i) in the case of a resignation or removal of CO-
---
AGENT or Collateral Agent, there shall be no successor CO-
----- ---
AGENT or Collateral Agent, (ii) in the case of a resignation
-----
or removal of any Supplemental Collateral Agent, Agent or
Collateral Agent may appoint a successor Supplemental
Collateral Agent as contemplated by subsection 9.1D, and (iii)
in the case of a resignation or removal of Agent, Requisite
Lenders shall have the right, upon five Business Days' notice
to Company, to appoint a successor Agent. Upon the acceptance
of any appointment as Agent or Supplemental Collateral Agent
hereunder by a successor Agent or Supplemental Collateral
Agent, that successor Agent or Supplemental Collateral Agent
shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or
removed Agent or Supplemental Collateral Agent and the
retiring or removed Agent or Supplemental Collateral Agent
<PAGE>
shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's, CO-AGENT's,
--------
Collateral Agent's or Supplemental Collateral Agent's
resignation or removal hereunder as Agent, CO-AGENT,
--------
Collateral Agent or Supplemental Collateral Agent, the
provisions of this Section 9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was
Agent, CO-AGENT, Collateral Agent or Supplemental Collateral
--------
Agent under this Agreement.
B. Successor Swing Line Lender. Any resignation
or removal of Agent pursuant to subsection 9.6A shall also
constitute the resignation or removal of Bankers or its
successor as Swing Line Lender, and any successor Agent
appointed pursuant to subsection 9.6A shall, upon its
acceptance of such appointment, become the successor Swing
Line Lender for all purposes hereunder. In such event
(i) Company shall prepay any outstanding Swing Line Loans made
by the retiring or removed Agent in its capacity as Swing Line
Lender, (ii) upon such prepayment, the retiring or removed
Agent and Swing Line Lender shall surrender the Swing Line
Note held by it to Company for cancellation, and (iii) Company
shall issue a new Swing Line Note to the successor Agent and
Swing Line Lender substantially in the form of Exhibit VI
------- --
annexed hereto, in the principal amount of the Swing Line Loan
Commitment then in effect and with other appropriate
insertions.
9.7 Collateral Documents.
---------- ---------
Each Lender hereby further authorizes Agent and, to
the extent directed to do so by Agent or Collateral Agent,
each Supplemental Collateral Agent to enter into the
Collateral Documents as secured party on behalf of and for the
benefit of Lenders and agrees to be bound by the terms of the
Collateral Documents; provided that neither Agent nor
--------
Collateral Agent nor any Supplemental Collateral Agent shall
enter into or consent to any amendment, modification,
termination or waiver of any provision contained in the
Collateral Documents without the prior consent of Requisite
Lenders. Each Lender agrees that no Lender shall have any
right individually to realize upon the Subsidiary Guaranty or
any of the Collateral under the Collateral Documents, it being
understood and agreed that all rights and remedies under the
Collateral Documents may be exercised solely by Agent,
Collateral Agent and Supplemental Collateral Agents for the
benefit of Lenders and the other beneficially interested
parties under the Collateral Documents and the other Loan
Documents in accordance with the terms thereof.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of
----------- --- -------------- -- ----- --- ------- --
Credit.
------
A. General. Each Lender shall have the right at any
time to (i) sell, assign, transfer or negotiate to any
Eligible Assignee, or (ii) sell participations to any Person
in, all or any part of any Loan or Loans made by it or its
Commitments or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed
to it; provided that no such assignment or participation
--------
shall, without the consent of Company, require Company to file
a registration statement with the Securities and Exchange
Commission or apply to qualify such assignment or
participation of the Loans, the Letters of Credit or
participations therein or the other Obligations under the
securities laws of any state. Except as otherwise provided in
this subsection 10.1, no Lender shall, as between Company and
such Lender, be relieved of any of its obligations hereunder
as a result of any sale, assignment, transfer or negotiation
of, or any granting of participations in, all or any part of
<PAGE>
the Loans, the Commitments, the Letters of Credit or
participations therein or the other Obligations owed to such
Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Loan,
------- --- ----- -- -----------
Commitment, Letter of Credit or participation therein or
other Obligation may (a) be assigned in any amount (of a
constant and not a varying percentage) to another Lender,
or to an Affiliate of the assigning Lender or another
Lender, with the giving of notice to Company and Agent
and, in the case of an assignment to an Affiliate of the
assigning Lender where the assigning Lender can
reasonably foresee that such assignment would result in a
requirement on the part of Company to pay any greater
amount pursuant to subsection 2.6D or 2.7 than Company
would have been required to pay to the assigning Lender
in respect of the amount of the assignment effected by
such assigning Lender to such Affiliate had no such
assignment occurred, with the consent of Company to such
assignment (which consent shall not be unreasonably
withheld), (b) be assigned in an amount (of a constant
and not a varying percentage) of not less than $5,000,000
(or such lesser amount as shall constitute the aggregate
amount of all Loans, Commitments, Letters of Credit and
participations therein and other Obligations of the
assigning Lender) to any other Eligible Assignee with the
consent of Company and Agent (which consent of Company
and Agent shall not be unreasonably withheld), or (c) be
assigned in accordance with the provisions of subsection
2.1E. To the extent of any such assignment in accordance
with clause (a), (b) or (c) above, the assigning Lender
shall be relieved of its obligations with respect to its
Loans, Commitments, Letters of Credit or participations
therein or other Obligations or the portion thereof so
assigned. The parties to each such assignment described
in clause (a) or (b) above shall execute and deliver to
Agent, for its acceptance, an Assignment and Acceptance
in substantially the form of Exhibit XII annexed hereto,
------- ---
together with (1) a processing fee of $1,500 in the case
of an assignment to another Lender or (2) a processing
fee of $2,500 in the case of an assignment to any other
Eligible Assignee and such certificates, documents or
other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee
under such Assignment and Acceptance may be required to
deliver to Agent pursuant to subsection 2.7B(iii). The
parties to each such assignment described in clause (c)
above shall execute and deliver to Agent, and Agent shall
accept, an Extension Assignment and Acceptance in
substantially the form of Exhibit XIII annexed hereto in
------- ----
accordance with the provisions of subsection 2.1E. Upon
such execution, delivery and acceptance, from and after
the effective date of the assignments and assumptions
contemplated by such Assignment and Acceptance or such
Extension Assignment and Acceptance, as the case may be,
(y) each assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have
been assigned to it pursuant to such Assignment and
Acceptance or such Extension Assignment and Acceptance,
as the case may be, shall have the rights and obligations
of a Lender hereunder and (z) each assigning Lender
thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant
to such Assignment and Acceptance or such Extension
Assignment and Acceptance, as the case may be, relinquish
its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and
Acceptance or an Extension Assignment and Acceptance
covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement,
<PAGE>
such Lender shall cease to be a party hereto). The
Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment
of such assigning Lender and, if any such assignment
pursuant to an Assignment and Acceptance occurs after the
issuance of the Notes hereunder, new Notes shall, upon
surrender of such assigning Lender's Notes, be issued to
such assignee and to such assigning Lender as necessary
to reflect the new Commitments of such assignee and such
assigning Lender.
(ii) Acceptance by Agent. Upon its receipt of an
---------- -- -----
Assignment and Acceptance executed by an assigning Lender
and an assignee representing that it is an Eligible
Assignee, together with the processing fee referred to in
subsection 10.1B(i) and any certificates, documents or
other evidence with respect to United States federal
income tax withholding matters that such assignee may be
required to deliver to Agent pursuant to subsection
2.7B(iii), Agent shall, if such Assignment and Acceptance
has been completed and is in substantially the form of
Exhibit XII annexed hereto and if Company and Agent have
------- ---
consented to the assignment evidenced thereby (in each
case to the extent such consent is required pursuant to
subsection 10.1B(i)), (a) accept such Assignment and
Acceptance by executing a counterpart thereof as provided
therein (which acceptance shall evidence any required
consent of Agent to such assignment), and (b) give prompt
notice thereof to Company. Agent shall maintain a copy
of each Assignment and Acceptance delivered to and
accepted by it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation,
other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to
take or omit to take any action hereunder except action
directly affecting (i) the extension of the scheduled final
maturity date of any Loan allocated to such participation or
(ii) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation,
and all amounts payable by Company hereunder (including
without limitation amounts payable to such Lender pursuant to
subsections 2.6D, 2.7 and 3.6) shall be determined as if such
Lender had not sold such participation. Company and each
Lender hereby acknowledge and agree that, solely for purposes
of subsections 10.4 and 10.5, (a) any participation will give
rise to a direct obligation of Company to the participant and
(b) the participant shall be considered to be a "Lender".
D. Assignments to Federal Reserve Bank. In addition to
the assignments and participations permitted under the
foregoing provisions of this subsection 10.1, any Lender may
assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A
of the Board of Governors of the Federal Reserve System and
any operating circular issued by such Federal Reserve Bank.
No Lender shall, as between Company and such Lender, be
relieved of any of its obligations hereunder as a result of
any such assignment and pledge.
E. Information. Each Lender may furnish any informa-
tion concerning Company and its Subsidiaries in the possession
of that Lender from time to time to assignees and participants
(including prospective assignees and participants); provided,
--------
however, that prior to being furnished with any such
-------
information which is non-public information obtained pursuant
to the requirements of this Agreement which has been
identified as confidential by Company, the assignee or
participant or prospective assignee or participant shall agree
to preserve the confidentiality of such information in
accordance with subsection 10.19.
<PAGE>
10.2 Expenses.
--------
Whether or not the transactions contemplated hereby
shall be consummated, Company agrees to pay promptly (i) all
the actual and reasonable costs and expenses of preparation of
the Loan Documents; (ii) all the costs of furnishing all
opinions by counsel for Company (including without limitation
any opinions requested by Lenders as to any legal matters
arising hereunder) and of Company's performance of and
compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the
other Loan Documents including, without limitation, with
respect to confirming compliance with environmental and
insurance requirements; (iii) the reasonable fees, expenses
and disbursements of counsel to Agent (including allocated
costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of the Loan Docu-
ments and the Loans and any consents, amendments, waivers or
other modifications hereto or thereto and any other documents
or matters requested by Company or any of its Subsidiaries;
(iv) all the actual costs and reasonable expenses of creating
and perfecting Liens in favor of Agent on behalf of Lenders
pursuant to any Loan Document, including filing and recording
fees and expenses, title insurance, fees and expenses of
counsel for providing such opinions as Agent or Requisite
Lenders may reasonably request and fees and expenses of legal
counsel to Agent; (v) all the actual costs and reasonable
expenses of obtaining and reviewing any appraisals provided
for under subsection 4.1F or 6.9, any environmental audits or
reports provided for under subsection 4.1G or 6.9 and any
audits or reports provided for under subsection 4.1K or 6.5
with respect to Inventory and accounts receivable of Company;
(vi) the reasonable fees, expenses and disbursements of any
accountants retained by Agent in connection with the review
and analysis prior to the Closing Date of any financial
statements of Company and its Subsidiaries or any other
reports furnished to Agent by or on behalf of Company or any
of its Subsidiaries pursuant to or for use in connection with
this Agreement; (vii) all other actual and reasonable costs
and expenses incurred by Agent in connection with the negotia-
tion, preparation and execution of the Loan Documents and the
transactions contemplated hereby and thereby; and (viii) after
the occurrence of an Event of Default, all costs and expenses,
including reasonable attorneys' fees (including allocated
costs of internal counsel) and costs of settlement, incurred
by Agent and Lenders in enforcing any Obligations of or in
collecting any payments due from Company or any of its
Subsidiaries hereunder or under the other Loan Documents by
reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or
pursuant to any insolvency or bankruptcy proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant to
subsection 10.2, whether or not the transactions contemplated
hereby shall be consummated, Company agrees to defend,
indemnify, pay and hold harmless Agent, CO-AGENT, Collateral
--------
Agent, Supplemental Collateral Agents and Lenders, and the
officers, directors, employees, agents and affiliates of
Agent, CO-AGENT, Collateral Agent, Supplemental Collateral
--------
Agents and Lenders (collectively called the "Indemnitees")
from and against any and all other liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
whatsoever (including without limitation the reasonable fees
and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or
not any such Indemnitee shall be designated as a party or a
potential party thereto), whether direct, indirect or
<PAGE>
consequential and whether based on any federal, state or
foreign laws, statutes, rules or regulations (including
without limitation securities and commercial laws, statutes,
rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be
imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of this
Agreement or the other Loan Documents or any Spin-Off
Agreements or the transactions contemplated hereby or thereby
(including without limitation Lenders' agreement to make the
Loans hereunder or the use or intended use of the proceeds of
any of the Loans or the issuance of Letters of Credit
hereunder or the use or intended use of any of the Letters of
Credit) or the statements contained in the commitment letter
delivered by any Lender to Company with respect thereto
(collectively called the "Indemnified Liabilities"); provided
--------
that Company shall not have any obligation to any Indemnitee
hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from the
gross negligence or willful misconduct of that Indemnitee as
determined by a final judgment of a court of competent
jurisdiction; and provided, further that in connection with
investigating, preparing to defend, or defending against any
Indemnified Liability of, to or against more than one
Indemnitee, such investigation, preparation or defense shall
be conducted by the same legal counsel on behalf of all such
Indemnitees except to the extent that one or more of such
Indemnitees determines in good faith that there is a conflict
of interests between such Indemnitee or Indemnitees and some
or all of the remaining Indemnitees. To the extent that the
undertaking to defend, indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and
satisfy under applicable law to the payment and satisfaction
of all Indemnified Liabilities incurred by the Indemnitees or
any of them.
10.4 Set Off; Security Interest in Deposit Accounts.
--- ---- -------- -------- -- ------- --------
In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default each
Lender is hereby authorized by Company at any time or from
time to time, without notice to Company or to any other
Person, any such notice being hereby expressly waived, to set
off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, Indebt-
edness evidenced by certificates of deposit, whether matured
or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or
for the credit or the account of Company against and on
account of the obligations and liabilities of Company to that
Lender under this Agreement, the Notes, the Letters of Credit
and participations therein, including, but not limited to, all
claims of any nature or description arising out of or
connected with this Agreement, the Notes, the Letters of
Credit and participations therein or any other Loan Document,
irrespective of whether or not (i) that Lender shall have made
any demand hereunder or (ii) the principal of or the interest
on the Loans or any amounts in respect of the Letters of
Credit or any other amounts due hereunder shall have become
due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent
or unmatured. Company hereby further grants to Agent and each
Lender a security interest in all deposits and accounts
maintained with Agent or such Lender as security for the
Obligations.
10.5 Ratable Sharing.
------- -------
<PAGE>
Lenders hereby agree among themselves that if any of
them shall, whether by voluntary payment, by realization upon
security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or
otherwise, or as adequate protection of a deposit treated as
cash collateral under the Bankruptcy Code, receive payment or
reduction of a proportion of the aggregate amount of
principal, interest, amounts payable in respect of Letters of
Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collec-
tively, the "Aggregate Amounts Due" to such Lender) which is
greater than the proportion received by any other Lender in
respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment
shall (i) notify Agent and each other Lender of the receipt of
such payment and (ii) apply a portion of such payment to
purchase participations (which it shall be deemed to have
purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such
payment) in the Aggregate Amounts Due to the other Lenders so
that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts
Due to them; provided that if all or part of such
--------
proportionately greater payment received by such purchasing
Lender is thereafter recovered from such Lender upon the
bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing
Lender ratably to the extent of such recovery, but without
interest. Company expressly consents to the foregoing
arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien,
set-off or counterclaim with respect to any and all monies
owing by Company to that holder with respect thereto as fully
as if that holder were owed the amount of the participation
held by that holder.
10.6 Amendments and Waivers.
---------- --- -------
No amendment, modification, termination or waiver of
any provision of this Agreement or of the Notes, or consent to
any departure by Company therefrom, shall in any event be
effective without the written concurrence of Requisite
Lenders; provided that any amendment, modification, termina-
--------
tion or waiver which: increases the amount of the Commitments
or reduces the principal amount of the Loans; changes each
Lender's Pro Rata Share; changes the definition of "Requisite
Lenders"; changes in any manner any provision of the Agreement
which, by its terms, expressly requires the approval or
concurrence of all Lenders; postpones the scheduled final
maturity dates of the Loans or the dates on which interest or
any fees are payable (other than any waiver of the requirement
that any Eurodollar Rate Loan may not be voluntarily prepaid
prior to the expiration of the Interest Period applicable
thereto); decreases the interest rates borne by the Loans or
the amount of any fees payable hereunder; increases the
maximum duration of Interest Periods; reduces the amount or
postpones the due date of any amount payable in respect of, or
postpones the required expiration date of, any Letters of
Credit; changes in any manner the obligations of Lenders
relating to the purchase of participations in Letters of
Credit; increases the percentage set forth in the definition
of the term "Borrowing Base"; releases any Lien granted in
favor of Agent with respect to any Collateral consisting of
Inventory other than in accordance with the terms of the Loan
Documents; or changes in any manner the provisions contained
in subsection 8.1 or this subsection 10.6 shall be effective
only if evidenced by a writing signed by or on behalf of all
Lenders. In addition, (i) any amendment, modification,
termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing
<PAGE>
signed by or on behalf of Agent and CO-AGENT and Requisite
--------
Lenders, (ii) no amendment, modification, termination or
waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of
that Note, (iii) no amendment, modification, termination or
waiver of any provision of Section 9 or of any other provision
of this Agreement which, by its terms, expressly requires the
approval or concurrence of Agent and/or CO-AGENT shall be
--------
effective without the written concurrence of Agent and/or CO-
---
AGENT, as the case may be, and (iv) no amendment,
-----
modification, termination or waiver of any provision of
subsection 2.1A(ii) or any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line
Loans shall be effective without the written concurrence of
Swing Line Lender. Agent may, but shall have no obligation
to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of that Lender.
Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given.
No notice to or demand on Company in any case shall entitle
Company to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termi-
nation, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each holder of the Notes
at the time outstanding, each future holder of the Notes and,
if signed by Company, on Company.
10.7 Independence of Covenants.
------------ -- ---------
All covenants hereunder shall be given independent
effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occur-
rence of an Event of Default or Potential Event of Default if
such action is taken or condition exists.
10.8 Notices.
-------
Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to
be given shall be in writing and may be personally served,
telecopied or sent by United States mail or courier service
and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telecopy, or
four Business Days after depositing it in the United States
mail, registered or certified, with postage prepaid and
properly addressed; provided that notices to Agent and CO-
-------- ---
AGENT shall not be effective until received. For the purposes
-----
hereof, the address of each party hereto shall be as set forth
under such party's name on the signature pages hereof or
(i) as to Company and Agent, such other address as shall be
designated by such Person in a written notice delivered to the
other parties hereto and (ii) as to each other party, such
other address as shall be designated by such party in a
written notice delivered to Agent.
10.9 Survival of Representations, Warranties and Agreements.
-------- -- ---------------- ---------- --- ----------
A. All representations, warranties and agreements made
herein shall survive the execution and delivery of this
Agreement and the making of the Loans and the issuance of the
Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Company set
forth in subsections 2.6D, 2.7, 3.5A, 3.6, 10.2 and 10.3 and
the agreements of Lenders set forth in subsections 9.2C, 9.4,
10.4 and 10.5 shall survive the payment of the Loans, the
cancellation or expiration of the Letters of Credit and the
reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.
<PAGE>
10.10 Failure or Indulgence Not Waiver; Remedies
------- -- ---------- --- ------- --------
Cumulative.
----------
No failure or delay on the part of Agent or any
Lender in the exercise of any power, right or privilege
hereunder or under any Note or Letter of Credit shall impair
such power, right or privilege or be construed to be a waiver
of any default or acquiescence therein, nor shall any single
or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other
power, right or privilege. All rights and remedies existing
under this Agreement, the Notes, the Letters of Credit and the
other Loan Documents are cumulative to, and not exclusive of,
any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
------------ -------- --- -----
None of Agent, CO-AGENT, Collateral Agent, any
--------
Supplemental Collateral Agent or any Lender shall be under any
obligation to marshal any assets in favor of Company or any
other party or against or in payment of any or all of the
Obligations. To the extent that Company makes a payment or
payments to Agent, CO-AGENT, Collateral Agent, Supplemental
--------
Collateral Agents or Lenders (or to Agent, CO-AGENT,
--------
Collateral Agent or Supplemental Collateral Agents for the
benefit of Lenders), or Agent, CO-AGENT, Collateral Agent,
--------
Supplemental Collateral Agents or Lenders enforce any security
interests or exercise their rights of setoff, and such payment
or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or
any equitable cause, then, to the extent of such recovery, the
obligation or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor or
related thereto, shall be revived and continued in full force
and effect as if such payment or payments had not been made or
such enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or un-
enforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or
of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders'
----------- -------- ----------- ------ -- --------
Rights.
------
The obligations of Lenders hereunder are several and
no Lender shall be responsible for the obligations or Commit-
ments of any other Lender hereunder. Nothing contained herein
or in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or
any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce
its rights arising out of this Agreement and it shall not be
necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
10.14 Headings.
--------
Section and subsection headings in this Agreement
are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other
purpose or be given any substantive effect.
<PAGE>
10.15 Applicable Law.
---------- ---
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
10.16 Successors and Assigns.
---------- --- -------
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors
and permitted assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1).
Neither Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company
without the prior written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
------- -- ------------ --- ------- -- -------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE CITY AND STATE
OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT
COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPER-
TIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURIS-
DICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY
JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT,
SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company hereby
agrees that service of all process in any such proceedings in
any such court may be made by registered or certified mail,
return receipt requested, to Company at its address provided
in subsection 10.8, such service being hereby acknowledged by
Company to be sufficient for personal jurisdiction in any
action against Company in the State of New York and to be
otherwise effective and binding service in every respect.
Nothing herein shall affect the right to serve process in any
other manner permitted by law or shall limit the right of any
Lender to bring proceedings against Company in the courts of
any other jurisdiction.
10.18 Waiver of Jury Trial.
------ -- ---- -----
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES
TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The
scope of this waiver is intended to be all-encompassing of any
and all disputes that may be filed in any court and that
relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of
duty claims and all other common law and statutory claims.
Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this
Agreement, and that each will continue to rely on this waiver
in their related future dealings. Each party hereto further
warrants and represents that it has reviewed this waiver with
its legal counsel and that it knowingly and voluntarily waives
its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT
BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO
THE LOANS MADE HEREUNDER. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the
court.
<PAGE>
10.19 Confidentiality.
---------------
Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement which
has been identified as confidential by Company in accordance
with such Lender's customary procedures for handling
confidential information of this nature and in accordance with
safe and sound banking practices, it being understood and
agreed by Company that in any event a Lender may make
disclosures reasonably required by any bona fide assignee or
participant in connection with the contemplated assignment by
such Lender of any Loans or any participation therein or as
required or requested by any governmental agency or repre-
sentative thereof or pursuant to legal process; provided that,
--------
unless specifically prohibited by applicable law or court
order, each Lender shall notify Company of any request by any
governmental agency or representative thereof (other than any
such request in connection with any examination of the
financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information
prior to disclosure of such information; and provided, further
-------- -------
that in no event shall any Lender be obligated or required to
return any materials furnished by Company or any of its
Subsidiaries.
10.20 Counterparts; Effectiveness.
------------- -------------
This Agreement and any amendments, waivers, consents
or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all
such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties
hereto and receipt by Company and Agent of written or tele-
phonic notification of such execution and authorization of
delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
COMPANY:
PLAINBRIDGE, INC.
By:
Title:
Notice Address:
Plainbridge, Inc.
301 Blair Road
P.O. Box 5021
Woodbridge, New Jersey 07095-5021
Attention: Chief Executive Officer
with a copy to:
Plainbridge, Inc.
301 Blair Road
P.O. Box 5021
Woodbridge, New Jersey 07095-5021
Attention: Corporate Secretary
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By:
Title:
Notice Address:
Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Michael R. Duckworth
<PAGE>
HELLER FINANCIAL, INC.
By:
Title:
Notice Address:
101 Park Avenue
10th Floor
New York, New York 10178
Attention: HBC Portfolio Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
Title:
Notice Address:
520 Madison Avenue
39th Floor
New York, New York 10022
Attention: Patricia Loret de Mola
NATIONAL CANADA FINANCE CORPORATION
By:
Title:
Notice Address:
85 Livingston Avenue
Roseland, New Jersey 07068
Attention: John Leifer
John Richter
<PAGE>
CREDIT AGREEMENT
DATED AS OF OCTOBER 26, 1993
AMONG
PLAINBRIDGE, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
BANKERS TRUST COMPANY,
as Agent
<PAGE>
PLAINBRIDGE, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
----- -- --------
Page
----
Section 1. DEFINITIONS1
1.1 Certain Defined Terms1
1.2 Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement26
1.3 Other Definitional Provisions26
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS26
2.1 Commitments; Loans26
2.2 Interest on the Loans36
2.3 Fees39
2.4 Prepayments and Reductions in Commitments;
General Provisions Regarding Payments40
2.5 Use of Proceeds46
2.6 Special Provisions Governing
Eurodollar Rate Loans46
2.7 Increased Costs; Taxes;
Capital Adequacy49
2.8 Obligation of Lenders and Issuing
Lenders to Mitigate53
2.9 Removal of a Lender53
2.10 Defaulting Lenders54
Section 3. LETTERS OF CREDIT56
3.1 Issuance of Letters of Credit and Lenders'
Purchase of Participations Therein56
3.2 Letter of Credit Fees59
3.3 Drawings and Reimbursement of Amounts Drawn
Under Letters of Credit.60
3.4 Obligations Absolute62
3.5 Indemnification; Nature of Issuing Lenders'
Duties63
3.6 Increased Costs and Taxes Relating
to Letters of Credit65
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT66
4.1 Conditions to Initial Revolving Loans
and Swing Line Loans66
4.2 Conditions to All Loans72
4.3 Conditions to Letters of Credit74
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES74
5.1 Organization, Powers, Qualification, Good
Standing, Business and Subsidiaries75
5.2 Authorization of Borrowing, etc.75
5.3 Financial Condition77
<PAGE>
5.4 No Material Adverse Change;
No Restricted Junior Payments77
5.5 Title to Properties; Liens77
5.6 Litigation; Adverse Facts78
5.7 Payment of Taxes78
5.8 Performance of Agreements; Materially
Adverse Agreements78
5.9 Governmental Regulation79
5.10 Securities Activities79
5.11 Employee Benefit Plans79
5.12 Certain Fees80
5.13 Environmental Protection80
5.14 Employee Matters82
5.15 Solvency82
5.16 Disclosure82
5.17 Intellectual Property82
5.18 Spin-Off Agreements83
Section 6. COMPANY'S AFFIRMATIVE COVENANTS83
6.1 Financial Statements and Other Reports83
6.2 Corporate Existence, etc.89
6.3 Payment of Taxes and Claims;
Tax Consolidation89
6.4 Maintenance of Properties; Insurance90
6.5 Inspection; Lender Meeting90
6.6 Compliance with Laws, etc91
6.7 Environmental Disclosure and Inspection91
6.8 Execution of Subsidiary Guaranty and
Collateral Documents by Certain
Subsidiaries and Future Subsidiaries92
6.9 Additional Mortgages; Release of
Mortgages93
6.10 Assignability of Lease Agreements96
Section 7. COMPANY'S NEGATIVE COVENANTS96
7.1 Indebtedness96
7.2 Liens and Related Matters98
7.3 Investments; Joint Ventures99
7.4 Contingent Obligations100
7.5 Restricted Junior Payments101
7.6 Financial Covenants101
7.7 Restriction on Fundamental Changes;
Asset Sales103
7.8 Consolidated Capital Expenditures104
7.9 Restriction on Leases105
7.10 Sales and Lease-backs105
7.11 Sale or Discount of Receivables106
7.12 Transactions with Shareholders
and Affiliates106
7.13 Disposal of Subsidiary Stock106
7.14 Conduct of Business107
7.15 Amendments of Certain Documents107
7.16 Fiscal Year107
Section 8. EVENTS OF DEFAULT108
8.1 Failure to Make Payments When Due108
8.2 Default in Other Agreements108
8.3 Breach of Certain Covenants108
8.4 Breach of Warranty109
8.5 Other Defaults Under Loan Documents109
8.6 Involuntary Bankruptcy; Appointment
of Receiver, etc.109
8.7 Voluntary Bankruptcy; Appointment of
Receiver, etc.109
8.8 Judgments and Attachments110
8.9 Dissolution110
8.10 Employee Benefit Plans110
8.11 Change in Control110
8.12 Invalidity of Subsidiary Guaranty111
8.13 Failure of Security111
8.14 Failure to Consummate Spin-Off111
8.15 Termination of Logistical
<PAGE>
Services Agreement111
8.16 Incurrence of Liability Relating to
Spin-Off111
8.17 Material Difference in Closing Date
Balance Sheets112
Section 9. AGENT, CO-AGENT, COLLATERAL AGENT
--------
AND SUPPLEMENTAL COLLATERAL AGENTS113
9.1 Appointment113
9.2 Powers; General Immunity115
9.3 Representations and Warranties;
No Responsibility For Appraisal
of Creditworthiness117
9.4 Right to Indemnity118
9.5 Payee of Note Treated as Owner118
9.6 Successor Agent and Swing Line Lender118
9.7 Collateral Documents119
Section 10. MISCELLANEOUS120
10.1 Assignments and Participations in
Loans and Letters of Credit120
10.2 Expenses123
10.3 Indemnity123
10.4 Set Off; Security Interest in
Deposit Accounts124
10.5 Ratable Sharing125
10.6 Amendments and Waivers126
10.7 Independence of Covenants127
10.8 Notices127
10.9 Survival of Representations,
Warranties and Agreements127
10.10 Failure or Indulgence Not Waiver;
Remedies Cumulative127
10.11 Marshalling; Payments Set Aside128
10.12 Severability128
10.13 Obligations Several; Independent
Nature of Lenders' Rights128
10.14 Headings129
10.15 Applicable Law129
10.16 Successors and Assigns129
10.17 Consent to Jurisdiction and Service
of Process129
10.18 Waiver of Jury Trial130
10.19 Confidentiality130
10.20 Counterparts; Effectiveness131
Signature pages S-1
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF EXTENSION REQUEST
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF BORROWING BASE CERTIFICATE
VIII FORM OF COMPLIANCE CERTIFICATE
IX FORM OF OPINION OF SHEARMAN & STERLING
X FORM OF OPINION OF GENERAL COUNSEL OF COMPANY
XI FORM OF OPINION OF O'MELVENY & MYERS
XII FORM OF ASSIGNMENT AND ACCEPTANCE
XIII FORM OF EXTENSION ASSIGNMENT AND ACCEPTANCE
XIV FORM OF COLLATERAL ACCOUNT AGREEMENT
XV FORM OF COMPANY PLEDGE AGREEMENT
XVI FORM OF COMPANY SECURITY AGREEMENT
XVII FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XVIII FORM OF SUBSIDIARY GUARANTY
XIX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XX FORM OF SUBSIDIARY SECURITY AGREEMENT
XXI FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XXII FORM OF MORTGAGE
XXIII FORM OF INVENTORY REPORT
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1C REAL PROPERTY COVERED BY CLOSING DATE
MORTGAGES
4.1G REAL PROPERTY COVERED BY ENVIRONMENTAL
REPORTS
5.1 SUBSIDIARIES OF COMPANY
5.2B CERTAIN APPROVALS AND CONSENTS
5.2C CERTAIN GOVERNMENTAL CONSENTS
5.6 LITIGATION
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.17 INTELLECTUAL PROPERTY MATTERS
6.9 REAL PROPERTY REQUIRING LANDLORD CONSENT
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
PATHMARK STORES, INC.
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of October 26, 1993
and entered into by and among PATHMARK STORES, INC., a Delaware
corporation ("Company"), THE FINANCIAL INSTITUTIONS LISTED ON THE
SIGNATURE PAGES HEREOF (each individually referred to herein as a
"Lender" and collectively as "Lenders"), and BANKERS TRUST
COMPANY ("Bankers"), as agent for Lenders (in such capacity,
"Agent").
R E C I T A L S
WHEREAS, Company proposes to engage in a series of
transactions, including the issuance of the New Subordinated Debt
(this and other capitalized terms used in these recitals without
definition being used as defined in subsection 1.1), in
connection with the Restructuring;
WHEREAS, Company desires that Lenders extend certain
credit facilities to Company to provide a portion of the
financing necessary to consummate the Restructuring and to
provide financing for working capital and other general corporate
purposes of Company and its Subsidiaries;
WHEREAS, Company proposes to use a portion of the
proceeds from the Loans and from the issuance of the Senior
Subordinated Notes and the Junior Subordinated Notes to repay all
amounts outstanding under the Existing Credit Agreement, to repay
all amounts owing to Holdings under the Holdings Intercompany
Notes related to the Holdings Senior Subordinated Notes and the
Holdings Discount Debentures and to repay a portion of the amount
owing to Holdings under the Holdings Intercompany Note related to
the Holdings Subordinated Debentures, and Holdings proposes to
use the proceeds from the repayment of the Holdings Intercompany
Notes related to the Holdings Senior Subordinated Notes and the
Holdings Discount Debentures to redeem all of the Holdings Senior
Subordinated Notes and the Holdings Discount Debentures and to
use the proceeds from the repayment of the Holdings Intercompany
Note related to the Holdings Subordinated Debentures to purchase
a corresponding portion of the Holdings Subordinated Debentures;
WHEREAS, Company proposes to issue Subordinated
Debentures in exchange for a portion of the Holdings Subordinated
Debentures pursuant to the Subordinated Debenture Exchange Offer
and to deliver the Holdings Subordinated Debentures tendered in
such exchange to Holdings in satisfaction of a corresponding
portion of Company's obligations under the Holdings Intercompany
Note related to the Holdings Subordinated Debentures;
<PAGE>
WHEREAS, PTKH proposes to issue the PTKH Bonds to
Holdings in satisfaction of a corresponding portion of Company's
obligations under the Holdings Intercompany Note related to the
Holdings Subordinated Debentures and Holdings proposes to sell
the PTKH Bonds to Equitable or its Affiliates pursuant to the
PTKH Private Placement in exchange for a corresponding portion of
the Holdings Subordinated Debentures held by Equitable or its
Affiliates;
WHEREAS, Company proposes to issue Subordinated Notes
in exchange for Holdings Subordinated Notes pursuant to the
Subordinated Note Exchange Offer and to deliver the Holdings
Subordinated Notes tendered in such exchange to Holdings in
satisfaction of a corresponding portion of Company's obligations
under the Holdings Intercompany Note related to the Holdings
Subordinated Notes;
WHEREAS, in connection with the transactions pursuant
to which the Holdings Subordinated Debentures are to be exchanged
or purchased, Holdings proposes to obtain the consent of the
requisite number of holders of the Holdings Subordinated
Debentures to the execution of the Supplemental Holdings
Subordinated Debenture Indenture which, among other things, will
remove substantially all of the restrictive covenants contained
in the indenture pursuant to which the Holdings Subordinated
Debentures were issued;
WHEREAS, in connection with the Subordinated Note
Exchange Offer, Holdings proposes to obtain the consent of the
requisite number of holders of the Holdings Subordinated Notes to
the execution of the Supplemental Holdings Subordinated Note
Indenture which, among other things, will remove substantially
all of the restrictive covenants contained in the indenture
pursuant to which the Holdings Subordinated Notes were issued;
WHEREAS, in connection with the Restructuring, Company
has spun off certain of its assets to Chefmark and has entered
into certain of the Spin-Off Agreements with Chefmark;
WHEREAS, in connection with the Restructuring, Company
proposes to spin off certain of its assets to Plainbridge and to
enter into certain of the Spin-Off Agreements and certain other
arrangements with Plainbridge, Chefmark, PTKH, Holdings and SMG-
II;
WHEREAS, concurrently with the execution of this
Agreement, Plainbridge is entering into the Plainbridge Credit
Agreement; and
WHEREAS, Company desires to secure all of the
Obligations hereunder and under the other Loan Documents by
granting to Agent, on behalf of Lenders, a first priority Lien on
certain unencumbered real, personal and mixed property of
Company;
<PAGE>
NOW, THEREFORE, in consideration of the premises and
the agreements, provisions and covenants herein contained,
Company, Lenders and Agent agree as follows:
Section 1. DEFINITIONS
1.1 Certain Defined Terms.
---------------------
The following terms used in this Agreement shall have
the following meanings:
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to a Eurodollar Rate Loan, the
rate per annum obtained by dividing (i) the arithmetic average
--------
(rounded upward to the nearest 1/16 of one percent) of the
offered quotation, if any, to first class banks in the interbank
Eurodollar market by each of the Reference Lenders for U.S.
dollar deposits of amounts in same day funds comparable to the
principal amount of the Eurodollar Rate Loan of that Reference
Lender for which the Adjusted Eurodollar Rate is then being
determined with maturities comparable to the Interest Period for
which such Adjusted Eurodollar Rate will apply as of
approximately 10:00 A.M. (New York time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus the
-- -----
stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental,
special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve
System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under
Regulation D); provided that if any Reference Lender fails to
--------
provide Agent with its aforementioned quotation then the Adjusted
Eurodollar Rate shall be determined based on the quotation(s)
provided to Agent by the other Reference Lender(s).
"Affected Lender" has the meaning assigned to that term
in subsection 2.6C.
"Affiliate", as applied to any Person, means any other
Person directly or indirectly controlling, controlled by, or
under common control with, that Person. For the purposes of this
definition, "control" (including, with correlative meanings, the
terms "controlling", "controlled by" and "under common control
with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and policies of that Person, whether through the
ownership of voting securities or by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any
successor Agent appointed pursuant to subsection 9.6A.
<PAGE>
"Agreement" means this Credit Agreement dated as of
October 26, 1993, as it may be amended, supplemented or otherwise
modified from time to time.
"Applicable Pricing Discount" means, during any Pricing
Discount Period, (i) with respect to interest payable on the
Term A Loans and the Revolving Loans and letter of credit fees
payable under clause (b) of subsection 3.2(i), (a) 0.25% per
annum if the Consolidated Interest Coverage Ratio (as such term
is defined in the definition of Pricing Discount Period) set
forth in the applicable APD Certificate (as such term is defined
in the definition of Pricing Discount Period) for each of the two
four-fiscal quarter periods covered by such APD Certificate is
equal to or greater than 2.50:1.00 but less than 3.00:1.00 or
(b) 0.50% per annum if the Consolidated Interest Coverage Ratio
set forth in the applicable APD Certificate for each of such two
four-fiscal quarter periods is equal to or greater than 3.00:1.00
and (ii) with respect to commitment fees payable under clause
(ii) of subsection 2.3A, 0.125% per annum.
"Asset Sale" means (i) the sale by Company or any of
its Subsidiaries to any Person other than Company or any of its
wholly-owned Subsidiaries of (a) any of the stock of any of
Company's Subsidiaries or (b) any other assets (whether tangible
or intangible) of Company or any of its Subsidiaries other than
(1) inventory sold in the ordinary course of business and (2) any
other assets to the extent that the aggregate fair market value
of such assets sold in any single transaction or related series
of transactions is equal to $1,000 or less, (ii) the assignment
by Company or any of its Subsidiaries to any Person other than
Company or any of its wholly-owned Subsidiaries of any lease,
whether a Capital Lease or an Operating Lease, to which it is a
party as lessee, (iii) the taking of any assets of Company or any
of its Subsidiaries, or any part thereof or interest therein, for
public or quasi-public use under the power of eminent domain,
condemnation or otherwise, other than any such taking to the
extent that the aggregate net cash proceeds received by Company
and its Subsidiaries in connection with such taking and all other
takings related to such taking are equal to or less than
$100,000, or (iv) the occurrence of any loss, damage or
destruction of any assets of Company or any of its Subsidiaries
giving rise to insurance proceeds, other than any such occurrence
to the extent that the aggregate insurance proceeds received by
Company and its Subsidiaries in connection with such occurrence
are equal to or less than $5,000,000.
"Assignment and Acceptance" means an Assignment and
Acceptance entered into by a Lender and an Eligible Assignee, and
accepted by Agent, in substantially the form of Exhibit XI
----------
annexed hereto.
"Bankers" has the meaning assigned to that term in the
introduction to this Agreement.
<PAGE>
"Bankruptcy Code" means Title 11 of the United States
Code entitled "Bankruptcy", as now and hereafter in effect, or
any successor statute.
"Base Rate" means, at any time, the higher of (x) the
Prime Rate or (y) the rate which is 1/2 of 1% in excess of the
Federal Funds Effective Rate.
"Base Rate Loans" means Loans bearing interest at rates
determined by reference to the Base Rate as provided in
subsection 2.2A.
"Business Day" means (i) for all purposes other than as
covered by clause (ii) below, any day excluding Saturday, Sunday
and any day which is a legal holiday under the laws of the State
of New York or is a day on which banking institutions located in
such state are authorized or required by law or other
governmental action to close, and (ii) with respect to all
notices, determinations, fundings and payments in connection with
the Adjusted Eurodollar Rate or any Eurodollar Rate Loans, any
day that is a Business Day described in clause (i) above and that
is also a day for trading by and between banks in Dollar deposits
in the applicable interbank Eurodollar market.
"Capital Lease", as applied to any Person, means any
lease of any property (whether real, personal or mixed) by that
Person as lessee that, in conformity with GAAP, is accounted for
as a capital lease on the balance sheet of that Person.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Equivalents" means (i) marketable securities
issued or directly and unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case
maturing within one year from the date of acquisition thereof;
(ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such
state or any public instrumentality thereof (a) maturing within
one year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either
Standard & Poor's Corporation ("S&P") or Moody's Investors
Service, Inc. ("Moody's") or (b) in the case of tax exempt
securities referred to as "Variable Rate Demand Notes", maturing
within 90 days from the date of acquisition thereof and, at the
time of acquisition, having a rating of at least A from S&P or at
least A2 from Moody's; (iii) commercial paper maturing no more
than six months from the date of creation thereof and, at the
time of acquisition, having a rating of at least A-1 from S&P or
at least P-1 from Moody's; (iv) certificates of deposit or
bankers' acceptances maturing within one year from the date of
acquisition thereof issued by any Lender or any commercial bank
organized under the laws of the United States of America or any
<PAGE>
state thereof or the District of Columbia having unimpaired
capital and surplus of not less than $250,000,000 (each Lender
and each such commercial bank herein called a "Cash Equivalent
Bank"); and (v) Eurodollar time deposits having a maturity of
less than one year purchased directly from any Cash Equivalent
Bank (whether such deposit is with such Cash Equivalent Bank or
any other Cash Equivalent Bank).
"Chefmark" means Chefmark, Inc., a Delaware
corporation.
"Class" means, with respect to Lenders, (i) Lenders
having Term A Loan Exposure, (ii) Lenders having Term B Loan
Exposure, or (iii) Lenders having Revolving Loan Exposure, as the
case may be.
"Closing Date" means the date on or before October 29,
1993, on which the initial Loans are made.
"Collateral" means, collectively, all real, personal
and mixed property collateral securing the Obligations pursuant
to the Collateral Documents.
"Collateral Account" has the meaning assigned to that
term in the Collateral Account Agreement.
"Collateral Account Agreement" means the Collateral
Account Agreement executed and delivered by Company and Agent on
the Closing Date, substantially in the form of Exhibit XII
-----------
annexed hereto, as such Collateral Account Agreement may
hereafter be amended, supplemented or otherwise modified from
time to time.
"Collateral Co-Agent" has the meaning assigned to that
term in subsection 9.1.
"Collateral Documents" means the Company Pledge
Agreement, the Company Security Agreement, the Company Trademark
Security Agreement, the Collateral Account Agreement, the
Subsidiary Pledge Agreements, the Subsidiary Security Agreements,
the Subsidiary Trademark Security Agreements, the Mortgages and
all other instruments or documents delivered by any Loan Party
pursuant to this Agreement or any of the other Loan Documents in
order to grant to Agent, on behalf of Lenders, Liens in real,
personal or mixed property of that Loan Party as security for the
Obligations.
"Commercial Letter of Credit" means any letter of
credit or similar instrument issued for the purpose of providing
the primary payment mechanism in connection with the purchase of
any materials, goods or services by Company or any of its
Subsidiaries in the ordinary course of business of Company or
such Subsidiary.
<PAGE>
"Commitments" means the commitments of Lenders to make
Loans as set forth in subsection 2.1A.
"Company" has the meaning assigned to that term in the
introduction to this Agreement.
"Company Pledge Agreement" means the Pledge Agreement
executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such
------------
Pledge Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"Company Security Agreement" means the Security
Agreement executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XIV annexed hereto, as such
-----------
Security Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"Company Trademark Security Agreement" means the
Trademark Collateral Security Agreement and Conditional
Assignment executed and delivered by Company on the Closing Date,
substantially in the form of Exhibit XV annexed hereto, as such
----------
Trademark Collateral Security Agreement and Conditional
Assignment may hereafter be amended, supplemented or otherwise
modified from time to time.
"Compliance Certificate" means a certificate substan-
tially in the form annexed hereto as Exhibit VII delivered to
-----------
Lenders by Company pursuant to subsection 6.1(iv).
"Consolidated Adjusted EBITDA" means, for any period,
the sum of the amounts for such period of (i) Consolidated Net
Income, (ii) Consolidated Interest Expense, (iii) provisions for
taxes based on income, (iv) total depreciation and amortization
expense, (v) provisions for expenses related to the
Restructuring, (vi) total non-cash interest expense of Company
with respect to the Junior Subordinated Notes, and (vii) other
non-cash items (including without limitation LIFO charges)
reducing Consolidated Net Income less other non-cash items
----
increasing Consolidated Net Income, all of the foregoing as
determined on a consolidated basis for Company and its
Subsidiaries in conformity with GAAP.
"Consolidated Capital Expenditures" means, for any
period, an amount equal to (i) the sum of (a) the aggregate of
all expenditures (whether paid in cash or other consideration or
accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of
Company and its Subsidiaries) by Company and its Subsidiaries
during that period that, in conformity with GAAP, are included in
"additions to property, plant or equipment" or comparable items
reflected in the consolidated statement of cash flows of Company
and its Subsidiaries plus (b) to the extent not covered by clause
----
(a) hereof, the aggregate of all expenditures by Company and its
<PAGE>
Subsidiaries during that period to acquire (by purchase or
otherwise) the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person minus
-----
(ii) the aggregate amount of all Net Cash Proceeds of Asset Sale
received by Company and its Subsidiaries during that period in
connection with Sale and Lease-backs of any property all or a
portion of the purchase price of which was included in the
calculation of Consolidated Capital Expenditures for that period
or any prior period. For purposes of this definition (1) the
purchase price of any Equipment that is purchased simultaneously
with the trade-in or other disposition in the ordinary course of
business of existing Equipment or with insurance proceeds
received by Company and its Subsidiaries in respect of the actual
or constructive total loss of any Equipment shall be included in
Consolidated Capital Expenditures only to the extent of the gross
amount of such purchase price less the credit granted by the
----
seller of such Equipment for the Equipment being traded in at
such time or the amount of proceeds from such other disposition
or the amount of such insurance proceeds, as the case may be, and
(2) the amount of any expenditure for any Equipment (the "New
Equipment") that replaces existing leased Equipment (the "Leased
Equipment") that was purchased at the end of the applicable lease
term and then subsequently sold for a greater amount shall be
included in Consolidated Capital Expenditures only to the extent
of the gross amount of the expenditure for the New Equipment less
----
the excess of the proceeds received by Company or any of its
Subsidiaries from the sale of the Leased Equipment over the gross
amount of the purchase price of the Leased Equipment.
"Consolidated Current Assets" means, as at any date of
determination, the total assets of Company and its Subsidiaries
on a consolidated basis which may properly be classified as
current assets in conformity with GAAP, excluding Cash and Cash
---------
Equivalents.
"Consolidated Current Liabilities" means, as at any
date of determination, the total liabilities of Company and its
Subsidiaries on a consolidated basis which may properly be
classified as current liabilities in conformity with GAAP,
excluding the current portions of Funded Debt and Capital Leases.
---------
"Consolidated Excess Cash Flow" means, for any Fiscal
Year, an amount equal to (i) the sum (without duplication) of the
amounts for such Fiscal Year of (a) Consolidated Net Income,
(b) any after-tax gains attributable to returned surplus assets
of any Pension Plan, (c) the aggregate amount of Net Cash
Proceeds of Asset Sale that are not otherwise included in
Consolidated Net Income, (d) the aggregate amount of Cash
proceeds (net of underwriting discounts and commissions and other
reasonable fees, commissions and costs associated therewith) from
the issuance after the Closing Date of any debt or equity
Securities of Company, (e) total depreciation and amortization
expense, (f) total non-cash interest expense of Company with
respect to the Junior Subordinated Notes, (g) other non-cash
<PAGE>
charges reducing Consolidated Net Income, and (h) the
Consolidated Working Capital Adjustment minus (ii) the sum
-----
(without duplication) of the amounts for such Fiscal Year of
(a) Consolidated Capital Expenditures permitted under subsection
7.8 to the extent paid in Cash during such Fiscal Year,
(b) payments of principal on the Term Loans (other than mandatory
prepayments pursuant to clause (e) of subsection 2.4A(iii)),
(c) payments of principal or premium or other similar payments
made in respect of any outstanding Subordinated Indebtedness to
the extent such payments are permitted pursuant to subsection
7.5, (d) payments of principal or premium or other similar
payments made in respect of any outstanding Holdings Intercompany
Notes to the extent such payments are permitted pursuant to
subsection 7.5, (e) payments of principal on the Revolving Loans
(other than mandatory prepayments pursuant to clause (e) of
subsection 2.4A(iii)) to the extent such payments are accompanied
by a permanent reduction in the Revolving Loan Commitments,
(f) to the extent not included in subclauses (b) through (e) of
this clause (ii), scheduled payments and mandatory prepayments of
principal made in respect of any outstanding Funded Debt,
(g) other non-cash credits increasing Consolidated Net Income,
and (h) $25,000,000, all of the foregoing as determined on a
consolidated basis for Company and its Subsidiaries in conformity
with GAAP.
"Consolidated Interest Expense" means, for any period,
total interest expense (including that portion attributable to
Capital Leases in accordance with GAAP and capitalized interest)
of Company and its Subsidiaries on a consolidated basis with
respect to all outstanding Indebtedness of Company and its
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under
Interest Rate Agreements, but excluding, however, (i) any amounts
referred to in subsection 2.3 payable to Agent and Lenders on or
before the Closing Date, (ii) any deferred financing expenses
amortized by Company and its Subsidiaries during such period, and
(iii) any non-cash interest expense of Company for such period
with respect to the Junior Subordinated Notes.
"Consolidated Net Income" means, for any period, the
net income (or loss) of Company and its Subsidiaries on a
consolidated basis for such period taken as a single accounting
period determined in conformity with GAAP; provided that there
--------
shall be excluded (i) the income (or loss) of any Person (other
than a Subsidiary of Company) in which any other Person (other
than Company or any of its Subsidiaries) has a joint interest,
except to the extent of the amount of dividends or other
distributions actually paid to Company or any of its Subsidiaries
by such Person during such period, (ii) the income (or loss) of
any Person accrued prior to the date it becomes a Subsidiary of
Company or is merged into or consolidated with Company or any of
its Subsidiaries or that Person's assets are acquired by Company
or any of its Subsidiaries, (iii) the income of any Subsidiary of
<PAGE>
Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that
income is not at the time permitted by operation of the terms of
its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to
that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan,
and (v) (to the extent not included in clauses (i) through (iv)
above) any net extraordinary gains or net non-cash extraordinary
losses.
"Consolidated Rental Payments" means, for any period,
the aggregate amount of all rents paid or payable by Company and
its Subsidiaries on a consolidated basis during that period under
all Capital Leases and Operating Leases to which Company or any
of its Subsidiaries is a party as lessee (in each case net of any
sublease income received or receivable by Company and its
Subsidiaries on a consolidated basis during that period with
respect thereto), excluding, however, (i) any amount of rent for
--------- -------
which Company or any Subsidiary of Company is contingently liable
under any lease as a result of the assignment thereof by Company
or such Subsidiary to any Person and (ii) any tax, insurance,
maintenance and similar expenses that Company or any Subsidiary
of Company is obligated to pay as lessee under the terms of the
applicable lease.
"Consolidated Total Debt" means, as at any date of
determination, the aggregate stated balance sheet amount of all
Indebtedness of Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
"Consolidated Working Capital" means, as at any date of
determination, the excess of Consolidated Current Assets over
Consolidated Current Liabilities.
"Consolidated Working Capital Adjustment" means, for
any period on a consolidated basis, the amount (which may be a
negative number) by which the Consolidated Working Capital of
Company and its Subsidiaries as of the beginning of such period
exceeds (or is less than) the Consolidated Working Capital of
Company and its Subsidiaries as of the end of such period.
"Contingent Obligation", as applied to any Person,
means any direct or indirect liability, contingent or otherwise,
of that Person (i) with respect to any Indebtedness, lease,
dividend or other obligation of another if the primary purpose or
intent thereof by the Person incurring the Contingent Obligation
is to provide assurance to the obligee of such obligation of
another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be
complied with, or that the holders of such obligation will be
protected (in whole or in part) against loss in respect thereof,
(ii) with respect to any letter of credit issued for the account
of that Person or as to which that Person is otherwise liable for
<PAGE>
reimbursement of drawings, or (iii) under Interest Rate
Agreements and Currency Agreements. Contingent Obligations shall
include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with
recourse or sale with recourse by such Person of the obligation
of another, (b) the obligation to make take-or-pay or similar
payments if required regardless of non-performance by any other
party or parties to an agreement, and (c) any liability of such
Person for the obligation of another through any agreement
(contingent or otherwise) (X) to purchase, repurchase or other-
wise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation
(whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (Y) to maintain the solvency or
any balance sheet item, level of income or financial condition of
another if, in the case of any agreement described under
subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The
amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if
less, the amount to which such Contingent Obligation is
specifically limited.
"Contractual Obligation", as applied to any Person,
means any provision of any Security issued by that Person or of
any material indenture, mortgage, deed of trust, contract,
undertaking, agreement or other instrument to which that Person
is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"Covered Real Property" means, at any time, (i) any
Real Property Asset listed in Schedule 7.2 annexed hereto that is
------------
not, at such time, subject to Liens permitted under subsection
7.2 securing Indebtedness (other than the Obligations) of Company
or any of its Subsidiaries permitted under subsection 7.1,
(ii) any Real Property Asset (other than any Real Property Asset
listed in Schedule 7.2 annexed hereto) consisting of a leasehold
------------
interest in real property now owned or hereafter acquired by
Company or any of its Subsidiaries, and (iii) any Real Property
Asset (other than any Real Property Asset listed in Schedule 7.2
------------
annexed hereto) consisting of a fee interest in real property now
owned or hereafter acquired by Company or any of its Subsidiaries
excluding, however, (a) any fee interest in undeveloped land held
--------- -------
by Company or any of its Subsidiaries for the development of a
Related Store, provided that construction of such Related Store
--------
has commenced thereon not later than six months following the
acquisition of such fee interest in undeveloped land by Company
or such Subsidiary, (b) any fee interest in any Real Property
Asset consisting of a Related Store that is under construction,
provided that (X) such construction has not been continuing for
--------
longer than one year and (Y) such fee interest was not, prior to
the commencement of such construction, required to be encumbered
by a Mortgage pursuant to subsection 6.9, (c) any fee interest in
<PAGE>
any Real Property Asset consisting of a Related Store the
construction of which is complete, provided that (X) no more than
--------
six months have elapsed since the later of the date of completion
of such construction and the date on which Company or any of its
Subsidiaries acquired such fee interest and (Y) such fee interest
was not previously required to be encumbered by a Mortgage
pursuant to subsection 6.9, (d) any fee interest in any Real
Property Asset consisting of a Related Store (whether fully
constructed or under construction) that is subject to a Lien
permitted under subsection 7.2A(iv), and (e) any Real Property
Asset from and after such time as such Real Property Asset
becomes subject to a Lien permitted under subsection 7.2A(v) or
subsection 7.2A(vi); provided that if an Unavoidable Delay (as
--------
defined below) occurs during any time period specified with
respect to any Related Store in clause (a), (b) or (c) above,
such time period for such Related Store shall be extended for a
period equal to the duration of such Unavoidable Delay plus 5
----
days. For purposes of this definition, the term "Unavoidable
Delay" means the temporary prevention of, or delay in, the
performance of any obligation or the satisfaction of any
condition set forth in the proviso to clause (a), (b) or (c)
above as a result of the occurrence of any unforeseeable
condition beyond the reasonable control of Company or any of its
Subsidiaries, including any strike, lockout, labor dispute,
inability to obtain labor or materials or reasonable substitutes
therefor, act of God, governmental restriction, regulation or
control, enemy or hostile governmental action, civil commotion,
insurrection, sabotage, or fire or other casualty; provided that
--------
if at any time it becomes reasonably likely that the condition
giving rise to any such temporary prevention or delay will result
in a permanent prevention of the performance or satisfaction of
the obligation or condition in question, the related Unavoidable
Delay shall be deemed to terminate immediately.
"Currency Agreement" means any foreign exchange
contract, currency swap agreement, futures contract, option
contract, synthetic cap or other similar agreement or arrangement
designed to protect Company or any of its Subsidiaries against
fluctuations in currency values.
"Default Period" has the meaning assigned to that term
in subsection 2.10.
"Defaulting Lender" has the meaning assigned to that
term in subsection 2.10.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than an
account evidenced by a negotiable certificate of deposit.
"Dollars" and the sign "$" mean the lawful money of the
United States of America.
<PAGE>
"Eligible Assignee" means (A) (i) a commercial bank
organized under the laws of the United States or any state
thereof; (ii) a savings and loan association or savings bank
organized under the laws of the United States or any state
thereof; (iii) a commercial bank organized under the laws of any
other country, or a political subdivision thereof; provided that
--------
(x) such bank is acting through a branch or agency located in the
United States or (y) such bank is organized under the laws of a
country that is a member of the Organization for Economic
Cooperation and Development or a political subdivision of such
country; (iv) any other entity which is an "accredited investor"
(as defined in Regulation D under the Securities Act) which
extends credit or buys loans as one of its businesses including,
but not limited to, insurance companies, mutual funds and lease
financing companies; and (v) Restructured Obligations Backed By
Senior Assets B.V. (or any pledgee of its assets generally), in
each case (under clauses (i) through (iv) above) that is
reasonably acceptable to Agent; and (B) any Lender and any
Affiliate of any Lender; provided that no Affiliate of Company
--------
shall be an Eligible Assignee.
"Employee Benefit Plan" means any "employee benefit
plan" as defined in Section 3(3) of ERISA which is, or was at any
time, maintained or contributed to by Company or any of its ERISA
Affiliates.
"Environmental Claim" means any written notice of
material violation, claim, demand or abatement order by any
governmental authority or any Person for any damage, including,
without limitation, personal injury (including sickness, disease
or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the
environment, nuisance, pollution, contamination or other adverse
effects on the environment, or for fines, penalties or
restrictions, in each case relating to, resulting from or in
connection with Hazardous Materials and relating to Company, any
of its Subsidiaries, or any of their respective Affiliates.
"Environmental Laws" means all statutes, ordinances,
orders, rules, regulations, plans, policies or decrees and the
like relating to (i) environmental matters, including, without
limitation, those relating to fines, injunctions, penalties,
damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of
Hazardous Materials, or (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, in any manner
applicable to Company or any of its Subsidiaries or any of the
Facilities.
"Equipment" means all equipment (including without
limitation all distribution, retailing, data processing, office
and motor vehicle equipment) owned or leased by Company or any of
its Subsidiaries.
<PAGE>
"Equitable" means The Equitable Life Assurance Society
of the United States.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time, and any successor
statute.
"ERISA Affiliate", as applied to any Person, means
(i) any corporation which is, or was at any time, a member of a
controlled group of corporations within the meaning of Section
414(b) of the Internal Revenue Code of which that Person is, or
was at any time, a member; (ii) any trade or business (whether or
not incorporated) which is, or was at any time, a member of a
group of trades or businesses under common control within the
meaning of Section 414(c) of the Internal Revenue Code of which
that Person is, or was at any time, a member; and (iii) any
member of an affiliated service group within the meaning of
Section 414(m) or (o) of the Internal Revenue Code of which that
Person, any corporation described in clause (i) above or any
trade or business described in clause (ii) above is, or was at
any time, a member.
"ERISA Event" means (i) a "reportable event" within the
meaning of Section 4043 of ERISA and the regulations issued
thereunder with respect to any Pension Plan (excluding those for
which the provision for 30-day notice to the PBGC has been waived
by regulation); (ii) the failure to meet the minimum funding
standard of Section 412 of the Internal Revenue Code with respect
to any Pension Plan (whether or not waived in accordance with
Section 412(d) of the Internal Revenue Code) or the failure to
make by its due date a required installment under Section 412(m)
of the Internal Revenue Code with respect to any Pension Plan or
the failure to make any required contribution to a Multiemployer
Plan; (iii) the provision by the administrator of any Pension
Plan pursuant to Section 4041(a)(2) of ERISA of a notice of
intent to terminate such plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the withdrawal by Company or
any of its ERISA Affiliates from any Pension Plan with two or
more contributing sponsors or the termination of any such Pension
Plan resulting in liability pursuant to Sections 4063 or 4064 of
ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or
condition which might constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer,
any Pension Plan; (vi) the imposition of liability on Company or
any of its ERISA Affiliates pursuant to Section 4062(e) or 4069
of ERISA or by reason of the application of Section 4212(c) of
ERISA; (vii) the withdrawal by Company or any of its ERISA
Affiliates in a complete or partial withdrawal (within the
meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor,
or the receipt by Company or any of its ERISA Affiliates of
notice from any Multiemployer Plan that it is in reorganization
or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
<PAGE>
it intends to terminate or has terminated under Section 4041A or
4042 of ERISA; (viii) the occurrence of an act or omission which
could reasonably be expected to give rise to the imposition on
Company or any of its ERISA Affiliates of fines, penalties, taxes
or related charges under Chapter 43 of the Internal Revenue Code
or under Section 409 or 502(c), (i) or (l) or 4071 of ERISA in
respect of any Employee Benefit Plan; (ix) the assertion of a
material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the
assets thereof, or against Company or any of its ERISA Affiliates
in connection with any such Employee Benefit Plan; (x) receipt
from the Internal Revenue Service of notice of the failure of any
Pension Plan (or any other Employee Benefit Plan intended to be
qualified under Section 401(a) of the Internal Revenue Code) to
qualify under Section 401(a) of the Internal Revenue Code, or the
failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to
Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at
rates determined by reference to the Adjusted Eurodollar Rate as
provided in subsection 2.2A.
"Event of Default" means each of the events set forth
in Section 8.
"Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"Existing Credit Agreement" means that certain Working
Capital Agreement dated as of June 15, 1987, as amended, by and
among Company (as successor in interest to SMG Acquisition
Corporation), the banks listed therein as lenders, and Bankers
and Chemical Bank (as successor in interest to Manufacturers
Hanover Trust Company), as co-agents.
"Facilities" means any and all real property
(including, without limitation, all buildings, fixtures or other
improvements located thereon) now or hereafter during the term of
this Agreement owned, leased or operated or heretofore owned by
(i) Company or any of its Subsidiaries, (ii) any of Company's or
any such Subsidiary's predecessors by merger or consolidation, or
(iii) any of Company's Affiliates that are directly or indirectly
controlled by Company.
"Federal Funds Effective Rate" means, for any period, a
fluctuating interest rate equal for each day during such period
to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day)
by the Federal Reserve Bank of New York, or, if such rate is not
<PAGE>
so published for any day which is a Business Day, the average of
the quotations for such day on such transactions received by
Agent from three Federal funds brokers of recognized standing
selected by Agent.
"Fiscal Year" means the fiscal year of Company and its
Subsidiaries ending on the Saturday closest to January 31 of each
calendar year. For purposes of this Agreement, any particular
Fiscal Year shall be designated by reference to the calendar year
in which such Fiscal Year commences.
"Funded Debt", as applied to any Person, means all
Indebtedness of that Person (including any current portions
thereof) which by its terms or by the terms of any instrument or
agreement relating thereto matures more than one year from, or is
directly renewable or extendable at the option of the debtor to a
date more than one year from (including an option of the debtor
under a revolving credit or similar agreement obligating the
lender or lenders to extend credit over a period of one year or
more from), the date of the creation thereof.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the
application thereof set forth in subsection 1.2, generally
accepted accounting principles set forth in opinions and pro-
nouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by
a significant segment of the accounting profession, in each case
as the same are applicable to the circumstances as of the date of
determination.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree
of or from any federal, state or local governmental authority,
agency or court.
"Hazardous Materials" means (i) any chemical, material
or substance at any time defined as or included in the definition
of "hazardous substances", "hazardous wastes", "hazardous
materials", "extremely hazardous waste", "restricted hazardous
waste", "infectious waste", "toxic substances" or any other terms
intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity,
"TCLP toxicity" or "EP toxicity" or words of similar import under
any applicable Environmental Laws or publications promulgated
pursuant thereto; (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced
waters and other wastes associated with the exploration,
development or production of crude oil, natural gas or geothermal
resources; (iv) any flammable substances or explosives; (v) any
<PAGE>
radioactive materials; (vi) asbestos in any form that is or may
become friable; (vii) urea formaldehyde foam insulation;
(viii) electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of
fifty parts per million; (ix) pesticides; and (x) any other
chemical, material or substance, exposure to which is prohibited,
limited or regulated by any governmental authority.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation.
"Holdings Discount Debentures" means the 13 1/8% Junior
Subordinated Discount Debentures due 2003 issued by Holdings in
an aggregate original face amount equal to $312,655,000, which
debentures have an aggregate outstanding principal amount
(including up to $32,800,000 of unamortized original issue
discount) not exceeding $217,271,000 as of immediately prior to
the Closing Date.
"Holdings Existing Credit Agreement" means that
certain Credit Agreement dated as of May 29, 1987, as amended, by
and among Holdings (formerly SMG Holdings Corporation), the banks
listed therein as lenders, Bankers and Chemical Bank (as
successor in interest to Manufacturers Hanover Trust Company), as
co-agents, and Chemical Bank, as collateral co-agent.
"Holdings Intercompany Notes" means, collectively,
(i) that certain
Promissory Note dated as of December 17, 1991, made by Company to
Holdings in the original principal amount of $90,820,000,
(ii) that certain Promissory Note dated as of December 17, 1991,
made by Company to Holdings in the original principal amount of
$41,218,673, (iii) that certain Promissory Note dated as of
December 17, 1991, made by Company to Holdings in the original
principal amount of $43,020,000, (iv) that certain Promissory
Note dated as of May 28, 1992, made by Company to Holdings in the
original principal amount of $200,000,000, (v) that certain
Promissory Note dated as of April 27, 1993, made by Company to
Holdings in the original principal amount of $24,000,000, (vi)
that certain Promissory Note dated as of November 7, 1989, made
by Company to Holdings in the original principal amount of
$251,644,387, (vii) that certain Promissory Note dated as of
November 7, 1989, made by Company to Holdings in the original
principal amount of $181,980,000, (viii) that certain Promissory
Note dated as of November 7, 1989 made by Company to Holdings in
the original principal amount of $384,180,000, and (ix) that
certain Promissory Note dated as of November 7, 1989, made by
Company to Holdings in the original principal amount of
$425,772,540.
"Holdings Senior Subordinated Notes" means the 14 1/2%
Senior Subordinated Notes due 1997 issued by Holdings in an
aggregate original principal amount equal to $475,000,000, which
notes have an aggregate outstanding principal amount equal to
<PAGE>
approximately $388,192,000 as of immediately prior to the Closing
Date.
"Holdings Subordinated Debenture Trustee" means the
trustee under the indenture pursuant to which the Holdings
Subordinated Debentures were issued.
"Holdings Subordinated Debentures" means the 12 5/8%
Subordinated Debentures due 2002 issued by Holdings in an
aggregate original principal amount equal to $415,000,000, which
debentures have an aggregate outstanding principal amount equal
to approximately $414,979,000 as of immediately prior to the
Closing Date.
"Holdings Subordinated Note Trustee" means the trustee
under the indenture pursuant to which the Holdings Subordinated
Notes were issued.
"Holdings Subordinated Notes" means the 11 5/8%
Subordinated Notes due 2002 issued by Holdings in an aggregate
original principal amount of $200,000,000, which notes have an
aggregate outstanding principal amount equal to approximately
$200,000,000 as of immediately prior to the Closing Date.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations
with respect to Capital Leases that is properly classified as a
liability on a balance sheet in conformity with GAAP, (iii) notes
payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the deferred
purchase price of property or services (excluding any such
obligations incurred under ERISA), which purchase price is
(A) due more than six months (or a longer period up to one year,
if such terms are available from suppliers in the ordinary course
of business) from the date of incurrence of the obligation in
respect thereof or (B) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been assumed
by that Person or is nonrecourse to the credit of that Person.
Obligations under Interest Rate Agreements and Currency
Agreements constitute Contingent Obligations and not
Indebtedness.
"Indemnitee" has the meaning assigned to that term in
subsection 10.3.
"Intellectual Property" means all patents, trademarks,
tradenames, copyrights, technology, know-how and processes used
in or necessary for the conduct of the business of Company and
its Subsidiaries as currently conducted that are material to the
condition (financial or otherwise), business or operations of
Company and its Subsidiaries, taken as a whole.
<PAGE>
"Interest Payment Date" means (i) with respect to any
Base Rate Loan, each January 15, April 15, July 15 and October 15
of each year, commencing on the first such date to occur after
the Closing Date, and (ii) with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such
Loan; provided that in the case of each Interest Period of six
--------
months, "Interest Payment Date" shall also include the date that
is three months after the commencement of such Interest Period.
"Interest Period" has the meaning assigned to that term
in subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement, interest rate collar
agreement or other similar agreement or arrangement.
"Interest Rate Determination Date" means, in respect of
an Interest Period, the second Business Day prior to the first
day of such Interest Period.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter.
"Investment" means (i) any direct or indirect purchase
or other acquisition by Company or any of its Subsidiaries of, or
of a beneficial interest in, stock or other Securities of any
other Person, or (ii) any direct or indirect loan, advance (other
than advances to employees for moving, entertainment and travel
expenses, drawing accounts and similar expenditures in the
ordinary course of business) or capital contribution by Company
or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that
are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any
Investment shall be the original cost of such Investment plus the
cost of all additions thereto, without any adjustments for
increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment.
"Issuing Lender" means, with respect to any Letter of
Credit, the Lender which agrees or is otherwise obligated to
issue such Letter of Credit, determined as provided in subsection
3.1B(ii).
"Joint Venture" means a joint venture, partnership or
other similar arrangement, whether in corporate, partnership or
other legal form; provided that in no event shall any corporate
--------
Subsidiary of any Person be considered to be a Joint Venture to
which such Person is a party.
"Junior Subordinated Note Indenture" means the
indenture pursuant to which the Junior Subordinated Notes are
<PAGE>
issued, as such indenture may be amended from time to time to the
extent permitted under subsection 7.14A.
"Junior Subordinated Notes" means the up to
$225,250,000 principal amount at final maturity of 10 3/4 % Junior
Subordinated Deferred Coupon Notes due 2003 of Company issued
pursuant to the Junior Subordinated Note Indenture on the Closing
Date.
"Lender" and "Lenders" means the persons identified as
"Lenders" and listed on the signature pages of this Agreement,
together with their successors and permitted assigns pursuant to
subsection 10.1, and the term "Lenders" shall include Swing Line
Lender unless the context otherwise requires; provided that the
--------
term "Lenders", when used in the context of a particular
Commitment, shall mean Lenders having that Commitment.
"Letter of Credit" or "Letters of Credit" means
Commercial Letters of Credit and Standby Letters of Credit issued
or to be issued by Issuing Lenders for the account of Company
pursuant to subsection 3.1.
"Letter of Credit Usage" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which
is or at any time thereafter may, pursuant to the terms thereof,
become available for drawing under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under
----
Letters of Credit honored by Issuing Lenders and not theretofore
reimbursed by Company (including any such reimbursement out of
the proceeds of Revolving Loans pursuant to subsection 3.3B).
"Lien" means any lien, mortgage, pledge, assignment (to
the extent such assignment is intended to secure an obligation of
any Person), security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention
agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of
the foregoing.
"Loan" or "Loans" means one or more of (i) the Term A
Loans, (ii) the Term B Loans, (iii) the Revolving Loans, or
(iv) the Swing Line Loans, or any combination thereof, and each
of the different types of Loans identified in clauses (i) through
(iv) above shall be a "Type" of Loan.
"Loan Documents" means this Agreement, the Notes, the
Letters of Credit (and any applications for, or reimbursement
agreements or other documents or certificates executed by Company
in favor of an Issuing Lender relating to, the Letters of
Credit), the Subsidiary Guaranty and the Collateral Documents.
<PAGE>
"Loan Party" means each of Company and any of Company's
Subsidiaries from time to time executing a Loan Document, and
"Loan Parties" means all such Persons, collectively.
"Margin Stock" has the meaning assigned to that term in
Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.
"Material Adverse Effect" means (i) a material adverse
effect upon the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company and
its Subsidiaries, taken as a whole, (ii) the impairment of the
ability of any Loan Party to perform any Obligations of a
monetary nature, or (iii) the impairment of the rights of Agent
or Lenders to enforce any Obligations of a monetary nature.
"Mortgage" means an instrument (whether designated as a
deed of trust, a trust deed or a mortgage or by any similar
title) executed and delivered by Company or any of its
Subsidiaries substantially in the form of Exhibit XX annexed
----------
hereto encumbering a fee or leasehold interest in Real Property
Assets, as such instrument may be amended, supplemented or
otherwise modified from time to time, and "Mortgages" means all
such instruments, including the Closing Date Mortgages (as
defined in subsection 4.1B) and any Additional Mortgages (as
defined in subsection 6.9), collectively.
"Multiemployer Plan" means a "multiemployer plan", as
defined in Section 3(37) of ERISA, to which Company or any of its
ERISA Affiliates is contributing, or ever has contributed, or to
which Company or any of its ERISA Affiliates has, or ever has
had, an obligation to contribute.
"Net Cash Proceeds of Asset Sale" means, with respect
to any Asset Sale, Cash payments (including any Cash received by
way of deferred payment pursuant to, or monetization of, a note
receivable or otherwise, but only as and when so received)
actually received from such Asset Sale net of bona fide direct
costs incurred in connection with such Asset Sale, including
without limitation (i) reasonable brokerage commissions,
underwriting fees and discounts, legal fees and expenses,
finder's fees and other similar fees, expenses and commissions,
(ii) taxes reasonably estimated to be actually payable as a
result of such Asset Sale within two years of the date of such
Asset Sale, (iii) payment of the outstanding principal amount of,
premium or penalty, if any, and interest on any Indebtedness
(other than the Loans) secured by a Lien on the assets in
question that is required to be repaid under the terms thereof as
a result of such Asset Sale, and (iv) the costs and expenses of
any repairs, alterations or improvements made to the property
sold in connection with such Asset Sale to the extent such
repairs, alterations or improvements are required pursuant to the
terms of such Asset Sale.
<PAGE>
"New Subordinated Debt" means, collectively, the
Indebtedness of Company evidenced by the Senior Subordinated
Notes, the Subordinated Notes, the Subordinated Debentures and
the Junior Subordinated Notes.
"New Subordinated Debt Indentures" means, collectively,
the Senior Subordinated Note Indenture, the Subordinated Note
Indenture, the Subordinated Debenture Indenture and the Junior
Subordinated Note Indenture.
"Non-Recourse Indebtedness" means, as applied to any
Person, all Indebtedness of that Person secured by Liens on
specified assets of that Person under the terms of which (i) no
recourse may be had against that or any other Person for the
payment of the principal of or interest or premium on such
Indebtedness or for any claim based thereon and (ii) the
enforcement of all obligations relating to such Indebtedness is
limited to foreclosure or other actions with respect to such
specified assets.
"Notes" means one or more of the Term A Notes, Term B
Notes, Revolving Notes or Swing Line Note or any combination
thereof.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit I annexed hereto delivered by Company to
---------
Agent pursuant to subsection 2.1B with respect to a proposed
borrowing.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit II annexed hereto delivered
----------
by Company to Agent pursuant to subsection 2.2D with respect to a
proposed conversion or continuation of the applicable basis for
determining the interest rate with respect to the Loans specified
therein.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit III annexed hereto delivered
-----------
by Company to the proposed Issuing Lender pursuant to subsection
3.1B(i) with respect to the proposed issuance of a Letter of
Credit.
"Obligations" means all obligations of every nature of
each Loan Party from time to time owed to Agent, Lenders or any
of them under the Loan Documents, whether for principal,
interest, reimbursement of amounts drawn under Letters of Credit,
fees, expenses, indemnification or otherwise.
"Officers' Certificate" means, as applied to any
corporation, a certificate executed on behalf of such corporation
by its chairman of the board (if an officer) or its president or
one of its vice presidents and by its chief financial officer or
its treasurer; provided that every Officers' Certificate with
--------
respect to the compliance with a condition precedent to the
<PAGE>
making of any Loans hereunder shall include (i) a statement that
the officer or officers making or giving such Officers' Certif-
icate have read such condition and any definitions or other
provisions contained in this Agreement relating thereto, (ii) a
statement that, in the opinion of the signers, they have made or
have caused to be made such examination or investigation as is
necessary to enable them to express an informed opinion as to
whether or not such condition has been complied with, and (iii) a
statement as to whether, in the opinion of the signers, such
condition has been complied with.
"Operating Lease" means, as applied to any Person, any
lease (including, without limitation, leases that may be
terminated by the lessee at any time) of any property (whether
real, personal or mixed) that is not a Capital Lease other than
any such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation
(or any successor thereto).
"Pension Plan" means any Employee Benefit Plan, other
than a Multiemployer Plan, which is subject to Section 412 of the
Internal Revenue Code or Section 302 of ERISA.
"Permitted Encumbrances" means the following types of
Liens (other than any such Lien imposed pursuant to Section
401(a)(29) or 412(n) of the Internal Revenue Code or by ERISA):
(i) Liens for taxes, assessments or governmental
charges or claims the payment of which is not, at the time,
required by subsection 6.3;
(ii) statutory Liens of landlords and Liens of
carriers, workmen, repairmen, warehousemen, mechanics and
materialmen and other Liens imposed by law, in each case
incurred in the ordinary course of business and securing
obligations that are not overdue for a period of more than
30 days or securing obligations that are overdue for a
period of more than 30 days that are being contested in good
faith, if (with respect to any such obligations that are
overdue for a period of more than 30 days) such reserve or
other appropriate provision, if any, as shall be required by
GAAP shall have been made therefor;
(iii) Liens incurred or deposits made in the
ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of
social security, or securing liability to insurance carriers
under insurance or self-insurance arrangements, or obtaining
utility service or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids,
leases, government contracts, trade contracts, performance
and return-of-money bonds and other similar obligations
<PAGE>
(exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting
an Event of Default under subsection 8.8;
(v) leases or subleases granted to others not
interfering in any material respect with the ordinary
conduct of the business of Company or any of its Subsidi-
aries;
(vi) easements, rights-of-way, restrictions, minor
defects, encroachments or irregularities in title and other
similar charges or encumbrances not interfering in any
material respect with the ordinary conduct of the business
of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or
sublessor under any lease permitted by subsection 7.9,
(b) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or
(c) subordination of the interest of the lessee or sublessee
under such lease to any restriction or encumbrance referred
to in the preceding clause (b);
(viii) Liens arising from filing UCC financing
statements relating solely to leases permitted by this
Agreement;
(ix) Liens in favor of customs and revenue authorities
arising as a matter of law to secure payment of customs
duties in connection with the importation of goods; and
(x) Liens in favor of issuers of Commercial Letters of
Credit encumbering any goods or documents covered by such
Commercial Letters of Credit and securing obligations that
are not overdue for a period of more than 15 days.
"Person" means and includes natural persons, corpora-
tions, limited partnerships, general partnerships, joint stock
companies, Joint Ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
"Plainbridge" means Plainbridge, Inc., a Delaware
corporation.
"Plainbridge Credit Agreement" means that certain
Credit Agreement dated as of even date herewith among
Plainbridge, the lenders party thereto and Bankers, as agent for
such lenders, as such agreement may hereafter be amended,
supplemented or otherwise modified from time to time.
<PAGE>
"Plainbridge Loan Documents" means the "Loan Documents"
as defined in the Plainbridge Credit Agreement.
"Potential Event of Default" means a condition or event
that, after notice or lapse of time or both, would constitute an
Event of Default.
"Pricing Discount Period" means any period (i) during
which the aggregate outstanding principal amount of the Term
Loans is equal to or less than $322,000,000 and (ii) which is an
APD Certification Period (as defined below).
For purposes of this definition: (A) "APD Certificate" means an
Officers' Certificate of Company delivered within the first
forty-five days of any fiscal quarter of Company certifying that
the Consolidated Interest Coverage Ratio for each of the four-
fiscal quarter periods ending as of the last day of each of the
two consecutive fiscal quarters of Company immediately preceding
the fiscal quarter during which such Officers' Certificate is
delivered is equal to or greater than 2.50:1.00 and setting forth
the calculation of the Consolidated Interest Coverage Ratio for
each such four-fiscal quarter period in reasonable detail,
(B) "APD Certification Period" means the period commencing on the
fifth day after the receipt of an APD Certificate by Agent and
ending on the earlier of (x) the forty-fifth day after the end of
the fiscal quarter of Company during which such APD Certificate
was delivered and (y) the fifth day after the next APD
Certificate, if any, is delivered to Agent, and (C) "Consolidated
Interest Coverage Ratio" means, for any period, the ratio of
(1) Consolidated Adjusted EBITDA to (2) Consolidated Interest
Expense.
"Prime Rate" means the rate that Bankers announces from
time to time as its prime lending rate, as in effect from time to
time. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate actually charged to
any customer. Bankers or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the
Prime Rate.
"Pro Rata Share" means (i) with respect to all
payments, computations and other matters relating to the Term A
Loan Commitment or the Term A Loan of any Lender, the percentage
obtained by dividing (x) the Term A Loan Exposure of that Lender
--------
by (y) the aggregate Term A Loan Exposure of all Lenders,
--
(ii) with respect to all payments, computations and other matters
relating to the Term B Loan Commitment or the Term B Loan of any
Lender, the percentage obtained by dividing (x) the Term B Loan
--------
Exposure of that Lender by (y) the aggregate Term B Loan Exposure
--
of all Lenders, (iii) with respect to all payments, computations
and other matters relating to the Revolving Loan Commitment or
the Revolving Loans of any Lender or any Letters of Credit issued
or participations therein purchased by any Lender or any
participations in any Swing Line Loans purchased by any Lender,
<PAGE>
the percentage obtained by dividing (x) the Revolving Loan
--------
Exposure of that Lender by (y) the aggregate Revolving Loan
--
Exposure of all Lenders, and (iv) for all other purposes with
respect to each Lender, the percentage obtained by dividing
--------
(x) the sum of the Term A Loan Exposure of that Lender plus the
----
Term B Loan Exposure of that Lender plus the Revolving Loan
----
Exposure of that Lender by (y) the sum of the aggregate Term A
--
Loan Exposure of all Lenders plus the aggregate Term B Loan
----
Exposure of all Lenders plus the aggregate Revolving Loan
----
Exposure of all Lenders, in any such case as the applicable
percentage may be adjusted by assignments permitted pursuant to
subsection 10.1. The initial Pro Rata Share of each Lender for
purposes of each of clauses (i), (ii), (iii) and (iv) of the
preceding sentence is set forth opposite the name of that Lender
in Schedule 2.1 annexed hereto.
------------
"PTKH" means PTK Holdings, Inc., a Delaware
corporation.
"PTKH Bond Indenture" means the indenture dated as of
October 26, 1993 between PTKH and Nations Bank of Georgia,
National Association, as trustee, pursuant to which the PTKH
Bonds are issued, as such indenture may be amended from time to
time (other than pursuant to an amendment that would result in an
Event of Default under subsection 8.17).
"PTKH Bonds" means the $130,000,000 original principal
amount of 10 1/4% Exchangeable Guaranteed Debentures due 2003 of
PTKH issued pursuant to the PTKH Bond Indenture on the Closing
Date.
"PTKH Private Placement" means (i) the issuance by PTKH
of the PTKH Bonds to Holdings in satisfaction of a corresponding
portion of Company's obligations under the Holdings Intercompany
Note related to the Holdings Subordinated Debentures, (ii) the
sale by Holdings of the PTKH Bonds to Equitable or its Affiliates
in exchange for Holdings Subordinated Debentures held by
Equitable or its Affiliates with an aggregate outstanding
principal amount equal to $130,000,000 as of immediately prior to
the Closing Date, and (iii) the payment by Holdings of all
accrued interest on the Holdings Subordinated Debentures so
exchanged and all premium in connection with such exchange to
Equitable or its Affiliates.
"Qualified Sale and Lease-back" means the sale,
pursuant to a Sale and Lease-back, of (i) any fee interest in any
Real Property Asset consisting of a Related Store the
construction of which is complete; provided that such sale occurs
--------
no more than six months after the later of the date of completion
of such construction and the date on which Company or any of its
Subsidiaries acquired such fee interest; or (ii) any Equipment
within 180 days after the acquisition of such Equipment by
Company or any of its Subsidiaries.
<PAGE>
"Real Estate Subsidiary" means each wholly-owned
Subsidiary of Company listed in Part A of Schedule 5.1 annexed
------------
hereto so long as such wholly-owned Subsidiary remains liable
with respect to Indebtedness which prohibits such wholly-owned
Subsidiary from entering into the Subsidiary Guaranty and the
Collateral Documents.
"Real Property Assets" means interests in land,
buildings, improvements, and fixtures attached thereto or used in
the operation thereof, in each case owned or leased (as lessee)
by Company or any of its Subsidiaries.
"Redemption Agreement" means the Redemption Agreement
dated as of October 26, 1993, among Holdings, PTKH and the
holders of the PTKH Bonds, as such Redemption Agreement is in
effect on the Closing Date and as such Redemption Agreement may
thereafter be amended from time to time (other than pursuant to
an amendment that would result in an Event of Default under
subsection 8.17).
"Reference Lenders" means Bankers, LTCB Trust Company
and The Bank of Nova Scotia.
"Refunded Swing Line Loans" has the meaning given to
that term in subsection 2.1A(iv).
"Regulation D" means Regulation D of the Board of
Governors of the Federal Reserve System, as in effect from time
to time.
"Reimbursement Date" has the meaning assigned to that
term in subsection 3.3B.
"Related Store" means any store or facility (including
without limitation any grocery store, drug store or supermarket)
that is or is intended to be used by Company or any of its
Subsidiaries in connection with the businesses permitted under
subsection 7.13.
"Release" means any release, spill, emission, leaking,
pumping, pouring, injection, escaping, deposit, disposal,
discharge or dumping of Hazardous Materials into the environment
(including, without limitation, the abandonment or disposal of
any barrels, containers or other closed receptacles containing
any Hazardous Materials).
"Requisite Class Lenders" means, at any time, (i) for
the Class of Lenders having Term A Loan Exposure, Lenders having
or holding 51% or more of the aggregate Term A Loan Exposure of
all Lenders, (ii) for the Class of Lenders having Term B Loan
Exposure, Lenders having or holding 51% or more of the aggregate
Term B Loan Exposure of all Lenders, and (iii) for the Class of
Lenders having Revolving Loan Exposure, Lenders having or holding
<PAGE>
51% or more of the aggregate Revolving Loan Exposure of all
Lenders.
"Requisite Lenders" means Lenders having or holding 51%
or more of the sum of the aggregate Term A Loan Exposure of all
Lenders plus the aggregate Term B Loan Exposure of all Lenders
----
plus the aggregate Revolving Loan Exposure of all Lenders.
----
"Restricted Junior Payment" means (i) any dividend or
other distribution, direct or indirect, on account of any shares
of any class of stock of Company now or hereafter outstanding,
except a dividend payable solely in shares of that class of stock
to the holders of that class, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of
stock of Company now or hereafter outstanding, (iii) any payment
made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding, and (iv) any
payment or prepayment of principal of, premium, if any, or
interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or
similar payment with respect to, any Subordinated Indebtedness or
any Indebtedness in respect of any of the Holdings Intercompany
Notes.
"Restructuring" means, collectively, (i) the Spin-Off,
(ii) the issuance of the Subordinated Notes in exchange for
Holdings Subordinated Notes tendered pursuant to the Subordinated
Note Exchange Offer, the issuance of the Subordinated Debentures
in exchange for Holdings Subordinated Debentures tendered
pursuant to the Subordinated Debenture Exchange Offer, and the
issuance of the Senior Subordinated Notes and the Junior
Subordinated Notes, in each case as contemplated by subsection
4.1E, (iii) the issuance of the PTKH Bonds to Holdings and the
sale by Holdings of the PTKH Bonds to Equitable or its Affiliates
in exchange for a portion of the Holdings Subordinated Debentures
held by Equitable or its Affiliates pursuant to the PTKH Private
Placement as contemplated by subsection 4.1D, (iv) the repayment
by Company of Indebtedness of Company under the Existing Credit
Agreement and the repayment by Company or other satisfaction by
Company or PTKH of Indebtedness of Company under the Holdings
Intercompany Notes, in each case as contemplated by subsections
4.1D, 4.1F and 4.1G, (v) the redemption by Holdings of the
Holdings Senior Subordinated Notes and the Holdings Discount
Debentures, the purchase by Holdings of a portion of the Holdings
Subordinated Debentures, and the surrender for cancellation by
Holdings of all of the Holdings Subordinated Debentures and
Holdings Subordinated Notes purchased or exchanged by Holdings or
delivered to Holdings by Company, in each case as contemplated by
subsection 4.1G, and (vi) the transactions contemplated by this
Agreement and the Plainbridge Credit Agreement, all as
consummated in accordance with the Restructuring Documents.
<PAGE>
"Restructuring Documents" means the Loan Documents, the
Plainbridge Loan Documents, the New Subordinated Debt Indentures,
the New Subordinated Debt, the PTKH Bond Indenture, the PTKH
Bonds, the Redemption Agreement and the Spin-Off Agreements.
"Revolving Loan Commitment" or "Revolving Loan Commit-
ments" means the commitment or commitments of a Lender or Lenders
to make Revolving Loans pursuant to subsection 2.1A(iii).
"Revolving Loan Commitment Termination Date" means
July 31, 1998.
"Revolving Loan Exposure" means, with respect to any
Lender as of any date of determination (i) prior to the
termination of the Revolving Loan Commitments, that Lender's
Revolving Loan Commitment and (ii) after the termination of the
Revolving Loan Commitments, the sum of (a) the aggregate
outstanding principal amount of the Revolving Loans of that
Lender plus (b) in the event that Lender is an Issuing Lender,
----
the aggregate amount of all drawings under Letters of Credit
honored by that Lender and not theretofore reimbursed by Company
(in each case net of any participations purchased by other
Lenders in the applicable Letters of Credit) plus (c) the
----
aggregate amount of all participations purchased by that Lender
in any drawings under Letters of Credit honored by Issuing
Lenders and not theretofore reimbursed by Company plus (d) the
----
aggregate amount of all participations purchased by that Lender
in any outstanding Swing Line Loans plus (e) in the case of Swing
----
Line Lender, the aggregate outstanding principal amount of all
Swing Line Loans (net of any participations therein purchased by
other Lenders).
"Revolving Loans" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(iii).
"Revolving Notes" means the promissory notes of Company
issued pursuant to subsection 2.1D on the Closing Date or issued
pursuant to the last sentence of subsection 10.1B(i) from time to
time after the Closing Date, in each case substantially in the
form of Exhibit V annexed hereto, as they may be amended,
---------
supplemented or otherwise modified from time to time.
"Sale and Lease-back" means any arrangement between
Company or any of its Subsidiaries and any other Person providing
for the leasing by Company or such Subsidiary of real or personal
or mixed property which has been or is to be sold or transferred
by Company or such Subsidiary to such other Person.
"Securities" means any stock, shares, partnership
interests, voting trust certificates, certificates of interest or
participation in any profit-sharing agreement or arrangement,
options, warrants, bonds, debentures, notes, or other evidences
of indebtedness, secured or unsecured, convertible, subordinated
or otherwise, or in general any instruments commonly known as
<PAGE>
"securities" or any certificates of interest, shares or
participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to,
purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
"Senior Subordinated Note Indenture" means the
indenture pursuant to which the Senior Subordinated Notes are
issued, as such indenture may be amended from time to time to the
extent permitted under subsection 7.14A.
"Senior Subordinated Notes" means the up to
$440,000,000 principal amount of 9 5/8% Senior Subordinated Notes
due 2003 of Company issued pursuant to the Senior Subordinated
Note Indenture.
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation.
"Solvent" means, with respect to any Person, that as of
the date of determination both (A) (i) the then fair saleable
value of the property of such Person is (y) greater than the
total amount of liabilities (including contingent liabilities) of
such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then
existing debts as they become absolute and matured considering
all financing alternatives and potential asset sales reasonably
available to such Person; (ii) such Person's capital is not
unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person
does not intend to incur, or believe that it will incur, debts
beyond its ability to pay such debts as they become due; and
(B) such Person is "solvent" within the meaning given that term
and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the
amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and
circumstances existing at such time, represents the amount that
can reasonably be expected to become an actual or matured
liability.
"Spin-Off" means, collectively, (i) the contribution by
Company to Plainbridge of the Rickel home center business of
Company, certain warehouse, distribution and transportation
operations and facilities, and certain other real and personal
property assets of Company on or prior to the Closing Date,
(ii) the contribution by Company to Chefmark of assets consisting
of a banana ripening warehouse and the Chef Mark deli food
preparation operations of Company on or prior to the Closing
Date, (iii) the distribution by Company to Holdings of the
capital stock of Chefmark prior to the Closing Date, (iv) the
distribution by Company to PTKH of the capital stock of
<PAGE>
Plainbridge after the contribution of assets described in
clause (i) above but on or prior to the Closing Date, and (v) to
the extent not covered by clauses (i) through (iv) above, the
entering into of the Spin-Off Agreements by the parties thereto
and the consummation of the transactions contemplated thereby.
"Spin-Off Agreements" means (i) that certain
Distribution and Transfer Agreement dated as of October 26, 1993,
among Company, PTKH and Plainbridge, (ii) that certain
Distribution and Transfer Agreement dated as of May 3, 1993,
among Company, Holdings and Chefmark, (iii) that certain Tax
Indemnity Agreement dated as of October 26, 1993, between Company
and Plainbridge, (iv) that certain Tax Sharing Agreement dated as
of October 26, 1993, between Company and SMG-II, (v) that certain
Logistical Services Agreement dated as of October 26, 1993,
between Company and Plainbridge, (vi) that certain Blair Services
Agreement dated as of October 26, 1993, between Company and
Plainbridge, (vii) that certain Rickel Services Agreement dated
as of October 26, 1993, between Company and Plainbridge,
(viii) that certain Chefmark Services Agreement dated as of
May 3, 1993, between Company and Chefmark, and (ix) that certain
letter agreement dated as of May 3, 1993 between Company and
Chefmark filed as Exhibit 10.5 to the Registration Statement of
Company and Holdings (Registration No. 33-59616) filed with the
Securities and Exchange Commission on March 16, 1993, as amended
by Amendment No. 1 to Post-Effective Amendment No. 1 thereto, in
each case in the form approved by Agent and Requisite Lenders
pursuant to subsection 4.1R, and in each case as such agreement
may be amended from time to time after the Closing Date to the
extent permitted under subsection 7.14B.
"Standby Letter of Credit" means any standby letter of
credit or similar instrument issued for the purpose of supporting
(i) Indebtedness of Company or any of its Subsidiaries in respect
of industrial revenue or development bonds or financings,
(ii) workers' compensation liabilities of Company or any of its
Subsidiaries, (iii) the obligations of third party insurers of
Company or any of its Subsidiaries arising by virtue of the laws
of any jurisdiction requiring third party insurers,
(iv) obligations with respect to Capital Leases or Operating
Leases of Company or any of its Subsidiaries, (v) performance,
payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule
or regulation or in accordance with custom and practice in the
industry, and (vi) other obligations of Company and its
Subsidiaries to the extent consistent with past practices of
Company and its Subsidiaries or otherwise consistent with custom
and practice in the industry; provided that Standby Letters of
--------
Credit may not be issued for the purpose of supporting (a) trade
payables or (b) Indebtedness existing on the Closing Date that is
not supported by a previously issued Standby Letter of Credit.
<PAGE>
"Subordinated Debenture Exchange Offer" means the offer
by Company to exchange Subordinated Debentures for Holdings
Subordinated Debentures, as more fully described in the
Registration Statement of Company and Holdings on Form S-1
(Registration No. 33-50053) as amended by Amendment No. 1 thereto
filed with the Securities and Exchange Commission on September
21, 1993 and as declared effective by the Securities and Exchange
Commission on September 22, 1993.
"Subordinated Debenture Indenture" means the indenture
pursuant to which the Subordinated Debentures are issued, as such
indenture may be amended from time to time to the extent
permitted under subsection 7.14A.
"Subordinated Debentures" means the up to $100,000,000
principal amount of 12 5/8% Subordinated Debentures due 2002 of
Company issued pursuant to the Subordinated Debenture Indenture.
"Subordinated Indebtedness" means (i) the New
Subordinated Debt and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to
documentation containing maturities, amortization schedules,
covenants, defaults, remedies, subordination provisions and other
material terms in form and substance satisfactory to Agent and
Requisite Lenders.
"Subordinated Note Exchange Offer" means the offer by
Company to exchange Subordinated Notes for Holdings Subordinated
Notes, as more fully described in the Registration Statement of
Company and Holdings on Form S-1 (Registration No. 33-59616)
filed with the Securities and Exchange Commission on March 16,
1993, as amended by Amendment Nos. 1, 2 and 3 thereto and Post-
Effective Amendment No. 1 filed with the Securities and Exchange
Commission on August 23, 1993, as amended by Amendment No. 1
thereto.
"Subordinated Note Indenture" means the indenture
pursuant to which the Subordinated Notes are issued, as such
indenture may be amended from time to time to the extent
permitted under subsection 7.14A.
"Subordinated Notes" means the up to $200,000,000
principal amount of 11 5/8% Subordinated Notes due 2002 of Company
issued pursuant to the Subordinated Note Indenture.
"Subsidiary" means, with respect to any Person, any
corporation, partnership, association, joint venture or other
business entity of which more than 50% of the total voting power
of shares of stock or other ownership interests entitled (without
regard to the occurrence of any contingency) to vote in the
election of the Person or Persons (whether directors, managers,
trustees or other Persons performing similar functions) having
the power to direct or cause the direction of the management and
policies thereof is at the time owned or controlled, directly or
indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
<PAGE>
"Subsidiary Guaranty" means the Subsidiary Guaranty to
be executed and delivered by Subsidiaries of Company from time to
time in accordance with subsection 6.8, substantially in the form
of Exhibit XVI annexed hereto, as such Subsidiary Guaranty may be
-----------
amended, supplemented or otherwise modified from time to time.
"Subsidiary Pledge Agreement" means each Subsidiary
Pledge Agreement to be executed and delivered by Subsidiaries of
Company from time to time in accordance with subsection 6.8,
substantially in the form of Exhibit XVII annexed hereto, as such
------------
Subsidiary Pledge Agreement may be amended, supplemented or
otherwise modified from time to time, and "Subsidiary Pledge
Agreements" means all such Subsidiary Pledge Agreements,
collectively.
"Subsidiary Security Agreement" means each Subsidiary
Security Agreement to be executed and delivered by Subsidiaries
of Company from time to time in accordance with subsection 6.8,
substantially in the form of Exhibit XVIII annexed hereto, as
-------------
such Subsidiary Security Agreement may be amended, supplemented
or otherwise modified from time to time, and "Subsidiary Security
Agreements" means all such Subsidiary Security Agreements,
collectively.
"Subsidiary Trademark Security Agreement" means each
Subsidiary Trademark Collateral Security Agreement and
Conditional Assignment to be executed and delivered by
Subsidiaries of Company from time to time in accordance with
subsection 6.8, substantially in the form of Exhibit XIX annexed
-----------
hereto, as such Subsidiary Trademark Collateral Security
Agreement and Conditional Assignment may be amended, supplemented
or otherwise modified from time to time, and "Subsidiary
Trademark Security Agreements" means all such Subsidiary
Trademark Collateral Security Agreements and Conditional
Assignments, collectively.
"Supermajority Lenders" means Lenders having or holding
66 and 2/3% or more of the sum of the aggregate Term A Loan
Exposure of all Lenders plus the aggregate Term B Loan Exposure
----
of all Lenders plus the aggregate Revolving Loan Exposure of all
----
Lenders.
"Supplemental Holdings Subordinated Debenture
Indenture" means the supplemental indenture in the form of
Exhibit 4.4 to the Registration Statement of Company and Holdings
on Form S-1 (Registration No. 33-50053) filed with the Securities
and Exchange Commission on August 23, 1993, as amended by
Amendment No. 1 thereto.
"Supplemental Holdings Subordinated Note Indenture"
means the supplemental indenture in the form of Exhibit 4.2 to
the Registration Statement of Company and Holdings on Form S-1
(Registration No. 33-59616) filed with the Securities and
Exchange Commission on March 16, 1993, as amended by Amendment
Nos. 1, 2 and 3 thereto and Post-Effective Amendment No. 1 filed
<PAGE>
with the Securities and Exchange Commission on August 23, 1993,
as amended by Amendment No. 1 thereto.
"Swing Line Lender" means Bankers, or any Person
serving as a successor Agent hereunder, in its capacity as Swing
Line Lender hereunder.
"Swing Line Loan Commitment" means the commitment of
Swing Line Lender to make Swing Line Loans pursuant to subsection
2.1A(iv).
"Swing Line Loans" means the Swing Line Loans made by
Swing Line Lender to Company pursuant to subsection 2.1A(iv).
"Swing Line Note" means (i) the promissory note of
Company issued pursuant to subsection 2.1D on the Closing Date
and (ii) any promissory note issued by Company to any successor
Agent and Swing Line Lender pursuant to the last sentence of
subsection 9.6B, in each case substantially in the form of
Exhibit VI annexed hereto, as it may be amended, supplemented or
----------
otherwise modified from time to time.
"Tax" or "Taxes" means any present or future tax, levy,
impost, duty, charge, fee, deduction or withholding of any nature
and whatever called, by whomsoever, on whomsoever and wherever
imposed, levied, collected, withheld or assessed; provided that
--------
"Tax on the overall net income" of a Person shall be construed as
a reference to a tax imposed by the jurisdiction in which that
Person's principal office (and/or, in the case of a Lender, its
lending office) is located or in which that Person is deemed to
be doing business on all or part of the net income, profits or
gains of that Person (whether worldwide, or only insofar as such
income, profits or gains are considered to arise in or to relate
to a particular jurisdiction, or otherwise).
"Tender Offer" means the offer by Holdings to purchase
for cash up to $100,000,000 aggregate outstanding principal
amount of Holdings Subordinated Debentures (other than Holdings
Subordinated Debentures held by Equitable or any of its
Affiliates or Holdings Subordinated Debentures tendered for
exchange pursuant to the Subordinated Debenture Exchange Offer),
as more fully described in the Registration Statement of Company
and Holdings on Form S-1 (Registration No. 33-50053) filed with
the Securities and Exchange Commission on August 23, 1993, as
amended by Amendment No. 1 thereto.
"Term A Loan Commitment" or "Term A Loan Commitments"
means the commitment or commitments of a Lender or Lenders to
make Term A Loans pursuant to subsection 2.1A(i).
"Term A Loan Exposure" means, with respect to any
Lender as of any date of determination (i) prior to the funding
of the Term A Loans, that Lender's Term A Loan Commitment and
(ii) after the funding of the Term A Loans, the outstanding
principal amount of the Term A Loan of that Lender.
<PAGE>
"Term A Loans" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(i).
"Term A Notes" means the promissory notes of Company
issued pursuant to subsection 2.1D on the Closing Date or issued
pursuant to the last sentence of subsection 10.1B(i) from time to
time after the Closing Date, in each case substantially in the
form of Exhibit IV-A annexed hereto, as they may be amended,
------------
supplemented or otherwise modified from time to time.
"Term B Loan Commitment" or "Term B Loan Commitments"
means the commitment or commitments of a Lender or Lenders to
make Term B Loans pursuant to subsection 2.1A(ii).
"Term B Loan Exposure" means, with respect to any
Lender as of any date of determination (i) prior to the funding
of the Term B Loans, that Lender's Term B Loan Commitment and
(ii) after the funding of the Term B Loans, the outstanding
principal amount of the Term B Loan of that Lender.
"Term B Loans" means the Loans made by Lenders to
Company pursuant to subsection 2.1A(ii).
"Term B Notes" means the promissory notes of Company
issued pursuant to subsection 2.1D on the Closing Date or issued
pursuant to the last sentence of subsection 10.1B(i) from time to
time after the Closing Date, in each case substantially in the
form of Exhibit IV-B annexed hereto, as they may be amended,
------------
supplemented or otherwise modified from time to time.
"Term Loans" means one or more of the Term A Loans or
Term B Loans or any combination thereof.
"Total Utilization of Revolving Loan Commitments"
means, as at any date of determination, the sum of (i) the
aggregate principal amount of all outstanding Revolving Loans
plus (ii) the aggregate principal amount of all outstanding Swing
----
Line Loans plus (iii) the Letter of Credit Usage.
----
"Transaction Costs" means the fees, costs and expenses
payable by Company pursuant hereto and other fees, costs and
expenses payable by Company in connection with the Restructuring.
1.2 Accounting Terms; Utilization of GAAP for Purposes of
-----------------------------------------------------
Calculations Under Agreement.
----------------------------
Except as otherwise expressly provided in this
Agreement, all accounting terms not otherwise defined herein
shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be
delivered by Company to Lenders pursuant to clauses (i), (ii),
(iii) and (xiii) of subsection 6.1 shall be prepared in
accordance with GAAP as in effect at the time of such preparation
(and delivered together with the reconciliation statements
provided for in subsection 6.1(v)). Calculations in connection
<PAGE>
with the definitions, covenants and other provisions of this
Agreement shall utilize accounting principles and policies in
conformity with those used to prepare the financial statements
referred to in subsection 5.3.
1.3 Other Definitional Provisions.
-----------------------------
References to "Sections" and "subsections" shall be to
Sections and subsections, respectively, of this Agreement unless
otherwise specifically provided. Any of the terms defined in
subsection 1.1 may, unless the context otherwise requires, be
used in the singular or the plural, depending on the reference.
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 Commitments; Loans.
------------------
A. Commitments. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and
warranties of Company herein set forth, each Lender hereby
severally agrees to make the Loans described in subsections
2.1A(i), 2.1A(ii) and 2.1A(iii) and Swing Line Lender hereby
agrees to make the Swing Line Loans described in subsection
2.1A(iv).
(i) Term A Loans. Each Lender severally agrees to
------------
lend to Company on the Closing Date an amount not exceeding
its Pro Rata Share of the aggregate amount of the Term A
Loan Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Lender's Term A Loan
Commitment is set forth opposite its name on Schedule 2.1
------------
annexed hereto and the aggregate amount of the Term A Loan
Commitments is $225,000,000; provided that the Term A Loan
--------
Commitments of Lenders shall be adjusted to give effect to
any assignments of the Term A Loan Commitments pursuant to
subsection 10.1B. Each Lender's Term A Loan Commitment
shall expire immediately and without further action on
October 29, 1993 if the Term A Loans are not made on or
before that date. Company may make only one borrowing under
the Term A Loan Commitments. Amounts borrowed under this
subsection 2.1A(i) and subsequently repaid or prepaid may
not be reborrowed.
(ii) Term B Loans. Each Lender severally agrees to
------------
lend to Company on the Closing Date an amount not exceeding
its Pro Rata Share of the aggregate amount of the Term B
Loan Commitments to be used for the purposes identified in
subsection 2.5A. The amount of each Lender's Term B Loan
Commitment is set forth opposite its name on Schedule 2.1
------------
annexed hereto and the aggregate amount of the Term B Loan
Commitments is $175,000,000; provided that the Term B Loan
--------
Commitments of Lenders shall be adjusted to give effect to
any assignments of the Term B Loan Commitments pursuant to
subsection 10.1B. Each Lender's Term B Loan Commitment
<PAGE>
shall expire immediately and without further action on
October 29, 1993 if the Term B Loans are not made on or
before that date. Company may make only one borrowing under
the Term B Loan Commitments. Amounts borrowed under this
subsection 2.1A(ii) and subsequently repaid or prepaid may
not be reborrowed.
(iii) Revolving Loans. Each Lender severally
---------------
agrees, subject to the limitations set forth below with
respect to the maximum amount of Revolving Loans permitted
to be outstanding from time to time, to lend to Company from
time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an
aggregate amount not exceeding its Pro Rata Share of the
aggregate amount of the Revolving Loan Commitments to be
used for the purposes identified in subsection 2.5B. The
original amount of each Lender's Revolving Loan Commitment
is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate original amount of the Revolving
Loan Commitments is $175,000,000; provided that the
--------
Revolving Loan Commitments of Lenders shall be adjusted to
give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; and provided,
--------
further that the amount of the Revolving Loan Commitments
-------
shall be reduced from time to time by the amount of any
reductions thereto made pursuant to subsections 2.4A(ii) and
2.4A(iii). Each Lender's Revolving Loan Commitment shall
expire on the Revolving Loan Commitment Termination Date and
all Revolving Loans and all other amounts owed hereunder
with respect to the Revolving Loans and the Revolving Loan
Commitments shall be paid in full no later than that date;
provided that each Lender's Revolving Loan Commitment shall
--------
expire immediately and without further action on October 29,
1993 if the Term Loans and the initial Revolving Loans are
not made on or before that date. Amounts borrowed under
this subsection 2.1A(iii) may be repaid and reborrowed to
but excluding the Revolving Loan Commitment Termination
Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Revolving Loans and the Revolving Loan
Commitments shall be subject to the following limitations in
the amounts and during the periods indicated:
(a) the amount otherwise available to be borrowed
or maintained as Revolving Loans under the Revolving
Loan Commitments as of any time of determination (other
than to repay Swing Line Loans or to reimburse any
Issuing Lender for the amount of any drawings under any
Letters of Credit honored by such Issuing Lender and
not theretofore reimbursed by Company) shall be reduced
by (1) the aggregate principal amount of Swing Line
Loans outstanding as of such time of determination plus
----
(2) the Letter of Credit Usage as of such time of
determination; and
<PAGE>
(b) for 30 consecutive days during each
consecutive twelve-month period (other than any such
period that includes any month prior to February 1,
1994), the sum of (1) the aggregate outstanding
principal amount of all Revolving Loans plus (2) the
----
aggregate outstanding principal amount of all Swing
Line Loans shall not exceed $50,000,000.
(iv) Swing Line Loans. Swing Line Lender hereby
----------------
agrees, subject to the limitations set forth below with
respect to the maximum amount of Swing Line Loans permitted
to be outstanding from time to time, to make a portion of
the Revolving Loan Commitments available to Company from
time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date by
making Swing Line Loans to Company in an aggregate amount
not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B,
notwithstanding the fact that such Swing Line Loans, when
aggregated with Swing Line Lender's outstanding Revolving
Loans and Swing Line Lender's Pro Rata Share of the Letter
of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment. The original amount of
the Swing Line Loan Commitment is $30,000,000; provided that
--------
the amount of the Swing Line Loan Commitment is subject to
reduction as provided in clause (c) of the next paragraph.
The Swing Line Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Swing Line Loans
and all other amounts owed hereunder with respect to the
Swing Line Loans shall be paid in full no later than that
date; provided that the Swing Line Loan Commitment shall
--------
expire immediately and without further action on October 29,
1993 if the Term Loans and the initial Revolving Loans are
not made on or before that date. Amounts borrowed under
this subsection 2.1A(iv) may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary
notwithstanding, the Swing Line Loans and the Swing Line
Loan Commitment shall be subject to the following
limitations in the amounts and during the periods indicated:
(a) in no event shall the Total Utilization of
Revolving Loan Commitments at any time exceed the
Revolving Loan Commitments then in effect;
(b) for 30 consecutive days during each
consecutive twelve-month period (other than any such
period that includes any month prior to February 1,
1994), the sum of (1) the aggregate outstanding
principal amount of all Revolving Loans plus (2) the
----
aggregate outstanding principal amount of all Swing
Line Loans shall not exceed $50,000,000; and
<PAGE>
(c) any reduction of the Revolving Loan
Commitments made pursuant to subsection 2.4A which
reduces the aggregate Revolving Loan Commitments to an
amount less than the then current amount of the Swing
Line Loan Commitment shall result in an automatic
corresponding reduction of the Swing Line Loan
Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further action
on the part of Agent or Swing Line Lender.
With respect to any Swing Line Loans which have not
been voluntarily prepaid by Company pursuant to subsection
2.4A(i), Swing Line Lender may, at any time in its sole and
absolute discretion, deliver to Agent (with a copy to
Company), no later than 12:00 Noon (New York time) on the
first Business Day in advance of the proposed Funding Date,
a notice (which shall be deemed to be a Notice of Borrowing
given by Company) requesting Lenders to make Revolving Loans
that are Base Rate Loans on such Funding Date in an amount
equal to the amount of such Swing Line Loans (the "Refunded
Swing Line Loans") outstanding on the date such notice is
given which Swing Line Lender requests Lenders to prepay.
Anything contained in this Agreement to the contrary
notwithstanding, (i) the proceeds of such Revolving Loans
made by Lenders other than Swing Line Lender shall be
immediately delivered by Agent to Swing Line Lender (and not
to Company) and applied to repay a corresponding portion of
the Refunded Swing Line Loans and (ii) on the day such
Revolving Loans are made, Swing Line Lender's Pro Rata Share
of the Refunded Swing Line Loans shall be deemed to be paid
with the proceeds of a Revolving Loan made by Swing Line
Lender and such portion of the Swing Line Loans deemed to be
so paid shall no longer be outstanding as Swing Line Loans,
shall no longer be due under the Swing Line Note of Swing
Line Lender and shall be due under the Revolving Note of
Swing Line Lender. Company hereby authorizes Agent and
Swing Line Lender to charge Company's accounts with Agent
and Swing Line Lender (up to the amount available in each
such account) in order to immediately pay Swing Line Lender
the amount of the Refunded Swing Line Loans to the extent
the proceeds of such Revolving Loans made by Lenders,
including the Revolving Loan deemed to be made by Swing Line
Lender, are not sufficient to repay in full the Refunded
Swing Line Loans. If any portion of any such amount paid
(or deemed to be paid) to Swing Line Lender should be
recovered by or on behalf of Company from Swing Line Lender
in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be
ratably shared among all Lenders in the manner contemplated
by subsection 10.5.
If, as a result of any bankruptcy or similar proceeding
with respect to Company, Revolving Loans are not made
pursuant to this subsection 2.1A(iv) in an amount sufficient
to repay any amounts owed to Swing Line Lender in respect of
<PAGE>
any outstanding Swing Line Loans, each Lender shall be
deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans in an
amount equal to its Pro Rata Share of the unpaid amount
together with accrued interest thereon. Upon one Business
Day's notice from Swing Line Lender, each Lender shall
deliver to Swing Line Lender an amount equal to its
respective participation in same day funds at the office of
Swing Line Lender located at One Bankers Trust Plaza, New
York, New York. In order to evidence such participation
each Lender agrees to enter into a participation agreement
at the request of Swing Line Lender in form and substance
reasonably satisfactory to all parties. In the event any
Lender fails to make available to Swing Line Lender the
amount of such Lender's participation as provided in this
paragraph, Swing Line Lender shall be entitled to recover
such amount on demand from such Lender together with
interest thereon at the rate customarily used by Swing Line
Lender for the correction of errors among banks for three
Business Days and thereafter at the Base Rate.
Anything contained herein to the contrary
notwithstanding, (i) each Lender's obligation to make
Revolving Loans for the purpose of repaying any Refunded
Swing Line Loans pursuant to the second preceding paragraph
and each Lender's obligation to purchase a participation in
any unpaid Swing Line Loans pursuant to the immediately
preceding paragraph shall be absolute and unconditional and
shall not be affected by any circumstance, including without
limitation (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against
Swing Line Lender, Company or any other Person for any
reason whatsoever; (b) the occurrence or continuance of an
Event of Default or a Potential Event of Default; (c) any
adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of
Company or any of its Subsidiaries; (d) any breach of this
Agreement or any other Loan Document by any party thereto;
or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing;
provided that such obligations of each Lender are subject to
--------
the condition that (X) Swing Line Lender believed in good
faith that all conditions under Section 4 to the making of
the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, as the case may be, were satisfied at the
time such Refunded Swing Line Loans or unpaid Swing Line
Loans were made, (Y) such Lender had actual knowledge, by
receipt of any notices required to be delivered to Lenders
pursuant to subsection 6.1(ix) or otherwise, that any such
condition had not been satisfied and such Lender failed to
notify Swing Line Lender and Agent in writing that it had no
obligation to make Revolving Loans until such condition was
satisfied (any such notice to be effective as of the date of
receipt thereof by Swing Line Lender and Agent), or (Z) the
satisfaction of any such condition not satisfied had been
<PAGE>
waived by Requisite Lenders prior to or at the time such
Refunded Swing Line Loans or other unpaid Swing Line Loans
were made; and (ii) Swing Line Lender shall not be obligated
to make any Swing Line Loans if it has elected not to do so
after the occurrence and during the continuation of a
Potential Event of Default or Event of Default.
B. Borrowing Mechanics. Term A Loans or Term B Loans made
on the Closing Date as Eurodollar Rate Loans with a particular
Interest Period shall be in an aggregate minimum amount of
$25,000,000 and integral multiples of $5,000,000 in excess of
that amount. Revolving Loans made on any Funding Date (other
than Revolving Loans made pursuant to a request by Swing Line
Lender pursuant to subsection 2.1A(iv) for the purpose of
repaying any Refunded Swing Line Loans or Revolving Loans made
pursuant to subsection 3.3B for the purpose of reimbursing any
Issuing Lender for the amount of a drawing under a Letter of
Credit issued by it) shall be in an aggregate minimum amount of
$5,000,000 and integral multiples of $1,000,000 in excess of that
amount; provided that Revolving Loans made on any Funding Date as
--------
Eurodollar Rate Loans with a particular Interest Period shall be
in an aggregate minimum amount of $5,000,000 and integral
multiples of $1,000,000 in excess of that amount. Swing Line
Loans made on any Funding Date shall be in an aggregate minimum
amount of $2,000,000 and integral multiples of $1,000,000 in
excess of that amount. Whenever Company desires that Lenders
make Term Loans or Revolving Loans under subsection 2.1A(i),
2.1A(ii) or 2.1A(iii), as the case may be, it shall deliver to
Agent a Notice of Borrowing no later than 12:00 Noon (New York
time) at least three Business Days in advance of the proposed
Funding Date (in the case of a Eurodollar Rate Loan) or at least
one Business Day in advance of the proposed Funding Date (in the
case of a Base Rate Loan). Whenever Company desires that Swing
Line Lender make a Swing Line Loan under subsection 2.1A(iv), it
shall deliver to Agent a Notice of Borrowing no later than 12:00
Noon (New York time) on the proposed Funding Date. The Notice of
Borrowing shall specify (i) the proposed Funding Date (which
shall be a Business Day), (ii) the amount and Type of Loans
requested, (iii) in the case of Swing Line Loans, that such Loans
shall be Base Rate Loans, (iv) in the case of Term Loans and
Revolving Loans, whether such Loans shall be Base Rate Loans or
Eurodollar Rate Loans, and (v) in the case of any Loans requested
to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Term Loans and Revolving Loans may be
continued as or converted into Base Rate Loans and Eurodollar
Rate Loans in the manner provided in subsection 2.2D. In lieu of
delivering the above-described Notice of Borrowing, Company may
give Agent telephonic notice by the required time of any proposed
borrowing under this subsection 2.1B; provided that such notice
--------
shall be promptly confirmed in writing by delivery of a Notice of
Borrowing to Agent on or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above
that Agent believes in good faith to have been given by a duly
<PAGE>
authorized officer or other person authorized to borrow on behalf
of Company or for otherwise acting in good faith under this
subsection 2.1B, and upon receipt by Company of the proceeds of
Loans made by Lenders in accordance with this Agreement pursuant
to any such telephonic notice Company shall have effected Loans
hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C
and 2.6G, a Notice of Borrowing for a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company
shall be bound to make a borrowing in accordance therewith.
C. Disbursement of Funds. All Term Loans and Revolving
Loans under this Agreement shall be made by Lenders
simultaneously and proportionately to their respective Pro Rata
Shares of the Commitments for the particular Type of Loans
requested, it being understood that no Lender shall be
responsible for any default by any other Lender in that other
Lender's obligation to make a Loan requested hereunder nor shall
the Commitment of any Lender to make the particular Type of Loan
requested be increased or decreased as a result of a default by
any other Lender in that other Lender's obligation to make a Loan
requested hereunder. Promptly after receipt by Agent of a Notice
of Borrowing pursuant to subsection 2.1B (or telephonic notice in
lieu thereof), Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each
Lender shall make the amount of its Loan available to Agent not
later than 12:00 Noon (New York time) on the applicable Funding
Date and Swing Line Lender shall make the amount of its Swing
Line Loan available to Agent not later than 2:00 P.M. (New York
time) on the applicable Funding Date, in each case in same day
funds, at the office of Agent located at One Bankers Trust Plaza,
New York, New York. Except as provided in subsection 2.1A(iv) or
subsection 3.3B with respect to Revolving Loans used to repay
Swing Line Loans or to reimburse any Issuing Lender for the
amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in
subsections 4.1 (in the case of Loans made on the Closing Date)
and 4.2 (in the case of all Loans), Agent shall make the proceeds
of such Loans available to Company on the applicable Funding Date
by causing an amount of same day funds equal to the proceeds of
all such Loans received by Agent from Lenders or Swing Line
Lender, as the case may be, to be credited to the account of
Company at the office of Agent specified in the preceding
sentence.
Unless Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not
intend to make available to Agent the amount of such Lender's
Loan requested on such Funding Date, Agent may assume that such
Lender has made such amount available to Agent on such Funding
Date and Agent may, in its sole discretion, but shall not be
obligated to, make available to Company a corresponding amount on
such Funding Date. If such corresponding amount is not in fact
<PAGE>
made available to Agent by such Lender, Agent shall be entitled
to recover such corresponding amount on demand from such Lender
together with interest thereon, for each day from such Funding
Date until the date such amount is paid to Agent, at the
customary rate set by Agent for the correction of errors among
banks for three Business Days and thereafter at the Base Rate.
If such Lender does not pay such corresponding amount forthwith
upon Agent's demand therefor, Agent shall promptly notify Company
and Company shall immediately pay such corresponding amount to
Agent together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing
in this subsection 2.1C shall be deemed to relieve any Lender
from its obligation to fulfill its Commitments hereunder or to
prejudice any rights that Company may have against any Lender as
a result of any default by such Lender hereunder.
D. Notes. Company shall execute and deliver on the
Closing Date (i) to each Lender (or to Agent for that Lender)
(a) a Term A Note substantially in the form of Exhibit IV-A
------------
annexed hereto to evidence that Lender's Term A Loan, in the
principal amount of that Lender's Term A Loan and with other
appropriate insertions, (b) a Term B Note substantially in the
form of Exhibit IV-B annexed hereto to evidence that Lender's
------------
Term B Loan, in the principal amount of that Lender's Term B Loan
and with other appropriate insertions, and (c) a Revolving Note
substantially in the form of Exhibit V annexed hereto to evidence
---------
that Lender's Revolving Loans, in the principal amount of that
Lender's Revolving Loan Commitment and with other appropriate
insertions, and (ii) to Swing Line Lender (or to Agent for Swing
Line Lender) a Swing Line Note substantially in the form of
Exhibit VI annexed hereto to evidence Swing Line Lender's Swing
----------
Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions.
E. Scheduled Payments of Term Loans.
(i) Scheduled Payments of Term A Loans. Company shall
----------------------------------
make principal payments on the Term A Loans in installments on
the dates and in the amounts set forth below:
Scheduled Repayment
Date of Term A Loans
------ -------------------------
January 15, 1994 $15,000,000
April 15, 1994 $ 8,750,000
July 15, 1994 $ 8,750,000
October 15, 1994 $ 8,750,000
January 15, 1995 $ 8,750,000
April 15, 1995 $ 8,750,000
July 15, 1995 $ 8,750,000
October 15, 1995 $ 8,750,000
January 15, 1996 $ 8,750,000
<PAGE>
April 15, 1996 $11,250,000
July 15, 1996 $11,250,000
October 15, 1996 $11,250,000
January 15, 1997 $11,250,000
April 15, 1997 $13,750,000
July 15, 1997 $13,750,000
October 15, 1997 $13,750,000
January 15, 1998 $13,750,000
April 15, 1998 $20,000,000
July 31, 1998 $20,000,000
; provided that the scheduled installments of principal of the
--------
Term A Loans set forth above shall be reduced in connection with
any voluntary or mandatory prepayments of the Term A Loans in
accordance with subsection 2.4A(iv); and provided, further that
-------- -------
the Term A Loans and all other amounts owed hereunder with
respect to the Term A Loans shall be paid in full no later than
July 31, 1998, and the final installment payable by Company in
respect of the Term A Loans on such date shall be in an amount,
if such amount is different from that specified above, sufficient
to repay all amounts owing by Company under this Agreement with
respect to the Term A Loans.
(ii) Scheduled Payments of Term B Loans.
----------------------------------
Company shall make principal payments on the Term B Loans in
installments on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Term B Loans
------ -------------------------
January 15, 1995 $ 1,750,000
January 15, 1996 $ 1,750,000
January 15, 1997 $ 1,750,000
January 15, 1998 $ 1,750,000
October 15, 1998 $15,000,000
January 15, 1999 $15,000,000
April 15, 1999 $20,000,000
July 15, 1999 $20,000,000
October 31, 1999 $98,000,000
; provided that the scheduled installments of principal of the
--------
Term B Loans set forth above shall be reduced in connection with
any voluntary or mandatory prepayments of the Term B Loans in
accordance with subsection 2.4A(iv); and provided, further that
-------- -------
the Term B Loans and all other amounts owed hereunder with
respect to the Term B Loans shall be paid in full no later than
October 31, 1999, and the final installment payable by Company in
respect of the Term B Loans on such date shall be in an amount,
if such amount is different from that specified above, sufficient
to repay all amounts owing by Company under this Agreement with
respect to the Term B Loans.
<PAGE>
2.2 Interest on the Loans.
---------------------
A. Rate of Interest. Subject to the provisions of
subsections 2.6 and 2.7, each Term Loan and each Revolving Loan
shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or
otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate, as the case may be. Subject to the
provisions of subsection 2.7, each Swing Line Loan shall bear
interest on the unpaid principal amount thereof from the date
made through maturity (whether by acceleration or otherwise) at a
rate determined by reference to the Base Rate. The applicable
basis for determining the rate of interest with respect to any
Loan shall be selected by Company initially at the time a Notice
of Borrowing is given with respect to such Loan pursuant to sub-
section 2.1B. The basis for determining the interest rate with
respect to any Term Loan or any Revolving Loan may be changed
from time to time pursuant to subsection 2.2D. If on any day a
Term Loan or Revolving Loan is outstanding with respect to which
notice has not been delivered to Agent in accordance with the
terms of this Agreement specifying the applicable basis for
determining the rate of interest, then for that day that Loan
shall bear interest determined by reference to the Base Rate.
Subject to the provisions of subsections 2.2E and
2.7, the Term A Loans and Revolving Loans shall bear interest
through maturity as follows:
(i) if a Base Rate Loan, then at the sum of the
Base Rate plus 1.50% per annum, less the Applicable
---- ----
Pricing Discount, if any; or
(ii) if a Eurodollar Rate Loan, then at the
sum of the Adjusted Eurodollar Rate plus 2.50% per
----
annum, less the Applicable Pricing Discount, if any.
----
Subject to the provisions of subsections 2.2E and
2.7, the Term B Loans shall bear interest through maturity as
follows:
(i) if a Base Rate Loan, then at the sum of the
Base Rate plus 2.00% per annum; or
----
(ii) if a Eurodollar Rate Loan, then at the
sum of the Adjusted Eurodollar Rate plus 3.00% per
----
annum.
Subject to the provisions of subsections 2.2E and
2.7, the Swing Line Loans shall bear interest through maturity at
the sum of the Base Rate plus 1.00% per annum, less the
---- ----
Applicable Pricing Discount, if any.
B. Interest Periods. In connection with each
Eurodollar Rate Loan, Company may, pursuant to the applicable
Notice of Borrowing or Notice of Conversion/Continuation, as the
<PAGE>
case may be, select an interest period (each an "Interest
Period") to be applicable to such Loan, which Interest Period
shall be, at Company's option, a one, two, three or six month
period; provided that:
--------
(i) the initial Interest Period for any
Eurodollar Rate Loan shall commence on the Funding
Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the
date specified in the applicable Notice of Conversion/
Continuation, in the case of a Loan converted to a
Eurodollar Rate Loan;
(ii) in the case of immediately successive
Interest Periods applicable to a Eurodollar Rate Loan
continued as such pursuant to a Notice of Conversion/
Continuation, each successive Interest Period shall
commence on the day on which the next preceding Inter-
est Period expires;
(iii) if an Interest Period would otherwise
expire on a day that is not a Business Day, such
Interest Period shall expire on the next succeeding
Business Day; provided that if any Interest Period
--------
would otherwise expire on a day that is not a Business
Day but is a day of the month after which no further
Business Day occurs in such month, such Interest
Period shall expire on the next preceding Business
Day;
(iv) any Interest Period that begins on the
last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
calendar month at the end of such Interest Period)
shall, subject to clause (v) of this subsection 2.2B,
end on the last Business Day of a calendar month;
(v) no Interest Period with respect to any Term
A Loan shall extend beyond July 31, 1998, no Interest
Period with respect to any Term B Loan shall extend
beyond October 31, 1999, and no Interest Period with
respect to any Revolving Loan shall extend beyond the
Revolving Loan Commitment Termination Date;
(vi) (a) no Interest Period with respect to
any Term A Loan shall extend beyond a date on which
Company is required to make a scheduled payment of
principal of the Term A Loans unless the aggregate
principal amount of Term A Loans that are Base Rate
Loans plus the aggregate principal amount of Term A
----
Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on
the Term A Loans on such date; and
<PAGE>
(b) no Interest Period with respect to any
Term B Loan shall extend beyond a date on which
Company is required to make a scheduled payment of
principal of the Term B Loans unless the aggregate
principal amount of Term B Loans that are Base Rate
Loans plus the aggregate principal amount of Term B
----
Loans that are Eurodollar Rate Loans with Interest
Periods expiring on or before such date equals or
exceeds the principal amount required to be paid on
the Term B Loans on such date;
(vii) there shall be no more than 20 Interest
Periods outstanding at any time; and
(viii) in the event Company fails to specify an
Interest Period for any Eurodollar Rate Loan in the
applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to
have selected an Interest Period of one month.
C. Interest Payments. Subject to the provisions of
subsection 2.2E, interest on each Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that
Loan, upon any prepayment of that Loan (to the extent accrued on
the amount being prepaid) and at maturity (including final
maturity).
D. Conversion or Continuation. Subject to the
provisions of subsection 2.6, Company shall have the option
(i) to convert at any time after the Closing Date (a) all or any
part of its outstanding Term A Loans or Term B Loans, in each
case equal to $25,000,000 (subject to the first proviso to this
sentence) and integral multiples of $5,000,000 in excess of that
amount or (b) all or any part of its outstanding Revolving Loans
equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount, in each case from Loans bearing interest
at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative
basis, or (ii) upon the expiration of any Interest Period
applicable to a Eurodollar Rate Loan, to continue (a) with
respect to any such Loan that is a Term A Loan or a Term B Loan,
all or any portion of such Loan equal to $25,000,000 (subject to
the first proviso to this sentence) and integral multiples of
$5,000,000 in excess of that amount or (b) with respect to any
such Loan that is a Revolving Loan, all or any portion of such
Loan equal to $5,000,000 and integral multiples of $1,000,000 in
excess of that amount, in each case as a Eurodollar Rate Loan;
provided that the minimum amount of outstanding Term A Loans or
--------
Term B Loans that may be converted to, or continued as, a
Eurodollar Rate Loan shall be modified to the extent necessary to
permit Company to maintain at any time one (but not more than
one) amount of Term A Loans and one (but not more than one)
amount of Term B Loans, in each case equal to less than
$25,000,000 but at least equal to $10,000,000 and, if desired by
Company, integral multiples of $1,000,000 in excess of that
<PAGE>
amount, as a Eurodollar Rate Loan; provided further, however,
-------- ------- -------
that a Eurodollar Rate Loan may only be converted into a Loan
bearing interest at a rate determined by reference to an
alternative basis on the expiration date of an Interest Period
applicable thereto; and provided, further that no Loan may be
-------- -------
made as or converted into a Base Rate Loan during the period from
December 24 of any year to and including January 7 of the
immediately succeeding year for the purpose of investing in
securities bearing interest at a rate determined by reference to
any other basis for the purpose of arbitrage or speculation.
Company shall deliver a Notice of Conversion/
Continuation to Agent no later than 12:00 Noon (New York time) at
least one Business Day in advance of the proposed conversion date
(in the case of a conversion to a Base Rate Loan) and at least
three Business Days in advance of the proposed conversion/contin-
uation date (in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan). A Notice of Conversion/Continuation
shall specify (i) the proposed conversion/continuation date
(which shall be a Business Day), (ii) the amount and Type of the
Loan to be converted/continued, (iii) the nature of the proposed
conversion/continuation, (iv) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, the requested Interest
Period, and (v) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, that no Potential Event of Default or
Event of Default has occurred and is continuing. In lieu of
delivering the above-described Notice of Conversion/Continuation,
Company may give Agent telephonic notice by the required time of
any proposed conversion/continuation under this subsection 2.2D;
provided that such notice shall be promptly confirmed in writing
--------
by delivery of a Notice of Conversion/Continuation to Agent on or
before the proposed conversion/continuation date.
Neither Agent nor any Lender shall incur any
liability to Company in acting upon any telephonic notice
referred to above that Agent believes in good faith to have been
given by a duly authorized officer or other person authorized to
act on behalf of Company or for otherwise acting in good faith
under this subsection 2.2D, and upon conversion or continuation
of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant
to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B,
2.6C and 2.6G, a Notice of Conversion/Continuation for conversion
to, or continuation of, a Eurodollar Rate Loan (or telephonic
notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance there-
with.
E. Post-Maturity Interest. Any principal payments
on the Loans not paid when due and, to the extent permitted by
applicable law, any interest payments on the Loans or any fees or
<PAGE>
other amounts owed hereunder not paid when due, in each case
whether at stated maturity, by notice of prepayment, by
acceleration or otherwise, shall thereafter bear interest
(including post-petition interest in any proceeding under the
Bankruptcy Code or other applicable bankruptcy laws) payable on
demand at a rate which is 2% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the
applicable Loans (or, in the case of any such fees and other
amounts, at a rate which is 2% per annum in excess of the
interest rate otherwise payable under this Agreement for Base
Rate Loans); provided that, in the case of Eurodollar Rate Loans,
--------
upon the expiration of the Interest Period in effect at the time
any such increase in interest rate is effective such Eurodollar
Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is
2% per annum in excess of the interest rate otherwise payable
under this Agreement for Base Rate Loans. Payment or acceptance
of the increased rates of interest provided for in this
subsection 2.2E is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or
otherwise prejudice or limit any rights or remedies of Agent or
any Lender.
F. Computation of Interest. Interest on the Loans
shall be computed on the basis of a 360-day year, in each case
for the actual number of days elapsed in the period during which
it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period
applicable to such Loan or, with respect to a Base Rate Loan
being converted from a Eurodollar Rate Loan, the date of
conversion of such Eurodollar Rate Loan to such Base Rate Loan,
as the case may be, shall be included, and the date of payment of
such Loan or the expiration date of an Interest Period applicable
to such Loan or, with respect to a Base Rate Loan being converted
to a Eurodollar Rate Loan, the date of conversion of such Base
Rate Loan to such Eurodollar Rate Loan, as the case may be, shall
be excluded; provided that if a Loan is repaid on the same day on
--------
which it is made, one day's interest shall be paid on that Loan.
2.3 Fees.
----
A. Commitment Fees. (i) Company agrees to pay to
Agent, for distribution to each Lender, a commitment fee for the
period commencing on the earlier of the date of delivery to Agent
of an executed commitment letter of such Lender with respect to
the Commitments of such Lender hereunder and August 23, 1993 to
and excluding the Closing Date, equal to the aggregate amount of
the Commitments of such Lender as set forth in Schedule 2.1
------------
annexed hereto multiplied by 1/2 of 1% per annum, such commitment
-------------
fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable in arrears on the
earlier of the Closing Date or the termination of the
Commitments; and (ii) Company agrees to pay to Agent, for
distribution to each Lender in proportion to that Lender's Pro
Rata Share, commitment fees for the period from and including the
<PAGE>
Closing Date to and excluding the Revolving Loan Commitment
Termination Date equal to the average of the daily excess of the
Revolving Loan Commitments over the sum of the aggregate
principal amount of Revolving Loans outstanding (but not any
Swing Line Loans outstanding) plus the Letter of Credit Usage
----
(other than the Letter of Credit Usage in respect of Standby
Letters of Credit) multiplied by a rate per annum equal to 1/2 of
-------------
1% minus the Applicable Pricing Discount, if any, such commitment
-----
fees to be calculated on the basis of a 360-day year and the
actual number of days elapsed and to be payable quarterly in
arrears on January 15, April 15, July 15 and October 15 of each
year, commencing on January 15, 1994, and on the Revolving Loan
Commitment Termination Date.
B. Other Fees. Company agrees to pay to Agent such
other fees in the amounts and at the times separately agreed upon
between Company and Agent, as set forth in that certain letter
dated August 19, 1993 from Agent to Company.
2.4 Prepayments and Reductions in Commitments; General
--------------------------------------------------
Provisions Regarding Payments.
-----------------------------
A. Prepayments and Reductions in Commitments.
(i) Voluntary Prepayments. Company may, upon
---------------------
written or telephonic notice to Agent on or prior to
12:00 Noon (New York time) on the date of prepayment,
which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to
time prepay any Swing Line Loan in whole or in part on
any Business Day in an aggregate minimum amount of
$2,000,000 and integral multiples of $1,000,000 in
excess of that amount (or such lesser amount as shall
constitute the aggregate amount of all outstanding
Swing Line Loans). Company may, upon not less than
one Business Day's prior written or telephonic notice,
in the case of Base Rate Loans, and three Business
Days' prior written or telephonic notice, in the case
of Eurodollar Rate Loans, in each case confirmed in
writing to Agent (which notice Agent will promptly
transmit by telecopy or telephone to each Lender), at
any time and from time to time prepay any Revolving
Loans or Term Loans in whole or in part on any
Business Day in an aggregate minimum amount of
$5,000,000 and integral multiples of $1,000,000 in
excess of that amount (or, in each such case, such
lesser amount as shall constitute the aggregate amount
of all outstanding Term Loans or Revolving Loans, as
the case may be); provided, however, that a Eurodollar
-------- -------
Rate Loan may only be prepaid on the expiration of the
Interest Period applicable thereto. Notice of prepay-
ment having been given as aforesaid, the principal
amount of the Loans specified in such notice shall
become due and payable on the prepayment date
<PAGE>
specified therein. Any such voluntary prepayment
shall be applied as specified in subsection 2.4A(iv).
(ii) Voluntary Reductions of Revolving Loan
--------------------------------------
Commitments. Company may, upon not less than three
-----------
Business Days' prior written or telephonic notice
confirmed in writing to Agent (which notice Agent will
promptly transmit by telecopy or telephone to each
Lender), at any time and from time to time terminate
in whole or permanently reduce in part, without
premium or penalty, the Revolving Loan Commitments in
an amount up to the amount by which the Revolving Loan
Commitments exceed the Total Utilization of Revolving
Loan Commitments at the time of such proposed
termination or reduction; provided that any such
--------
partial reduction of the Revolving Loan Commitments
shall be in an aggregate minimum amount of $5,000,000
and integral multiples of $1,000,000 in excess of that
amount. Company's notice to Agent shall designate the
date (which shall be a Business Day) of such
termination or reduction and the amount of any partial
reduction, and such termination or reduction of the
Revolving Loan Commitments shall be effective on the
date specified in Company's notice and shall reduce
the Revolving Loan Commitment of each Lender
proportionately to its Pro Rata Share.
(iii) Mandatory Prepayments of Loans and
----------------------------------
Mandatory Reductions of Revolving Loan Commitments.
--------------------------------------------------
(a) Prepayments and Reductions from Asset
-------------------------------------
Sales. No later than the second Business Day
-----
following the date of receipt by Company or any
of its Subsidiaries or, in the case of insurance
proceeds paid to Agent pursuant to subsection
6.4, Agent of any Net Cash Proceeds of Asset Sale
(other than any Net Cash Proceeds of Asset Sale
from any Qualified Sale and Lease-back),
(1) Company shall prepay the Term Loans in an
amount equal to such Net Cash Proceeds of Asset
Sale minus any such Net Cash Proceeds of Asset
-----
Sale (the "Proposed Reinvestment Amount")
received by Company or such Subsidiary or, in the
case of insurance proceeds paid to Agent pursuant
to subsection 6.4, Agent in connection with (X)
any taking of assets described in clause (iii) of
the definition of the term "Asset Sale" or (Y)
any loss, damage or destruction of assets
described in clause (iv) of the definition of the
term "Asset Sale," in either case that Company or
such Subsidiary intends to use within 180 days of
such date of receipt to repair or restore the
portion of the assets so taken, lost, damaged or
destroyed that is remaining after such taking,
loss, damage or destruction or to replace the
<PAGE>
assets so taken, lost, damaged or destroyed;
provided that Company shall have delivered to
--------
Agent on or before such second Business Day an
Officers' Certificate setting forth the proposed
use of the Proposed Reinvestment Amount and such
other information with respect to such proposed
use as Agent may reasonably request, and (2) to
the extent such Net Cash Proceeds of Asset Sale
minus the Proposed Reinvestment Amount, if any,
-----
exceed the aggregate outstanding principal amount
of the Term Loans, Company shall prepay in an
amount equal to such excess first the Swing Line
-----
Loans to the full extent thereof and second the
------
Revolving Loans to the full extent thereof, and
the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such
excess; provided, however, that the first
-------- -------
$25,000,000 of Net Cash Proceeds of Asset Sale
(other than any Net Cash Proceeds of Asset Sale
from any Qualified Sale and Lease-back and other
than any Proposed Reinvestment Amount to the
extent such Proposed Reinvestment Amount is used
to repair, restore or replace assets of Company
or any of its Subsidiaries as provided above)
received by Company or any of its Subsidiaries in
any Fiscal Year shall not be required to be
applied to prepay any Loans or result in any
reduction of the Revolving Loan Commitments
pursuant to this subsection 2.4A(iii)(a). With
respect to any Proposed Reinvestment Amount, on
the one hundred and eighty-first day after
receipt thereof by Company or any of its
Subsidiaries, subject to the last proviso in the
immediately preceding sentence, (1) Company shall
prepay the Term Loans in an amount (the "Unused
Reinvestment Amount") equal to 100% of any
portion of such Proposed Reinvestment Amount that
has not been used to repair, restore or replace
the assets of Company or such Subsidiary as
provided above and (2) to the extent the Unused
Reinvestment Amount exceeds the aggregate
outstanding principal amount of the Term Loans,
Company shall prepay in an amount equal to such
excess first the Swing Line Loans to the full
-----
extent thereof and second the Revolving Loans to
------
the full extent thereof, and the Revolving Loan
Commitments shall be permanently reduced in an
amount equal to such excess. Concurrently with
any prepayment of the Loans and/or reduction of
the Revolving Loan Commitments pursuant to this
subsection 2.4A(iii)(a), Company shall deliver to
Agent an Officers' Certificate demonstrating the
derivation of the Net Cash Proceeds of Asset Sale
of the correlative Asset Sale from the gross
sales price thereof. In the event that Company
<PAGE>
shall, at any time after receipt of any Net Cash
Proceeds of Asset Sale in connection with any
Asset Sale, determine that the prepayments and/or
reductions of the Revolving Loan Commitments, if
any, previously made in respect of such Asset
Sale were in an aggregate amount less than that
required by the terms of this subsection
2.4A(iii)(a), Company shall promptly make an
additional prepayment of the Term Loans, Swing
Line Loans or Revolving Loans, as the case may be
(and, if applicable, the Revolving Loan Commit-
ments shall be permanently reduced), in the
manner described above in an amount equal to the
amount of any such deficit, and Company shall
concurrently therewith deliver to Agent an
Officers' Certificate demonstrating the
derivation of the additional Net Cash Proceeds of
Asset Sale resulting in such deficit. Any
mandatory prepayments pursuant to this subsection
2.4A(iii)(a) shall be applied as specified in
subsection 2.4A(iv).
(b) Prepayments and Reductions Due to
---------------------------------
Reversion of Surplus Assets of Pension Plans. No
--------------------------------------------
later than the second Business Day following the
date of return to Company or any of its
Subsidiaries of any surplus assets of any pension
plan of Company or any of its Subsidiaries,
(1) Company shall prepay the Term Loans in an
amount (the "Net Reversion Amount") equal to 100%
of such returned surplus assets, net of
transaction costs and expenses incurred in
obtaining such return, including incremental
taxes payable as a result thereof, and (2) to the
extent the Net Reversion Amount exceeds the
aggregate outstanding principal amount of the
Term Loans, Company shall prepay in an amount
equal to such excess first the Swing Line Loans
-----
to the full extent thereof and second the
------
Revolving Loans to the full extent thereof, and
the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such
excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(c) Prepayments and Reductions Due to
---------------------------------
Issuance of Equity Securities of Company. No
----------------------------------------
later than the second Business Day following the
date of receipt by Company or any of its
Affiliates of the Cash proceeds (net of under-
writing discounts and commissions and other
reasonable costs and expenses associated
therewith, including without limitation
reasonable legal fees and expenses) from the
issuance after the Closing Date of any equity
<PAGE>
Securities of Company (1) Company shall prepay
the Term Loans in an amount equal to 100% of
(A) such net Cash proceeds minus (B) any such net
-----
Cash proceeds (the "Proposed Redemption Amount")
that PTKH intends to use within 35 days of such
date of receipt to redeem all or any portion of
the PTKH Bonds (together with the applicable
prepayment premium required to be paid under the
PTKH Bond Indenture, as such indenture is in
effect as of the Closing Date) in an aggregate
amount of principal (including any principal
representing payment of deferred interest on any
PTKH Bonds) and interest not to exceed
(y) $180,000,000 minus (z) the aggregate amount
-----
of principal (including any principal
representing payment of deferred interest on any
PTKH Bonds) of PTKH Bonds and interest thereon
theretofore purchased, redeemed, defeased or paid
by PTKH (whether in accordance with this
subsection 2.3A(iii)(c) or otherwise) or for
which an irrevocable notice of purchase,
redemption or defeasance had theretofore been
given by PTKH (whether in accordance with this
subsection 2.4A(iii)(c) or otherwise); provided
--------
that no Event of Default or Potential Event of
Default shall have occurred and be continuing or
shall be caused by such proposed redemption; and
provided, further that PTKH shall have given
-------- -------
irrevocable notice of such redemption on or
before such second Business Day to the trustee
under the PTKH Bond Indenture, and (2) to the
extent such amount equal to 100% of (A) such net
Cash proceeds minus (B) the Proposed Redemption
-----
Amount, if any, exceeds the aggregate outstanding
principal amount of the Term Loans, Company shall
prepay in an amount equal to such excess first
-----
the Swing Line Loans to the full extent thereof
and second the Revolving Loans to the full extent
------
thereof, and the Revolving Loan Commitments shall
be permanently reduced in an amount equal to such
excess. With respect to any Proposed Redemption
Amount, on the thirty-fifth day after receipt
thereof by Company or any of its Affiliates
(1) Company shall prepay the Term Loans in an
amount (the "Unused Redemption Amount") equal to
100% of any portion of such Proposed Redemption
Amount that has not been used to redeem all or
any portion of the PTKH Bonds and accrued
interest thereon and any applicable prepayment
premium, in each case in accordance with this
subsection 2.4A(iii)(c) and subsection 7.5, and
(2) to the extent the Unused Redemption Amount
exceeds the aggregate outstanding principal
amount of the Term Loans, Company shall prepay in
an amount equal to such excess first the Swing
-----
<PAGE>
Line Loans to the full extent thereof and second
------
the Revolving Loans to the full extent thereof,
and the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such
excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(d) Prepayments and Reductions Due to
---------------------------------
Issuance of Equity Securities of Certain
----------------------------------------
Affiliates of Company. In the event that an
---------------------
Event of Default or a Potential Event of Default
shall have occurred and be continuing as of the
date of any issuance after the Closing Date of
any equity Securities of PTKH or any other entity
that directly or indirectly owns 100% of the
outstanding capital stock of Company or an Event
of Default or a Potential Event of Default shall
be caused by such issuance, no later than the
second Business Day following the date of receipt
by PTKH or any of its Affiliates of the Cash
proceeds (net of underwriting discounts and
commissions and other reasonable costs and
expenses associated therewith, including without
limitation reasonable legal fees and expenses)
from such issuance (1) Company shall prepay the
Term Loans in an amount equal to 100% of such net
Cash proceeds and (2) to the extent such amount
equal to 100% of such net Cash proceeds exceeds
the aggregate outstanding principal amount of the
Term Loans, Company shall prepay in an amount
equal to such excess first the Swing Line Loans
-----
to the full extent thereof and second the
------
Revolving Loans to the full extent thereof, and
the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such
excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(e) Prepayments and Reductions from
-------------------------------
Consolidated Excess Cash Flow. In the event that
-----------------------------
there shall be Consolidated Excess Cash Flow for
any Fiscal Year, within 90 days after the last
day of such Fiscal Year (1) Company shall prepay
the Term Loans in an amount equal to 50% of such
Consolidated Excess Cash Flow and (2) to the
extent such amount equal to 50% of such
Consolidated Excess Cash Flow exceeds the
aggregate outstanding principal amount of the
Term Loans, Company shall prepay in an amount
equal to such excess first the Swing Line Loans
-----
to the full extent thereof and second the
------
Revolving Loans to the full extent thereof, and
the Revolving Loan Commitments shall be
permanently reduced in an amount equal to such
<PAGE>
excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(f) Prepayments and Reductions Due to
---------------------------------
Incurrence of Certain Non-Recourse Indebtedness.
-----------------------------------------------
No later than the second Business Day following
the date of incurrence by Company or any of its
Subsidiaries of any Indebtedness permitted under
subsection 7.1(ix), (1) Company shall prepay the
Term Loans in an amount (the "Net Principal
Amount") equal to 100% of the principal amount of
such Indebtedness, net of any reasonable costs
and expenses associated therewith, including
without limitation reasonable legal fees and
expenses, and (2) to the extent the Net Principal
Amount exceeds the aggregate outstanding
principal amount of the Term Loans, Company shall
prepay in an amount equal to such excess first
-----
the Swing Line Loans to the full extent thereof
and second the Revolving Loans to the full extent
------
thereof, and the Revolving Loan Commitments shall
be permanently reduced in an amount equal to such
excess. Any such mandatory prepayments shall be
applied as specified in subsection 2.4A(iv).
(g) Prepayments Due to Reductions or
--------------------------------
Restrictions of Revolving Loan Commitments.
------------------------------------------
Company shall from time to time prepay first the
-----
Swing Line Loans and second the Revolving Loans
------
to the extent necessary (1) so that the Total
Utilization of Revolving Loan Commitments shall
not at any time exceed the Revolving Loan
Commitments then in effect and (2) to give effect
to the limitations set forth in clause (b) of the
second paragraph of subsection 2.1A(iii). Any
such mandatory prepayments shall be applied as
specified in subsection 2.4A(iv).
(iv) Application of Prepayments.
--------------------------
(a) Application of Voluntary Prepayments by
---------------------------------------
Type of Loans and Order of Maturity. Subject to
-----------------------------------
the last sentence of this subsection 2.4A(iv)(a),
any voluntary prepayments pursuant to subsection
2.4A(i) shall be applied as specified by Company
in the applicable notice of prepayment; provided
--------
that in the event Company fails to specify the
Loans to which any such prepayment shall be
applied, such prepayment shall be applied first
-----
to repay outstanding Swing Line Loans to the full
extent thereof, second to repay outstanding
------
Revolving Loans to the full extent thereof, and
third to repay outstanding Term Loans to the full
-----
extent thereof. Any voluntary prepayment of the
Term Loans pursuant to subsection 2.4A(i) shall
<PAGE>
be applied first to the prepayment of the Term A
-----
Loans in an amount equal to any installments of
principal of the Term A Loans set forth in
subsection 2.1E(i) that are scheduled to be paid
within 12 months of the date of such voluntary
prepayment and which remain unpaid at the time of
such voluntary prepayment, such prepayment of the
Term A Loans to be applied to reduce such
scheduled installments of principal of the Term A
Loans in forward order of maturity and second, to
------
the extent of any excess, pro rata to the
prepayment of the Term A Loans and Term B Loans
then outstanding, such prepayments to be applied
to reduce the scheduled installments of principal
of the Term A Loans set forth in subsection
2.1E(i) in inverse order of maturity and to
reduce the scheduled installments of principal of
the Term B Loans set forth in subsection 2.1E(ii)
in inverse order of maturity.
(b) Application of Mandatory Prepayments of
---------------------------------------
Term Loans by Order of Maturity. Any mandatory
-------------------------------
prepayments of the Term Loans pursuant to
subsection 2.4A(iii) shall be applied pro rata to
each scheduled installment of principal of the
Term A Loans and the Term B Loans set forth in
subsection 2.1E(i) and subsection 2.1E(ii),
respectively, that is unpaid at the time of such
prepayment.
(c) Application of Prepayments to Base Rate
---------------------------------------
Loans and Eurodollar Rate Loans. Considering
-------------------------------
Term A Loans, Term B Loans, Revolving Loans and
Swing Line Loans being prepaid separately, any
prepayment shall be applied first to Base Rate
Loans to the full extent thereof before applica-
tion to Eurodollar Rate Loans, in each case in a
manner which minimizes the amount of any payments
required to be made by Company pursuant to
subsection 2.6D.
B. General Provisions Regarding Payments.
(i) Manner and Time of Payment. All payments by
--------------------------
Company of principal, interest, fees and other
Obligations hereunder, under the Notes and under the
other Loan Documents shall be made in same day funds
and without defense, setoff or counterclaim, free of
any restriction or condition, and delivered to Agent
not later than 1:00 P.M. (New York time) on the date
due at its office located at One Bankers Trust Plaza,
New York, New York, for the account of Lenders; funds
received by Agent after that time on such due date
shall be deemed to have been paid by Company on the
next succeeding Business Day. Company hereby
<PAGE>
authorizes Agent to charge its accounts with Agent in
order to cause timely payment to be made to Agent of
all principal, interest, fees and expenses due
hereunder (subject to sufficient funds being available
in its accounts for that purpose).
(ii) Application of Payments to Principal and
----------------------------------------
Interest. All payments in respect of the principal
--------
amount of any Loan shall include payment of accrued
interest on the principal amount being repaid or
prepaid, and all such payments shall be applied to the
payment of interest before application to principal.
(iii) Apportionment of Payments. Aggregate
-------------------------
principal and interest payments shall be apportioned
among all outstanding Loans to which such payments
relate, in each case proportionately to Lenders'
respective Pro Rata Shares. Agent shall promptly
distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page
hereof or at such other address as such Lender may
request, its Pro Rata Share of all such payments
received by Agent and the commitment fees of such
Lender when received by Agent pursuant to subsection
2.3. Notwithstanding the foregoing provisions of this
subsection 2.4B(iii), if, pursuant to the provisions
of subsection 2.6C, any Notice of Conversion/Continu-
ation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its
Pro Rata Share of any Eurodollar Rate Loans, Agent
shall give effect thereto in apportioning payments
received thereafter.
(iv) Payments on Business Days. Whenever any
-------------------------
payment to be made hereunder shall be stated to be due
on a day that is not a Business Day, such payment
shall be made on the next succeeding Business Day and
such extension of time shall be included in the
computation of the payment of interest hereunder or of
the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees
-------------------
that before disposing of any Note held by it, or any
part thereof (other than by granting participations
therein), that Lender will make a notation thereon of
all Loans evidenced by that Note and all principal
payments previously made thereon and of the date to
which interest thereon has been paid; provided that
--------
the failure to make (or any error in the making of) a
notation of any Loan made under such Note shall not
limit or otherwise affect the obligations of Company
hereunder or under such Note with respect to any Loan
or any payments of principal or interest on such Note.
2.5 Use of Proceeds.
---------------
<PAGE>
A. Term Loans; Initial Revolving Loans. The
proceeds of the Term Loans, together with up to $95,000,000 in
proceeds of the initial Revolving Loans and other funds available
to Company, shall be applied by Company to (i) repay the Holdings
Intercompany Notes, (ii) repay Company's obligations under the
Existing Credit Agreement, and (iii) pay Transaction Costs in an
amount not exceeding $50,000,000.
B. Subsequent Revolving Loans; Swing Line Loans.
The proceeds of any subsequent Revolving Loans and the proceeds
of any Swing Line Loans shall be applied by Company for working
capital or general corporate purposes, which may include (i) the
repayment of the Swing Line Loans pursuant to subsection
2.1A(iv), (ii) the reimbursement to any Issuing Lender of any
amounts drawn under any Letters of Credit issued by such Issuing
Lender as provided in subsection 3.3, (iii) the making of inter-
company loans to any of Company's wholly-owned Subsidiaries, in
accordance with subsection 7.1(iv), for their own working capital
or general corporate purposes, (iv) the making of Restricted
Junior Payments permitted by subsections 7.5(ii) and 7.5(iii),
and (iv) the payment of Transaction Costs in an amount not
exceeding $50,000,000 minus the amount of Transaction Costs paid
-----
or to be paid out of the proceeds of the Term Loans and the
initial Revolving Loans.
C. Margin Regulations. No portion of the proceeds
of any borrowing under this Agreement shall be used by Company or
any of its Subsidiaries in any manner that might cause the
borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the
Board of Governors of the Federal Reserve System or any other
regulation of such Board or to violate the Exchange Act, in each
case as in effect on the date or dates of such borrowing and such
use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans.
--------------------------------------------------
Notwithstanding any other provision of this
Agreement to the contrary, the following provisions shall govern
with respect to Eurodollar Rate Loans as to the matters covered:
A. Determination of Applicable Interest Rate. As
soon as practicable after 10:00 A.M. (New York time) on each
Interest Rate Determination Date, Agent shall determine (which
determination shall, absent manifest error (including
arithmetical error), be final, conclusive and binding upon all
parties) the interest rate that shall apply to the Eurodollar
Rate Loans for which an interest rate is then being determined
for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to
Company and each Lender.
B. Inability to Determine Applicable Interest Rate.
In the event that Agent shall have determined (which
determination shall be final and conclusive and binding upon all
<PAGE>
parties hereto), on any Interest Rate Determination Date with
respect to any Eurodollar Rate Loans, that by reason of circum-
stances affecting the interbank Eurodollar market, adequate and
fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the
definition of Adjusted Eurodollar Rate, Agent shall on such date
give notice (by telecopy or by telephone confirmed in writing) to
Company and each Lender of such determination, whereupon (i) no
Loans may be made as, or converted to, Eurodollar Rate Loans
until such time as Agent notifies Company and Lenders that the
circumstances giving rise to such notice no longer exist and
(ii) any Notice of Borrowing or Notice of Conversion/Continuation
given by Company with respect to the Loans in respect of which
such determination was made shall be deemed to be rescinded by
Company.
C. Illegality or Impracticability of Eurodollar Rate
Loans. In the event that on any date any Lender shall have
determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after
consultation with Company and Agent) that the making, maintaining
or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith
with any law, treaty, governmental rule, regulation, guideline or
order (or would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even
though the failure to comply therewith would not be unlawful) or
(ii) has become impracticable, or would cause such Lender
material hardship, as a result of contingencies occurring after
the date of this Agreement which materially and adversely affect
the interbank Eurodollar market or the position of such Lender in
that market, then, and in any such event, such Lender shall be an
"Affected Lender" and it shall on that day give notice (by
telecopy or by telephone confirmed in writing) to Company and
Agent of such determination (which notice Agent shall promptly
transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to,
Eurodollar Rate Loans shall be suspended until such notice shall
be withdrawn by the Affected Lender, (b) to the extent such
determination by the Affected Lender relates to a Eurodollar Rate
Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected
Lender shall make such Loan as (or convert such Loan to, as the
case may be) a Base Rate Loan, (c) the Affected Lender's
obligation to maintain its outstanding Eurodollar Rate Loans (the
"Affected Loans"), shall be terminated at the earlier to occur of
the expiration of the Interest Period then in effect with respect
to the Affected Loans or when required by law, and (d) the
Affected Loans shall automatically convert into Base Rate Loans
on the date of such termination. Notwithstanding the foregoing,
to the extent a determination by an Affected Lender as described
above relates to a Eurodollar Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject
to the provisions of subsection 2.6D, to rescind such Notice of
<PAGE>
Borrowing or Notice of Conversion/Continuation as to all Lenders
by giving notice (by telecopy or by telephone confirmed in
writing) to Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described
above (which notice of rescission Agent shall promptly transmit
to each other Lender). Except as provided in the immediately
preceding sentence, nothing in this subsection 2.6C shall affect
the obligation of any Lender other than an Affected Lender to
make or maintain Loans as, or to convert Loans to, Eurodollar
Rate Loans in accordance with the terms of this Agreement.
D. Compensation For Breakage or Non-Commencement of
Interest Periods. Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth the
basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any
interest paid by that Lender to lenders of funds borrowed by it
to make or carry its Eurodollar Rate Loans and any loss, expense
or liability sustained by that Lender in connection with the
liquidation or re-employment of such funds) which that Lender may
sustain: (i) if for any reason (other than a default by that
Lender) a borrowing of any Eurodollar Rate Loan does not occur on
a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or
continuation of any Eurodollar Rate Loan does not occur on a date
specified therefor in a Notice of Conversion/Continuation or a
telephonic request for conversion or continuation, (ii) if any
prepayment or conversion of any of its Eurodollar Rate Loans
occurs on a date that is not the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its
Eurodollar Rate Loans is not made on any date specified in a
notice of prepayment given by Company, or (iv) as a consequence
of any other default by Company to repay its Eurodollar Rate
Loans when required by the terms of this Agreement.
E. Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for the
account of any of its branch offices or the office of an
Affiliate of that Lender.
F. Assumptions Concerning Funding of Eurodollar Rate
Loans. Calculation of all amounts payable to a Lender under this
subsection 2.6 and under subsection 2.7A shall be made as though
that Lender had actually funded each of its relevant Eurodollar
Rate Loans through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the
amount of such Eurodollar Rate Loan and having a maturity
comparable to the relevant Interest Period and through the
transfer of such Eurodollar deposit from an offshore office of
that Lender to a domestic office of that Lender in the United
States of America; provided, however, that each Lender may fund
-------- -------
each of its Eurodollar Rate Loans in any manner it sees fit and
the foregoing assumptions shall be utilized only for the purposes
<PAGE>
of calculating amounts payable under this subsection 2.6 and
under subsection 2.7A.
G. Eurodollar Rate Loans After Default. After the
occurrence of and during the continuation of a Potential Event of
Default or an Event of Default, (i) Company may not elect to have
a Loan be made or maintained as, or converted to, a Eurodollar
Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of
subsection 2.6D, any Notice of Borrowing or Notice of Conversion/
Continuation given by Company with respect to a requested
borrowing or conversion/continuation that has not yet occurred
shall be deemed to be rescinded by Company.
2.7 Increased Costs; Taxes; Capital Adequacy.
----------------------------------------
A. Compensation for Increased Costs and Taxes.
Subject to the provisions of subsection 2.7B(iii), in the event
that any Lender shall determine (which determination shall,
absent manifest error (including arithmetical error), be final
and conclusive and binding upon all parties hereto) that any law,
treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender
with any guideline, request or directive issued or made after the
date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable
lending office) to any additional Tax (other than any
Tax on the overall net income of such Lender) with
respect to this Agreement or any of the Loans or any
of its obligations hereunder;
(ii) imposes, modifies or holds applicable
any reserve (including without limitation any
marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held
by, or deposits or other liabilities in or for the
account of, or advances or loans by, or other credit
extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or
other requirements with respect to Eurodollar Rate
Loans that are reflected in the definition of Adjusted
Eurodollar Rate); or
(iii) imposes any other condition (other than
with respect to a Tax matter) on or affecting such
Lender (or its applicable lending office) or its
obligations hereunder or the interbank Eurodollar
market;
<PAGE>
and the result of any of the foregoing is to increase the cost to
such Lender of agreeing to make, making or maintaining Loans
hereunder or to reduce any amount received or receivable by such
Lender (or its applicable lending office) with respect thereto;
then, in any such case, Company shall promptly pay to such
Lender, upon receipt of the statement referred to in the
immediately succeeding sentence, such additional amount or
amounts (in the form of an increased rate of, or a different
method of calculating, interest or otherwise as such Lender in
its sole discretion shall determine) as may be necessary to
compensate such Lender for any such increased cost or reduction
in amounts received or receivable hereunder. Such Lender shall
deliver to Company a written statement, setting forth in
reasonable detail the basis for calculating the additional
amounts owed to such Lender under this subsection 2.7A, which
statement shall be conclusive and binding upon all parties hereto
absent manifest error (including arithmetical error).
B. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums
-----------------------------
payable by Company under this Agreement and the other
Loan Documents shall be paid free and clear of and
(except to the extent required by law) without any
deduction or withholding on account of any Tax
imposed, levied, collected, withheld or assessed by or
within the United States of America or any political
subdivision in or of the United States of America or
any other jurisdiction from or to which a payment is
made by or on behalf of Company or by any federation
or organization of which the United States of America
or any such jurisdiction is a member at the time of
payment (other than a Tax on the overall net income of
a Lender).
(ii) Grossing-up of Payments. If Company or
-----------------------
any other Person is required by law to make any
deduction or withholding on account of any such Tax
from any sum paid or payable by Company to Agent or
any Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such
requirement or any change in any such requirement
as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before
the date on which penalties attach thereto, such
payment to be made (if the liability to pay is
imposed on Company) for its own account or (if
that liability is imposed on Agent or such
Lender, as the case may be) on behalf of and in
the name of Agent or such Lender;
(c) the sum payable by Company in respect of
which the relevant deduction, withholding or
<PAGE>
payment is required shall be increased to the
extent necessary to ensure that, after the making
of that deduction, withholding or payment, Agent
or such Lender, as the case may be, receives on
the due date a net sum equal to what it would
have received had no such deduction, withholding
or payment been required or made; and
(d) within 30 days after paying any sum from
which it is required by law to make any deduction
or withholding, and within 30 days after the due
date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver
to Agent, to the extent reasonably available,
evidence reasonably satisfactory to the other
affected parties of such deduction, withholding
or payment and of the remittance thereof to the
relevant taxing or other authority;
provided that no such additional amount shall be
--------
required to be paid to any Lender under clause (c)
above except to the extent that any change after the
date hereof (in the case of each Lender listed on the
signature pages hereof) or after the date of the
Assignment and Acceptance pursuant to which such
Lender became a Lender (in the case of each other
Lender) in any such requirement for a deduction,
withholding or payment as is mentioned therein shall
result in an increase in the rate of such deduction,
withholding or payment from that in effect at the date
of this Agreement or at the date of such Assignment
and Acceptance, as the case may be, in respect of
payments to such Lender.
(iii) U.S. Tax Certificates. Each Lender that
---------------------
is organized under the laws of any jurisdiction other
than the United States or any state or other political
subdivision thereof shall deliver to Agent for
transmission to Company, on or prior to the Closing
Date (in the case of each Lender listed on the
signature pages hereof) or on the date of the
Assignment and Acceptance pursuant to which it becomes
a Lender (in the case of each other Lender), and at
such other times as may be necessary in the
determination of Company or Agent (each in the
reasonable exercise of its discretion), such certifi-
cates, documents or other evidence, properly completed
and duly executed by such Lender (including, without
limitation, Internal Revenue Service Form 1001 or Form
4224 or any other certificate or statement of
exemption required by Treasury Regulations Section
1.1441-4(a) or Section 1.1441-6(c) or any successor
thereto) to establish that such Lender is not subject
to deduction or withholding of United States federal
income tax under Section 1441 or 1442 of the Internal
<PAGE>
Revenue Code or otherwise (or under any comparable
provisions of any successor statute) with respect to
any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan
Documents. Company shall not be required to pay any
additional amount to any such Lender under clause (c)
of subsection 2.7B(ii) if such Lender shall have
failed to satisfy the requirements of the immediately
preceding sentence; provided that if such Lender shall
--------
have satisfied such requirements on the Closing Date
(in the case of each Lender listed on the signature
pages hereof) or on the date of the Assignment and
Acceptance pursuant to which it became a Lender (in
the case of each other Lender), nothing in this
subsection 2.7B(iii) shall relieve Company of its
obligation to pay any additional amounts pursuant to
clause (c) of subsection 2.7B(ii) in the event that,
as a result of any change in applicable law, such
Lender is no longer properly entitled to deliver
certificates, documents or other evidence at a
subsequent date establishing the fact that such Lender
is not subject to withholding as described in the
immediately preceding sentence.
(iv) Notice of Assessment. In the event that
--------------------
any Lender or Agent receives any written communication
from any taxing authority with respect to an
assessment or proposed assessment of any Taxes in
respect of which Company is obligated to make any
payments pursuant to this subsection 2.7B, such Lender
or Agent, as the case may be, shall promptly so notify
Company in writing and provide a copy of such
communication to Company.
C. Capital Adequacy Adjustment. If any Lender shall
have determined that the adoption, effectiveness, phase-in or
applicability after the date hereof of any law, rule or
regulation (or any provision thereof) regarding capital adequacy,
or any change therein or 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 applicable lending office)
with any guideline, request or directive regarding capital
adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or
would have the effect of reducing the rate of return on the
capital of such Lender or any corporation controlling such Lender
as a consequence of, or with reference to, such Lender's Loans or
Commitments or Letters of Credit or participations therein or
other obligations hereunder with respect to the Loans or the
Letters of Credit to a level below that which such Lender or such
controlling corporation could have achieved but for such
adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such Lender
or such controlling corporation with regard to capital adequacy),
<PAGE>
then from time to time, within five Business Days after receipt
by Company from such Lender of the statement referred to in the
immediately succeeding sentence, Company shall pay to such Lender
such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such
reduction. Each Lender, upon determining in good faith that any
additional amounts will be payable pursuant to this subsection
2.7C, will give a written statement thereof to Company (with a
copy of such statement to Agent), which statement shall set forth
in reasonable detail the basis of the calculation of such
additional amounts.
2.8 Obligation of Lenders and Issuing Lenders to Mitigate.
-----------------------------------------------------
Each Lender and Issuing Lender agrees that, as
promptly as practicable after the officer of such Lender or
Issuing Lender responsible for administering the Loans or Letters
of Credit of such Lender or Issuing Lender, as the case may be,
becomes aware of the occurrence of an event or the existence of a
condition that would cause such Lender to become an Affected
Lender or that would entitle such Lender or Issuing Lender to
receive payments under subsection 2.7 or subsection 3.6, it will,
to the extent not inconsistent with the internal policies of such
Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or
maintain the Commitments of such Lender or the affected Loans or
Letters of Credit of such Lender or Issuing Lender through
another lending or letter of credit office of such Lender or
Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the
circumstances which would cause such Lender to be an Affected
Lender would cease to exist or the additional amounts which would
otherwise be required to be paid to such Lender or Issuing Lender
pursuant to subsection 2.7 or subsection 3.6 would be materially
reduced and if, as determined by such Lender or Issuing Lender in
its sole discretion, the making, issuing, funding or maintaining
of such Commitments or Loans or Letters of Credit through such
other lending or letter of credit office or in accordance with
such other measures, as the case may be, would not otherwise
materially adversely affect such Commitments or Loans or Letters
of Credit or the interests of such Lender or Issuing Lender;
provided that such Lender or Issuing Lender will not be obligated
--------
to utilize such other lending or letter of credit office pursuant
to this subsection 2.8 unless Company agrees to pay all
incremental expenses incurred by such Lender or Issuing Lenders
as a result of utilizing such other lending or letter of credit
office as described in clause (i) above. A certificate as to the
amount of any such expenses payable by Company pursuant to this
subsection 2.8 (setting forth in reasonable detail the basis for
requesting such amount) submitted by such Lender or Issuing
Lender to Company shall be conclusive absent manifest error
(including arithmetical error).
2.9 Removal of a Lender.
-------------------
<PAGE>
A. In the event that any Lender shall give notice to
Company that such Lender is an Affected Lender or that such
Lender is entitled to receive payments under subsection 2.7 or
subsection 3.6, and unless the circumstances which have caused
such Lender to be an Affected Lender or which entitle such Lender
to receive such payments are no longer in effect, Company may, if
such Lender is not then an Issuing Lender and such Lender shall
fail to withdraw such notice within 5 Business Days after
Company's request for such withdrawal, upon thirty days' prior
written notice by Company to Agent and such Lender, elect (i) to
terminate the Commitments of such Lender upon receipt by such
Lender of such notice and prepay on the date of such termination
any outstanding Loans made by such Lender, together with accrued
and unpaid interest thereon and any other amounts payable to such
Lender hereunder pursuant to subsection 2.7 or subsection 3.6 or
otherwise; provided that if there are any Loans of such Lender
--------
outstanding at the time of such termination, the written consent
of Agent and Requisite Lenders, which consent shall not be
unreasonably withheld, shall be required in order for Company to
make the foregoing election; or (ii) to cause such Lender to
assign its Loans and Commitments in full to an Eligible Assignee
in accordance with the provisions of subsection 10.1B.
B. In the event that any Lender is a Defaulting
Lender, and unless the Default Period for such Defaulting Lender
is no longer continuing, Company may, if such Lender is not then
an Issuing Lender and such Lender shall fail to cure the default
as a result of which it has become a Defaulting Lender within
five Business Days after Company's request that it cure such
default, elect to cause such Lender to assign its Loans and
Commitments in full to an Eligible Assignee in accordance with
the provisions of subsection 10.1B.
2.10 Defaulting Lenders.
------------------
Anything contained herein to the contrary
notwithstanding, in the event that any Lender (a "Defaulting
Lender") defaults (a "Funding Default") in its obligation to fund
any Revolving Loan (a "Defaulted Revolving Loan") in accordance
with subsection 2.1, then (i) during any Default Period (as
defined below) with respect to such Defaulting Lender, such
Defaulting Lender shall be deemed not to be a "Lender" for
purposes of voting on any matters (including without limitation
the granting of any consents or waivers) with respect to any of
the Loan Documents; (ii) to the extent permitted by applicable
law, until such time as the Default Excess (as defined below)
with respect to such Defaulting Lender shall have been reduced to
zero (a) any voluntary prepayment of the Revolving Loans pursuant
to subsection 2.4A(i) shall, if Company so directs at the time of
making such voluntary prepayment, be applied to the Revolving
Loans of other Lenders as if such Defaulting Lender had no
Revolving Loans outstanding and the Revolving Loan Exposure of
such Defaulting Lender were zero and (b) any mandatory prepayment
of the Revolving Loans pursuant to subsection 2.4A(iii) shall, if
Company so directs at the time of making such mandatory
<PAGE>
prepayment, be applied to the Revolving Loans of other Lenders
(but not to the Revolving Loans of such Defaulting Lender) as if
such Defaulting Lender had funded all Defaulted Revolving Loans
of such Defaulting Lender, it being understood and agreed that
Company shall be entitled to retain any portion of any mandatory
prepayment of the Revolving Loans that is not paid to such
Defaulting Lender solely as a result of the operation of the
provisions of this clause (b); provided that the provisions of
---------
this clause (b) shall not affect any mandatory reductions of the
Revolving Loan Commitment of such Defaulting Lender pursuant to
subsection 2.4A(iii); (iii) such Defaulting Lender's Revolving
Loan Commitment and outstanding Revolving Loans and such
Defaulting Lender's Pro Rata Share of the Letter of Credit Usage
in respect of Commercial Letters of Credit shall be excluded for
purposes of calculating the commitment fee payable to Lenders
pursuant to subsection 2.3A in respect of any day during any
Default Period with respect to such Defaulting Lender, and such
Defaulting Lender shall not be entitled to receive any commitment
fee pursuant to subsection 2.3A with respect to such Defaulting
Lender's Revolving Loan Commitment in respect of any Default
Period with respect to such Defaulting Lender; and (iv) the Total
Utilization of Revolving Loan Commitments as at any date of
determination shall be calculated as if such Defaulting Lender
had funded all Defaulted Revolving Loans of such Defaulting
Lender.
For purposes of this Agreement (A) "Default
Period" means, with respect to any Defaulting Lender, the period
commencing on the date of the applicable Funding Default and
ending on the earliest of the following dates: (a) the date on
which all Revolving Loan Commitments are cancelled or terminated
and/or the Obligations are declared or become immediately due and
payable, (b) the date on which (1) the Default Excess with
respect to such Defaulting Lender shall have been reduced to zero
(whether by the funding by such Defaulting Lender of any
Defaulted Revolving Loans of such Defaulting Lender or by the
non-pro rata application of any voluntary or mandatory
prepayments of the Revolving Loans in accordance with the terms
of this subsection 2.10 or by a combination thereof) and (2) such
Defaulting Lender shall have delivered to Company and Agent a
written reaffirmation of its intention to honor its obligations
under this Agreement with respect to its Revolving Loan
Commitment, and (c) the date on which Company, Agent and
Requisite Lenders waive all Funding Defaults of such Defaulting
Lender in writing, and (B) "Default Excess" means, with respect
to any Defaulting Lender, the excess, if any, of such Defaulting
Lender's Pro Rata Share of the aggregate outstanding principal
amount of Revolving Loans of all Lenders (calculated as if all
Defaulting Lenders (other than such Defaulting Lender) had funded
all of their respective Defaulted Revolving Loans) over the
aggregate outstanding principal amount of Revolving Loans of such
Defaulting Lender.
No Commitment of any Lender shall be increased or
otherwise affected, and, except as otherwise expressly provided
<PAGE>
in this subsection 2.10, performance by Company of its
obligations under this Agreement and the other Loan Documents
shall not be excused or otherwise modified, as a result of any
Funding Default or the operation of this subsection 2.10. The
rights and remedies against a Defaulting Lender under this
subsection 2.10 are in addition to other rights and remedies
which Company may have against such Defaulting Lender with
respect to any Funding Default and which Agent or any Lender may
have against such Defaulting Lender with respect to any Funding
Default.
Section 3. LETTERS OF CREDIT
3.1 Issuance of Letters of Credit and Lenders' Purchase of
------------------------------------------------------
Participations Therein.
----------------------
A. Letters of Credit. In addition to Company
requesting that Lenders make Revolving Loans pursuant to
subsection 2.1A(iii) and that Swing Line Lender make Swing Line
Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time
to time during the period from the Closing Date to but excluding
the Revolving Loan Commitment Termination Date, that one or more
Lenders issue Letters of Credit for the account of Company for
the purposes specified in the definitions of Commercial Letters
of Credit and Standby Letters of Credit. Subject to the terms
and conditions of this Agreement and in reliance upon the
representations and warranties of Company herein set forth, any
one or more Lenders may, but (except as provided in subsection
3.1B(ii)) shall not be obligated to, issue such Letters of Credit
in accordance with the provisions of this subsection 3.1;
provided that Company shall not request that any Lender issue
--------
(and no Lender shall issue):
(i) any Letter of Credit if, after giving effect
to such issuance, the Total Utilization of Revolving
Loan Commitments would exceed the Revolving Loan
Commitments then in effect;
(ii) any Letter of Credit if, after giving
effect to such issuance, the Letter of Credit Usage
would exceed $100,000,000;
(iii) any Standby Letter of Credit having an
expiration date later than the earlier of (a) the
Revolving Loan Commitment Termination Date and (b) the
date which is one year from the date of issuance of
such Standby Letter of Credit; provided that the
--------
immediately preceding clause (b) shall not prevent any
Issuing Lender from agreeing that a Standby Letter of
Credit will automatically be extended for one or more
successive periods not to exceed one year each unless
such Issuing Lender elects not to extend for any such
additional period; provided, further that such Issuing
-------- -------
<PAGE>
Lender shall deliver a written notice to Agent setting
forth the last day on which such Issuing Lender may
give notice that it will not extend such Standby
Letter of Credit (the "Notification Date" with respect
to such Standby Letter of Credit) at least ten
Business Days prior to such Notification Date; and
provided, further that, unless Requisite Lenders
-------- -------
otherwise consent, such Issuing Lender shall give
notice that it will not extend such Standby Letter of
Credit if it has knowledge that an Event of Default
has occurred and is continuing on such Notification
Date;
(iv) any Commercial Letter of Credit having
an expiration date (a) later than the earlier of
(X) the Revolving Loan Commitment Termination Date and
(Y) the date which is 180 days from the date of
issuance of such Commercial Letter of Credit or
(b) that is otherwise unacceptable to the applicable
Issuing Lender in its reasonable discretion; or
(v) any Letter of Credit denominated in a
currency other than Dollars.
B. Mechanics of Issuance.
(i) Notice of Issuance. Whenever Company
------------------
desires the issuance of a Letter of Credit, it shall
deliver to the proposed Issuing Lender (with a copy to
Agent if Agent is not the proposed Issuing Lender) a
Notice of Issuance of Letter of Credit no later than
12:00 Noon (New York time) at least five Business Days
(or such shorter period as may be agreed to by the
Issuing Lender in any particular instance) in advance
of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (a) the
Lender requested to issue the Letter of Credit,
(b) the proposed date of issuance (which shall be a
Business Day), (c) the face amount of the Letter of
Credit, (d) the expiration date of the Letter of
Credit, (e) the name and address of the beneficiary,
and (f) the verbatim text of the proposed Letter of
Credit or the proposed terms and conditions, including
a precise description of any documents and the
verbatim text of any certificates to be presented by
the beneficiary which, if presented by the beneficiary
prior to the expiration date of the Letter of Credit,
would require the Issuing Lender to make payment under
the Letter of Credit; provided that the Issuing
--------
Lender, in its reasonable discretion, may require
changes in the text of the proposed Letter of Credit
or any such documents or certificates; and provided,
--------
further that no Letter of Credit shall require payment
-------
against a conforming draft to be made thereunder on
the same business day (under the laws of the
<PAGE>
jurisdiction in which the office of the Issuing Lender
to which such draft is required to be presented is
located) that such draft is presented if such
presentation is made after 10:00 A.M. (in the time
zone of such office of the Issuing Lender) on such
business day.
(ii) Determination of Issuing Lender. Upon
-------------------------------
receipt by a proposed Issuing Lender of a Notice of
Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit,
(a) in the event Agent is the proposed Issuing Lender,
Agent shall be the Issuing Lender with respect to such
Letter of Credit, notwithstanding the fact that the
Letter of Credit Usage with respect to such Letter of
Credit and with respect to all other Letters of Credit
issued by Agent, when aggregated with Agent's
outstanding Revolving Loans and Swing Line Loans, may
exceed Agent's Revolving Loan Commitment then in
effect, and (b) in the event any other Lender is the
proposed Issuing Lender, such Lender shall promptly
notify Company and Agent whether or not, in its sole
discretion, it has elected to issue such Letter of
Credit, and (1) if such Lender so elects to issue such
Letter of Credit it shall be the Issuing Lender with
respect thereto and (2) if such Lender fails to so
promptly notify Company and Agent or declines to issue
such Letter of Credit, Company may request Agent or
another Lender to be the Issuing Lender with respect
to such Letter of Credit in accordance with the
provisions of this subsection 3.1B.
(iii) Notification to Lenders. Promptly after
-----------------------
receipt of a Notice of Issuance of Letter of Credit
and the determination of the Issuing Lender with
respect to the proposed Letter of Credit, (a) Agent
shall notify each Lender of the proposed issuance of
such Letter of Credit, the Issuing Lender and the
amount of such Lender's respective participation
therein, determined in accordance with subsection
3.1C, and (b) the Issuing Lender shall deliver to each
other Lender a copy of such Notice of Issuance of
Letter of Credit.
(iv) Issuance of Letter of Credit. Upon
----------------------------
satisfaction or waiver (in accordance with subsection
10.6) of the conditions set forth in subsection 4.3,
the Issuing Lender shall issue the requested Letter of
Credit in accordance with the Issuing Lender's
standard operating procedures, and upon its issuance
of such Letter of Credit the Issuing Lender shall
promptly notify Agent and each Lender of such
issuance, which notice shall be accompanied by a copy
of such Letter of Credit.
<PAGE>
(v) Report to Lenders. Within 15 days after the
-----------------
end of each calendar quarter ending after the Closing
Date, so long as any Letter of Credit shall have been
outstanding during such calendar quarter, each Issuing
Lender shall deliver to each other Lender a report
setting forth the average for such calendar quarter of
the daily maximum amount available to be drawn under
the Letters of Credit issued by such Issuing Lender
that were outstanding during such calendar quarter.
C. Lenders' Purchase of Participations in Letters of
Credit. Immediately upon the issuance of each Letter of Credit,
each Lender shall be deemed to, and hereby agrees to, have
irrevocably purchased from the Issuing Lender a participation in
such Letter of Credit and drawings thereunder in an amount equal
to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 Letter of Credit Fees.
---------------------
Company agrees to pay the following amounts to
each Issuing Lender with respect to Letters of Credit issued by
it:
(i) with respect to each Standby Letter of
Credit, (a) a fronting fee equal to 0.25% per annum of
the average daily maximum amount available to be drawn
under such Standby Letter of Credit; provided that in
--------
any event the minimum fronting fee for any Standby
Letter of Credit shall be $500 (it being agreed that,
at the time of any cancellation or expiration of a
Standby Letter of Credit, if $500 exceeds the amount
of fronting fees theretofore paid or then accrued with
respect to such Standby Letter of Credit, the amount
of such excess shall be payable on the next date upon
which accrued fronting fees in respect of Standby
Letters of Credit are otherwise payable as provided in
this sentence); and (b) a letter of credit fee equal
to 1.75% per annum minus the Applicable Pricing
-----
Discount, if any, multiplied by the average daily
-------------
maximum amount available to be drawn under such
Standby Letter of Credit, in each case payable in
arrears on and through each January 15, April 15,
July 15 and October 15 of each year and computed on
the basis of a 360-day year for the actual number of
days elapsed;
(ii) with respect to each Commercial Letter
of Credit, (a) a fronting fee equal to 0.25% per annum
of the average daily maximum amount available to be
drawn under such Commercial Letter of Credit and (b) a
letter of credit fee equal to 0.50% per annum of the
average daily maximum amount available to be drawn
under such Commercial Letter of Credit, in each case
payable in arrears on and through each January 15,
<PAGE>
April 15, July 15 and October 15 of each year and
computed on the basis of a 360-day year for the actual
number of days elapsed; and
(iii) with respect to the issuance, amendment
or transfer of each Letter of Credit and each drawing
made thereunder (without duplication of the fees
payable under clauses (i) and (ii) above), documentary
and processing charges in accordance with such Issuing
Lender's standard schedule for such charges in effect
at the time of such issuance, amendment, transfer or
drawing, as the case may be.
Promptly upon receipt by such Issuing Lender of any amount
described in clause (i)(b) or (ii)(b) of this subsection 3.2,
such Issuing Lender shall distribute to each other Lender its Pro
Rata Share of such amount.
3.3 Drawings and Reimbursement of Amounts Drawn Under
-------------------------------------------------
Letters of Credit.
-----------------
A. Responsibility of Issuing Lender With Respect to
Requests For Drawings. In determining whether to honor any
request for drawing under any Letter of Credit by the beneficiary
thereof, the Issuing Lender shall be responsible only to
determine that the documents and certificates required to be
delivered under such Letter of Credit have been delivered and
that they strictly comply on their face with the requirements of
such Letter of Credit.
B. Reimbursement by Company of Amounts Drawn Under
Letters of Credit. In the event an Issuing Lender has determined
to honor a request for drawing under a Letter of Credit issued by
it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which
such drawing is honored (the "Reimbursement Date") in an amount
in Dollars in same day funds equal to the amount of such drawing;
provided that, anything contained in this Agreement to the
--------
contrary notwithstanding, (i) unless Company shall have notified
Agent and such Issuing Lender prior to 12:00 Noon (New York time)
on the date of such drawing that Company intends to reimburse
such Issuing Lender for the amount of such drawing with funds
other than the proceeds of Revolving Loans, Company shall be
deemed to have given a timely Notice of Borrowing to Agent
requesting Lenders to make Revolving Loans that are Base Rate
Loans on the Reimbursement Date in an amount in Dollars equal to
the amount of such drawing and (ii) subject to satisfaction or
waiver of the conditions specified in subsection 4.2B, Lenders
shall, on the Reimbursement Date, make Revolving Loans that are
Base Rate Loans in the amount of such drawing, the proceeds of
which shall be applied directly by Agent to reimburse such
Issuing Lender for the amount of such drawing; and provided,
--------
further that if for any reason proceeds of Revolving Loans are
-------
not received by such Issuing Lender on the Reimbursement Date in
<PAGE>
an amount equal to the amount of such drawing, Company shall
reimburse such Issuing Lender, on demand, in an amount in same
day funds equal to the excess of the amount of such drawing over
the aggregate amount of such Revolving Loans, if any, which are
so received. Nothing in this subsection 3.3B shall be deemed to
relieve any Lender from its obligation to make Revolving Loans on
the terms and conditions set forth in this Agreement, and Company
shall retain any and all rights it may have against any Lender
resulting from the failure of such Lender to make such Revolving
Loans under this subsection 3.3B.
C. Payment by Lenders of Unreimbursed Drawings Under
Letters of Credit.
(i) Payment by Lenders. In the event that
------------------
Company shall fail for any reason to reimburse any
Issuing Lender as provided in subsection 3.3B in an
amount equal to the amount of any drawing honored by
such Issuing Lender under a Letter of Credit issued by
it, such Issuing Lender shall promptly notify each
other Lender of the unreimbursed amount of such
drawing and of such other Lender's respective
participation therein based on such Lender's Pro Rata
Share. Each Lender shall make available to such
Issuing Lender an amount equal to its respective
participation, in Dollars and in same day funds, at
the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (New York time) on
the first business day (under the laws of the
jurisdiction in which such office of such Issuing
Lender is located) after the date notified by such
Issuing Lender. In the event that any Lender fails to
make available to such Issuing Lender on such business
day the amount of such Lender's participation in such
Letter of Credit as provided in this subsection 3.3C,
such Issuing Lender shall be entitled to recover such
amount on demand from such Lender together with
interest thereon at the rate customarily used by such
Issuing Lender for the correction of errors among
banks for three Business Days and thereafter at the
Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover
from any Issuing Lender any amounts made available by
such Lender to such Issuing Lender pursuant to this
subsection 3.3C in the event that it is determined by
the final judgment of a court of competent
jurisdiction that the payment with respect to a Letter
of Credit by such Issuing Lender in respect of which
payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such
Issuing Lender.
(ii) Distribution to Lenders of
--------------------------
Reimbursements Received From Company. In the event
------------------------------------
any Issuing Lender shall have been reimbursed by other
<PAGE>
Lenders pursuant to subsection 3.3C(i) for all or any
portion of any drawing honored by such Issuing Lender
under a Letter of Credit issued by it, such Issuing
Lender shall distribute to each other Lender which has
paid all amounts payable by it under subsection
3.3C(i) with respect to such drawing such other
Lender's Pro Rata Share of all payments subsequently
received by such Issuing Lender from Company in reim-
bursement of such drawing when such payments are
received. Any such distribution shall be made to a
Lender at its primary address set forth below its name
on the appropriate signature page hereof or at such
other address as such Lender may request.
D. Interest on Amounts Drawn Under Letters of
Credit.
(i) Payment of Interest by Company. Company
------------------------------
agrees to pay to each Issuing Lender, with respect to
drawings made under any Letters of Credit issued by
it, interest on the amount paid by such Issuing Lender
in respect of each such drawing from the date of such
drawing to but excluding the date such amount is
reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B) at a rate equal to
(a) for the period from the date of such drawing to
but excluding the Reimbursement Date, the rate then in
effect under this Agreement with respect to Revolving
Loans that are Base Rate Loans and (b) thereafter, a
rate which is 2% per annum in excess of the rate of
interest otherwise payable under this Agreement with
respect to Revolving Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i)
shall be computed on the basis of a 360-day year for
the actual number of days elapsed in the period during
which it accrues and shall be payable on demand or, if
no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in
full.
(ii) Distribution of Interest Payments by
------------------------------------
Issuing Lender. Promptly upon receipt by any Issuing
--------------
Lender of any payment of interest pursuant to
subsection 3.3D(i), (a) such Issuing Lender shall
distribute to each other Lender, out of the interest
received by such Issuing Lender in respect of the
period from the date of the applicable drawing under a
Letter of Credit issued by such Issuing Lender to but
excluding the date on which such Issuing Lender is
reimbursed for the amount of such drawing (including
any such reimbursement out of the proceeds of
Revolving Loans pursuant to subsection 3.3B), the
amount that such other Lender would have been entitled
to receive in respect of the letter of credit fee that
<PAGE>
would have been payable in respect of such Letter of
Credit for such period pursuant to subsection 3.2 if
no drawing had been made under such Letter of Credit,
and (b) in the event such Issuing Lender shall have
been reimbursed by other Lenders pursuant to
subsection 3.3C(i) for all or any portion of such
drawing, such Issuing Lender shall distribute to each
other Lender which has paid all amounts payable by it
under subsection 3.3C(i) with respect to such drawing
such other Lender's Pro Rata Share of any interest
received by such Issuing Lender in respect of that
portion of such drawing so reimbursed by other Lenders
for the period from the date on which such Issuing
Lender was so reimbursed by other Lenders to and
including the date on which such portion of such
drawing is reimbursed by Company. Any such distri-
bution shall be made to a Lender at its primary
address set forth below its name on the appropriate
signature page hereof or at such other address as such
Lender may request.
3.4 Obligations Absolute.
--------------------
The obligation of Company to reimburse each
Issuing Lender for drawings made under the Letters of Credit
issued by it and to repay any Revolving Loans made by Lenders
pursuant to subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and
shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of
any Letter of Credit;
(ii) the existence of any claim, set-off,
defense or other right which Company or any Lender may
have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for
whom any such transferee may be acting), any Issuing
Lender or other Lender or any other Person or, in the
case of a Lender, against Company, whether in
connection with this Agreement, the transactions
contemplated herein or any unrelated transaction
(including any underlying transaction between Company
or one of its Subsidiaries and the beneficiary for
which any Letter of Credit was procured);
(iii) any draft, demand, certificate or other
document presented under any Letter of Credit proving
to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or
inaccurate in any respect;
<PAGE>
(iv) payment by the applicable Issuing Lender
under any Letter of Credit against presentation of a
demand, draft or certificate or other document which
does not strictly comply with the terms of such Letter
of Credit;
(v) any adverse change in the business,
operations, properties, assets, condition (financial
or otherwise) or prospects of Company or any of its
Subsidiaries;
(vi) any breach of this Agreement or any
other Loan Document by any party thereto;
(vii) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing; or
(viii) the fact that an Event of Default or a
Potential Event of Default shall have occurred and be
continuing;
provided, in each case, that payment by the applicable Issuing
--------
Lender under the applicable Letter of Credit shall not have
constituted gross negligence or willful misconduct of such
Issuing Lender under the circumstances in question (as determined
by a final judgment of a court of competent jurisdiction).
3.5 Indemnification; Nature of Issuing Lenders' Duties.
--------------------------------------------------
A. Indemnification. In addition to amounts payable
as provided in subsection 3.6, Company hereby agrees to protect,
indemnify, pay and save harmless each Issuing Lender from and
against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable fees,
expenses and disbursements of counsel and allocated costs of
internal counsel) which such Issuing Lender may incur or be
subject to as a consequence, direct or indirect, of (i) the
issuance of any Letter of Credit by such Issuing Lender, other
than as a result of (a) the gross negligence or willful
misconduct of such Issuing Lender as determined by a final
judgment of a court of competent jurisdiction or (b) subject to
the following clause (ii), the wrongful dishonor by such Issuing
Lender of a proper demand for payment made under any Letter of
Credit issued by it; or (ii) the failure of such Issuing Lender
to honor a drawing under any such Letter of Credit as a result of
any act or omission, whether rightful or wrongful, of any present
or future de jure or de facto government or governmental
authority (all such acts or omissions herein called "Governmental
Acts").
B. Nature of Issuing Lenders' Duties. As between
Company and any Issuing Lender, Company assumes all risks of the
acts and omissions of, or misuse of the Letters of Credit issued
by such Issuing Lender by, the respective beneficiaries of such
<PAGE>
Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for:
(i) the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in connection
with the application for and issuance of any such Letter of
Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged;
(ii) the validity or sufficiency of any instrument transferring
or assigning or purporting to transfer or assign any such Letter
of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions
required in order to draw upon such Letter of Credit;
(iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (v) errors in
interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to
make a drawing under any such Letter of Credit or of the proceeds
thereof; (vii) the misapplication by the beneficiary of any such
Letter of Credit of the proceeds of any drawing under such Letter
of Credit; or (viii) any consequences arising from causes beyond
the control of such Issuing Lender, including without limitation
any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of such Issuing Lender's
rights or powers hereunder.
In furtherance and extension and not in
limitation of the specific provisions set forth in the first
paragraph of this subsection 3.5B, any action taken or omitted by
any Issuing Lender under or in connection with the Letters of
Credit issued by it or any documents and certificates delivered
thereunder, if taken or omitted in good faith, shall not put such
Issuing Lender under any resulting liability to Company.
Notwithstanding anything to the contrary
contained in this subsection 3.5 (including without limitation
the last sentence of the second preceding paragraph), Company
shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross
negligence or willful misconduct of such Issuing Lender, as
determined by a final judgment of a court of competent
jurisdiction.
3.6 Increased Costs and Taxes Relating to Letters of
------------------------------------------------
Credit.
------
In the event that any Issuing Lender or Lender
shall determine (which determination shall, absent manifest error
(including arithmetical error), be final and conclusive and
binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or
in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or
<PAGE>
governmental rule, regulation or order), or any determination of
a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by any Issuing
Lender or Lender with any guideline, request or directive issued
or made after the date hereof by any central bank or other
governmental or quasi-governmental authority (whether or not
having the force of law):
(i) subjects such Issuing Lender or Lender (or
its applicable lending or letter of credit office) to
any additional Tax (other than any Tax on the overall
net income of such Issuing Lender or Lender) with
respect to the issuing or maintaining of any Letters
of Credit or the purchasing or maintaining of any
participations therein or any other obligations under
this Section 3, whether directly or by such being
imposed on or suffered by any particular Issuing
Lender;
(ii) imposes, modifies or holds applicable
any reserve (including without limitation any
marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement in respect of any
Letters of Credit issued by any Issuing Lender or
participations therein purchased by any Lender; or
(iii) imposes any other condition (other than
with respect to a Tax matter) on or affecting such
Issuing Lender or Lender (or its applicable lending or
letter of credit office) regarding this Section 3 or
any Letter of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to
such Issuing Lender or Lender of agreeing to issue, issuing or
maintaining any Letter of Credit or agreeing to purchase,
purchasing or maintaining any participation therein or to reduce
any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office)
with respect thereto; then, in any case, Company shall promptly
pay to such Issuing Lender or Lender, upon receipt of the
statement referred to in the immediately succeeding sentence,
such additional amount or amounts as may be necessary to
compensate such Issuing Lender or Lender for any such increased
cost or reduction in amounts received or receivable hereunder.
Such Issuing Lender or Lender shall deliver to Company a written
statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Issuing Lender or
Lender under this subsection 3.6, which statement shall be
conclusive and binding upon all parties hereto absent manifest
error (including arithmetical error).
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
<PAGE>
The obligations of Lenders to make Loans and the
issuance of Letters of Credit hereunder are subject to the
satisfaction of the following conditions.
4.1 Conditions to Term Loans and Initial Revolving Loans
----------------------------------------------------
and Swing Line Loans.
--------------------
The obligations of Lenders to make the Term Loans
and any Revolving Loans and Swing Line Loans to be made on the
Closing Date are, in addition to the conditions precedent
specified in subsection 4.2, subject to prior or concurrent
satisfaction of the following conditions:
A. Company Documents. On or before the Closing
Date, Company shall deliver or cause to be delivered to Lenders
(or to Agent for Lenders with sufficient originally executed
copies, where appropriate, for each Lender and its counsel) the
following, each, unless otherwise noted, dated the Closing Date:
(i) Certified copies of its Certificate of
Incorporation, together with a good standing
certificate from the Secretary of State of the State
of Delaware and each other state in which it is
qualified as a foreign corporation to do business,
each dated a recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of
the Closing Date by its corporate secretary or an
assistant secretary;
(iii) Resolutions of its Board of Directors
approving and authorizing the execution, delivery and
performance of this Agreement, the other Loan
Documents and the other Restructuring Documents to
which Company is a party and authorizing the
consummation of the Restructuring in accordance with
and in the manner contemplated by the Restructuring
Documents, certified as of the Closing Date by its
corporate secretary or an assistant secretary as being
in full force and effect without modification or
amendment;
(iv) Signature and incumbency certificates of
its officers executing this Agreement and the other
Loan Documents; and
(v) Executed originals of this Agreement, the
Notes (duly executed in accordance with subsection
2.1D, drawn to the order of each Lender and the Swing
Line Lender and with appropriate insertions), the
Company Security Agreement, the Company Trademark
Security Agreement, the Company Pledge Agreement, the
Collateral Account Agreement and the other Loan
Documents to which it is a party.
<PAGE>
B. Delivery of Closing Date Mortgages; Closing Date
Mortgage Policies. Agent shall have received from Company
(i) fully executed and notarized Mortgages (each a "Closing Date
Mortgage" and collectively the "Closing Date Mortgages")
encumbering the fee interest and/or leasehold interest of Company
in each Real Property Asset designated on Schedule 4.1B annexed
-------------
hereto (each a "Closing Date Mortgaged Property" and collectively
the "Closing Date Mortgaged Properties"); (ii) a title report
obtained by Company in respect of each real property fee interest
of Company constituting Closing Date Mortgaged Property; (iii) an
opinion of counsel (which counsel shall be reasonably
satisfactory to Agent) in the state in which each Closing Date
Mortgaged Property is located with respect to the enforceability
of the form of Closing Date Mortgage to be recorded in such state
and such other matters as Agent may reasonably request, in form
and substance reasonably satisfactory to Agent; (iv) in the case
of each real property leasehold interest of Company constituting
Closing Date Mortgaged Property, (a) such estoppel letters,
consents and waivers from the landlords on such real property as
may be required by Agent, which estoppel letters shall be in form
and substance reasonably satisfactory to Agent and which consents
and waivers shall consent to the Closing Date Mortgage relating
to such leasehold interest and to the assignment of such
leasehold interest to the successful bidder at a foreclosure or
similar sale (and to a subsequent third party assignee by Agent
or any Lender to the extent Agent or such Lender is the
successful bidder at such sale) in the event of a foreclosure or
similar action pursuant to such Closing Date Mortgage and
(b) evidence that the applicable lease, a memorandum of lease
with respect thereto, or other evidence of such lease in form and
substance reasonably satisfactory to Agent, has been or will be
recorded in all places to the extent necessary or desirable, in
the reasonable judgment of Agent, so as to enable the Closing
Date Mortgage encumbering such leasehold interest to effectively
create a valid and enforceable first priority lien (subject to
Permitted Encumbrances) on such leasehold interest in favor of
Agent (or such other Person as may be required or desired under
local law) for the benefit of Lenders; (v) ALTA mortgagee title
insurance policies issued by First American Title Insurance
Company of New York or other title insurers reasonably
satisfactory to Agent (the "Closing Date Mortgage Policies"), in
amounts not less than the respective amounts designated in
Schedule 4.1B annexed hereto with respect to any particular
-------------
Closing Date Mortgaged Properties, assuring Agent that the
applicable Closing Date Mortgages create valid and enforceable
first priority mortgage liens on the respective Closing Date
Mortgaged Properties, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a
standard survey exception, which Closing Date Mortgage Policies
shall be in form and substance reasonably satisfactory to Agent
and shall include an endorsement for mechanics' liens, for any
other matters that Agent may reasonably request and, with respect
to Closing Date Mortgage Policies that are issued for Closing
Date Mortgaged Properties located outside the State of New York,
for future advances under this Agreement, the Notes and the other
<PAGE>
Loan Documents, and shall provide for affirmative insurance and
such reinsurance as Agent may reasonably request, all of the
foregoing in form and substance reasonably satisfactory to Agent;
(vi) evidence, which may be in the form of a letter from an
insurance broker, a municipal engineer, Charles Jones, Inc. or
Transamerica Flood Hazard Certification, as to whether (a) any
Closing Date Mortgaged Property (``Closing Date Flood Hazard
Property'') is in an area designated by the Federal Emergency
Management Agency as having special flood or mud slide hazards
and (b) the community in which such Closing Date Flood Hazard
Property is located is participating in the National Flood
Insurance Program; and (vii) if there are any Closing Date Flood
Hazard Properties, Company's written acknowledgement of receipt
of written notification from Agent (a) as to the existence of
each such Closing Date Flood Hazard Property and (b) as to
whether the community in which each such Closing Date Flood
Hazard Property is located is participating in the National Flood
Insurance Program.
C. Security Interests. To the extent not otherwise
satisfied pursuant to subsection 4.1B, Company shall have taken
or caused to be taken (and Agent shall have received satisfactory
evidence thereof) such actions (other than the filing or
recording of items described in clauses (ii), (iii) and (iv)
below) in such a manner so that Agent has a valid and perfected
first priority security interest as of such date in the entire
Collateral (except to the extent any such security interest
cannot be granted under applicable laws). Such actions shall
include, without limitation, (i) delivery to Agent of
certificates (which certificates shall be registered in the name
of Agent or properly endorsed in blank for transfer or
accompanied by irrevocable undated stock powers duly endorsed in
blank, all in form and substance satisfactory to Agent)
representing the capital stock pledged pursuant to the Company
Pledge Agreement and delivery to Agent of all other instruments
(duly endorsed where appropriate) evidencing the Collateral, (ii)
delivery to Agent of Uniform Commercial Code financing statements
as to the Collateral for all jurisdictions as may be necessary or
desirable to perfect the security interests in the Collateral,
(iii) delivery to Agent of the Company Trademark Security
Agreement together with the cover sheet required for filing with
the United States Patent and Trademark Office and (iv) delivery
to Agent of such other documents and instruments that Agent
reasonably deems necessary or advisable to establish, preserve
and perfect the first priority Liens granted to Agent on behalf
of Lenders under the Collateral Documents.
D. PTKH Private Placement. On or prior to the
Closing Date, (i) PTKH shall have issued PTKH Bonds in an
aggregate original principal amount not to exceed $130 million to
Holdings in satisfaction of $130 million in principal amount of
Company's obligations under the Holdings Intercompany Note
related to the Holdings Subordinated Debentures, (ii) Holdings
shall have sold such PTKH Bonds to Equitable or its Affiliates in
exchange for Holdings Subordinated Debentures held by Equitable
<PAGE>
or its Affiliates having an aggregate outstanding principal
amount equal to $130 million as of immediately prior to the
Closing Date, and (iii) Holdings shall have paid all accrued
interest on the Holdings Subordinated Debentures so exchanged and
a premium in connection therewith which does not exceed 12.125%
of the aggregate outstanding principal amount of the Holdings
Subordinated Debentures so exchanged, all pursuant to the PTKH
Private Placement.
E. New Subordinated Debt. On or prior to the
Closing Date, Company shall have (i) issued and sold the Senior
Subordinated Notes, the aggregate gross cash proceeds of which
shall be no less than $436 million, (ii) issued and sold the
Junior Subordinated Notes, the aggregate gross cash proceeds of
which shall be $120 million, (iii) issued Subordinated Notes in
exchange for all of the Holdings Subordinated Notes that have
been tendered for exchange pursuant to the Subordinated Note
Exchange Offer, and (iv) issued Subordinated Debentures in
exchange for all of the Holdings Subordinated Debentures that
have been tendered for exchange pursuant to the Subordinated
Debenture Exchange Offer.
F. Termination of Existing Credit Agreement and
Holdings Existing Credit Agreement. On or prior to the Closing
Date, Company shall have repaid in full all amounts outstanding
under the Existing Credit Agreement and shall have terminated any
commitments to lend or make other extensions of credit
thereunder, Holdings shall have repaid in full all amounts
outstanding under the Holdings Existing Credit Agreement and
shall have terminated any commitments to lend or make other
extensions of credit thereunder, and Company shall have made
arrangements satisfactory to Agent with respect to any
outstanding letters of credit issued pursuant to the Existing
Credit Agreement that will remain outstanding after the Closing
Date.
G. Repayment of Indebtedness and Payment of Other
Amounts. On the Closing Date (i) with the proceeds of the Senior
Subordinated Notes, the Junior Subordinated Notes, the Term Loans
and the initial Revolving Loans hereunder (a) Company shall have
repaid in full all amounts outstanding under the Holdings
Intercompany Note related to the Holdings Senior Subordinated
Notes and repaid in full all amounts (other than a principal
amount not exceeding $1,800,000) outstanding under the Holdings
Discount Debentures and the Holdings Intercompany Note related to
the Holdings Senior Subordinated Notes shall have been cancelled
and returned to Company, (b) Company shall have repaid the
Holdings Intercompany Note related to the Holdings Subordinated
Debentures in an amount equal to the aggregate principal amount
of the Holdings Subordinated Debentures purchased by Holdings in
accordance with clause (d) of this subsection 4.1G, (c) Holdings
(1) shall have redeemed (X) all of the aggregate principal amount
of the Holdings Senior Subordinated Notes outstanding as of
immediately prior to the Closing Date, together with accrued
interest thereon, at a premium which does not exceed 3.63% of
<PAGE>
such aggregate outstanding principal amount, and (Y) all of the
aggregate principal amount (including up to $32,800,000 of
unamortized original issue discount) of the Holdings Discount
Debentures outstanding as of immediately prior to the Closing
Date, together with accrued interest thereon, at a premium which
does not exceed 2.50% of the aggregate face amount of the
Holdings Discount Debentures so redeemed or (2) shall have placed
on deposit amounts sufficient for each such redemption and shall
have timely given all necessary notices for each such redemption,
in each case pursuant to arrangements, and in form and substance,
satisfactory to Agent and Lenders, (d) Holdings shall have
(1) purchased for cash (X) all of the Holdings Subordinated
Debentures that have been tendered for purchase pursuant to the
Tender Offer and (Y) all of the Holdings Subordinated Debentures
held by Equitable or its Affiliates (other than Holdings
Subordinated Debentures exchanged for PTKH Bonds as described in
subsection 4.1D), which shall be in an aggregate outstanding
principal amount of approximately $185 million as of immediately
prior to the Closing Date, pursuant to the offer by Company to
purchase such Holdings Subordinated Debentures from Equitable or
its Affiliates, as more fully described in the Registration
Statement of Company and Holdings on Form S-1 (Registration No.
33-50053) filed with the Securities and Exchange Commission on
August 23, 1993, as amended by Amendment No. 1 thereto, (2) paid
all accrued interest on the Holdings Subordinated Debentures so
purchased, and (3) paid a premium in connection therewith which
does not exceed 12.125% of the aggregate outstanding principal
amount of the Holdings Subordinated Debentures so purchased, and
Holdings shall have surrendered all of the Holdings Subordinated
Debentures so purchased to the Holdings Subordinated Debenture
Trustee for cancellation, (e) Holdings shall have paid a consent
fee relating to the Supplemental Holdings Subordinated Note
Indenture to the holders of the Holdings Subordinated Notes that
have validly consented to the Supplemental Holdings Subordinated
Note Indenture, the aggregate amount of which consent fee shall
not exceed 0.50% of the aggregate principal amount of Holdings
Subordinated Notes with respect to which such consent has been
given, and (f) Holdings shall have paid a consent fee relating to
the Supplemental Holdings Subordinated Debenture Indenture to the
holders of the Holdings Subordinated Debentures that have validly
consented to the Supplemental Holdings Subordinated Debenture
Indenture, the aggregate amount of which consent fee shall not
exceed 0.50% of the aggregate principal amount of the Holdings
Subordinated Debentures with respect to which such consent has
been given, (ii) Company shall have delivered to Holdings the
Holdings Subordinated Notes tendered pursuant to the Subordinated
Note Exchange Offer in satisfaction of a corresponding portion of
Company's obligations under the Holdings Intercompany Note
related to the Holdings Subordinated Notes, and Holdings shall
have surrendered all of the Holdings Subordinated Notes so
delivered to the Holdings Subordinated Note Trustee for
cancellation, (iii) Company shall have delivered to Holdings the
Holdings Subordinated Debentures tendered pursuant to the
Subordinated Debenture Exchange Offer in satisfaction of a
corresponding portion of Company's obligations under the Holdings
<PAGE>
Intercompany Note related to the Holdings Subordinated
Debentures, and Holdings shall have surrendered all of the
Holdings Subordinated Debentures so delivered to the Holdings
Subordinated Debenture Trustee for cancellation, (iv) Holdings
shall have surrendered all of the Holdings Subordinated
Debentures exchanged pursuant to the PTKH Private Placement to
the Holdings Subordinated Debenture Trustee for cancellation, and
(v) Company shall have provided evidence satisfactory to Agent
that the obligations of Company under each of the Holdings
Intercompany Notes remaining outstanding after giving effect to
the Restructuring have been subordinated to the Obligations
pursuant to an amendment thereto containing subordination
provisions and other terms in form and substance satisfactory to
Agent.
H. Consent of Holders of Holdings Subordinated Notes
and Holdings Subordinated Debentures. On or prior to the Closing
Date, Company shall have provided evidence satisfactory to Agent
that (i) Holdings has obtained all consents from the holders of
the Holdings Subordinated Notes and the holders of the Holdings
Subordinated Debentures necessary to permit the effectiveness of
the Supplemental Holdings Subordinated Note Indenture and the
Supplemental Holdings Subordinated Debenture Indenture,
respectively, and (ii) the Supplemental Holdings Subordinated
Note Indenture and the Supplemental Holdings Subordinated
Debenture Indenture shall be in full force and effect.
I. Arrangements with SMG-II, Holdings, PTKH,
Plainbridge and Chefmark. On or prior to the Closing Date, each
of Company, SMG-II, Holdings, PTKH, Plainbridge and Chefmark
shall have entered into each of the Spin-Off Agreements to which
such Person is a party, in each case in form and substance
satisfactory to Agent and Lenders, and all other arrangements
among Company, SMG-II, Holdings, PTKH, Plainbridge and Chefmark
shall be satisfactory in form and substance to Agent and
Requisite Lenders.
J. Appraisals. Agent shall have received
appraisals, in form, scope and substance satisfactory to Agent
and satisfying the requirements of any applicable laws and
regulations, concerning any real property fee interests of
Company constituting Closing Date Mortgaged Properties (in each
case to the extent required under such laws and regulations as
determined by Agent in its discretion).
K. Environmental Matters. Agent shall have received
reports and other information, in form, scope and substance
satisfactory to Agent, concerning environmental liabilities of
Company and its Subsidiaries with respect to the Facilities
listed on Schedule 4.1K annexed hereto.
-------------
L. Plainbridge Credit Agreement. On or prior to the
Closing Date, Plainbridge shall have entered into the Plainbridge
Credit Agreement with the other parties thereto and all
conditions precedent to the funding of the initial loans or the
<PAGE>
issuance of the initial letters of credit thereunder shall have
been satisfied or waived with the consent of Agent and Requisite
Lenders.
M. Opinions of Company's Counsel. Lenders and their
respective counsel shall have received (i) originally executed
copies of one or more favorable written opinions of Shearman &
Sterling, counsel for Company, in form and substance reasonably
satisfactory to Agent and its counsel, dated as of the Closing
Date and setting forth substantially the matters in the opinions
designated in Exhibit VIII annexed hereto and as to such other
------------
matters as Agent acting on behalf of Lenders may reasonably
request, together with evidence satisfactory to Agent that
Company has requested such counsel to deliver such opinions to
Lenders, (ii) originally executed copies of one or more favorable
written opinions of Marc A. Strassler, vice president and general
counsel of Company, in form and substance reasonably satisfactory
to Agent and its counsel, dated as of the Closing Date and
setting forth substantially the matters in the opinions
designated in Exhibit IX annexed hereto and as to such other
----------
matters as Agent acting on behalf of Lenders may reasonably
request, and (iii) copies of all opinions delivered by Shearman &
Sterling, counsel for SMG-II, Holdings, PTKH, Company,
Plainbridge and Chefmark, and Marc A. Strassler, vice president
and general counsel of SMG-II, Holdings, PTKH, Company,
Plainbridge and Chefmark, in each case in connection with the
Restructuring Documents (other than the Loan Documents).
N. Opinions of Agent's Counsel. Lenders shall have
received originally executed copies of one or more favorable
written opinions of O'Melveny & Myers, counsel to Agent, dated as
of the Closing Date, substantially in the form of Exhibit X
---------
annexed hereto and as to such other matters as Agent acting on
behalf of Lenders may reasonably request.
O. Solvency. On the Closing Date, Agent and Lenders
shall have received a certificate from Company executed by its
chief financial officer, in form and substance satisfactory to
Agent and Lenders, to the effect that, after giving effect to the
Restructuring and the contemplated borrowings of the full amounts
which will be available under the Commitments, the Company will
be Solvent, and Agent and Lenders shall have received such other
factual information supporting the conclusions reached in such
certificate as may be available to such chief financial officer
and as Agent or any Lender may reasonably request, all in form
and substance satisfactory to Agent and Requisite Lenders.
P. Fees. Company shall have paid to Agent, for
distribution (as appropriate) to Agent and Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
Q. No Material Adverse Effect. Since January 30,
1993, no material adverse change in the business, operations,
properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole, or
<PAGE>
of Holdings and its Subsidiaries, taken as a whole, shall have
occurred.
R. Restructuring Documents. On the Closing Date,
(i) Agent shall have received executed or conformed copies of the
Spin-Off Agreements (in each case as amended through and
including the Closing Date), the terms and conditions of which
shall be in all respects satisfactory to Agent and Requisite
Lenders, (ii) Agent shall have received executed or conformed
copies of the New Subordinated Debt Indentures and the PTKH Bond
Indenture and (a) the Senior Subordinated Note Indenture shall be
in the form of Exhibit 4.1 to the Registration Statement of
Company on Form S-1 (Registration No. 33-59612) filed with the
Securities and Exchange Commission on March 16, 1993, as amended
by Amendment Nos. 1, 2, 3 and 4 thereto, with such changes
thereto, if any, that have been approved by Agent and Requisite
Lenders or that would otherwise have been permitted to be made
pursuant to subsection 7.14A if the Senior Subordinated Notes
were issued and outstanding at the time of any such change,
(b) the Subordinated Note Indenture shall be in the form of
Exhibit 4.1 to the Registration Statement of Company and Holdings
on Form S-1 (Registration No. 33-59616) filed with the Securities
and Exchange Commission on March 16, 1993, as amended by
Amendment Nos. 1, 2 and 3 thereto and Post-Effective Amendment
No. 1 filed with the Securities and Exchange Commission on August
23, 1993, as amended by Amendment No. 1 thereto, with such
changes thereto, if any, that have been approved by Agent and
Requisite Lenders or that would otherwise have been permitted to
be made pursuant to subsection 7.14A if the Subordinated Notes
were issued and outstanding at the time of any such change,
(c) the Junior Subordinated Note Indenture shall be in the form
of Exhibit 4.2 to the Registration Statement of Company on Form
S-1 (Registration No. 33-59612) filed with the Securities and
Exchange Commission on March 16, 1993, as amended by Amendment
Nos. 1, 2, 3 and 4 thereto, with such changes thereto, if any,
that have been approved by Agent and Requisite Lenders or that
would otherwise have been permitted to be made pursuant to
subsection 7.14A if the Junior Subordinated Notes were issued and
outstanding at the time of any such change, (d) the Subordinated
Debenture Indenture shall be in the form of Exhibit 4.3 to the
Registration Statement of Company and Holdings on Form S-1
(Registration No. 33-50053) filed with the Securities and
Exchange Commission on August 23, 1993, as amended by Amendment
No. 1 thereto, with such changes thereto, if any, that have been
approved by Agent and Requisite Lenders or that would otherwise
have been permitted to be made pursuant to subsection 7.14A if
the Subordinated Debentures were issued and outstanding at the
time of any such change, (e) the PTKH Bond Indenture and the
Redemption Agreement shall be in the form delivered to Agent and
Lenders on or prior to the date of execution of this Agreement by
Lenders, with such changes thereto, if any, that have been
approved by Agent and Requisite Lenders or that would not result
in an Event of Default under subsection 8.17 if the PTKH Bonds
were issued and outstanding at the time of any such change,
(f) the interest rate payable on the Senior Subordinated Notes
<PAGE>
(taking into account any original issue discount) shall be no
more than 10 3/4% per annum, (g) the interest rate payable on the
Subordinated Notes shall be no more than 11 5/8% per annum, (h) the
interest rate payable on the Junior Subordinated Notes shall be
no more than 12 1/4% per annum, (i) the interest rate payable on the
Subordinated Debentures shall be no more than 12 5/8% per annum, and
(j) the interest rate payable on the PTKH Bonds shall be no more
than 12% per annum, (iii) except as otherwise disclosed to and
agreed to in writing by Agent and Requisite Lenders, (a) the
Restructuring Documents (other than the Loan Documents) shall be
in full force and effect and no term or condition thereof shall
have been amended, modified or waived after the execution
thereof, (b) Company shall not have failed in any material
respect to perform any material obligation or covenant required
by the Restructuring Documents (other than the Loan Documents) to
be performed or complied with by it on or before the Closing
Date, and (c) all conditions to the Restructuring (including,
without limitation, any necessary third party consents and
approvals) shall have been satisfied or waived pursuant to all
applicable terms and proceedings and by Agent, and (iv) Agent
shall have received an Officers' Certificate from Company, in
form and substance satisfactory to Agent, to the effect set forth
in clause (iii) above.
S. Representations and Warranties; Performance of
Agreements. Company shall have delivered to Agent an Officers'
Certificate, in form and substance satisfactory to Agent, to the
effect that the representations and warranties in Section 5
hereof are true, correct and complete in all material respects on
and as of the Closing Date to the same extent as though made on
and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true,
correct and complete in all material respects on and as of such
earlier date, and that Company shall have performed in all
material respects all agreements and satisfied all conditions
which this Agreement provides shall be performed or satisfied by
it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agent and Requisite Lenders.
T. Completion of Proceedings. All corporate and
other proceedings taken or to be taken in connection with the
transactions contemplated hereby and by the other Restructuring
Documents and all documents incidental thereto not previously
found acceptable by Agent, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agent and
such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents
as Agent may reasonably request.
4.2 Conditions to All Loans.
-----------------------
The obligations of Lenders to make Loans on each
Funding Date are subject to the following further conditions
precedent:
<PAGE>
A. Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an
originally executed Notice of Borrowing, in each case signed by
the chief executive officer, the chief financial officer or the
treasurer of Company or by any other officer or cash management
personnel of Company designated by any of the above-described
officers on behalf of Company in a writing delivered to Agent.
B. As of that Funding Date the following statements
shall be true (and each of the giving of the applicable Notice of
Borrowing and the acceptance by Company of the proceeds of such
Loan shall constitute a representation and warranty by Company
that such statements (other than statements as to matters of
opinion of Agent or of Requisite Lenders) are true as of that
Funding Date):
(i) The representations and warranties contained
herein and in the other Loan Documents are true,
correct and complete in all material respects on and
as of that Funding Date to the same extent as though
made on and as of that date, except to the extent such
representations and warranties specifically relate to
an earlier date, in which case such representations
and warranties were true, correct and complete in all
material respects on and as of such earlier date;
(ii) No event has occurred and is continuing
or would result from the consummation of the borrowing
contemplated by such Notice of Borrowing that would
constitute an Event of Default or a Potential Event of
Default;
(iii) Each Loan Party has performed in all
material respects all agreements and satisfied all
conditions which this Agreement provides shall be
performed or satisfied by it on or before that Funding
Date;
(iv) No order, judgment or decree of any
court, arbitrator or governmental authority has
purported to enjoin or restrain any Lender from making
the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such
Funding Date does not violate any law including,
without limitation, Regulation G, Regulation T,
Regulation U or Regulation X of the Board of Governors
of the Federal Reserve System; and
(vi) There is not pending or, to the knowl-
edge of Company, threatened, any action, suit, pro-
ceeding, governmental investigation or arbitration
against or affecting Company or any of its
Subsidiaries or any property of Company or any of its
Subsidiaries that has not been disclosed by Company in
<PAGE>
writing pursuant to subsection 5.6 or 6.1(x) prior to
the making of the last preceding Loans (or, in the
case of the initial Loans, prior to the execution of
this Agreement), and there has occurred no development
not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so
disclosed, that, in either event, in the opinion of
Agent or of Requisite Lenders, could reasonably be
expected to have a Material Adverse Effect; and no
injunction or other restraining order has been issued
and no hearing to cause an injunction or other
restraining order to be issued is pending or noticed
with respect to any action, suit or proceeding seeking
to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result
of, the Restructuring, the transactions contemplated
by this Agreement or the making of Loans hereunder.
4.3 Conditions to Letters of Credit.
-------------------------------
The issuance of any Letter of Credit hereunder
(whether or not the applicable Issuing Bank is obligated to issue
such Letter of Credit) is subject to the following conditions
precedent:
A. On or before the date of issuance of the initial
Letter of Credit pursuant to this Agreement, the Term Loans shall
have been made.
B. On or before the date of issuance of such Letter
of Credit, Agent shall have received, in accordance with the
provisions of subsection 3.1B(i), an originally executed Notice
of Issuance of Letter of Credit, in each case signed by the chief
executive officer, the chief financial officer or the treasurer
of Company or by any other officer or cash management personnel
of Company designated by any of the above-described officers on
behalf of Company in a writing delivered to Agent, together with
all other information specified in subsection 3.1B(i) and such
other documents or information as the applicable Issuing Lender
may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit,
all conditions precedent described in subsection 4.2B shall be
satisfied to the same extent as if the issuance of such Letter of
Credit were the making of a Loan and the date of issuance of such
Letter of Credit were a Funding Date.
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this
Agreement and to make the Loans, to induce Issuing Lenders to
issue Letters of Credit and to induce other Lenders to purchase
participations therein, Company represents and warrants to each
<PAGE>
Lender, on the date of this Agreement, on each Funding Date and
on the date of issuance of each Letter of Credit, that the
following statements are true, correct and complete (it being
agreed that each such statement which expressly refers to a
particular date shall be understood to continue to refer to such
particular date each time that the representation and warranty of
Company set forth in this paragraph is made):
5.1 Organization, Powers, Qualification, Good Standing,
---------------------------------------------------
Business and Subsidiaries.
-------------------------
A. Organization and Powers. Each Loan Party is a
corporation duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation. Each Loan
Party has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted
and as proposed to be conducted, to enter into the Loan Documents
and the other Restructuring Documents, to carry out the
transactions contemplated thereby and to issue and pay the Notes,
in each case to the extent it is a party thereto.
B. Qualification and Good Standing. Each Loan Party
is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary
to carry out its business and operations, except in jurisdictions
where the failure to be so qualified or in good standing has not
had and could not reasonably be expected to have a Material
Adverse Effect.
C. Conduct of Business. Company and its
Subsidiaries are engaged only in the businesses permitted to be
engaged in pursuant to subsection 7.13.
D. Subsidiaries. All of the Subsidiaries of Company
as of the Closing Date are identified in Schedule 5.1 annexed
------------
hereto. The capital stock of each of the Subsidiaries of Company
identified in Schedule 5.1 annexed hereto is duly authorized,
------------
validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Subsidiaries
of Company identified in Schedule 5.1 annexed hereto is validly
------------
existing and in good standing under the laws of its respective
jurisdiction of incorporation set forth therein, has full
corporate power and authority to own its assets and properties
and to operate its business as presently owned and conducted, and
is qualified to do business and in good standing in every
jurisdiction where its assets are located and wherever necessary
to carry out its business and operations, in each case except
where failure to be so qualified or in good standing or a lack of
such corporate power and authority has not had and could not
reasonably be expected to have a Material Adverse Effect.
Schedule 5.1 annexed hereto correctly sets forth, as of the
------------
Closing Date, the ownership interest of Company in each of its
Subsidiaries identified therein.
5.2 Authorization of Borrowing, etc.
--------------------------------
<PAGE>
A. Authorization of Borrowing. The execution,
delivery and performance of the Loan Documents and the other
Restructuring Documents and the issuance, delivery and payment of
the Notes have been duly authorized by all necessary corporate
action on the part of each Loan Party that is a party thereto.
B. No Conflict. The execution, delivery and perfor-
mance by Company and its Subsidiaries of the Loan Documents and
the other Restructuring Documents, the issuance, delivery and
payment of the Notes and the consummation of the Restructuring
and the other transactions contemplated by the Loan Documents and
the other Restructuring Documents do not and will not (i) violate
any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate
or Articles of Incorporation or Bylaws of Company or any of its
Subsidiaries or any order, judgment or decree of any court or
other agency of government binding on Company or any of its
Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default
under any Contractual Obligation of Company or any of its
Subsidiaries, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of
Company or any of its Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Agent on behalf of
Lenders), or (iv) require any approval of stockholders or any
approval or consent of any Person under any Contractual
Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the
Closing Date and those set forth on Schedule 5.2B annexed hereto.
-------------
C. Governmental Consents. The execution, delivery
and performance by Company and its Subsidiaries of the Loan
Documents and the other Restructuring Documents, the issuance,
delivery and payment of the Notes and the consummation of the
Restructuring and the other transactions contemplated by the Loan
Documents and the other Restructuring Documents do not and will
not require any registration with, consent or approval of, or
notice to, or other action to, with or by, any federal, state or
other governmental authority or regulatory body, except for
------
(i) filings and recordings required in connection with the
perfection of the security interests granted pursuant to the Loan
Documents, (ii) registrations, consents, approvals, notices or
other actions set forth on Schedule 5.2C annexed hereto, and
-------------
(iii) registrations, consents, approvals, notices or other
actions the absence of which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
D. Binding Obligation. Each of the Loan Documents
and the other Restructuring Documents to which any Loan Party is
a party has been duly executed and delivered by each Loan Party
that is a party thereto and is the legal, valid and binding
obligation of such Loan Party, enforceable against such Loan
Party in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
<PAGE>
laws relating to or limiting creditors' rights generally or by
general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in
equity).
E. Valid Issuance of New Subordinated Debt and PTKH
Bonds.
(i) New Subordinated Debt. Company has the
---------------------
corporate power and authority to issue the New
Subordinated Debt. The New Subordinated Debt, when
issued and paid for, will be the legal, valid and
binding obligations of Company, enforceable against
Company in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by general
principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or
in equity). The subordination provisions of the New
Subordinated Debt will be enforceable against the
holders thereof, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting
creditors' rights generally or by general principles
of equity (regardless of whether such enforceability
is considered in a proceeding at law or in equity),
and the Loans and all other monetary Obligations
hereunder are and will be within the definition of
"Senior Indebtedness" included in such provisions.
The New Subordinated Debt, when issued and sold, will
either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be
exempt therefrom.
(ii) PTKH Bonds. PTKH has the corporate power
----------
and authority to issue the PTKH Bonds. The PTKH
Bonds, when issued and paid for, will be the legal,
valid and binding obligations of PTKH, enforceable
against PTKH in accordance with their respective
terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
relating to or limiting creditors' rights generally or
by general principles of equity (regardless of whether
such enforceability is considered in a proceeding at
law or in equity). The PTKH Bonds, when issued and
sold, will either (a) have been registered or
qualified under applicable federal and state
securities laws or (b) be exempt therefrom.
5.3 Financial Condition.
-------------------
Company has heretofore delivered to Lenders, at
Lenders' request, the following financial statements and
information: (i) the audited consolidated balance sheet of
<PAGE>
Company and its Subsidiaries as at January 30, 1993, and the
related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal
Year then ended and (ii) the unaudited consolidated balance sheet
of Company and its Subsidiaries as at July 31, 1993 and the
related unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its
Subsidiaries for the six months then ended. All such statements
were prepared in conformity with GAAP and fairly present the
financial position (on a consolidated basis) of the entities
described in such financial statements as at the respective dates
thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of
the periods then ended, subject, in the case of any such
unaudited financial statements, to changes resulting from audit
and year-end adjustments. Company does not (and will not
following the funding of the initial Loans) have any Contingent
Obligation, contingent liability or liability for taxes, long-
term lease or unusual forward or long-term commitment that is not
(but should in conformity with GAAP be) reflected in the
foregoing financial statements or the notes thereto and which in
any such case is material in relation to the business,
operations, properties, assets, condition (financial or
otherwise) or prospects of Company or any of its Subsidiaries.
5.4 No Material Adverse Change; No Restricted Junior
------------------------------------------------
Payments.
--------
Since January 30, 1993, no event or change has
occurred that has caused or evidences, either in any case or in
the aggregate, a Material Adverse Effect. Neither Company nor
any of its Subsidiaries has directly or indirectly declared,
ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted
by subsection 7.5.
5.5 Title to Properties; Liens.
--------------------------
Company and its Subsidiaries have (i) good,
sufficient and legal title to (in the case of fee interests in
real property), (ii) valid leasehold interests in (in the case of
leasehold interests in real or personal property), or (iii) good
title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent
financial statements delivered pursuant to subsection 6.1, in
each case except for assets disposed of since the date of such
financial statements in the ordinary course of business, pursuant
to the Spin-Off Agreements or as otherwise permitted under
subsection 7.7. Except as permitted by this Agreement, all such
properties and assets are free and clear of Liens.
5.6 Litigation; Adverse Facts.
-------------------------
<PAGE>
Except as set forth in Schedule 5.6 annexed
------------
hereto, there is no action, suit, proceeding, arbitration or
governmental investigation (whether or not purportedly on behalf
of Company or any of its Subsidiaries) at law or in equity or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, pending or, to the knowledge of Company,
threatened against or affecting Company or any of its
Subsidiaries or any property of Company or any of its Subsidi-
aries that has had, or could reasonably be expected to result in,
a Material Adverse Effect. Neither Company nor any of its
Subsidiaries is (i) in violation of any applicable law that has
had, or could reasonably be expected to result in, a Material
Adverse Effect or (ii) subject to or in default with respect to
any final judgment, writ, injunction, decree, rule or regulation
of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, that has had, or could
reasonably be expected to result in, a Material Adverse Effect.
5.7 Payment of Taxes.
----------------
Except to the extent permitted by subsection 6.3,
all tax returns and reports of Company and its Subsidiaries
required to be filed by any of them have been timely filed, and
all taxes, assessments, fees and other governmental charges upon
Company and its Subsidiaries and upon their respective
properties, assets, income, businesses and franchises which are
shown thereon to be due and payable have been paid when due and
payable. Company knows of no proposed tax assessment against
Company or any of its Subsidiaries which is not being contested
by Company or such Subsidiary in good faith and by appropriate
proceedings; provided that such reserves or other appropriate
--------
provisions, if any, as shall be required in conformity with GAAP
shall have been made or provided therefor.
5.8 Performance of Agreements; Materially Adverse
---------------------------------------------
Agreements.
----------
A. Neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of
the obligations, covenants or conditions contained in any of its
Contractual Obligations, and no condition exists that, with the
giving of notice or the lapse of time or both, would constitute
such a default, except where the consequences, direct or
indirect, of such default or defaults, if any, could not
reasonably be expected to result in a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a
party to or is otherwise subject to any agreement or instrument
or any charter or other internal restriction which has had, or
could reasonably be expected to result in, individually or in the
aggregate, a Material Adverse Effect.
5.9 Governmental Regulation.
-----------------------
<PAGE>
Neither Company nor any of its Subsidiaries is
subject to regulation under the Public Utility Holding Company
Act of 1935, the Federal Power Act, the Interstate Commerce Act
or the Investment Company Act of 1940 or under any other federal
or state statute or regulation which may limit its ability to
incur Indebtedness or which may otherwise render all or any
portion of the Obligations unenforceable.
5.10 Securities Activities.
---------------------
Neither Company nor any of its Subsidiaries is
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying any Margin Stock.
5.11 Employee Benefit Plans.
----------------------
A. Company and each of its ERISA Affiliates are in
compliance in all material respects with all applicable
provisions and requirements of ERISA and the regulations and
published interpretations thereunder with respect to each
Employee Benefit Plan, and have performed all their obligations
under each Employee Benefit Plan.
B. No ERISA Event has occurred with respect to which
Company or any of its ERISA Affiliates is subject to any
unsatisfied liability in excess of $2,000,000 or with respect to
which Company or any of its ERISA Affiliates could reasonably be
expected to incur liability in excess of $2,000,000, and no ERISA
Event is reasonably expected to occur after the date hereof which
could reasonably be expected to result in a liability to Company
or any of its ERISA Affiliates in excess of $1,000,000.
C. Except as set forth on Schedule 5.11 annexed
-------------
hereto, as of the most recent valuation date for any Pension
Plan, the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA), individually or in the aggregate
for all Pension Plans (excluding for purposes of such computation
any Pension Plans with respect to which assets exceed benefit
liabilities), does not exceed $0.
5.12 Certain Fees.
------------
Except as disclosed in the Registration Statement
of Company and Holdings on Form S-1 (Registration No. 33-59616)
filed with the Securities and Exchange Commission on March 16,
1993, as amended by Amendment Nos. 1, 2 and 3 thereto and Post-
Effective Amendment No. 1 filed with the Securities and Exchange
Commission on August 23, 1993, as amended by Amendment No. 1
thereto, no broker's or finder's fee or commission (other than
any such fees or commissions that may be payable to Persons
engaged by Agent or any Lender in connection with such engagement
by Agent or such Lender) will be payable with respect to this
Agreement or the Restructuring, and Company hereby indemnifies
Lenders against, and agrees that it will hold Lenders harmless
<PAGE>
from, any claim, demand or liability for any such broker's or
finder's fees alleged to have been incurred in connection
herewith or therewith and any expenses (including reasonable
fees, expenses and disbursements of counsel) arising in
connection with any such claim, demand or liability.
5.13 Environmental Protection.
------------------------
Except as set forth in Schedule 5.13 annexed
-------------
hereto:
(i) the operations of Company and each of its
Subsidiaries (including, without limitation, all
operations and conditions at or in the Facilities that
are presently owned, leased or operated by Company or
any of its Subsidiaries) comply with all Environmental
Laws except where the failure to comply therewith
could not reasonably be expected to have a Material
Adverse Effect;
(ii) Company and each of its Subsidiaries
have obtained all Governmental Authorizations under
Environmental Laws necessary to their respective
operations, and all such Governmental Authorizations
are in effect, and Company and each of its
Subsidiaries are in compliance with such Governmental
Authorizations except where the failure to obtain or
comply with any such Governmental Authorization
individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect;
(iii) neither Company nor any of its
Subsidiaries has received (a) any notice or claim to
the effect that it is or may be liable to any Person
as a result of or in connection with any Hazardous
Materials or (b) any letter or request for information
under Section 104 of the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C.
Sec. 9604) or comparable state laws, and, to the best of
Company's knowledge, none of the operations of Company
or any of its Subsidiaries is the subject of any
federal or state investigation relating to or in
connection with any Hazardous Materials at any
Facility or at any other location;
(iv) none of the operations of Company or any
of its Subsidiaries is subject to any judicial or
administrative proceeding alleging the violation of or
liability under any Environmental Laws which if
adversely determined could reasonably be expected to
have a Material Adverse Effect;
(v) other than provisions in leases entered into
by Company or any of its Subsidiaries in the ordinary
course of business which individually or in the
<PAGE>
aggregate would not create a liability that could
reasonably be expected to have a Material Adverse
Effect, neither Company nor any of its Subsidiaries
nor any of their respective Facilities that are
presently owned, leased or operated by Company or any
of its Subsidiaries nor any of their respective
operations are subject to any outstanding written
order or agreement with any governmental authority or
private party relating to (a) any Environmental Laws
or (b) any Environmental Claims which, in the case of
clause (a) or (b), individually or in the aggregate
could reasonably be expected to have a Material
Adverse Effect;
(vi) neither Company nor any of its
Subsidiaries nor, to the best knowledge of Company,
any of their respective predecessors by merger or
consolidation has filed any notice under any
Environmental Law indicating past or present treatment
or Release of Hazardous Materials at any Facility, and
none of Company's or any of its Subsidiaries'
operations involves the generation, transportation,
treatment, storage or disposal of hazardous waste, as
defined under 40 C.F.R. Parts 260-270 or any state
equivalent;
(vii) no Hazardous Materials exist on, under
or about any Facility in a manner that could
reasonably be expected to give rise to an
Environmental Claim having a Material Adverse Effect;
(viii) neither Company nor any of its
Subsidiaries nor, to the best knowledge of Company,
any of their respective predecessors by merger or
consolidation has disposed of any Hazardous Materials
in a manner that could reasonably be expected to give
rise to an Environmental Claim having a Material
Adverse Effect;
(ix) to the best knowledge of Company, no
underground storage tanks are on or at any Facility
that is presently owned, leased or operated by Company
or any of its Subsidiaries;
(x) neither Company nor any of its Subsidiaries
bears any liability in connection with underground
storage tanks on or at Facilities heretofore owned,
leased or operated by Company or any of its
Subsidiaries that individually or in the aggregate
could reasonably be expected to have a Material
Adverse Effect; and
(xi) to the best knowledge of Company, no
Lien in favor of any Person relating to or in
connection with any Environmental Claim involving in
<PAGE>
the aggregate at any time an amount in excess of
$1,000,000 has been filed or has been attached to one
or more Facilities that are presently owned, leased or
operated by Company or any of its Subsidiaries.
5.14 Employee Matters.
----------------
There is no strike or work stoppage in existence
or threatened involving Company or any of its Subsidiaries that
could reasonably be expected to have a Material Adverse Effect.
5.15 Solvency.
--------
Company and each of its Subsidiaries is and, upon
the incurrence of any Obligations by Company on any date on which
this representation is made, will be, Solvent.
5.16 Disclosure.
----------
No representation or warranty of Company or any
of its Subsidiaries contained in any Loan Document, in any other
Restructuring Document or in any other document, certificate or
written statement furnished to Lenders by or on behalf of Company
or any of its Subsidiaries for use in connection with the
transactions contemplated by this Agreement contains any untrue
statement of a material fact or omits to state a material fact
(known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances in which the
same were made. Any projections and pro forma financial
information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at
the time made, it being recognized by Lenders that such projec-
tions as to future events are not to be viewed as facts and that
actual results during the period or periods covered by any such
projections may differ from the projected results. There is no
fact known (or which should upon the reasonable exercise of
diligence be known) to Company (other than matters of a general
economic nature) that has had, or could reasonably be expected to
result in, a Material Adverse Effect and that has not been
disclosed herein or in such other documents, certificates and
statements furnished to Lenders for use in connection with the
transactions contemplated hereby.
5.17 Intellectual Property.
---------------------
A. Company and its Subsidiaries own, or are licensed
(to the extent required to be so licensed) to use, the
Intellectual Property and all such Intellectual Property is fully
protected and duly and properly registered, filed or issued in
the appropriate office and jurisdictions for such registrations,
filing or issuances, and Company owns all of the right, title and
interest in and to the "Pathmark" trademark under the applicable
laws of the United States free and clear of any Lien (other than
<PAGE>
Permitted Encumbrances and Liens created in favor of Agent on
behalf of Lenders pursuant to the Loan Documents).
B. Except as disclosed in Schedule 5.17, no material
-------------
claim has been asserted by any Person with respect to the use of
any such Intellectual Property, or challenging or questioning the
validity or effectiveness of any such Intellectual Property.
Except as disclosed in Schedule 5.17, the use of such
-------------
Intellectual Property by Company or any of its Subsidiaries does
not infringe on the rights of any Person, subject to such claims
and infringements as do not, in the aggregate, give rise to any
liabilities on the part of Company or any of its Subsidiaries
that are material to Company or any of its Subsidiaries. The
consummation of the transactions contemplated by this Agreement
or the Restructuring will not in any material manner or to any
material extent impair the ownership of (or the license to use,
as the case may be) any of such Intellectual Property by Company
or any of its Subsidiaries.
5.18 Restructuring Documents.
-----------------------
Company has delivered to Lenders complete and
correct copies of the Restructuring Documents and of all exhibits
and schedules thereto.
Section 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any
of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 6.
6.1 Financial Statements and Other Reports.
--------------------------------------
Company will maintain, and cause each of its
Subsidiaries to maintain, a system of accounting established and
administered in accordance with sound business practices to
permit preparation of financial statements in conformity with
GAAP. Company will deliver to Lenders:
(i) Monthly Reports: as soon as available and
---------------
in any event within 30 days after the end of each
month ending after the Closing Date, the weekly "EBIT"
report for such month and the corporate weekly reports
for the weeks ending during such month, in each case
substantially in the form delivered to Lenders prior
to the Closing Date with respect to the month of
August, 1993;
(ii) Quarterly Financials: as soon as
--------------------
available and in any event within 45 days after the
<PAGE>
end of each of the first three fiscal quarters of each
Fiscal Year, the consolidated and (if prepared)
consolidating balance sheets of Company and its
Subsidiaries as at the end of such fiscal quarter and
the related consolidated and (if prepared)
consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries
for such fiscal quarter and for the period from the
beginning of the then current Fiscal Year to the end
of such fiscal quarter, setting forth in each case in
comparative form the corresponding figures for the
corresponding periods of the previous Fiscal Year (but
only if such corresponding periods begin after the
Closing Date), and the corresponding figures from the
consolidated plan and financial forecast for the
current Fiscal Year delivered pursuant to subsection
6.1(xiii), all in reasonable detail and certified by
the chief financial officer of Company that they
fairly present the financial condition of Company and
its Subsidiaries as at the dates indicated and the
results of their operations and their cash flows for
the periods indicated, subject to changes resulting
from audit and year-end adjustments;
(iii) Year-End Financials: as soon as
-------------------
available and in any event within 90 days after the
end of each Fiscal Year, (a) the consolidated and (if
prepared) consolidating balance sheets of Company and
its Subsidiaries as at the end of such Fiscal Year and
the related consolidated and (if prepared)
consolidating statements of income, stockholders'
equity and cash flows of Company and its Subsidiaries
for such Fiscal Year and for the fourth fiscal quarter
of such Fiscal Year, setting forth in each case in
comparative form the corresponding figures for the
previous Fiscal Year or the fourth fiscal quarter
thereof, as the case may be (but only if such previous
Fiscal Year or the fourth fiscal quarter thereof, as
the case may be, begins after the Closing Date), and
the corresponding figures from the consolidated plan
and financial forecast delivered pursuant to
subsection 6.1(xiii) for the Fiscal Year covered by
such financial statements, all in reasonable detail
and certified by the chief financial officer of
Company that they fairly present the financial
condition of Company and its Subsidiaries as at the
dates indicated and the results of their operations
and their cash flows for the periods indicated, and
(b) in the case of such consolidated financial
statements with respect to such Fiscal Year, a report
thereon of Deloitte & Touche or other independent
certified public accountants of recognized national
standing selected by Company and satisfactory to
Agent, which report shall be unqualified, shall
express no doubts about the ability of Company and its
<PAGE>
Subsidiaries to continue as a going concern, and shall
state that such consolidated financial statements
fairly present the consolidated financial position of
Company and its Subsidiaries as at the dates indicated
and the results of their operations and their cash
flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years
(except as otherwise disclosed in such financial
statements) and that the examination by such
accountants in connection with such consolidated
financial statements has been made in accordance with
generally accepted auditing standards;
(iv) Officers' and Compliance Certificates:
-------------------------------------
(a) together with each delivery of financial
statements of Company and its Subsidiaries pursuant to
subdivisions (ii) and (iii) above, (1) an Officers'
Certificate of Company stating that the signers have
reviewed the terms of this Agreement and have made, or
caused to be made under their supervision, a review in
reasonable detail of the transactions and condition of
Company and its Subsidiaries during the accounting
period covered by such financial statements and that
such review has not disclosed the existence during or
at the end of such accounting period, and that the
signers do not have knowledge of the existence as at
the date of such Officers' Certificate, of any
condition or event that constitutes an Event of
Default or Potential Event of Default, or, if any such
condition or event existed or exists, specifying the
nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with
respect thereto; and (2) a Compliance Certificate
demonstrating in reasonable detail compliance during
and at the end of the applicable accounting periods
with the restrictions contained in Section 7; and
(b) together with each delivery of financial
statements of Company and its Subsidiaries pursuant to
subdivision (iii) above, an Officers' Certificate of
Company setting forth the Consolidated Excess Cash
Flow for the Fiscal Year covered by such financial
statements and demonstrating in reasonable detail the
derivation of such Consolidated Excess Cash Flow;
(v) Reconciliation Statements: if, as a result
-------------------------
of any change in accounting principles and policies
from those used in the preparation of the audited
financial statements referred to in subsection 5.3,
the consolidated financial statements of Company and
its Subsidiaries delivered pursuant to subdivisions
(ii), (iii) or (xiii) of this subsection 6.1 will
differ in any material respect from the consolidated
financial statements that would have been delivered
pursuant to such subdivisions had no such change in
accounting principles and policies been made, then
<PAGE>
(a) together with the first delivery of financial
statements pursuant to subdivision (i), (ii), (iii) or
(xiii) of this subsection 6.1 following such change,
consolidated financial statements of Company and its
Subsidiaries for (y) the current Fiscal Year to the
effective date of such change and (z) the one full
Fiscal Year immediately preceding the Fiscal Year in
which such change is made, in each case prepared on a
pro forma basis as if such change had been in effect
during such periods, and (b) together with each
delivery of financial statements pursuant to
subdivision (ii), (iii) or (xiii) of this subsection
6.1 following such change, a written statement of the
chief accounting officer or chief financial officer of
Company setting forth the differences which would have
resulted if such financial statements had been
prepared without giving effect to such change;
(vi) Accountants' Certification: together
--------------------------
with each delivery of consolidated financial
statements of Company and its Subsidiaries pursuant to
subdivision (iii) above, a written statement by the
independent certified public accountants giving the
report thereon (a) stating that their audit
examination has included a review of the terms of
subsections 7.1, 7.2, 7.3, 7.6, 7.7, 7.8, 7.9 and 7.15
of this Agreement and any definitions set forth in
this Agreement relating thereto, in each case as they
relate to accounting matters, and (b) stating whether,
in connection with their audit examination, any condi-
tion or event (including without limitation any
condition or event relating to the subsections of this
Agreement specified in the immediately preceding
clause (a) or relating to subsection 7.4 of this
Agreement) that constitutes an Event of Default or
Potential Event of Default has come to their attention
and, if such a condition or event has come to their
attention, specifying the nature and period of exis-
tence thereof; provided that such accountants shall
--------
not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential
Event of Default that would not be disclosed in the
course of their audit examination;
(vii) Accountants' Reports: promptly upon
--------------------
receipt thereof (unless restricted by applicable
professional standards), copies of all reports
submitted to Company by independent certified public
accountants in connection with each annual, interim or
special audit of the financial statements of Company
and its Subsidiaries made by such accountants, includ-
ing, without limitation, any comment letter submitted
by such accountants to management in connection with
their annual audit;
<PAGE>
(viii) SEC Filings and Press Releases:
------------------------------
promptly upon their becoming available, copies of
(a) all financial statements, reports, notices and
proxy statements sent or made available generally by
Company to its security holders or by any Subsidiary
of Company to its security holders other than Company
or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements
(other than on Form S-8 or a similar form) containing
initial preliminary and final (but not, unless
otherwise requested by Agent, intermediate draft)
prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the
Securities and Exchange Commission or any governmental
or private regulatory authority, and (c) all press
releases and other statements made available generally
by Company or any of its Subsidiaries to the public
concerning material developments in the business of
Company or any of its Subsidiaries;
(ix) Events of Default, etc.: promptly upon
-----------------------
any officer of Company obtaining knowledge (a) of any
condition or event that constitutes an Event of
Default or Potential Event of Default, or becoming
aware that any Lender has given any notice (other than
to Agent) or taken any other action with respect to a
claimed Event of Default or Potential Event of
Default, (b) that any Person has given any notice to
Company or any of its Subsidiaries or taken any other
action with respect to a claimed default or event or
condition of the type referred to in subsection 8.2,
(c) of any condition or event that would be required
to be disclosed in a current report filed by Company
with the Securities and Exchange Commission on Form 8-
K (Items 1, 2, 4, 5 and 6 of such Form as in effect on
the date hereof) if Company were required to file such
reports under the Exchange Act, or (d) of the
occurrence of any event or change that has caused or
evidences, either in any case or in the aggregate, a
Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence of such
condition, event or change, or specifying the notice
given or action taken by any such Person and the
nature of such claimed Event of Default, Potential
Event of Default, default, event or condition, and
what action Company has taken, is taking and proposes
to take with respect thereto;
(x) Litigation or Other Proceedings: promptly
-------------------------------
upon any officer of Company obtaining knowledge of
(X) the institution of, or non-frivolous threat of,
any action, suit, proceeding (whether administrative,
judicial or otherwise), governmental investigation or
arbitration against or affecting Company or any of its
Subsidiaries or any property of Company or any of its
<PAGE>
Subsidiaries (collectively, "Proceedings") not
previously disclosed in writing by Company to Lenders
or (Y) any material development in any Proceeding
that, in any case:
(1) after giving effect to coverage and
policy limits of insurance policies maintained by
Company and its Subsidiaries issued by
unaffiliated insurers, has a reasonable
possibility of giving rise to a Material Adverse
Effect; or
(2) seeks to enjoin or otherwise prevent the
consummation of, or to recover any damages or
obtain relief as a result of, the transactions
contemplated hereby or by the Restructuring
Documents;
written notice thereof together with such other
information as may be reasonably available to Company
to enable Lenders and their counsel to evaluate such
matters;
(xi) ERISA Events: within 20 days of
------------
becoming aware of the occurrence of or forthcoming
occurrence of any ERISA Event, a written notice
specifying the nature thereof, what action Company or
any of its ERISA Affiliates has taken, is taking or
proposes to take with respect thereto and, when known,
any action taken or threatened by the Internal Revenue
Service, the Department of Labor or the PBGC with
respect thereto;
(xii) ERISA Notices: with reasonable
-------------
promptness, copies of (a) if requested by any Lender,
each Schedule B (Actuarial Information) to the annual
----------
report (Form 5500 Series) filed by Company or any of
its ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan; (b) all notices
received by Company or any of its ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA
Event; and (c) such other documents or governmental
reports or filings relating to any Employee Benefit
Plan as Agent shall reasonably request;
(xiii) Financial Plans: as soon as practicable
---------------
and in any event no later than February 28 of each
Fiscal Year, a consolidated plan and financial
forecast for such Fiscal Year and the next four
succeeding Fiscal Years, including without limitation
(a) forecasted consolidated balance sheets and
forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each of such
five Fiscal Years, together with an explanation of the
assumptions on which such forecasts are based,
<PAGE>
(b) forecasted consolidated balance sheets and
forecasted consolidated statements of income and cash
flows of Company and its Subsidiaries for each fiscal
quarter of the first such Fiscal Year, together with
an explanation of the assumptions on which such
forecasts are based, and (c) such other information as
any Lender may reasonably request;
(xiv) Insurance: as soon as practicable and
---------
in any event by the last day of each Fiscal Year, a
report in form and substance reasonably satisfactory
to Agent outlining all material insurance coverage
maintained as of the date of such report by Company
and its Subsidiaries and all material insurance
coverage planned to be maintained by Company and its
Subsidiaries in the immediately succeeding Fiscal
Year;
(xv) Environmental Audits and Reports: as
--------------------------------
soon as practicable following receipt thereof by
Company, copies of all environmental audits and
reports, whether prepared by personnel of Company or
any of its Subsidiaries or by independent consultants,
with respect to significant environmental matters at
any Facility or which relate to an Environmental Claim
which has a reasonable possibility of giving rise to a
Material Adverse Effect;
(xvi) Board of Directors: with reasonable
------------------
promptness, written notice of any change in the Board
of Directors of Company; and
(xvii) Other Information: with reasonable
-----------------
promptness, such other information and data with
respect to Company or any of its Subsidiaries as from
time to time may be reasonably requested by any
Lender.
6.2 Corporate Existence, etc.
-------------------------
Except to the extent permitted under subsection
7.7, Company will, and will cause each of its Subsidiaries to, at
all times preserve and keep in full force and effect its
corporate existence and all rights and franchises material to its
business; provided, however, that neither Company nor any of its
-------- -------
Subsidiaries shall be required to preserve any such right or
franchise if the Board of Directors of Company or such Subsidiary
shall determine that the preservation thereof is no longer
desirable in the conduct of the business of Company or such
Subsidiary, as the case may be, and that the loss thereof is not
disadvantageous in any material respect to Company, such
Subsidiary or Lenders.
6.3 Payment of Taxes and Claims; Tax Consolidation.
----------------------------------------------
<PAGE>
A. Company will, and will cause each of its
Subsidiaries to, pay all taxes, assessments and other
governmental charges imposed upon it or any of its properties or
assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims
(including, without limitation, claims for labor, services,
materials and supplies) for sums that have become due and payable
and that by law have or may become a Lien upon any of its
properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such
--------
charge or claim need be paid if being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been
made therefor.
B. Company will not, nor will it permit any of its
Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than SMG-
II, Holdings or PTKH so long as the filing of such consolidated
income tax return is required by applicable law and other than
Company or any of its Subsidiaries).
6.4 Maintenance of Properties; Insurance.
------------------------------------
Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good
repair, working order and condition, ordinary wear and tear
excepted, all material properties used or useful in the business
of Company and its Subsidiaries (including, without limitation,
Intellectual Property) and from time to time will make or cause
to be made all appropriate repairs, renewals and replacements
thereof. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, insurance with respect
to its properties and business and the properties and businesses
of its Subsidiaries against loss or damage of the kinds
customarily carried or maintained under similar circumstances by
corporations of established reputation engaged in similar
businesses, in such amounts (giving effect to self-insurance),
with such deductibles and by such methods as shall be customary
for corporations similarly situated in the industry. Each such
policy of insurance that insures against loss or damage with
respect to any Collateral shall name Agent for the benefit of
Lenders as the loss payee thereunder for amounts in excess of
$5,000,000 per occurrence and shall provide for at least 30 days
prior written notice to Agent of any modification or cancellation
of such policy. Upon receipt by Agent of any insurance proceeds
as loss payee, (i) to the extent that Company or any of its
Subsidiaries intends to use any such insurance proceeds that are
Net Cash Proceeds of Asset Sale to repair, restore or replace
assets of Company or any of its Subsidiaries as provided in
subsection 2.4A(iii)(a), Agent shall, subject to the provisions
of subsection 2.4A(iii)(a), deliver such insurance proceeds to
Company and (ii) otherwise, Agent shall, and Company hereby
authorizes Agent to, apply such insurance proceeds that are Net
<PAGE>
Cash Proceeds of Asset Sale to prepay the Loans in accordance
with subsection 2.4A(iii)(a).
6.5 Inspection; Lender Meeting.
--------------------------
Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated
by any Lender to visit and inspect any of the properties of
Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take
extracts therefrom, and to discuss its and their affairs,
finances and accounts with its and their officers and independent
public accountants (provided that Company may, if it so chooses,
be present at or participate in any such discussion), all upon
reasonable notice and at such reasonable times during normal
business hours and as often as may be reasonably requested.
Without in any way limiting the foregoing, Company will, upon the
request of Agent or Requisite Lenders, participate in a meeting
of Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or such other location as may be
agreed to by Company and Agent) at such time as may be agreed to
by Company and Agent.
6.6 Compliance with Laws, etc.
--------------------------
Company shall, and shall cause each of its
Subsidiaries to, comply with the requirements of all applicable
laws, rules, regulations and orders of any governmental
authority, noncompliance with which could reasonably be expected
to cause, individually or in the aggregate at any one time, a
Material Adverse Effect, in each case except to the extent that
Company's or such Subsidiary's requirement to comply therewith is
being contested in good faith by Company or such Subsidiary, as
the case may be, and such reserve or other appropriate provision,
if any, as shall be required by GAAP shall have been made
therefor.
6.7 Environmental Disclosure and Inspection.
---------------------------------------
A. Company shall, and shall cause each of its
Subsidiaries to, exercise reasonable due diligence in order to
comply and cause (i) all tenants under any leases or occupancy
agreements affecting any portion of the Facilities that are
presently owned, leased or operated by Company or any of its
Subsidiaries and (ii) all other Persons on or occupying such
property, to comply in all material respects with all
Environmental Laws.
B. Company shall, promptly after obtaining knowledge
thereof, advise Lenders in writing and in reasonable detail of
(i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or
regulatory agency under any applicable Environmental Laws,
(ii) any and all written communications with respect to any
Environmental Claims that could reasonably be expected to give
<PAGE>
rise to a Material Adverse Effect or with respect to any Release
of Hazardous Materials required to be reported to any federal,
state or local governmental or regulatory agency that could
reasonably be expected to give rise to a Material Adverse Effect,
(iii) any remedial action taken by Company or any other Person in
response to (x) any Hazardous Materials on, under or about any
Facility, the existence of which could reasonably be expected to
result in an Environmental Claim which could reasonably be
expected to have a Material Adverse Effect, or (y) any
Environmental Claim that could reasonably be expected to have a
Material Adverse Effect, (iv) Company's discovery of any
occurrence or condition on any real property adjoining or in the
vicinity of any Facility that is presently owned, leased or
operated by Company or any of its Subsidiaries that could
reasonably be expected to cause such Facility or any part thereof
to be subject to any material restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental
Laws, and (v) any request for information from any governmental
agency that suggests such agency is investigating whether Company
or any of its Subsidiaries may be potentially responsible for a
material Release of Hazardous Materials.
C. Company shall promptly notify Lenders of any
proposed acquisition of stock, assets, or property by Company or
any of its Subsidiaries that could reasonably be expected to
expose Company or any of its Subsidiaries to, or result in,
Environmental Claims that have a reasonable possibility of giving
rise to a Material Adverse Effect.
D. Company shall, at its own expense, provide copies
of such documents or written information as Agent may reasonably
request in relation to any matters disclosed pursuant to this
subsection 6.7.
6.8 Execution of Subsidiary Guaranty and Collateral
-----------------------------------------------
Documents by Subsidiaries and Future Subsidiaries.
-------------------------------------------------
In the event that any Subsidiary of Company
existing as of the date hereof (other than any Real Estate
Subsidiary) hereafter owns or acquires assets with an aggregate
fair market value (without netting such fair market value against
any liability of such Subsidiary) exceeding $25,000 or in the
event that any Person becomes a Subsidiary of Company after the
date hereof, Company will promptly notify Agent of that fact and
cause such Subsidiary to execute and deliver to Agent a
counterpart of the Subsidiary Guaranty and a Subsidiary Security
Agreement, a Subsidiary Pledge Agreement, a Subsidiary Trademark
Security Agreement and Additional Mortgages and to take all such
further action and execute all such further documents and
instruments as may be required to grant and perfect in favor of
Agent, for the benefit of Lenders, a first-priority security
interest in all of the Covered Real Property and all of the
personal property assets of such Subsidiary described in the
applicable Collateral Documents. Company shall deliver to Agent,
together with such Collateral Documents, (i) certified copies of
<PAGE>
such Subsidiary's Articles or Certificate of Incorporation,
together with a good standing certificate from the Secretary of
State of the jurisdiction of its incorporation, each to be dated
a recent date prior to their delivery to Agent, (ii) a copy of
such Subsidiary's Bylaws, certified by its corporate secretary or
an assistant corporate secretary as of a recent date prior to
their delivery to Agent, (iii) a certificate executed by the
secretary or an assistant secretary of such Subsidiary as to
(a) the incumbency and signatures of the officers of such
Subsidiary executing the Subsidiary Guaranty and the Collateral
Documents to which such Subsidiary is a party and (b) the fact
that the attached resolutions of the Board of Directors of such
Subsidiary authorizing the execution, delivery and performance of
the Subsidiary Guaranty and such Collateral Documents are in full
force and effect and have not been modified or rescinded, and
(iv) a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Agent and its counsel, as to
(a) the due organization and good standing of such Subsidiary,
(b) the due authorization, execution and delivery by such
Subsidiary of the Subsidiary Guaranty and such Collateral
Documents, (c) the enforceability of the Subsidiary Guaranty and
such Collateral Documents against such Subsidiary, and (d) such
other matters as Agent may reasonably request, all of the
foregoing to be satisfactory in form and substance to Agent and
its counsel.
6.9 Additional Mortgages; Release of Mortgages.
------------------------------------------
A. On and after the Closing Date, Company shall, and
shall cause its Subsidiaries to, (i) with respect to each
leasehold interest in Real Property Assets listed in Part I of
Schedule 6.9 annexed hereto or hereafter acquired by Company or
------------
any of its Subsidiaries, use its best efforts (which shall not be
deemed to include, in the good faith judgment of Company, the
material modification of any rights or obligations, or the
incurrence of any material obligations, under the applicable
lease or the expenditure of money in excess of nominal amounts or
the payment of monetary consideration other than nominal monetary
consideration) until the end of the applicable three month period
described below to obtain the consent of the lessor under each
related lease to the encumbrancing of Company's or such
Subsidiary's leasehold interest under such lease pursuant to an
Additional Mortgage (as defined below) and to the assignment of
such leasehold interest to the successful bidder at a foreclosure
or similar sale (and to a subsequent third party assignee by
Agent or any Lender to the extent Agent or such Lender is the
successful bidder at such sale) in the event of a foreclosure or
similar action pursuant to such Additional Mortgage as soon as
practicable but in any event within three months after the
commencement of the lease term under the applicable lease (or, in
the case of Company's leasehold interests in Real Property Assets
listed in Part I of Schedule 6.9 annexed hereto, as soon as
------------
practicable but in any event within three months after the
Closing Date), (ii) with respect to each leasehold interest in
Real Property Assets listed in Part II of Schedule 6.9 annexed
------------
<PAGE>
hereto, use its best efforts (which shall not be deemed to
include, in the good faith judgment of Company, the material
modification of any rights or obligations, or the incurrence of
any material obligations, under the applicable lease or the
expenditure of money in excess of nominal amounts or the payment
of monetary consideration other than nominal monetary
consideration) until the end of the three month period after the
Closing Date to record the applicable lease, or a memorandum of
lease with respect thereto, or other evidence of such lease in
form and substance reasonably satisfactory to Agent in all places
to the extent necessary or desirable, in the reasonable judgment
of Agent, so as to enable the Additional Mortgage encumbering
such leasehold interest to effectively create a valid and
enforceable first priority lien (subject to Permitted
Encumbrances) on such leasehold interest in favor of Agent (or
such other Person as may be required or desired under local law)
for the benefit of the Lenders), and (iii) with respect to each
Covered Real Property (other than any leasehold interest for
which Company or any of its Subsidiaries was unable to obtain the
applicable lessor's consent pursuant to clause (i) above or to
record the applicable instrument pursuant to clause (ii) above),
as soon as practicable and in any event within three months after
the applicable Real Property Asset becomes Covered Real Property
(or, in the case of Company's leasehold interest in Real Property
Assets listed in Schedule 6.9 annexed hereto for which Company
------------
was able to obtain the applicable lessor's consent pursuant to
clause (i) above or was able to record the applicable instrument
pursuant to clause (ii) above, as the case may be, as soon as
practicable but in any event within three months after the
Closing Date), deliver (a) fully executed counterparts of
Mortgages (each an "Additional Mortgage" and collectively the
"Additional Mortgages") encumbering such Covered Real Property,
together with evidence that counterparts of such Additional
Mortgages have been recorded in all places to the extent
necessary or desirable, in the reasonable judgment of Agent, so
as to effectively create a valid and enforceable first priority
lien (or such other priority lien as may be specified in the
applicable Additional Mortgage), subject to Permitted
Encumbrances, on such Covered Real Property in favor of Agent (or
such other trustee as may be required or desired under local law)
for the benefit of Lenders; (b) a title report obtained by
Company in respect of any such Covered Real Property consisting
of fee interests in Real Property Assets and, if reasonably
required by Agent, a title report obtained by Company in respect
of any such Covered Real Property consisting of material
leasehold interests in Real Property Assets; (c) if required by
Agent, an opinion of counsel (which counsel shall be reasonably
satisfactory to Agent) in the state in which such Covered Real
Property is located with respect to the enforceability of the
form of Additional Mortgage recorded in such state and such other
matters as Agent may reasonably request, in form and substance
reasonably satisfactory to Agent; (d) in the case of each such
Covered Real Property consisting of leasehold interests in Real
Property Assets, such estoppel letters from the landlords on such
real property as may be reasonably requested by Agent, in form
<PAGE>
and substance reasonably satisfactory to Agent; (e) if required
by Agent, in the case of each such Covered Real Property
consisting of fee interests in Real Property Assets,
environmental audits prepared by professional consultants
mutually acceptable to Company and Agent, in form, scope and
substance satisfactory to Agent in its reasonable discretion;
(f) if required by Agent, in the case of each such Covered Real
Property consisting of fee interests in Real Property Assets,
ALTA mortgagee title insurance policies issued by title insurers
reasonably satisfactory to Agent (the "Additional Mortgage
Policies"), in amounts reasonably satisfactory to Agent, assuring
Agent that the applicable Additional Mortgages create valid and
enforceable first priority mortgage liens (or such other priority
liens as may be specified in the applicable Additional Mortgage)
on such Covered Real Property, free and clear of all defects and
encumbrances except Permitted Encumbrances and subject to a
standard survey exception, which Additional Mortgage Policies
shall be in form and substance reasonably satisfactory to Agent
and shall include an endorsement for mechanics' liens, for any
other matters that Agent may reasonably request and, with respect
to Additional Mortgage Policies that are issued for Covered Real
Property located outside the State of New York, for future
advances under this Agreement, the Notes and the other Loan
Documents, and shall provide for affirmative insurance and such
reinsurance as Agent may reasonably request, all of the foregoing
in form and substance reasonably satisfactory to Agent;
(g) evidence, which may be in the form of a letter from an
insurance broker, a municipal engineer, Charles Jones, Inc. or
Transamerica Flood Hazard Certification, as to whether (1) any
such Covered Real Property ("Additional Flood Hazard Property")
is in an area designated by the Federal Emergency Management
Agency as having special flood or mud slide hazards and (2) the
community in which each Additional Flood Hazard Property is
located is participating in the National Flood Insurance Program;
and (h) if there are any Additional Flood Hazard Properties,
Company's written acknowledgement of receipt of written
notification from Agent (1) as to the existence of each such
Additional Flood Hazard Property and (2) as to whether the
community in which each such Flood Hazard Property is located is
participating in the National Flood Insurance Program.
Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated
by Agent, upon reasonable notice, to visit and inspect any fee
interests in Real Property Assets and, if reasonably required by
Agent, any material leasehold interests in Real Property Assets,
in each case to be subject to the Lien of an Additional Mortgage,
for the purpose of obtaining an appraisal of value, conducted by
consultants retained by Agent in compliance with all applicable
banking regulations, with respect to such real property fee or
leasehold interest.
B. At least 30 days prior to the incurrence by
Company or any of its Subsidiaries of any Non-Recourse
Indebtedness secured by Liens on any Real Property Assets
<PAGE>
permitted under subsection 7.2(A)(v), Company shall, to the
extent necessary to incur such Indebtedness and to grant such
Liens, request that Agent execute and deliver to Company
reconveyance documents and/or releases releasing any Liens on
such Real Property Assets that were granted in favor of Agent
pursuant to any Mortgage. Upon receiving any such request, Agent
shall execute and deliver to Company such reconveyance documents
and/or releases, in recordable form, on the date of incurrence of
such Indebtedness; provided that, at the time of Agent's
--------
execution and delivery to Company of such reconveyance documents
and/or releases, (i) no Event of Default or Potential Event of
Default shall have occurred and be continuing or shall be caused
thereby, (ii) Agent shall have received evidence satisfactory to
it that the granting of the Liens securing such Indebtedness
shall be permitted under subsection 7.2A(v), and (iii) Company
shall have (a) paid Agent an amount equal to the Net Principal
Amount (as defined in subsection 2.4A(iii)(f)) of such
Indebtedness for application to the prepayment of the Loans
pursuant to subsection 2.4A(iii)(f), or (b) provided Agent with
evidence satisfactory to it that irrevocable arrangements, in
form and substance satisfactory to Agent, have been made to
transfer such Net Principal Amount to Agent.
C. At least 30 days prior to the making by Company
or any of its Subsidiaries of any sale or disposition of assets
permitted under clause (iv), (v), (vii), (viii) or (ix) of
subsection 7.7 of any assets of Company or any of its
Subsidiaries encumbered by any Collateral Document, Company
shall, to the extent necessary to make such sale or disposition
of assets, request that Agent execute and deliver to Company
reconveyance documents and/or releases (including without
limitation amendments to the UCC-1 financing statements that have
been filed or recorded in connection with such Collateral
Document) releasing any Liens on the assets being sold pursuant
to such sale or disposition of assets that were granted in favor
of Agent pursuant to such Collateral Document. Upon receiving
any such request, Agent shall, at Company's expense, execute and
deliver to Company such reconveyance documents and/or releases,
in recordable form, on the date of such sale or disposition of
assets; provided that, at the time of Agent's execution and
--------
delivery to Company of such reconveyance documents and/or
releases, (i) no Event of Default or Potential Event of Default
shall have occurred and be continuing or shall be caused thereby,
(ii) Agent shall have received evidence satisfactory to it that
such sale or disposition of assets shall be permitted under
clause (iv), (v), (vii), (viii) or (ix) of subsection 7.7, and
(iii) Company shall have (a) paid Agent, for application to the
prepayment of the Loans pursuant to subsection 2.4A(iii)(a), an
amount (the "Required Prepayment Amount") equal to the Net Cash
Proceeds of Asset Sale of such sale or disposition of assets that
are required to be applied to the prepayment of the Loans
pursuant to subsection 2.4A(iii)(a), or (b) provided Agent with
evidence satisfactory to it that irrevocable arrangements, in
form and substance satisfactory to Agent, have been made to
transfer the Required Prepayment Amount to Agent.
<PAGE>
6.10 Assignability of Lease Agreements.
---------------------------------
Company shall, and shall cause each of its
Subsidiaries to, use its best efforts (which shall not be deemed
to include, in the good faith judgement of Company, the material
modification of any rights or obligations, or the incurrence of
any material obligations, under the applicable lease or the
expenditure of money in excess of nominal amounts or the payment
of monetary consideration other than nominal monetary
consideration) in entering into any lease as a lessee (including
without limitation any such lease entered into in connection with
any Sale and Lease-back), whether such lease is an Operating
Lease or a Capital Lease, to obtain lease terms permitting (or
not expressly prohibiting) the encumbrancing of the leasehold
interest of Company or such Subsidiary, as the case may be, in
the property that is the subject of such lease pursuant to an
Additional Mortgage and the assignment of such leasehold interest
to the successful bidder at a foreclosure or similar sale (and to
a subsequent third party assignee by Agent or any Lender to the
extent Agent or such Lender is the successful bidder at such
sale) in the event of a foreclosure or similar action pursuant to
such Additional Mortgage.
Section 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any
of the Commitments hereunder shall remain in effect and until
payment in full of all of the Loans and other Obligations and the
cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent,
Company shall perform, and shall cause each of its Subsidiaries
to perform, all covenants in this Section 7.
7.1 Indebtedness.
------------
Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur,
assume or guaranty, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness, except:
(i) Company may become and remain liable with
respect to the Obligations;
(ii) Company and its Subsidiaries may become
and remain liable with respect to Contingent
Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto,
the Indebtedness corresponding to the Contingent
Obligations so extinguished;
(iii) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness in
respect of Capital Leases; provided that such Capital
--------
<PAGE>
Leases are permitted under the terms of subsection
7.9;
(iv) Company may become and remain liable
with respect to Indebtedness to any of its wholly-
owned Subsidiaries, and any wholly-owned Subsidiary of
Company (other than any Real Estate Subsidiary) may
become and remain liable with respect to Indebtedness
to Company or any other wholly-owned Subsidiary of
Company; provided that (a) all such intercompany
--------
Indebtedness shall be evidenced by promissory notes
that are pledged to Agent pursuant to the terms of the
Company Pledge Agreement or the applicable Subsidiary
Pledge Agreement, as the case may be, (b) all such
intercompany Indebtedness owed by Company to any of
its Subsidiaries shall be subordinated in right of
payment to the payment in full of the Obligations
pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, and
(c) any payment by any Subsidiary of Company under the
Subsidiary Guaranty shall result in a pro tanto
--- -----
reduction of the amount of any intercompany
Indebtedness owed by such Subsidiary to Company or to
any of its Subsidiaries for whose benefit such payment
is made;
(v) Company and its Subsidiaries, as applicable,
may remain liable with respect to Indebtedness
described in Schedule 7.1 annexed hereto;
------------
(vi) Company may become and remain liable
with respect to the New Subordinated Debt;
(vii) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness
incurred to refinance, in whole or in part, any
outstanding Indebtedness of Company or any of its
Subsidiaries permitted under subdivisions (v) and (vi)
of this subsection 7.1; provided, however, that in
-------- -------
each case (a) the principal amount of such refinancing
Indebtedness does not exceed the principal amount of
the Indebtedness so refinanced and (b) the interest
rates, maturities, amortization schedules, covenants,
defaults, remedies, subordination provisions (in the
event the Indebtedness being refinanced is
Subordinated Indebtedness) and other terms of such
refinancing Indebtedness are in each case (1) the same
as those in the Indebtedness being refinanced or
(2) otherwise satisfactory to Agent and Requisite
Lenders; provided that interest rates that are less
--------
than, maturities that are longer than, and
amortization schedules that result in a longer average
life to maturity than, the comparable provisions of
the Indebtedness being refinanced shall be deemed
satisfactory to Agent and Requisite Lenders for
<PAGE>
purposes of this clause (2); and provided further,
-------- -------
however, that in no event shall any such refinancing
-------
Indebtedness which refinances Subordinated
Indebtedness have any required amortization prior to
the earliest scheduled amortization of the
Subordinated Indebtedness being refinanced without the
consent of Agent and Requisite Lenders;
(viii) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness secured
by Liens permitted under subsection 7.2A(iv);
(ix) Company and its Subsidiaries may become
and remain liable with respect to Indebtedness secured
by Liens permitted under subsection 7.2A(v);
(x) Company and its Subsidiaries may become and
remain liable with respect to Indebtedness secured by
Liens permitted under subsection 7.2A(vi); and
(xi) Company and its Subsidiaries may become
and remain liable with respect to other Indebtedness
in an aggregate principal amount not to exceed
$30,000,000 at any time outstanding.
7.2 Liens and Related Matters.
-------------------------
A. Prohibition on Liens. Company shall not, and
shall not permit any of its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist any Lien on
or with respect to any property or asset of any kind (including
any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now
owned or hereafter acquired, or any income or profits therefrom,
or file or permit the filing of, or permit to remain in effect,
any financing statement or other similar notice of any Lien with
respect to any such property, asset, income or profits under the
Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral
Documents;
(iii) Liens described in Schedule 7.2 annexed
------------
hereto;
(iv) (a) Liens on Real Property Assets
consisting of fee interests in Related Stores (whether
fully constructed or under construction) or Liens on
Equipment (including rights of vendors under purchase
contracts whereby title is retained for the purpose of
securing the purchase price thereof), in each case
securing the purchase price or cost of construction or
<PAGE>
improvement thereof or Indebtedness incurred to
finance such purchase price or cost of construction or
improvement, (b) Liens on Real Property Assets
consisting of fee interests in Related Stores, in each
case which Liens were in existence at the time of
acquisition of such Real Property Assets by Company or
any of its Subsidiaries, and (c) Liens on Real
Property Assets consisting of fee interests in Related
Stores that are owned by any Subsidiaries of Company
(other than any Subsidiaries of Company as of the
Closing Date), in each case which Liens were in
existence at the time such Subsidiaries became
Subsidiaries of Company; provided, however, that in
-------- -------
each case (1) with respect to any such Lien described
in clause (a) above, no Event of Default shall have
occurred and be continuing at the time of incurrence
of such Lien, (2) with respect to any such Lien
described in clause (a) above encumbering any Real
Property Assets, such Lien was granted and the
Indebtedness secured by such Lien was incurred at a
time when such Real Property Assets were excluded from
the definition of Covered Real Property pursuant to
clause (iii)(b) or (iii)(c) of such definition,
(3) with respect to any such Lien on Equipment, the
Indebtedness secured by such Lien was incurred within
180 days after the acquisition thereof, (4) such Lien
is limited to such Real Property Assets or Equipment
and any fixed improvements thereafter erected thereon,
(5) with respect to any such Lien described in clause
(a) above, the Indebtedness secured by such Lien is
Non-Recourse Indebtedness, (6) with respect to any
such Lien described in clause (b) or (c) above, the
Indebtedness secured by such Lien was not incurred in
contemplation of the acquisition by Company or any of
its Subsidiaries of the applicable Real Property
Assets or the transaction pursuant to which the
applicable Subsidiary of Company became such a
Subsidiary, as the case may be, and (7) the principal
amount of the Indebtedness secured by such Lien
(X) shall not exceed the cost of such property to
Company or any of its Subsidiaries and (Y) shall not
be less than 60% of the fair market value of such
property at the time of incurrence of such
Indebtedness (in the case of any such Lien described
in clause (a) above), 40% of the fair market value of
such property at the time of acquisition of the
applicable Real Property Assets (in the case of any
such Lien described in clause (b) above), or 40% of
the fair market value of such property at the time
when the Subsidiary of Company which owns the
applicable Real Property Assets became a Subsidiary of
Company (in the case of any such Lien described in
clause (c) above);
<PAGE>
(v) Liens on any Real Property Assets which
immediately prior to the incurrence of such Liens
constitute Covered Real Property, which Liens secure
Non-Recourse Indebtedness of Company or any of its
Subsidiaries; provided, however, that in each case
-------- -------
(a) such Lien is limited to such Real Property Assets,
(b) the principal amount of the Indebtedness secured
by such Lien shall not be less than 60% of the fair
market value of such Real Property Assets at the time
of incurrence of such Indebtedness, and (c) the Net
Principal Amount (as defined in subsection
2.4A(iii)(f)) of the Indebtedness secured by such Lien
shall be applied to prepay the Loans in accordance
with subsection 2.4A(iii)(f);
(vi) Liens securing Non-Recourse Indebtedness
of Company or any of its Subsidiaries incurred to
refinance, in whole or in part, any outstanding
Indebtedness of Company or such Subsidiary that is
secured by Liens on Real Property Assets permitted
under subdivision (iv) or (v) of this subsection 7.2A;
provided, however, that in each case (a) the Liens
-------- -------
securing such refinancing Indebtedness are limited to
the Real Property Assets that were subject to the
Liens securing the Indebtedness so refinanced and
(b) the principal amount of such refinancing
Indebtedness shall not be less than 60% of the fair
market value of such Real Property Assets as of the
date of such refinancing;
(vii) Liens securing Indebtedness of Company
or any of its Subsidiaries incurred to refinance any
outstanding Indebtedness of Company or such Subsidiary
that is secured by Liens on Real Property Assets
permitted under subdivision (iii) of this subsection
7.2; provided, however, that in each case (a) such
-------- -------
refinancing Indebtedness is permitted under subsection
7.1(vii), (b) the Liens securing such refinancing
Indebtedness are limited to the Real Property Assets
that were subject to the Liens securing the
Indebtedness so refinanced, (c) the Indebtedness
secured by such Lien is Non-Recourse Indebtedness to
the extent that the Indebtedness so refinanced was
Non-Recourse Indebtedness, and (d) the principal
amount of such refinancing Indebtedness shall not be
(1) less than 60% of the fair market value of such
Real Property Assets as of the date of such
refinancing or (2) if such refinancing Indebtedness is
not Non-Recourse Indebtedness, greater than 80% of the
fair market value of such Real Property Assets as of
the date of such refinancing; and
(viii) Other Liens securing Indebtedness or
other obligations in an aggregate amount not exceeding
$10,000,000 at any time outstanding.
<PAGE>
B. Equitable Lien in Favor of Lenders. If Company
or any of its Subsidiaries shall create or assume any Lien upon
any of its properties or assets, whether now owned or hereafter
acquired, other than Liens excepted by the provisions of
subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien
equally and ratably with any and all other Indebtedness secured
thereby as long as any such Indebtedness shall be so secured;
provided that, notwithstanding the foregoing, this covenant shall
--------
not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. No Further Negative Pledges. Except with respect
to specific property encumbered to secure payment of particular
Indebtedness or to be sold pursuant to an executed agreement with
respect to an Asset Sale, neither Company nor any of its
Subsidiaries shall enter into any agreement (other than the New
Subordinated Debt Indentures and any replacement indenture
entered into in connection with any refinancing of any of the New
Subordinated Debt permitted under subsection 7.1(vii))
prohibiting the creation or assumption of any Lien upon any of
its properties or assets, whether now owned or hereafter
acquired.
D. No Restrictions on Subsidiary Distributions to
Company or Other Subsidiaries. Except as provided herein,
Company will not, and will not permit any of its Subsidiaries to,
create or otherwise cause or suffer to exist or become effective
any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any
other distributions on any of such Subsidiary's capital stock
owned by Company or any other Subsidiary of Company, (ii) repay
or prepay any Indebtedness owed by such Subsidiary to Company or
any other Subsidiary of Company, (iii) make loans or advances to
Company or any other Subsidiary of Company, or (iv) transfer any
of its property or assets to Company or any other Subsidiary of
Company.
7.3 Investments; Joint Ventures.
---------------------------
Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, including any Joint Venture, except:
(i) Company and its Subsidiaries may make and
own Investments in Cash Equivalents;
(ii) Company and its Subsidiaries may make
intercompany loans to the extent permitted under
subsection 7.1(iv);
(iii) Company may continue to own its existing
Investments in its Subsidiaries as of the Closing Date
and may make and own Investments in Persons that, as a
<PAGE>
result of such Investments, become additional wholly-
owned Subsidiaries of Company; provided, however, that
-------- -------
no such additional wholly-owned Subsidiary shall
directly or indirectly (a) create, incur, assume or
guarantee, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness
(other than Indebtedness secured by Liens permitted
under clause (c) of subsection 7.2(iv)), (b) create,
incur, assume or permit to exist any Lien on or with
respect to any property or asset of any kind of such
additional wholly-owned Subsidiary (other than
Permitted Encumbrances and Liens granted pursuant to
the Collateral Documents or permitted under clause (c)
of subsection 7.2(iv)), or (c) create or become or
remain liable with respect to any Contingent
Obligation (other than Contingent Obligations under
the Subsidiary Guaranty);
(iv) Company and its Subsidiaries may
continue to own the Investments owned by them and
described in Schedule 7.3 annexed hereto;
------------
(v) Company and its Subsidiaries may make loans
and advances to employees in the ordinary course of
business in an aggregate amount not to exceed at any
time outstanding $1,000,000;
(vi) Company and its Subsidiaries may make
and own Investments in an aggregate amount not to
exceed at any time outstanding $10,000,000 consisting
of any deferred portion of the sales price received by
Company or any of its Subsidiaries in connection with
any Asset Sale permitted under subsection 7.7(iv);
(vii) Company or any of its Subsidiaries may
make and own Investments in respect of Securities of
another Person received by Company or such Subsidiary
in connection with a plan of reorganization of such
Person or a readjustment of its debts; and
(viii) Company and its Subsidiaries may make
and own other Investments in an aggregate amount not
to exceed at any time outstanding $30,000,000.
7.4 Contingent Obligations.
----------------------
Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create or become or
remain liable with respect to any Contingent Obligation, except:
(i) Company may become and remain liable with
respect to Contingent Obligations in respect of
(a) Letters of Credit, (b) letters of credit issued
under the Existing Credit Agreement and outstanding on
the Closing Date and described in Part I of Schedule
--------
<PAGE>
7.4 annexed hereto (but not any extensions or renewals
---
thereof), (c) other Commercial Letters of Credit in an
aggregate amount not to exceed at any time
$10,000,000, and (d) other Standby Letters of Credit
in an aggregate amount not to exceed at any time
$25,000,000;
(ii) Subsidiaries of Company may become and
remain liable with respect to Contingent Obligations
under the Subsidiary Guaranty;
(iii) Company may become and remain liable
with respect to Contingent Obligations under Interest
Rate Agreements; provided that Company shall not enter
--------
into any Interest Rate Agreement pursuant to which
Company would assume any floating interest rate
exposure if the ratio of (a) the aggregate principal
amount of that portion of Consolidated Total Debt for
which Company has floating interest rate exposure
(after giving effect to such Interest Rate Agreement
and all Interest Rate Agreements then in effect) to
(b) the aggregate principal amount of Consolidated
Total Debt exceeds 0.50:1.00;
(iv) Company and its Subsidiaries may become
and remain liable with respect to Contingent
Obligations in respect of indemnification and purchase
price adjustment obligations incurred in connection
with Asset Sales or other sales of assets so long as
such indemnification and purchase price adjustment
obligations are customary in light of the type of
Asset Sales or other sales of assets in connection
with which they were incurred;
(v) Company and its Subsidiaries may become and
remain liable with respect to Contingent Obligations
under guarantees in the ordinary course of business of
the obligations of suppliers, customers, franchisees
and licensees of Company and its Subsidiaries in an
aggregate amount not to exceed at any time
$10,000,000;
(vi) Company and its Subsidiaries may become
and remain liable with respect to Contingent
Obligations in respect of any Indebtedness or other
obligation (other than any Non-Recourse Indebtedness)
of Company or any of its Subsidiaries not prohibited
by the Loan Documents;
(vii) Company and its Subsidiaries may become
and remain liable with respect to Contingent
Obligations under guarantees of trade credit extended
to Plainbridge, Chefmark or Pauls Trucking Corp. in
the ordinary course of business for the purchase of
goods by Plainbridge, Chefmark or Pauls Trucking
<PAGE>
Corp., as the case may be, for or on behalf of
Company;
(viii) Company or any of its Subsidiaries may
become and remain liable with respect to Contingent
Obligations in respect of leasehold interests assigned
by Company or such Subsidiary on or after the Closing
Date to any Person other than Company or any of its
Subsidiaries;
(ix) Company and its Subsidiaries, as
applicable, may remain liable with respect to
Contingent Obligations described in Part II of
Schedule 7.4 annexed hereto; and
------------
(x) Company and its Subsidiaries may become and
remain liable with respect to other Contingent
Obligations; provided that the maximum aggregate
--------
liability, contingent or otherwise, of Company and its
Subsidiaries in respect of all such other Contingent
Obligations permitted by this clause (x) shall at no
time exceed $10,000,000.
7.5 Restricted Junior Payments.
--------------------------
Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, declare, order, pay,
make or set apart any sum for any Restricted Junior Payment;
provided that Company may (i) make regularly scheduled payments
--------
of principal and interest in respect of any Subordinated
Indebtedness in accordance with the terms of, and only to the
extent required by, and subject to the subordination provisions
contained in, the indenture or other agreement pursuant to which
such Subordinated Indebtedness was issued, as such indenture or
other agreement may be amended from time to time to the extent
permitted under subsection 7.14A; (ii) so long as no Event of
Default shall have occurred and be continuing or shall be caused
thereby, make payments to Holdings in satisfaction of a
corresponding portion of Company's obligations under the Holdings
Intercompany Note related to the Holdings Subordinated Notes at
such times, in such amounts and to such extent (and only at such
times, in such amounts and to such extent) necessary to allow
Holdings to make regularly scheduled payments of principal and
interest in respect of any Holdings Subordinated Notes not
tendered pursuant to the Subordinated Note Exchange Offer in
accordance with the terms of, and only to the extent required by,
and subject to the subordination provisions contained in, the
indenture pursuant to which the Holdings Subordinated Notes were
issued, as such indenture is in effect as of the Closing Date, as
amended by the Supplemental Holdings Subordinated Note Indenture;
(iii) so long as no Event of Default shall have occurred and be
continuing or shall be caused thereby, make payments in an
aggregate principal amount not exceeding $1,800,000 to Holdings
in satisfaction of a corresponding portion of Company's
obligations under the Holdings Intercompany Note related to the
<PAGE>
Holdings Discount Debentures at such times, in such amounts and
to such extent (and only at such times, in such amounts and to
such extent) necessary to allow Holdings to make required
payments of principal and interest in respect of any Holdings
Discount Debentures in accordance with the terms of, and only to
the extent required by, and subject to the subordination
provisions contained in, the indenture pursuant to which the
Holdings Discount Debentures were issued, as such indenture is in
effect as of the Closing Date; and (iv) so long as no Event of
Default or Potential Event of Default shall have occurred and be
continuing or shall be caused thereby, make payments to PTKH with
any Cash proceeds (net of underwriting discounts and commissions
and other reasonable costs and expenses associated therewith,
including without limitation reasonable legal fees and expenses)
from the issuance after the Closing Date of any equity Securities
of Company to the extent any such net Cash proceeds are not
required to be applied to prepay the Loans pursuant to subsection
2.4(A)(iii)(c) to allow PTKH to purchase or redeem for cash, or
defease in a manner satisfactory to Agent, all or any portion of
the PTKH Bonds together with accrued interest thereon and the
applicable prepayment premium required to be paid under the PTKH
Bond Indenture, as such indenture is in effect as of the Closing
Date.
7.6 Financial Covenants.
-------------------
A. Minimum Interest Coverage Ratio. Company shall
not permit the ratio of (i) Consolidated Adjusted EBITDA to
(ii) Consolidated Interest Expense for any four-fiscal quarter
period ending as of the last day of any fiscal quarter of Company
ending as of the dates set forth below (or, in the case of the
fiscal quarter of Company ending on January 29, 1994, April 30,
1994 or July 30, 1994, for the one-, two- or three-fiscal quarter
period, respectively, ending as of such date) to be less than the
correlative ratio indicated:
Minimum
Fiscal Quarter Ending Interest Coverage Ratio
--------------------------- -----------------------
January 29, 1994
1.65:1.00
April 30, 1994
1.65:1.00
July 30, 1994
1.70:1.00
October 29, 1994
1.75:1.00
January 28, 1995
1.80:1.00
April 29, 1995
1.85:1.00
<PAGE>
July 29, 1995 1.90:1.00
October 28, 1995
1.95:1.00
February 3, 1996
2.00:1.00
May 4, 1996
2.00:1.00
August 3, 1996
2.00:1.00
November 2, 1996
2.00:1.00
February 1, 1997
2.00:1.00
May 3, 1997
2.00:1.00
August 2, 1997
2.00:1.00
November 4, 1997
2.05:1.00
January 31, 1998
2.05:1.00
May 2, 1998
2.05:1.00
August 1, 1998
2.05:1.00
October 31, 1998
2.10:1.00
January 30, 1999
2.15:1.00
May 1, 1999
2.15:1.00
July 31, 1999
2.15:1.00
October 30, 1999
and thereafter
2.20:1.00
B. Maximum Leverage Ratio. Company shall not permit
the ratio of (i) Consolidated Total Debt as of the last day of
any fiscal quarter of Company ending as of the dates set forth
below to (ii) Consolidated Adjusted EBITDA for the four-fiscal
quarter period ending as of the last day of such fiscal quarter
of Company to exceed the correlative ratio indicated:
Fiscal Quarter Ending Maximum Leverage Ratio
------------------------- --------------------------
January 29, 1994
6.40:1.00
<PAGE>
April 30, 1994
6.40:1.00
July 30, 1994
5.90:1.00
October 29, 1994
5.85:1.00
January 28, 1995
5.65:1.00
April 29, 1995
5.50:1.00
July 29, 1995
5.30:1.00
October 28, 1995
5.15:1.00
February 3, 1996
5.00:1.00
May 4, 1996
5.00:1.00
August 3, 1996
4.95:1.00
November 2, 1996
4.90:1.00
February 1, 1997
4.80:1:00
May 3, 1997
4.75:1.00
August 2, 1997
4.70:1.00
November 4, 1997
4.65:1.00
January 31, 1998
4.60:1.00
May 2, 1998
4.55:1.00
August 1, 1998
4.50:1.00
October 31, 1998
4.45:1.00
January 30, 1999
4.35:1.00
May 1, 1999
4.25:1.00
July 31, 1999
4.20:1.00
October 30, 1999
and thereafter
3.85:1.00
C. Minimum Consolidated Adjusted EBITDA. Company
shall not permit Consolidated Adjusted EBITDA for any four-fiscal
<PAGE>
quarter period ending as of the last day of any fiscal quarter of
Company ending as of the dates set forth below (or, in the case
of the fiscal quarter of Company ending on January 29, 1994,
April 30, 1994 or July 30, 1994, for the one-, two- or three-
fiscal quarter period, respectively, ending as of such date) to
be less than the correlative amount indicated:
Minimum Consolidated
Fiscal Quarter Ending Adjusted EBITDA
---------------------------- ----------------------
January 29, 1994
$ 68,700,000
April 30, 1994
$122,000,000
July 30, 1994
$188,200,000
October 29, 1994
$261,600,000
January 28, 1995
$270,000,000
April 29, 1995
$276,500,000
July 29, 1995
$284,500,000
October 28, 1995
$291,800,000
February 3, 1996
$300,000,000
May 4, 1996
$300,000,000
August 3, 1996
$300,300,000
November 2, 1996
$303,700,000
February 1, 1997
$307,800,000
May 3, 1997
$307,800,000
August 2, 1997
$309,500,000
November 4, 1997
$312,200,000
January 31, 1998
$312,200,000
May 2, 1998
$312,200,000
August 1, 1998
$313,300,000
<PAGE>
October 31, 1998 $316,100,000
January 30, 1999
$319,400,000
May 1, 1999
$321,900,000
July 31, 1999
$325,100,000
October 30, 1999
and thereafter
$327,900,000
7.7 Restriction on Fundamental Changes; Asset Sales.
-----------------------------------------------
Company shall not, and shall not permit any of its
Subsidiaries to, enter into any transaction of merger or
consolidation, or liquidate, wind-up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease,
sub-lease, transfer or otherwise dispose of all or any part of
its business, property or fixed assets, whether now owned or
hereafter acquired, except:
(i) any Subsidiary of Company may be merged with
or into Company or any wholly-owned Subsidiary of
Company, or be liquidated, wound up or dissolved, or
all or any substantial part of its business, property
or assets may be conveyed, sold, leased, transferred
or otherwise disposed of, in one transaction or a
series of transactions, to Company or any wholly-owned
Subsidiary of Company (other than any Real Estate
Subsidiary); provided that, in the case of such a
--------
merger, Company or such wholly-owned Subsidiary shall
be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may make
Consolidated Capital Expenditures permitted under
subsection 7.8;
(iii) Company and its Subsidiaries may sell
inventory in the ordinary course of business;
(iv) Company and its Subsidiaries may make
Asset Sales; provided that the aggregate assets sold
--------
pursuant to Asset Sales in any Fiscal Year shall not
have accounted for more than 20% of the consolidated
revenues of Company and its Subsidiaries for the
immediately preceding Fiscal Year as shown on the
consolidated financial statements of Company and its
Subsidiaries for such immediately preceding Fiscal
Year; provided further that (a) the consideration
-------- -------
received for the related assets (other than (1) the
related assets to be sold pursuant to the Asset Sale
(the "Western Pennsylvania Stores Asset Sale") by
Company of the Real Property Assets designated on
<PAGE>
Schedule 7.7 annexed hereto and any personal property
------------
of Company located on and used in connection with such
Real Property Assets and (2) the related assets taken
pursuant to any taking of assets described in clause
(iii) of the definition of the term "Asset Sale")
shall be in an amount at least equal to (y) the fair
market value thereof (taking into account any
restrictions on the use of such related assets which
Company or any such Subsidiary may require in
connection with the Asset Sale in question) or (z) a
lower amount if the Board of Directors of Company or
such Subsidiary, as the case may be, shall determine
that the sale of such related assets for such lower
amount is desirable in order to minimize losses being
incurred by Company or such Subsidiary, as the case
may be, with respect to such related assets and that
such sale for such lower amount is in the best
interest of Company or such Subsidiary, as the case
may be; (b) at least 75% of the consideration received
(excluding any consideration received in the form of
the assumption of liability under any lease pertaining
to such related assets by the purchaser thereof) for
the related assets (other than (1) the related assets
sold pursuant to the Western Pennsylvania Stores Asset
Sale and (2) the related assets taken pursuant to any
taking of assets described in clause (iii) of the
definition of the term "Asset Sale") shall be cash;
and (c) the Net Cash Proceeds of Asset Sale of such
Asset Sales shall be applied in the manner and to the
extent required by subsection 2.4A(iii)(a);
(v) Company and its Subsidiaries may dispose of
obsolete, worn out or surplus property disposed of in
the ordinary course of business;
(vi) Company and its Subsidiaries may, as
lessor or sub-lessor, lease or sub-lease any Real
Property Assets in the ordinary course of business;
(vii) Company and its Subsidiaries may make
asset sales described in clause (i)(b)(2) of the
definition of the term "Asset Sale";
(viii) Company and its Subsidiaries may
transfer their respective assets pursuant to any
taking of assets described in clause (iii) of the term
"Asset Sale" to the extent that the aggregate net cash
proceeds received by Company and its Subsidiaries in
connection with such taking and all other takings
related to such taking are equal to or less than
$100,000; and
(ix) Company or any Subsidiary of Company
may, in the ordinary course of business, terminate any
lease to which it is a party as lessee.
<PAGE>
7.8 Consolidated Capital Expenditures.
---------------------------------
Company shall not, and shall not permit its
Subsidiaries to, make or incur Consolidated Capital Expenditures,
in any Fiscal Year indicated below, in an aggregate amount in
excess of the corresponding amount (the "Maximum Consolidated
Capital Expenditures Amount") set forth below opposite such
Fiscal Year; provided that the Maximum Consolidated Capital
--------
Expenditures Amount for any Fiscal Year shall be increased by an
amount equal to the excess, if any (but in no event more than
$20,000,000), of the Maximum Consolidated Capital Expenditures
Amount for the previous Fiscal Year (as adjusted in accordance
with this proviso) over the actual amount of Consolidated Capital
Expenditures for such previous Fiscal Year:
Maximum
Consolidated
Fiscal Year
----------------------------------
Capital Expenditures Amount
---------------------------
1993 $115,000,000
1994 $120,000,000
1995 $120,000,000
1996 $120,000,000
1997 and thereafter $125,000,000
7.9 Restriction on Leases.
---------------------
Company shall not, and shall not permit any of its
Subsidiaries to, become liable in any way, whether directly or by
assignment or as a guarantor or other surety, for the obligations
of the lessee under any lease, whether an Operating Lease or a
Capital Lease (other than intercompany leases between Company and
its wholly-owned Subsidiaries), unless, immediately after giving
effect to the incurrence of liability with respect to such lease,
the Consolidated Rental Payments at the time in effect during the
then current Fiscal Year shall not exceed the corresponding
amount set forth below opposite such Fiscal Year:
Maximum Consolidated
Fiscal Year
---------------------------------- ----
Rental Payments
-------------------
1993 $ 67,252,000
1994 $ 79,659,000
1995 $ 89,836,000
1996 $100,075,000
1997 $111,376,000
1998 $116,034,000
1999 and thereafter $121,118,000
7.10 Sale or Discount of Receivables.
-------------------------------
<PAGE>
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, sell with recourse, or
discount or otherwise sell for less than the face value thereof,
any of its notes or accounts receivable.
7.11 Transactions with Shareholders and Affiliates.
---------------------------------------------
Company shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, enter into or permit to
exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) with any holder of 5% or more of any
class of equity Securities of Company or with any Affiliate of
Company or of any such holder, on terms that are less favorable
to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such
a holder or Affiliate; provided that the foregoing restriction
--------
shall not apply to (i) any transaction between Company and any of
its wholly-owned Subsidiaries or between any of its wholly-owned
Subsidiaries (other than any transaction entered into on or after
the Closing Date by and between Company or any of its wholly-
owned Subsidiaries (other than a Real Estate Subsidiary) and any
Real Estate Subsidiary to the extent that the terms thereof are
more favorable to such Real Estate Subsidiary than those that
might be obtained at the time from Persons who are not Affiliates
of Company), (ii) transactions entered into or existing pursuant
to and in accordance with the Spin-Off Agreements, or
(iii) reasonable and customary fees paid to members of the Boards
of Directors of Company and its Subsidiaries.
7.12 Disposal of Subsidiary Stock.
----------------------------
Except for any sale of 100% of the capital stock or
other equity Securities of any of its Subsidiaries in compliance
with the provisions of subsection 7.7(iv) and except pursuant to
the Collateral Documents, Company shall not:
(i) directly or indirectly sell, assign, pledge
or otherwise encumber or dispose of any shares of
capital stock or other equity Securities of any of its
Subsidiaries, except to qualify directors if required
by applicable law; or
(ii) permit any of its Subsidiaries directly
or indirectly to sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or
other equity Securities of any of its Subsidiaries
(including such Subsidiary), except to Company,
another Subsidiary of Company, or to qualify directors
if required by applicable law.
7.13 Conduct of Business.
-------------------
From and after the Closing Date, Company shall not,
and shall not permit any of its Subsidiaries to, engage in any
<PAGE>
business other than (i) the businesses engaged in by Company and
its Subsidiaries on the Closing Date and similar or related
businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.14 Amendments of Certain Documents; Designation of
-----------------------------------------------
Specified Senior Indebtedness.
-----------------------------
A. Company shall not, and shall not permit any of
its Subsidiaries to, amend or otherwise change the terms of any
Subordinated Indebtedness or any Indebtedness of Company or any
of its Subsidiaries permitted to be incurred under subsection
7.1(vii) ("Specified Refinancing Indebtedness"), or make any
payment consistent with an amendment thereof or change thereto,
if the effect of such amendment or change is to increase the
interest rate on such Subordinated Indebtedness or such Specified
Refinancing Indebtedness, change (to earlier dates) any dates
upon which payments of principal or interest are due thereon,
change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of
default or to increase any grace period with respect thereto),
change the redemption, prepayment or defeasance provisions
thereof, change the subordination provisions thereof (or of any
guaranty thereof), or change any collateral therefor (other than
to release such collateral), or if the effect of such amendment
or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder
or to confer any additional rights on the holders of such
Subordinated Indebtedness or such Specified Refinancing
Indebtedness (or a trustee or other representative on their
behalf) which would be adverse to Company or Lenders.
B. Company shall not, and shall not permit any of
its Subsidiaries to, amend or otherwise change the terms of any
of the Spin-Off Agreements in any material respect or waive any
of its material rights thereunder without the prior written
consent of the Requisite Lenders.
C. Company shall not amend or otherwise change the
terms of any of the Holdings Intercompany Notes without the prior
written consent of Requisite Lenders.
D. Company shall not designate any Indebtedness as
"Specified Senior Indebtedness" (as defined in any of the New
Subordinated Debt Indentures) for purposes of any of the New
Subordinated Debt Indentures without the prior written consent of
Requisite Lenders.
7.15 Fiscal Year.
-----------
Company shall not change its Fiscal Year-end from
the Saturday closest to January 31.
Section 8. EVENTS OF DEFAULT
<PAGE>
If any of the following conditions or events
("Events of Default") shall occur:
8.1 Failure to Make Payments When Due.
---------------------------------
Failure to pay any installment of principal of
any Loan when due, whether at stated maturity, by acceleration,
by notice of prepayment or otherwise; failure to pay when due any
amount payable to an Issuing Lender in reimbursement of any
drawing under a Letter of Credit; or failure to pay any interest
on any Loan or any fee or any other amount due under this
Agreement within five days after the date due; or
8.2 Default in Other Agreements.
---------------------------
(i) Failure of Company or any of its
Subsidiaries to pay when due (a) any principal of or interest on
any Indebtedness (other than Indebtedness referred to in
subsection 8.1) in an individual principal amount of $5,000,000
or more or any items of Indebtedness with an aggregate principal
amount of $10,000,000 or more or (b) any Contingent Obligation in
an individual principal amount of $5,000,000 or more or any
Contingent Obligations with an aggregate principal amount of
$10,000,000 or more, in each case beyond the end of any grace
period provided therefor; or (ii) breach or default by Company or
any of its Subsidiaries with respect to any other material term
of (a) any evidence of any Indebtedness in an individual
principal amount of $5,000,000 or more or any items of
Indebtedness with an aggregate principal amount of $10,000,000 or
more or any Contingent Obligation in an individual principal
amount of $5,000,000 or more or any Contingent Obligations with
an aggregate principal amount of $10,000,000 or more or (b) any
loan agreement, mortgage, indenture or other agreement relating
to such Indebtedness or Contingent Obligation(s), if the effect
of such breach or default is to cause, or to permit the holder or
holders of that Indebtedness or Contingent Obligation(s) (or a
trustee on behalf of such holder or holders) to cause, that
Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated
maturity of any underlying obligation, as the case may be, in
each case after the end of any grace period provided therefor; or
8.3 Breach of Certain Covenants.
---------------------------
Failure of Company to perform or comply with any
term or condition contained in subsection 2.5 or 6.2 or Section 7
of this Agreement or any other material term of any Loan Document
(other than this Agreement); or
8.4 Breach of Warranty.
------------------
Any representation, warranty, certification or
other statement made by Company or any of its Subsidiaries in any
Loan Document or in any statement or certificate at any time
<PAGE>
given by Company or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be
false in any material respect on the date as of which made; or
8.5 Other Defaults Under Loan Documents.
-----------------------------------
Company or any of its Subsidiaries shall default
in the performance of or compliance with any term contained in
this Agreement or any of the other Loan Documents, other than any
such term referred to in any other subsection of this Section 8,
and such default shall not have been remedied or waived within 30
days after receipt by Company of notice from Agent or any Lender
of such default; or
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc.
-----------------------------------------------------
(i) A court having jurisdiction in the premises
shall enter a decree or order for relief in respect of Company or
any of its Subsidiaries in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, which
decree or order is not stayed; or any other similar relief shall
be granted under any applicable federal or state law; or (ii) an
involuntary case shall be commenced against Company or any of its
Subsidiaries under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter
in effect; or a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar
powers over Company or any of its Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of Company or any of
its Subsidiaries for all or a substantial part of its property;
or a warrant of attachment, execution or similar process shall
have been issued against any substantial part of the property of
Company or any of its Subsidiaries, and any such event described
in this clause (ii) shall continue for 60 days unless dismissed,
bonded or discharged; or
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.
---------------------------------------------------
(i) Company or any of its Subsidiaries shall
have an order for relief entered with respect to it or commence a
voluntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter
in effect, or shall consent to the entry of an order for relief
in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to
the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or
Company or any of its Subsidiaries shall make any general assign-
ment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall
admit in writing its inability, to pay its debts as such debts
<PAGE>
become due; or the Board of Directors of Company or any of its
Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize any action to approve any of
the actions referred to in clause (i) above or this clause (ii);
or
8.8 Judgments and Attachments.
-------------------------
Any money judgment, writ or warrant of attachment
or similar process involving in the aggregate at any time an
amount in excess of $10,000,000 (to the extent not adequately
covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or
filed against Company or any of its Subsidiaries or any of their
respective assets and shall remain 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); or
8.9 Dissolution.
-----------
Any order, judgment or decree shall be entered
against Company or any of its Subsidiaries decreeing the
dissolution or split up of Company or that Subsidiary and such
order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 Employee Benefit Plans.
----------------------
There shall occur one or more ERISA Events which
individually or in the aggregate results in or might reasonably
be expected to result in liability of Company or any of its ERISA
Affiliates in excess of $10,000,000 during the term of this
Agreement; or there shall exist an amount of unfunded benefit
liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding
for purposes of such computation any Pension Plans with respect
to which assets exceed benefit liabilities), which exceeds
$10,000,000; or
8.11 Change in Control.
-----------------
(i) At any time that SMG-II has beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Exchange Act ("Beneficial
Ownership")), directly or indirectly, of Securities of Company
(or other Securities convertible into such Securities)
representing 20% or more of the combined voting power of all
Securities of Company entitled to vote in the election of
directors, other than Securities having such power only by reason
of the happening of a contingency, any Person or any two or more
Persons acting in concert (other than Merrill Lynch Capital
Partners, Inc. ("MLCP") or any of its Affiliates or Equitable or
any of its Affiliates) shall have or shall have acquired
Beneficial Ownership, directly or indirectly, of Securities of
<PAGE>
SMG-II (or other Securities convertible into such Securities)
representing 25% or more of the combined voting power of all
Securities of SMG-II entitled to vote in the election of
directors, other than Securities having such power only by reason
of the happening of a contingency; (ii) at any time that Holdings
has Beneficial Ownership, directly or indirectly, of Securities
of Company (or other Securities convertible into such Securities)
representing 20% or more of the combined voting power of all
Securities of Company entitled to vote in the election of
directors, other than Securities having such power only by reason
of the happening of a contingency, any Person or any two or more
Persons acting in concert (other than MLCP or any of its
Affiliates, Equitable or any of its Affiliates, or SMG-II) shall
have or shall have acquired Beneficial Ownership, directly or
indirectly, of Securities of Holdings (or other Securities
convertible into such Securities) representing 25% or more of the
combined voting power of all Securities of Holdings entitled to
vote in the election of directors, other than Securities having
such power only by reason of the happening of a contingency;
(iii) at any time that PTKH has Beneficial Ownership, directly or
indirectly, of Securities of Company (or other Securities
convertible into such Securities) representing 20% or more of the
combined voting power of all Securities of Company entitled to
vote in the election of directors, other than Securities having
such power only by reason of the happening of a contingency, any
Person or any two or more Persons acting in concert (other than
MLCP or any of its Affiliates, Equitable or any of its
Affiliates, SMG-II or Holdings) shall have or shall have acquired
Beneficial Ownership, directly or indirectly, of Securities of
PTKH (or other Securities convertible into such Securities)
representing 25% or more of the combined voting power of all
Securities of PTKH entitled to vote in the election of directors,
other than Securities having such power only by reason of the
happening of a contingency; (iv) any Person or any two or more
Persons acting in concert (other than MLCP or any of its
Affiliates or Equitable or any of its Affiliates (including SMG-
II, Holdings or PTKH, in each case so long as such Person is an
Affiliate of MLCP or Equitable)) shall have acquired Beneficial
Ownership, directly or indirectly, of Securities of Company (or
other Securities convertible into such Securities) representing
25% or more of the combined voting power of all Securities of
Company entitled to vote in the election of directors, other than
Securities having such power only by reason of the happening of a
contingency; or (v) a "Change in Control" (as defined in the
Supplemental Holdings Subordinated Note Indenture, the
Supplemental Holdings Subordinated Debenture Indenture or any of
the New Subordinated Debt Indentures) shall occur; or
8.12 Invalidity of Subsidiary Guaranty.
---------------------------------
Upon execution and delivery thereof, the
Subsidiary Guaranty for any reason, other than the satisfaction
in full of all Obligations, ceases to be in full force and effect
(other than in accordance with its terms) or is declared to be
null and void, or any Loan Party denies in writing that it has
<PAGE>
any further liability, including without limitation with respect
to future advances by Lenders, under any Loan Document to which
it is a party; or
8.13 Failure of Security.
-------------------
Upon execution and delivery thereof, any
Collateral Document shall, at any time, cease to be in full force
and effect (other than by reason of a release of Collateral
thereunder in accordance with the terms hereof or thereof, the
satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof
or thereof) or shall be declared null and void, or the validity
or enforceability thereof shall be contested in writing by any
Loan Party, or the Agent shall not have or shall cease to have a
valid and perfected first priority security interest (subject to
Permitted Encumbrances) in any Collateral purported to be covered
thereby having a fair market value individually or in the
aggregate exceeding $1,000,000, in each case for any reason other
than the failure of Agent or any Lender to take any action within
its control; or
8.14 Failure to Consummate Restructuring.
-----------------------------------
The Restructuring shall not be consummated in
accordance with this Agreement concurrently with the making of
the initial Loans or the Restructuring shall be unwound, reversed
or otherwise rescinded in whole or in part for any reason; or
8.15 Termination or Breach of Logistical Services
--------------------------------------------
Agreement.
---------
The Spin-Off Agreement described in clause (v) of
the definition thereof shall terminate as a result of any reason
whatsoever or Plainbridge shall fail to perform its obligations
under such Spin-Off Agreement and such failure would reasonably
be expected to have a Material Adverse Effect, and, in either
case, Company shall not have made arrangements satisfactory to
Requisite Lenders for obtaining any services that are required to
be provided by Plainbridge to Company under such Spin-Off
Agreement that are not being so provided as a result of such
termination or failure to perform; or
8.16 Incurrence of Tax Liability Relating to Spin-Off.
------------------------------------------------
Company shall incur any liability for any Tax for
which Plainbridge has agreed to indemnify Company pursuant to the
Spin-Off Agreement described in clause (iii) of the definition of
the term "Spin-Off Agreements" and the incurrence of such
liability would reasonably be expected to have a Material Adverse
Effect; or
8.17 Amendments of Certain Documents Relating to PTKH
------------------------------------------------
Bonds.
-----
<PAGE>
The terms of the PTKH Bond Indenture, the PTKH
Bonds or the Redemption Agreement shall be amended or changed, or
any payment consistent with an amendment thereof or change
thereto shall be made, and (i) the effect of such amendment or
change is to increase the interest rate on the PTKH Bonds, change
(to earlier dates) any dates upon which payments of principal or
interest, or any cash payments of interest, are due thereon,
change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of
default or to increase any grace period with respect thereto),
change the redemption, prepayment or defeasance provisions
thereof, or change any collateral therefor (other than to release
such collateral), or (ii) the effect of such amendment or change,
together with all other amendments or changes made, is to
increase materially the obligations of the obligor thereunder or
to confer any additional rights on the holders of the PTKH Bonds
(or a trustee or other representative on their behalf) which
would be adverse to Holdings, PTKH, Company or Lenders:
THEN (i) upon the occurrence of any Event of Default described in
subsection 8.6 or 8.7, each of (a) the unpaid principal amount of
and accrued interest on the Loans, (b) an amount equal to the
maximum amount that may at any time be drawn under all Letters of
Credit then outstanding (whether or not any beneficiary under any
such Letter of Credit shall have presented, or shall be entitled
at such time to present, the drafts or other documents or
certificates required to draw under such Letter of Credit), and
(c) all other Obligations shall automatically become immediately
due and payable, without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any
Loan, the obligation of Agent to issue any Letter of Credit and
the right of any Lender to issue any Letter of Credit hereunder
shall thereupon terminate, and (ii) upon the occurrence and
during the continuation of any other Event of Default, Agent
shall, upon the written request of Requisite Lenders, by written
notice to Company, declare all or any portion of the amounts
described in clauses (a) through (c) above to be, and the same
shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of
Agent to issue any Letter of Credit and the right of any Lender
to issue any Letter of Credit hereunder shall thereupon
terminate; provided that the foregoing shall not affect in any
--------
way the obligations of Lenders under subsection 3.3C(i) or the
obligations of Lenders to repay Swing Line Loans or purchase
participations therein as provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when
received by Agent, shall be held by Agent pursuant to the terms
of the Collateral Account Agreement and shall be applied as
therein provided.
Section 9. AGENT AND COLLATERAL CO-AGENTS
9.1 Appointment.
-----------
<PAGE>
Bankers is hereby appointed Agent hereunder and
under the other Loan Documents and each Lender hereby authorizes
Agent to act as its agent in accordance with the terms of this
Agreement and the other Loan Documents. Agent agrees to act upon
the express conditions contained in this Agreement and the other
Loan Documents, as applicable. The provisions of this Section 9
are solely for the benefit of Agent and Lenders and Company shall
have no rights as a third party beneficiary of any of the
provisions thereof. In performing its functions and duties under
this Agreement, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for
Company or any of its Subsidiaries.
It is the purpose of this Agreement and the other
Loan Documents that there shall be no violation of any law of any
jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or
trustee in such jurisdiction. It is recognized that in case of
litigation under this Agreement or any of the other Loan
Documents, and in particular in case of the enforcement of any of
the Loan Documents, or in case Agent deems that by reason of any
present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the
other Loan Documents, or take any other action which may be
desirable or necessary in connection therewith, it may be
necessary that Agent appoint an additional individual or
institution (including without limitation Bankers Trust Company
New Jersey Limited) as a separate trustee, co-trustee, separate
collateral agent or collateral co-agent (any such additional
individual or institution being referred to herein individually
as a "Collateral Co-Agent" and collectively as "Collateral Co-
Agents").
In the event that Agent appoints a Collateral Co-
Agent with respect to any Collateral, each and every right,
power, privilege or duty expressed or intended by this Agreement
or any of the other Loan Documents to be exercised by or vested
in or conveyed to Agent with respect to such Collateral shall be
exercisable by and vest in such Collateral Co-Agent to the
extent, and only to the extent, necessary to enable such
Collateral Co-Agent to exercise such rights, powers and
privileges with respect to such Collateral and to perform such
duties with respect to such Collateral, and every covenant and
obligation contained in the Loan Documents and necessary to the
exercise or performance thereof by such Collateral Co-Agent shall
run to and be enforceable by either of such Collateral Co-Agent
and Agent.
Should any instrument in writing from Company be
required by any Collateral Co-Agent so appointed by Agent for
more fully and certainly vesting in and confirming to him or it
such rights, powers, privileges and duties, any and all such
instruments in writing shall, promptly upon request by Agent, be
executed, acknowledged and delivered by Company. In case any
<PAGE>
Collateral Co-Agent, or a successor thereto, shall die, become
incapable of acting, resign or be removed, all the rights,
powers, privileges and duties of such Collateral Co-Agent, to the
extent permitted by law, shall vest in and be exercised by Agent
until the appointment of a new Collateral Co-Agent.
9.2 Powers; General Immunity.
------------------------
A. Duties Specified. Each Lender irrevocably
authorizes Agent and each Collateral Co-Agent to take such action
on such Lender's behalf and to exercise such powers hereunder and
under the other Loan Documents as are specifically delegated to
Agent and such Collateral Co-Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental
thereto. Agent and each Collateral Co-Agent shall have only
those duties and responsibilities that are expressly specified in
this Agreement and the other Loan Documents and they may perform
such duties by or through their respective agents or employees.
Neither Agent nor any Collateral Co-Agent shall have, by reason
of this Agreement or any of the other Loan Documents, a fiduciary
relationship in respect of any Lender; and nothing in this
Agreement or any of the other Loan Documents, expressed or
implied, is intended to or shall be so construed as to impose
upon Agent or any Collateral Co-Agent any obligations in respect
of this Agreement or any of the other Loan Documents except as
expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Neither
Agent nor any Collateral Co-Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectability or sufficiency of this Agreement
or any other Loan Document or for any representations,
warranties, recitals or statements made herein or therein or made
in any written or oral statement or in any financial or other
statements, instruments, reports or certificates or any other
documents furnished or made by Agent or any Collateral Co-Agent
to Lenders or by or on behalf of Company to Agent or any
Collateral Co-Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other
Person liable for the payment of any Obligations, nor shall Agent
or any Collateral Co-Agent be required to ascertain or inquire as
to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the
use of the Letters of Credit or as to the existence or possible
existence of any Event of Default or Potential Event of Default.
Anything contained in this Agreement to the contrary not-
withstanding, Agent shall not have any liability arising from
confirmations of the amount of outstanding Loans or the Letter of
Credit Usage or the component amounts thereof.
C. Exculpatory Provisions. Neither Agent nor any
Collateral Co-Agent nor any of their respective officers,
directors, employees or agents shall be liable to Lenders for any
<PAGE>
action taken or omitted by Agent or such Collateral Co-Agent
hereunder or under any of the other Loan Documents or in
connection herewith or therewith except to the extent caused by
Agent's or such Collateral Co-Agent's gross negligence or willful
misconduct. If Agent or any Collateral Co-Agent shall request
instructions from Lenders with respect to any act or action
(including the failure to take an action) in connection with this
Agreement or any of the other Loan Documents, Agent or such
Collateral Co-Agent shall be entitled to refrain from such act or
taking such action unless and until Agent or such Collateral Co-
Agent shall have received instructions from Requisite Lenders.
Without prejudice to the generality of the foregoing, (i) each of
Agent and Collateral Co-Agents shall be entitled to rely, and
shall be fully protected in relying, upon any communication,
instrument or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons,
and shall be entitled to rely and shall be protected in relying
on opinions and judgments of attorneys (who may be attorneys for
Company and its Subsidiaries), accountants, experts and other
professional advisors selected by it; and (ii) no Lender shall
have any right of action whatsoever against Agent or any
Collateral Co-Agent as a result of Agent or such Collateral Co-
Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in
accordance with the instructions of Requisite Lenders. Each of
Agent and Collateral Co-Agents shall be entitled to refrain from
exercising any power, discretion or authority vested in it under
this Agreement or any of the other Loan Documents unless and
until it has obtained the instructions of Requisite Lenders.
D. Agent and Collateral Co-Agents Entitled to Act as
Lenders. The agency hereby created shall in no way impair or
affect any of the rights and powers of, or impose any duties or
obligations upon, Agent or, if any Collateral Co-Agent is or
becomes a Lender, such Collateral Co-Agent, in its individual
capacity as a Lender hereunder. With respect to its par-
ticipation in the Loans and the Letters of Credit, Agent and, if
any Collateral Co-Agent is or becomes a Lender, such Collateral
Co-Agent, shall have the same rights and powers hereunder as any
other Lender and may exercise the same as though it were not
performing the duties and functions delegated to it hereunder,
and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent
and, if any Collateral Co-Agent is or becomes a Lender, such
Collateral Co-Agent, in its individual capacity. Agent and, if
any Collateral Co-Agent is or becomes a Lender, such Collateral
Co-Agent, and their respective Affiliates may accept deposits
from, lend money to and generally engage in any kind of banking,
trust, financial advisory or other business with Company or any
of its Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration
from Company for services in connection with this Agreement and
otherwise without having to account for the same to Lenders.
<PAGE>
9.3 Representations and Warranties; No Responsibility For
-----------------------------------------------------
Appraisal of Creditworthiness.
-----------------------------
Each Lender represents and warrants that it has
made its own independent investigation of the financial condition
and affairs of Company and its Subsidiaries in connection with
the making of the Loans and the issuance of Letters of Credit
hereunder and that it has made and shall continue to make its own
appraisal of the creditworthiness of Company. Neither Agent nor
any Collateral Co-Agent shall have any duty or responsibility,
either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Lenders or to
provide any Lender with any credit or other information with
respect thereto, whether coming into its possession before the
making of the Loans or at any time or times thereafter, and
neither Agent nor any Collateral Co-Agent shall have any
responsibility with respect to the accuracy of or the complete-
ness of any information provided to Lenders.
9.4 Right to Indemnity.
------------------
Each Lender, in proportion to its Pro Rata Share,
severally agrees to indemnify Agent and each Collateral Co-Agent,
to the extent that Agent and such Collateral Co-Agent shall not
have been reimbursed by Company, for and against any and all
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including, without limitation,
counsel fees and disbursements) or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or
asserted against Agent or such Collateral Co-Agent in performing
its duties hereunder or under the other Loan Documents or
otherwise in their respective capacities as Agent and Collateral
Co-Agent in any way relating to or arising out of this Agreement
or the other Loan Documents; provided that no Lender shall be
--------
liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from Agent's or such Collateral Co-
Agent's gross negligence or willful misconduct. If any indemnity
furnished to Agent or any Collateral Co-Agent for any purpose
shall, in the opinion of Agent or such Collateral Co-Agent, be
insufficient or become impaired, Agent or such Collateral Agent
may call for additional indemnity and cease, or not commence, to
do the acts indemnified against until such additional indemnity
is furnished.
9.5 Payee of Note Treated as Owner.
------------------------------
Agent and Collateral Co-Agents may deem and treat
the payee of any Note as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or
transfer thereof shall have been filed with Agent. Any request,
authority or consent of any person or entity who, at the time of
making such request or giving such authority or consent, is the
holder of any Note shall be conclusive and binding on any
<PAGE>
subsequent holder, transferee or assignee of that Note or of any
Note or Notes issued in exchange therefor.
9.6 Successor Agent, Collateral Co-Agent and Swing Line
---------------------------------------------------
Lender.
------
A. Successor Agent and Collateral Co-Agent.
Agent or any Collateral Co-Agent may resign at any time by giving
30 days' prior written notice thereof to Lenders and Company, and
Agent or any Collateral Co-Agent may be removed at any time with
or without cause by an instrument or concurrent instruments in
writing delivered to Company and Agent or such Collateral Co-
Agent, as the case may be, and signed by Requisite Lenders. Upon
any such notice of resignation or any such removal, Requisite
Lenders shall have the right, upon five Business Days' notice to
Company, to appoint a successor Agent or Collateral Co-Agent, as
the case may be. Upon the acceptance of any appointment as Agent
or Collateral Co-Agent hereunder by a successor Agent or
Collateral Co-Agent, that successor Agent or Collateral Co-Agent
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring or removed Agent or
Collateral Co-Agent and the retiring or removed Agent or
Collateral Co-Agent shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed
Agent's or Collateral Co-Agent's resignation or removal hereunder
as Agent or Collateral Co-Agent, the provisions of this Section 9
shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent or Collateral Co-Agent under
this Agreement.
B. Successor Swing Line Lender. Any
resignation or removal of Agent pursuant to subsection 9.6A shall
also constitute the resignation or removal of Bankers or its
successor as Swing Line Lender, and any successor Agent appointed
pursuant to subsection 9.6A shall, upon its acceptance of such
appointment, become the successor Swing Line Lender for all
purposes hereunder. In such event (i) Company shall prepay any
outstanding Swing Line Loans made by the retiring or removed
Agent in its capacity as Swing Line Lender, (ii) upon such
prepayment, the retiring or removed Agent and Swing Line Lender
shall surrender the Swing Line Note held by it to Company for
cancellation, and (iii) Company shall issue a new Swing Line Note
to the successor Agent and Swing Line Lender substantially in the
form of Exhibit VI annexed hereto, in the principal amount of the
----------
Swing Line Loan Commitment then in effect and with other
appropriate insertions.
9.7 Collateral Documents.
--------------------
Each Lender hereby further authorizes Agent and
each Collateral Co-Agent to enter into the Collateral Documents
as secured party on behalf of and for the benefit of Lenders and
agrees to be bound by the terms of the Collateral Documents;
provided that neither Agent nor any Collateral Co-Agent shall
--------
enter into or consent to any amendment, modification, termination
<PAGE>
or waiver of any provision contained in the Collateral Documents
without the prior consent of Requisite Lenders. Each Lender
agrees that no Lender shall have any right individually to
realize upon the Subsidiary Guaranty or any of the Collateral
under the Collateral Documents, it being understood and agreed
that all rights and remedies under the Collateral Documents may
be exercised solely by Agent and Collateral Co-Agents for the
benefit of Lenders and the other beneficially interested parties
under the Collateral Documents and the other Loan Documents in
accordance with the terms thereof.
Section 10. MISCELLANEOUS
10.1 Assignments and Participations in Loans and Letters of
------------------------------------------------------
Credit.
------
A. General. Each Lender shall have the right at any
time to (i) sell, assign, transfer or negotiate to any Eligible
Assignee, or (ii) sell participations to any Person in, all or
any part of any Loan or Loans made by it or its Commitments or
its Letters of Credit or participations therein or any other
interest herein or in any other Obligations owed to it; provided
--------
that no such assignment or participation shall, without the
consent of Company, require Company to file a registration
statement with the Securities and Exchange Commission or apply to
qualify such assignment or participation of the Loans, the
Letters of Credit or participations therein or the other
Obligations under the securities laws of any state. Except as
otherwise provided in this subsection 10.1, no Lender shall, as
between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment,
transfer or negotiation of, or any granting of participations in,
all or any part of the Loans, the Commitments, the Letters of
Credit or participations therein or the other Obligations owed to
such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each
--------------------------------
Loan, Commitment, Letter of Credit or participation
therein or other Obligation may (a) be assigned in any
amount (of a constant and not a varying percentage) to
another Lender, or to an Affiliate of the assigning
Lender or another Lender, with the giving of notice to
Company and Agent and, in the case of an assignment to
an Affiliate of the assigning Lender where the
assigning Lender can reasonably foresee that such
assignment would result in a requirement on the part
of Company to pay any greater amount pursuant to
subsection 2.6D or 2.7 than Company would have been
required to pay to the assigning Lender in respect of
the amount of the assignment effected by such
assigning Lender to such Affiliate had no such
assignment occurred, with the consent of Company to
<PAGE>
such assignment (which consent shall not be
unreasonably withheld), or (b) be assigned in an
amount (of a constant and not a varying percentage) of
not less than $10,000,000 (or such lesser amount as
shall constitute the aggregate amount of all Loans,
Commitments, Letters of Credit and participations
therein and other Obligations of the assigning Lender)
to any other Eligible Assignee with the consent of
Company and Agent (which consent of Company and Agent
shall not be unreasonably withheld). To the extent of
any such assignment in accordance with either clause
(a) or (b) above, the assigning Lender shall be
relieved of its obligations with respect to its Loans,
Commitments, Letters of Credit or participations
therein or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall
execute and deliver to Agent, for its acceptance, one
or more Assignment and Acceptances (depending on
whether such assignment includes one or more of the
assigning Lender's Term A Loan, Term B Loan and/or
Revolving Loan Commitment and Revolving Loans) in
substantially the form of Exhibit XI, annexed hereto,
----------
together with (1) a processing fee of $1,500 in the
case of an assignment to another Lender or (2) a
processing fee of $2,500 in the case of an assignment
to any other Eligible Assignee and such certificates,
documents or other evidence, if any, with respect to
United States federal income tax withholding matters
as the assignee under such Assignment and Acceptances
may be required to deliver to Agent pursuant to
subsection 2.7B(iii). Upon such execution, delivery
and acceptance, from and after the effective date of
the assignments and assumptions contemplated by such
Assignment and Acceptances, (y) the assignee
thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and
Acceptances, shall have the rights and obligations of
a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and
obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptances,
relinquish its rights and be released from its
obligations under this Agreement (and, in the case of
one or more Assignment and Acceptances covering all or
the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such Lender
shall cease to be a party hereto). The Commitments
hereunder shall be modified to reflect the Commitment
of such assignee and any remaining Commitment of such
assigning Lender and, if any such assignment occurs
after the issuance of the Notes hereunder, new Notes
shall, upon surrender of the assigning Lender's Notes,
be issued to the assignee and to the assigning Lender
pursuant to subsection 2.1D as necessary to reflect
<PAGE>
the new Commitments of the assignee and the assigning
Lender.
(ii) Acceptance by Agent. Upon its receipt
-------------------
of one or more Assignment and Acceptances executed by
an assigning Lender and an assignee representing that
it is an Eligible Assignee, together with the
processing fee referred to in subsection 10.1B(i) and
any certificates, documents or other evidence with
respect to United States federal income tax
withholding matters that such assignee may be required
to deliver to Agent pursuant to subsection 2.7B(iii),
Agent shall, if such Assignment and Acceptances have
been completed and are in substantially the form of
Exhibit XI, annexed hereto, and if Company and Agent
----------
have consented to the assignment evidenced thereby (in
each case to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept each such
Assignment and Acceptance by executing a counterpart
thereof as provided therein (which acceptance shall
evidence any required consent of Agent to such
assignment), and (b) give prompt notice thereof to
Company. Agent shall maintain a copy of each
Assignment and Acceptance delivered to and accepted by
it as provided in this subsection 10.1B(ii).
C. Participations. The holder of any participation,
other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to
take or omit to take any action hereunder except action directly
affecting (i) the extension of the scheduled final maturity date
of any Loan allocated to such participation or (ii) a reduction
of the principal amount of or the rate of interest payable on any
Loan allocated to such participation, and all amounts payable by
Company hereunder (including without limitation amounts payable
to such Lender pursuant to subsections 2.6D, 2.7 and 3.6) shall
be determined as if such Lender had not sold such participation.
Company and each Lender hereby acknowledge and agree that, solely
for purposes of subsections 10.4 and 10.5, (a) any participation
will give rise to a direct obligation of Company to the
participant and (b) the participant shall be considered to be a
"Lender".
D. Assignments to Federal Reserve Bank. In addition
to the assignments and participations permitted under the
foregoing provisions of this subsection 10.1, any Lender may
assign and pledge all or any portion of its Loans, the other
Obligations owed to such Lender and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of
the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve Bank. No
Lender shall, as between Company and such Lender, be relieved of
any of its obligations hereunder as a result of any such
assignment and pledge.
<PAGE>
E. Information. Each Lender may furnish any
information concerning Company and its Subsidiaries in the
possession of that Lender from time to time to assignees and
participants (including prospective assignees and participants);
provided, however, that prior to being furnished with any such
-------- -------
information which is non-public information obtained pursuant to
the requirements of this Agreement which has been identified as
confidential by Company, the assignee or participant or
prospective assignee or participant shall agree to preserve the
confidentiality of such information in accordance with subsection
10.19.
10.2 Expenses.
--------
Whether or not the transactions contemplated
hereby shall be consummated, Company agrees to pay promptly
(i) all the actual and reasonable costs and expenses of prepara-
tion of the Loan Documents; (ii) all the costs of furnishing all
opinions by counsel for Company (including without limitation any
opinions requested by Lenders as to any legal matters arising
hereunder) and of Company's performance of and compliance with
all agreements and conditions on its part to be performed or
complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming
compliance with environmental and insurance requirements;
(iii) the reasonable fees, expenses and disbursements of counsel
to Agent (including allocated costs of internal counsel) in
connection with the negotiation, preparation, execution and
administration of the Loan Documents and the Loans and any
consents, amendments, waivers or other modifications hereto or
thereto and any other documents or matters requested by Company
or any of its Subsidiaries; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of
Agent on behalf of Lenders pursuant to any Loan Document,
including filing and recording fees and expenses, title
insurance, fees and expenses of counsel for providing such
opinions as Agent or Requisite Lenders may reasonably request and
fees and expenses of legal counsel to Agent; (v) all the actual
costs and reasonable expenses of obtaining and reviewing any
appraisals provided for under subsection 4.1J or 6.9 and any
environmental audits or reports provided for under subsection
4.1K or 6.9; (vi) the reasonable fees, expenses and disbursements
of any accountants retained by Agent in connection with the
review and analysis prior to the Closing Date of any financial
statements of Company and its Subsidiaries or any other reports
furnished to Agent by or on behalf of Company or any of its
Subsidiaries pursuant to or for use in connection with this
Agreement; (vii) all other actual and reasonable costs and
expenses incurred by Agent in connection with the negotiation,
preparation and execution of the Loan Documents and the
transactions contemplated hereby and thereby; and (viii) after
the occurrence of an Event of Default, all costs and expenses,
including reasonable attorneys' fees (including allocated costs
of internal counsel) and costs of settlement, incurred by Agent
and Lenders in enforcing any Obligations of or in collecting any
<PAGE>
payments due from Company or any of its Subsidiaries hereunder or
under the other Loan Documents by reason of such Event of Default
or in connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the nature
of a "work-out" or pursuant to any insolvency or bankruptcy
proceedings.
10.3 Indemnity.
---------
In addition to the payment of expenses pursuant
to subsection 10.2, whether or not the transactions contemplated
hereby shall be consummated, Company agrees to defend, indemnify,
pay and hold harmless Agent, Collateral Co-Agents and Lenders,
and the officers, directors, employees, agents and affiliates of
Agent, Collateral Co-Agents and Lenders (collectively called the
"Indemnitees") from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including without limitation the reasonable
fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or judicial
proceeding commenced or threatened by any Person, whether or not
any such Indemnitee shall be designated as a party or a potential
party thereto), whether direct, indirect or consequential and
whether based on any federal, state or foreign laws, statutes,
rules or regulations (including without limitation securities and
commercial laws, statutes, rules or regulations and Environmental
Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted
against any such Indemnitee, in any manner relating to or arising
out of this Agreement or the other Loan Documents or any other
Restructuring Documents or the transactions contemplated hereby
or thereby (including without limitation Lenders' agreement to
make the Loans hereunder or the use or intended use of the
proceeds of any of the Loans or the issuance of Letters of Credit
hereunder or the use or intended use of any of the Letters of
Credit) or the statements contained in the commitment letter
delivered by any Lender to Company with respect thereto
(collectively called the "Indemnified Liabilities"); provided
--------
that Company shall not have any obligation to any Indemnitee
hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise solely from the gross
negligence or willful misconduct of that Indemnitee as determined
by a final judgment of a court of competent jurisdiction; and
provided, further that in connection with investigating,
-------- -------
preparing to defend, or defending against any Indemnified
Liability of, to or against more than one Indemnitee, such
investigation, preparation or defense shall be conducted by the
same legal counsel on behalf of all such Indemnitees except to
the extent that one or more of such Indemnitees determines in
good faith that there is a conflict of interests between such
Indemnitee or Indemnitees and some or all of the remaining
Indemnitees. To the extent that the undertaking to defend,
indemnify, pay and hold harmless set forth in the preceding
sentence may be unenforceable because it is violative of any law
<PAGE>
or public policy, Company shall contribute the maximum portion
that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities
incurred by the Indemnitees or any of them.
10.4 Set Off; Security Interest in Deposit Accounts.
----------------------------------------------
In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any
such rights, upon the occurrence of any Event of Default each
Lender is hereby authorized by Company at any time or from time
to time, without notice to Company or to any other Person, any
such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or
special, including, but not limited to, Indebtedness evidenced by
certificates of deposit, whether matured or unmatured, but not
including trust accounts) and any other Indebtedness at any time
held or owing by that Lender to or for the credit or the account
of Company against and on account of the obligations and
liabilities of Company to that Lender under this Agreement, the
Notes, the Letters of Credit and participations therein,
including, but not limited to, all claims of any nature or
description arising out of or connected with this Agreement, the
Notes, the Letters of Credit and participations therein or any
other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal
of or the interest on the Loans or any amounts in respect of the
Letters of Credit or any other amounts due hereunder shall have
become due and payable pursuant to Section 8 and although said
obligations and liabilities, or any of them, may be contingent or
unmatured. Company hereby further grants to Agent and each
Lender a security interest in all deposits and accounts
maintained with Agent or such Lender as security for the
Obligations.
10.5 Ratable Sharing.
---------------
Lenders hereby agree among themselves that if any
of them shall, whether by voluntary payment, by realization upon
security, through the exercise of any right of set-off or
banker's lien, by counterclaim or cross action or by the
enforcement of any right under the Loan Documents or otherwise,
or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest,
amounts payable in respect of Letters of Credit, fees and other
amounts then due and owing to that Lender hereunder or under the
other Loan Documents (collectively, the "Aggregate Amounts Due"
to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such
other Lender, then the Lender receiving such proportionately
greater payment shall (i) notify Agent and each other Lender of
the receipt of such payment and (ii) apply a portion of such
payment to purchase participations (which it shall be deemed to
have purchased from each seller of a participation simultaneously
<PAGE>
upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all
such recoveries of Aggregate Amounts Due shall be shared by all
Lenders in proportion to the Aggregate Amounts Due to them;
provided that if all or part of such proportionately greater
--------
payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization
of Company or otherwise, those purchases shall be rescinded and
the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such
recovery, but without interest. Company expressly consents to
the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of
banker's lien, set-off or counterclaim with respect to any and
all monies owing by Company to that holder with respect thereto
as fully as if that holder were owed the amount of the partic-
ipation held by that holder.
10.6 Amendments and Waivers.
----------------------
No amendment, modification, termination or waiver
of any provision of this Agreement or of the Notes, or consent to
any departure by Company therefrom, shall in any event be
effective without the written concurrence of Requisite Lenders;
provided that any amendment, modification, termination or waiver
--------
which: postpones any scheduled payment date (other than any
scheduled final maturity date) of the Loans; reduces the amount
of any scheduled payment (other than the final payment at
maturity) of the Loans; or postpones the date or reduces the
aggregate amount of any mandatory prepayment of the Loans shall
be effective only if evidenced by a writing signed by or on
behalf of Supermajority Lenders; provided further that any
-------- -------
amendment, modification, termination or waiver which: increases
the amount of the Commitments or reduces the principal amount of
the Loans; changes each Lender's Pro Rata Share; changes the
definition of "Requisite Lenders" or the definition of
"Supermarjority Lenders"; changes in any manner any provision of
the Agreement which, by its terms, expressly requires the
approval or concurrence of all Lenders; postpones the scheduled
final maturity dates of the Loans or the dates on which interest
or any fees are payable (other than any waiver of the requirement
that any Eurodollar Rate Loan may not be voluntarily prepaid
prior to the expiration of the Interest Period applicable
thereto); decreases the interest rates borne by the Loans or the
amount of any fees payable hereunder; increases the maximum
duration of Interest Periods; reduces the amount or postpones the
due date of any amount payable in respect of, or postpones the
required expiration date of, any Letters of Credit; changes in
any manner the obligations of Lenders relating to the purchase of
participations in Letters of Credit; releases the Liens granted
in favor of Agent with respect to all or substantially all of the
Collateral other than in accordance with the terms of the Loan
Documents; or changes in any manner the provisions contained in
subsection 8.1 or this subsection 10.6 shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders. In
<PAGE>
addition, (i) any amendment, modification, termination or waiver
of any of the provisions contained in Section 4 shall be
effective only if evidenced by a writing signed by or on behalf
of Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is
the holder of that Note, (iii) no amendment, modification, termi-
nation or waiver of any provision of Section 9 or of any other
provision of this Agreement which, by its terms, expressly
requires the approval or concurrence of Agent shall be effective
without the written concurrence of Agent, (iv) no amendment,
modification, termination or waiver of any provision of
subsection 2.1A(iv) or any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line
Loans shall be effective without the written concurrence of Swing
Line Lender, and (v) no amendment, modification, termination or
waiver of any provision of subsection 2.1E or subsection 2.4
which has the effect of postponing or reducing the aggregate
scheduled payments, voluntary or mandatory prepayments or
Commitment reductions applicable to any Class (an "Affected
Class") in a manner that is proportionately greater than the
corresponding postponement or reduction applicable to any other
Class shall be effective without the written concurrence of the
Requisite Class Lenders of such Affected Class. Agent may, but
shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf
of that Lender. Any waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it
was given. No notice to or demand on Company in any case shall
entitle Company to any other or further notice or demand in
similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this
subsection 10.6 shall be binding upon each holder of the Notes at
the time outstanding, each future holder of the Notes and, if
signed by Company, on Company.
10.7 Independence of Covenants.
-------------------------
All covenants hereunder shall be given
independent effect so that if a particular action or condition is
not permitted by any of such covenants, the fact that it would be
permitted by an exception to, or would otherwise be within the
limitations of, another covenant shall not avoid the occurrence
of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
10.8 Notices.
-------
Unless otherwise specifically provided herein,
any notice or other communication herein required or permitted to
be given shall be in writing and may be personally served,
telecopied or sent by United States mail or courier service and
shall be deemed to have been given when delivered in person or by
courier service, upon receipt of telecopy, or four Business Days
after depositing it in the United States mail, registered or
<PAGE>
certified, with postage prepaid and properly addressed; provided
--------
that notices to Agent shall not be effective until received. For
the purposes hereof, the address of each party hereto shall be as
set forth under such party's name on the signature pages hereof
or (i) as to Company and Agent, such other address as shall be
designated by such Person in a written notice delivered to the
other parties hereto and (ii) as to each other party, such other
address as shall be designated by such party in a written notice
delivered to Agent.
10.9 Survival of Representations, Warranties and
-------------------------------------------
Agreements.
----------
A. All representations, warranties and agreements
made herein shall survive the execution and delivery of this
Agreement and the making of the Loans and the issuance of the
Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or
implied by law to the contrary, the agreements of Company set
forth in subsections 2.6D, 2.7, 3.5A, 3.6, 10.2 and 10.3 and the
agreements of Lenders set forth in subsections 9.2C, 9.4, 10.4
and 10.5 shall survive the payment of the Loans, the cancellation
or expiration of the Letters of Credit and the reimbursement of
any amounts drawn thereunder, and the termination of this
Agreement.
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.
-----------------------------------------------------
No failure or delay on the part of Agent or any
Lender in the exercise of any power, right or privilege hereunder
or under any Note or Letter of Credit shall impair such power,
right or privilege or be construed to be a waiver of any default
or acquiescence therein, nor shall any single or partial exercise
of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement, the Notes, the
Letters of Credit and the other Loan Documents are cumulative to,
and not exclusive of, any rights or remedies otherwise available.
10.11 Marshalling; Payments Set Aside.
-------------------------------
Neither Agent nor any Lender shall be under any
obligation to marshal any assets in favor of Company or any other
party or against or in payment of any or all of the Obligations.
To the extent that Company makes a payment or payments to Agent
or Lenders (or to Agent for the benefit of Lenders), or Agent or
Lenders enforce any security interests or exercise their rights
of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other
party under any bankruptcy law, any other state or federal law,
common law or any equitable cause, then, to the extent of such
recovery, the obligation or part thereof originally intended to
<PAGE>
be satisfied, and all Liens, rights and remedies therefor or
related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 Severability.
------------
In case any provision in or obligation under this
Agreement or the Notes shall be invalid, illegal or unenforceable
in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
10.13 Obligations Several; Independent Nature of Lenders'
---------------------------------------------------
Rights.
------
The obligations of Lenders hereunder are several
and no Lender shall be responsible for the obligations or Commit-
ments of any other Lender hereunder. Nothing contained herein or
in any other Loan Document, and no action taken by Lenders
pursuant hereto or thereto, shall be deemed to constitute Lenders
as a partnership, an association, a joint venture or any other
kind of entity. The amounts payable at any time hereunder to each
Lender shall be a separate and independent debt, and each Lender
shall be entitled to protect and enforce its rights arising out
of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for
such purpose.
10.14 Headings.
--------
Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose or
be given any substantive effect.
10.15 Applicable Law.
--------------
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
10.16 Successors and Assigns.
----------------------
This Agreement shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the successors and
permitted assigns of Lenders (it being understood that Lenders'
rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest
therein may be assigned or delegated by Company without the prior
written consent of all Lenders.
10.17 Consent to Jurisdiction and Service of Process.
----------------------------------------------
<PAGE>
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT OR ANY OBLIGATION MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE CITY AND STATE OF NEW
YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY FINAL AND
NONAPPEALABLE JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, SUCH OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company
hereby agrees that service of all process in any such proceedings
in any such court may be made by registered or certified mail,
return receipt requested, to Company at its address provided in
subsection 10.8, such service being hereby acknowledged by Com-
pany to be sufficient for personal jurisdiction in any action
against Company in the State of New York and to be otherwise
effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner per-
mitted by law or shall limit the right of any Lender to bring
proceedings against Company in the courts of any other juris-
diction.
10.18 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. The scope of this waiver is intended to be all-
encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach
of duty claims and all other common law and statutory claims.
Each party hereto acknowledges that this waiver is a material
inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement,
and that each will continue to rely on this waiver in their
related future dealings. Each party hereto further warrants and
represents that it has reviewed this waiver with its legal
counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In
the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
10.19 Confidentiality.
---------------
<PAGE>
Each Lender shall hold all non-public information
obtained pursuant to the requirements of this Agreement which has
been identified as confidential by Company in accordance with
such Lender's customary procedures for handling confidential
information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that
in any event a Lender may make disclosures reasonably required by
any bona fide assignee or participant in connection with the
contemplated assignment by such Lender of any Loans or any
participation therein or as required or requested by any govern-
mental agency or representative thereof or pursuant to legal
process; provided that, unless specifically prohibited by
--------
applicable law or court order, each Lender shall notify Company
of any request by any governmental agency or representative
thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such
governmental agency) for disclosure of any such non-public
information prior to disclosure of such information; and
provided, further that in no event shall any Lender be obligated
-------- -------
or required to return any materials furnished by Company or any
of its Subsidiaries.
10.20 Counterparts; Effectiveness.
---------------------------
This Agreement and any amendments, waivers,
consents or supplements hereto or in connection herewith may be
executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed
and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the
execution of a counterpart hereof by each of the parties hereto
and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery
thereof.
[Remainder of page intentionally left blank]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be duly executed and delivered by their
respective officers thereunto duly authorized as of the date
first written above.
COMPANY:
PATHMARK STORES, INC.
By:
Title:
Notice Address:
Pathmark Stores, Inc.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-
0915
Attention: Chief Executive
Officer
with a copy to:
Pathmark Stores, Inc.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-
0915
Attention: Corporate
Secretary
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By:
Title:
Notice Address:
Bankers Trust Company
280 Park Avenue
New York, New York 10017
Attention: Mary Jo Jolly
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st
Floor
<PAGE>
Los Angeles, California 90071
Attention: Michael R.
Duckworth
PRIME INCOME TRUST
By:
Title:
Notice Address:
Dean Witter Intercapital
2 World Trade Center, 72nd
Floor
New York, New York 10048
Attention: Raphael Scolari
THE BANK OF NOVA SCOTIA
By:
Title:
Notice Address:
165 Broadway
26th Floor
New York, New York 10006
Attention: Stephen Lockhart
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
Title:
Notice Address:
<PAGE>
645 Fifth Avenue
20th Floor
New York, New York 10022
Attention: David Kopp
Jean Richard
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
By:
Title:
Notice Address:
520 Madison Avenue
37th Floor
New York, New York 10022
Attention: Alain Merle
d'Aubigne
EATON VANCE PRIME RATE RESERVES
By:
Title:
Notice Address:
24 Federal Street
Boston, Massachusetts 02110
Attention: Jeffrey S. Garner
FIRST FIDELITY BANK, N.A., NEW
JERSEY
By:
Title:
Notice Address:
<PAGE>
550 Broad Street
5th Floor
Newark, New Jersey 07102
Attention: Joseph DiFrancesco
THE FIRST NATIONAL BANK OF BOSTON
By:
Title:
Notice Address:
100 Federal Street
01-08-05
Boston, Massachusetts 02110
Attention: Gordon L. Nelson
LTCB TRUST COMPANY
By:
Title:
Notice Address:
165 Broadway
50th Floor
New York, New York 10006
Attention: Fumihiko Kamoshida
MIDLANTIC NATIONAL BANK
By:
Title:
Notice Address:
499 Thornall Street
9th Floor
Edison, New Jersey 08818
<PAGE>
Attention: Edward M.
Tessalone
THE MITSUBISHI TRUST AND BANKING
CORPORATION
By:
Title:
Notice Address:
520 Madison Avenue
39th Floor
New York, New York 10022
Attention: Patricia Loret de
Mola
CORESTATES BANK, N.A.
By:
Title:
Notice Address:
1345 Chestnut Street
Philadelphia, Pennsylvania
19101
F.C. 1-8-12-3
Attention: Thomas J.
McDonnell
PILGRIM PRIME RATE TRUST
By:
Title:
Notice Address:
<PAGE>
10100 Santa Monica Boulevard
21st Floor
Los Angeles, California 90067
Attention: Michael Hatley
UNION BANK OF FINLAND, LTD. --
GRAND CAYMAN BRANCH
By:
Title:
Notice Address:
437 Madison Avenue
22nd Floor
New York, New York 10022
Attention: James Kyprios
Durval Araujo
UNITED JERSEY BANK
By:
Title:
Notice Address:
25 East Salem Street
2nd Floor
Hackensack, New Jersey 07602
Attention: Jeffrey L. Knoop
VAN KAMPEN MERRITT PRIME RATE
INCOME TRUST
By:
Title:
Notice Address:
One Parkview Plaza
<PAGE>
Oakbrook Terrace, Illinois
60181
Attention: Jeffrey W. Maillet
<PAGE>
CREDIT AGREEMENT
DATED AS OF OCTOBER 26, 1993
AMONG
PATHMARK STORES, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
and
BANKERS TRUST COMPANY,
as Agent
<PAGE>
PATHMARK STORES, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
-----------------
Page
----
Section 1. DEFINITIONS . . . . . . . . . . . . . . . 3
1.1 Certain Defined Terms . . . . . . . . . . 3
---------------------
1.2 Accounting Terms; Utilization of
--------------------------------
GAAP for Purposes of Calculations
---------------------------------
Under Agreement . . . . . . . . . . . . . 35
---------------
1.3 Other Definitional Provisions . . . . . . 36
-----------------------------
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS . . . . 36
2.1 Commitments; Loans . . . . . . . . . . . 36
------------------
2.2 Interest on the Loans . . . . . . . . . . 45
---------------------
2.3 Fees . . . . . . . . . . . . . . . . . . 50
----
2.4 Prepayments and Reductions in
-----------------------------
Commitments; General Provisions
-------------------------------
Regarding Payments . . . . . . . . . . . 50
------------------
2.5 Use of Proceeds . . . . . . . . . . . . . 58
---------------
2.6 Special Provisions Governing Euro-
----------------------------------
dollar Rate Loans . . . . . . . . . . . . 59
-----------------
2.7 Increased Costs; Taxes; Capital
-------------------------------
Adequacy . . . . . . . . . . . . . . . . 61
--------
2.8 Obligation of Lenders and Issuing
---------------------------------
Lenders to Mitigate . . . . . . . . . . . 65
-------------------
2.9 Removal of a Lender. . . . . . . . . . . 66
-------------------
2.10 Defaulting Lenders . . . . . . . . . . . 66
------------------
Section 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . 68
3.1 Issuance of Letters of Credit and
---------------------------------
Lenders' Purchase of
--------------------
Participations Therein . . . . . . . . . 68
----------------------
3.2 Letter of Credit Fees . . . . . . . . . . 71
---------------------
3.3 Drawings and Reimbursement of
-----------------------------
Amounts Drawn Under Letters of
------------------------------
Credit. . . . . . . . . . . . . . . . . . 72
------
3.4 Obligations Absolute . . . . . . . . . . 75
--------------------
3.5 Indemnification; Nature of Issuing
----------------------------------
Lenders' Duties . . . . . . . . . . . . . 76
---------------
3.6 Increased Costs and Taxes Relating
----------------------------------
to Letters of Credit . . . . . . . . . . 77
--------------------
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . . 78
4.1 Conditions to Term Loans and
----------------------------
Initial Revolving Loans and Swing
---------------------------------
Line Loans . . . . . . . . . . . . . . . 78
----------
4.2 Conditions to All Loans . . . . . . . . . 87
-----------------------
4.3 Conditions to Letters of Credit . . . . . 88
-------------------------------
Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES . . . . . 89
<PAGE>
5.1 Organization, Powers,
---------------------
Qualification, Good Standing,
-----------------------------
Business and Subsidiaries . . . . . . . . 89
-------------------------
5.2 Authorization of Borrowing, etc. . . . . 90
--------------------------------
5.3 Financial Condition . . . . . . . . . . . 92
-------------------
5.4 No Material Adverse Change; No
------------------------------
Restricted Junior Payments . . . . . . . 92
--------------------------
5.5 Title to Properties; Liens . . . . . . . 92
--------------------------
5.6 Litigation; Adverse Facts . . . . . . . . 93
-------------------------
5.7 Payment of Taxes . . . . . . . . . . . . 93
----------------
5.8 Performance of Agreements;
--------------------------
Materially Adverse Agreements . . . . . . 93
-----------------------------
5.9 Governmental Regulation . . . . . . . . . 94
-----------------------
5.10 Securities Activities . . . . . . . . . . 94
---------------------
5.11 Employee Benefit Plans . . . . . . . . . 94
----------------------
5.12 Certain Fees . . . . . . . . . . . . . . 95
------------
5.13 Environmental Protection . . . . . . . . 95
------------------------
5.14 Employee Matters . . . . . . . . . . . . 97
----------------
5.15 Solvency . . . . . . . . . . . . . . . . 97
--------
5.16 Disclosure . . . . . . . . . . . . . . . 97
----------
5.17 Intellectual Property . . . . . . . . . . 97
---------------------
5.18 Restructuring Documents . . . . . . . . . 98
-----------------------
Section 6. COMPANY'S AFFIRMATIVE COVENANTS . . . . . . . . . 98
6.1 Financial Statements and Other
------------------------------
Reports . . . . . . . . . . . . . . . . . 98
-------
6.2 Corporate Existence, etc. . . . . . . . . 104
-------------------------
6.3 Payment of Taxes and Claims; Tax
--------------------------------
Consolidation . . . . . . . . . . . . . . 104
-------------
6.4 Maintenance of Properties;
--------------------------
Insurance . . . . . . . . . . . . . . . . 104
---------
6.5 Inspection; Lender Meeting . . . . . . . 105
--------------------------
6.6 Compliance with Laws, etc. . . . . . . . 105
--------------------------
6.7 Environmental Disclosure and
----------------------------
Inspection . . . . . . . . . . . . . . . 106
----------
6.8 Execution of Subsidiary Guaranty
--------------------------------
and Collateral Documents by
---------------------------
Subsidiaries and Future
-----------------------
Subsidiaries . . . . . . . . . . . . . . 107
------------
6.9 Additional Mortgages; Release of
--------------------------------
Mortgages . . . . . . . . . . . . . . . . 107
---------
6.10 Assignability of Lease Agreements . . . . 111
---------------------------------
Section 7. COMPANY'S NEGATIVE COVENANTS . . . . . . . . . . . 111
7.1 Indebtedness . . . . . . . . . . . . . . 111
------------
7.2 Liens and Related Matters . . . . . . . . 113
-------------------------
7.3 Investments; Joint Ventures . . . . . . . 116
---------------------------
7.4 Contingent Obligations . . . . . . . . . 117
----------------------
7.5 Restricted Junior Payments . . . . . . . 119
--------------------------
7.6 Financial Covenants . . . . . . . . . . . 120
-------------------
7.7 Restriction on Fundamental
--------------------------
Changes; Asset Sales . . . . . . . . . . 123
--------------------
7.8 Consolidated Capital Expenditures . . . . 124
---------------------------------
7.9 Restriction on Leases . . . . . . . . . . 125
---------------------
7.10 Sale or Discount of Receivables . . . . . 125
-------------------------------
<PAGE>
7.11 Transactions with Shareholders and
----------------------------------
Affiliates . . . . . . . . . . . . . . . 126
----------
7.12 Disposal of Subsidiary Stock . . . . . . 126
----------------------------
7.13 Conduct of Business . . . . . . . . . . . 126
-------------------
7.14 Amendments of Certain Documents;
--------------------------------
Designation of Specified Senior
-------------------------------
Indebtedness . . . . . . . . . . . . . . 127
------------
7.15 Fiscal Year . . . . . . . . . . . . . . . 127
-----------
Section 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . 128
8.1 Failure to Make Payments When Due . . . . 128
---------------------------------
8.2 Default in Other Agreements . . . . . . . 128
---------------------------
8.3 Breach of Certain Covenants . . . . . . . 128
---------------------------
8.4 Breach of Warranty . . . . . . . . . . . 129
------------------
8.5 Other Defaults Under Loan
-------------------------
Documents . . . . . . . . . . . . . . . . 129
---------
8.6 Involuntary Bankruptcy;
-----------------------
Appointment of Receiver, etc. . . . . . . 129
-----------------------------
8.7 Voluntary Bankruptcy; Appointment
---------------------------------
of Receiver, etc. . . . . . . . . . . . . 129
-----------------
8.8 Judgments and Attachments . . . . . . . . 130
-------------------------
8.9 Dissolution . . . . . . . . . . . . . . . 130
-----------
8.10 Employee Benefit Plans . . . . . . . . . 130
----------------------
8.11 Change in Control . . . . . . . . . . . . 130
-----------------
8.12 Invalidity of Subsidiary Guaranty . . . . 131
---------------------------------
8.13 Failure of Security . . . . . . . . . . . 132
-------------------
8.14 Failure to Consummate
---------------------
Restructuring . . . . . . . . . . . . . . 132
-------------
8.15 Termination or Breach of
------------------------
Logistical Services Agreement . . . . . . 132
-----------------------------
8.16 Incurrence of Tax Liability
---------------------------
Relating to
------------
Spin-Off. . . . . . . . . . . . . . . . . 132
--------
8.17 Amendments of Certain Documents
-------------------------------
Relating to PTKH Bonds. . . . . . . . . . 133
----------------------
Section 9. AGENT AND COLLATERAL CO-AGENTS . . . . . . . . . . 134
9.1 Appointment . . . . . . . . . . . . . . . 134
-----------
9.2 Powers; General Immunity . . . . . . . . 135
------------------------
9.3 Representations and Warranties; No
----------------------------------
Responsibility For Appraisal of
--------------------------------
Creditworthiness . . . . . . . . . . . . 137
----------------
9.4 Right to Indemnity . . . . . . . . . . . 137
------------------
9.5 Payee of Note Treated as Owner . . . . . 137
------------------------------
9.6 Successor Agent, Collateral Co-
-------------------------------
Agent
------
and Swing Line Lender . . . . . . . . . . 138
---------------------
9.7 Collateral Documents . . . . . . . . . . 138
--------------------
Section 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 139
10.1 Assignments and Participations in
---------------------------------
Loans and Letters of Credit . . . . . . . 139
---------------------------
10.2 Expenses . . . . . . . . . . . . . . . . 142
--------
10.3 Indemnity . . . . . . . . . . . . . . . . 142
---------
<PAGE>
10.4 Set Off; Security Interest in
-----------------------------
Deposit
--------
Accounts . . . . . . . . . . . . . . . . 143
--------
10.5 Ratable Sharing . . . . . . . . . . . . . 144
---------------
10.6 Amendments and Waivers . . . . . . . . . 145
----------------------
10.7 Independence of Covenants . . . . . . . . 146
-------------------------
10.8 Notices . . . . . . . . . . . . . . . . . 146
-------
10.9 Survival of Representations,
----------------------------
Warranties and Agreements . . . . . . . . 146
-------------------------
10.10 Failure or Indulgence Not Waiver;
---------------------------------
Remedies Cumulative . . . . . . . . . . . 147
-------------------
10.11 Marshalling; Payments Set Aside . . . . . 147
-------------------------------
10.12 Severability . . . . . . . . . . . . . . 147
------------
10.13 Obligations Several; Independent
--------------------------------
Nature of Lenders' Rights . . . . . . . . 147
-------------------------
10.14 Headings . . . . . . . . . . . . . . . . 148
--------
10.15 Applicable Law . . . . . . . . . . . . . 148
--------------
10.16 Successors and Assigns . . . . . . . . . 148
----------------------
10.17 Consent to Jurisdiction and
---------------------------
Service of Process . . . . . . . . . . . 148
------------------
10.18 Waiver of Jury Trial . . . . . . . . . . 149
--------------------
10.19 Confidentiality . . . . . . . . . . . . . 149
---------------
10.20 Counterparts; Effectiveness . . . . . . . 150
---------------------------
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF TERM A NOTE
IV-B FORM OF TERM B NOTE
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF OPINION OF SHEARMAN & STERLING
IX FORM OF OPINION OF GENERAL COUNSEL OF COMPANY
X FORM OF OPINION OF O'MELVENY & MYERS
XI FORM OF ASSIGNMENT AND ACCEPTANCE
XII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIII FORM OF COMPANY PLEDGE AGREEMENT
XIV FORM OF COMPANY SECURITY AGREEMENT
XV FORM OF COMPANY TRADEMARK SECURITY AGREEMENT
XVI FORM OF SUBSIDIARY GUARANTY
XVII FORM OF SUBSIDIARY PLEDGE AGREEMENT
XVIII FORM OF SUBSIDIARY SECURITY AGREEMENT
XIX FORM OF SUBSIDIARY TRADEMARK SECURITY AGREEMENT
XX FORM OF MORTGAGE
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1B REAL PROPERTY COVERED BY CLOSING DATE MORTGAGES
4.1K REAL PROPERTY COVERED BY ENVIRONMENTAL REPORTS
5.1 SUBSIDIARIES OF COMPANY
5.2B CERTAIN APPROVALS AND CONSENTS
5.2C CERTAIN GOVERNMENTAL CONSENTS
5.6 LITIGATION
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
5.13 ENVIRONMENTAL MATTERS
5.17 INTELLECTUAL PROPERTY MATTERS
6.9 REAL PROPERTY REQUIRING LANDLORD CONSENT
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
7.7 REAL PROPERTY TO BE SOLD PURSUANT TO WESTERN
PENNSYLVANIA STORES ASSETS
DRAFT - 8/23/93
8882H/8883H/
6862M/6863M
PATHMARK STORES, INC.,
Issuer,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
Trustee
INDENTURE
Dated as of October 26, 1993
9 5/8% Senior Subordinated Notes
due 2003
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 26, 1993*
Trust Indenture Indenture
Act Section Section
Sec. 310(a)(1) ............................. 608
(a)(2) ............................. 608
(b) ............................. 607, 609
Sec. 312(c) ............................. 701
Sec. 314(a) ............................. 703
(a)(4) ............................. 1018
(c)(1) ............................. 103
(c)(2) ............................. 103
(e) ............................. 103
Sec. 315(b) ............................. 601
Sec. 316(a)(last
sentence) ............................. 101 ("Out-
standing")
(a)(1)(A) ............................. 502, 512
(a)(1)(B) ............................. 513
(b) ............................. 508
(c) ............................. 105
Sec. 317(a)(1) ............................. 503
(a)(2) ............................. 504
Sec. 318(a) ............................. 108
* This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 101. Definitions ............................ 1
Acquired Indebtedness .................. 2
Acquisition ............................ 2
Affiliate .............................. 2
Applicable Premium ..................... 3
Average Life to Stated Maturity ........ 3
Bank Credit Agreement .................. 3
Board of Directors ..................... 3
Board Resolution ....................... 3
Business Day ........................... 3
Capital Lease Obligation ............... 4
Capital Stock .......................... 4
Change in Control ...................... 4
Chefmark ............................... 4
Commission ............................. 4
Company ................................ 4
Company Request or Company Order ....... 5
Consolidated Adjusted Net Income (Loss). 5
Consolidated Assets .................... 5
Consolidated Capital Expenditures ...... 6
Consolidated Fixed Charge
Coverage Ratio ....................... 6
Consolidated Interest Expense .......... 6
Consolidated Non-cash Charges .......... 6
Consolidated Tax Expense ............... 6
Corporate Trust Office ................. 7
Corporation ............................ 7
Day Count Fraction ..................... 7
Default ................................ 7
Deferred Coupon Notes .................. 7
Equitable Investors .................... 7
Event of Default ....................... 7
Exchange Act ........................... 7
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Existing Assets ........................ 7
Fair Market Value ...................... 7
Federal Bankruptcy Code ................ 7
Generally Accepted Accounting
Principles or GAAP ................... 8
Guaranteed Debt ........................ 8
Holder ................................. 8
Holdings ............................... 8
Holdings Intercompany Notes............. 8
Holdings Preferred Stock ............... 8
Indebtedness ........................... 9
Indenture .............................. 9
Intercompany Agreement ................. 10
Interest Payment Date .................. 10
Interest Rate Hedge Arrangement ........ 10
Investments ............................ 10
Lien ................................... 10
Logistical Services Agreement .......... 10
Majority-owned Subsidiary .............. 10
Management Investors ................... 11
Material Subsidiary .................... 11
Maturity ............................... 11
ML Funds ............................... 11
Newco................................... 11
Officers' Certificate .................. 12
Opinion of Counsel ..................... 12
Outstanding ............................ 12
Pari Passu Indebtedness ................ 13
Paying Agent ........................... 13
Permitted Holders ...................... 13
Permitted Indebtedness ................. 13
Permitted Investment ................... 15
Permitted Payment ...................... 15
Person ................................. 16
Plainbridge ............................ 16
Predecessor Security ................... 16
Preferred Stock ........................ 16
Purchase Money Mortgages ............... 16
Qualified Capital Stock ................ 16
Recapitalization ....................... 16
Redeemable Capital Stock ............... 16
Redemption Date ........................ 17
Redemption Price ....................... 17
Regular Record Date .................... 17
Representative ......................... 17
Responsible Officer .................... 17
Restricted Payments .................... 17
Security and Securities ................ 17
-ii-
<PAGE>
PAGE
Senior Indebtedness .................... 17
Senior Subordinated Notes............... 18
SMG-II ................................. 18
Special Record Date .................... 18
Specified Senior Indebtedness .......... 18
Spin-Off Agreements .................... 19
Spin-Off .............................. 19
Stated Maturity ........................ 19
Subordinated Debentures ................ 19
Subordinated Indebtedness .............. 19
Subordinated Notes ..................... 19
Subsidiary ............................. 20
Tax Sharing Agreement .................. 20
Temporary Cash Investment .............. 20
Treasury Rate .......................... 20
Trust Indenture Act .................... 21
Trustee ................................ 21
Unrestricted Subsidiary ................ 21
Unrestricted Subsidiary Indebtedness ... 21
Voting Stock ........................... 22
Section 102. Other Definitions ...................... 22
Section 103. Compliance Certificates and Opinions ... 23
Section 104. Form of Documents Delivered to Trustee . 23
Section 105. Acts of Holders ........................ 24
Section 106. Notices, etc., to Trustee
and Company .......................... 25
Section 107. Notice to Holders; Waiver .............. 26
Section 108. Conflict of any Provision of
Indenture with Trust Indenture Act ... 27
Section 109. Effect of Headings and Table of
Contents ............................. 27
Section 110. Successors and Assigns ................. 27
Section 111. Separability Clause .................... 27
Section 112. Benefits of Indenture .................. 27
Section 113. Governing Law .......................... 27
Section 114. Legal Holidays ......................... 28
Section 115. No Recourse Against Others ............. 28
ARTICLE TWO
Security Forms
Section 201. Forms Generally ........................ 28
Section 202. Form of Face of Security ............... 29
Section 203. Form of Reverse of Security ............ 31
Section 204. Form of Trustee's Certificate of
Authentication ....................... 35
-iii-
<PAGE>
PAGE
ARTICLE THREE
The Securities
Section 301. Title and Terms ........................ 36
Section 302. Denominations .......................... 36
Section 303. Execution, Authentication, Delivery and
Dating ............................... 36
Section 304. Temporary Securities ................... 38
Section 305. Registration, Registration of Transfer
and Exchange ......................... 38
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities ........................... 40
Section 307. Payment of Interest; Interest Rights
Preserved ............................ 41
Section 308. Persons Deemed Owners .................. 42
Section 309. Cancellation ........................... 42
Section 310. Computation of Interest ................ 43
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge
of Indenture ......................... 43
Section 402. Application of Trust Money ............. 44
ARTICLE FIVE
Remedies
Section 501. Events of Default ...................... 45
Section 502. Acceleration of Maturity; Rescission ... 47
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee ........... 48
Section 504. Trustee May File Proofs of Claim ....... 49
Section 505. Trustee May Enforce Claims Without
Possession of Securities ............. 50
Section 506. Application of Money Collected ......... 50
Section 507. Limitation on Suits .................... 51
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest ............................. 52
Section 509. Restoration of Rights and Remedies ..... 52
Section 510. Rights and Remedies Cumulative ......... 52
Section 511. Delay or Omission Not Waiver ........... 52
Section 512. Control by Holders ..................... 53
Section 513. Waiver of Past Defaults ................ 53
-iv-
<PAGE>
PAGE
Section 514. Undertaking for Costs .................. 53
Section 515. Waiver of Stay, Extension or
Usury Laws ........................... 54
Section 516. Unconditional Right of Holders
to Institute Certain Suits ........... 54
ARTICLE SIX
The Trustee
Section 601. Notice of Defaults ..................... 55
Section 602. Certain Rights of Trustee .............. 55
Section 603. Not Responsible for Recitals or
Issuance of Securities ............... 57
Section 604. Trustee and Agents May Hold
Securities; Collections; etc. ........ 57
Section 605. Money Held in Trust .................... 58
Section 606. Compensation and Reimbursement ......... 58
Section 607. Conflicting Interests .................. 60
Section 608. Corporate Trustee Required;
Eligibility .......................... 60
Section 609. Resignation and Removal; Appointment
of Successor ......................... 60
Section 610. Acceptance of Appointment by
Successor ............................ 62
Section 611. Merger, Conversion, Consolidation or
Succession to Business ............... 63
Section 612. Preferential Collection of Claims
Against Company ...................... 63
ARTICLE SEVEN
Holders' Lists and Reports by
Trustee and Company
Section 701. Disclosure of Names and Addresses
of Holders ........................... 63
Section 702. Reports by Trustee ..................... 64
Section 703. Reports by Company ..................... 64
ARTICLE EIGHT
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 801. Company May Consolidate, etc.,
Only on Certain Terms ................ 65
Section 802. Successor Substituted .................. 66
-v-
<PAGE>
PAGE
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures
without Consent of Holders ........... 66
Section 902. Supplemental Indentures
with Consent of Holders .............. 67
Section 903. Execution of Supplemental Indentures ... 68
Section 904. Effect of Supplemental Indentures ...... 69
Section 905. Conformity with Trust Indenture Act .... 69
Section 906. Reference in Securities to Supplemental
Indentures ........................... 69
Section 907. Effect on Senior Indebtedness .......... 69
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest ............................. 70
Section 1002. Maintenance of Office or Agency ........ 70
Section 1003. Money for Security Payments to Be
Held in Trust ........................ 70
Section 1004. Corporate Existence .................... 72
Section 1005. Payment of Taxes and Other Claims ...... 73
Section 1006. Maintenance of Properties .............. 73
Section 1007. Limitation on Indebtedness ............. 74
Section 1008. Limitation on Restricted Payments ...... 74
Section 1009. Limitation on Transactions with
Affiliates ........................... 79
Section 1010. Limitation on Liens .................... 81
Section 1011. Purchase of Securities Upon Change in
Control .............................. 81
Section 1012. Restrictions on Preferred Stock of
Subsidiaries ......................... 85
Section 1013. Limitations on Issuances of Guarantees
of Indebtedness ...................... 85
Section 1014. Restriction on Transfer of Assets ...... 86
Section 1015. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries ......................... 87
-vi-
<PAGE>
PAGE
Section 1016. Limitation on Unrestricted
Subsidiaries ......................... 87
Section 1017. Limitation on Other Senior
Subordinated Indebtedness ............ 88
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial
Statements ........................... 88
Section 1019. Waiver of Certain Covenants ............ 89
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption .................... 89
Section 1102. Applicability of Article ............... 90
Section 1103. Election to Redeem; Notice to Trustee .. 90
Section 1104. Selection by Trustee of Securities to
Be Redeemed .......................... 90
Section 1105. Notice of Redemption ................... 90
Section 1106. Deposit of Redemption Price ............ 91
Section 1107. Securities Payable on Redemption Date .. 92
Section 1108. Securities Redeemed in Part ............ 92
ARTICLE TWELVE
[Intentionally Omitted]
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior
Indebtedness ......................... 93
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc. .................... 93
Section 1303. No Payment When Specified Senior
Indebtedness in Default .............. 95
Section 1304. Payment Permitted if No Default ........ 97
Section 1305. Subrogation to Rights of Holders
of Senior Indebtedness ............... 97
Section 1306. Provisions Solely to Define
Relative Rights ...................... 97
Section 1307. Trustee to Effectuate Subordination .... 98
Section 1308. No Waiver of Subordination Provisions .. 98
Section 1309. Notice to Trustee ...................... 99
Section 1310. Reliance on Judicial Order or
Certificate of Liquidating Agent ..... 100
-vii-
<PAGE>
PAGE
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights ..................... 100
Section 1312. Article Applicable to Paying Agents .... 100
Section 1313. Rescission ............................. 101
Section 1314. Application by Trustee of Assets
Deposited With It .................... 101
ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section 1401. Option to Effect Defeasance
or Covenant Defeasance ............... 101
Section 1402. Defeasance and Discharge ............... 101
Section 1403. Covenant Defeasance..................... 102
Section 1404. Conditions to Defeasance or
Covenant Defeasance .................. 103
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ....... 105
Section 1406. Reinstatement .......................... 106
TESTIMONIUM........................................... 107
SIGNATURES AND SEALS.................................. 107
ACKNOWLEDGMENTS
EXISTING INDEBTEDNESS..............................SCHEDULE I
FORM OF INTERCOMPANY AGREEMENT.....................APPENDIX A
FORM OF HOLDINGS INTERCOMPANY NOTE.................APPENDIX B
-viii-
<PAGE>
INDENTURE, dated as of October 26, 1993, between PATHMARK
STORES, INC., a Delaware corporation (hereinafter called the
"Company"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York banking corporation, as trustee (hereinafter called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an
issue of its 9 5/8% Senior Subordinated Notes due 2003
(hereinafter called the "Securities"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the
Company has duly authorized the execution and delivery of this
Indenture;
This Indenture is subject to, and shall be governed by,
the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust
Indenture Act;
All acts and things necessary have been done to make
the Securities, when executed by the Company and authenticated
and delivered hereunder and duly issued by the Company, the
valid, binding and legal obligations of the Company, and to make
this Indenture a valid agreement of the Company in accordance
with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
<PAGE>
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United
States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Articles Five, Six,
Ten, Thirteen and Fourteen are defined in those Articles.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) (i) existing at the time
such Person becomes a Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person, other than
Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary or such acquisition, as the
case may be.
"Acquisition" means the acquisition of the Company by
Holdings completed in October 1987 pursuant to the Agreement and
Plan of Merger dated as of April 22, 1987 among Holdings, SMG
Acquisition Corporation and the Company, as amended.
"Affiliate" means, with respect to any specified Person,
(i) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person or (ii) for purposes of Section l009 only,
any other Person that owns, directly or indirectly, 10% or more
of such Person's Capital Stock or any officer or director of any
such Person or other Person or with respect to any natural
Person, any person having a relationship with such Person by
blood, marriage or adoption not more remote than first cousin.
For the purposes of this definition, "control"
when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or
indirectly, whether through the ownership of Voting Stock,
- 2-
<PAGE>
by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Premium" means the greater of (i) 1.0% of
the then outstanding principal amount of the Securities and (ii)
(a) the sum of the present values, discounted for all full
semiannual periods at a discount rate equal to one-half
multiplied by the Treasury Rate plus 125 basis points (provided,
however, that the discount rate for the period from the
Redemption Date to the next Interest Payment Date shall equal the
result of multiplying the Treasury Rate plus 125 basis points by
the Day Count Fraction) of (I) the remaining payments of interest
on such Securities and (II) the payment of such principal amount
that, but for such redemption, would have been payable on such
Securities at Stated Maturity, minus (b) the unpaid principal
amount of the Securities to be redeemed, minus (c) accrued and
unpaid interest paid on the Redemption Date.
"Average Life to Stated Maturity" means, as of the date
of determination, with respect to any Indebtedness, the quotient
obtained by dividing (i) the sum of the products of (a) the
number of years from the date of determination to the date or
dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated
as of the date hereof among the Company and the lenders
thereunder and Bankers Trust Company, as agent, as in effect on
the date hereof, and as such agreement may be amended, renewed,
extended, supplemented or otherwise modified from time to time,
and any agreement or successive agreements governing Indebtedness
incurred to refund, refinance, restructure or replace the
Indebtedness and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or other agreement.
"Board of Directors" means the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking
- 3-
<PAGE>
institutions in The City of New York or the State of Delaware are
authorized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated
basis under any capital lease of real or personal property which,
in accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated) of such Person's capital stock whether now
outstanding or issued after the date hereof.
"Change in Control" means an event as a result of which:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Permitted Holders is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and
l3d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total Voting
Stock of the Company and (ii) such person succeeds in having its
nominees constitute a majority of the Company's Board of
Directors.
"Chefmark" means Chefmark, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act Sections
3l0 through 317 as they are applicable to the Company, the term
"Company" shall include any other obligor with respect to the
Securities for the purposes of complying with such provisions.
- 4-
<PAGE>
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company (i) by its
Chairman, a Vice Chairman, its President or a Vice President and
(ii) by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any
two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Consolidated Adjusted Net Income (Loss)" of the Company
means, for any period, the consolidated net income (loss) of the
Company and its consolidated Subsidiaries for such period as
determined in accordance with GAAP, adjusted by excluding (i) net
after-tax extraordinary gains or losses (less all fees and
expenses relating thereto), as the case may be, (ii) net
after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset sales, (iii) any depreciation and
amortization expense incurred by the Company and its consolidated
Subsidiaries from the date of the Acquisition to the date of
determination resulting from (a) any write-up in the book value
of any assets due to the Acquisition and (b) any goodwill due to
the Acquisition (including any write-off or accelerated
amortization of goodwill), (iv) any expenses incurred in
connection with the Acquisition and the financing thereof and the
Recapitalization, (v) any expenses relating to the incurrence or
refinancing of Indebtedness, (vi) the net income (or loss) of any
Person (including any Unrestricted Subsidiary and excluding the
Company or a Subsidiary) in which the Company or any of its
Subsidiaries has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to
the Company or its Subsidiaries by such other Person during such
period, (vii) net income (or net loss) of any Person combined
with the Company or any of its Subsidiaries in a "pooling of
interests" basis attributable to any period prior to the date of
combination and (viii) non-cash charges of the Company and its
Subsidiaries resulting from the application of Statement of
Financial Accounting Standards No. 106 ("SFAS 106") to the extent
such charges exceed the cash payments for benefits covered by
SFAS 106 for the relevant period.
"Consolidated Assets" means the net book value of the
Existing Assets shown on the balance sheet of the Company, as
determined in accordance with GAAP consistently applied, as of
the last day of the Company's last fiscal quarter prior to the
date hereof.
- 5-
<PAGE>
"Consolidated Capital Expenditures" means cash capital
expenditures reflected in the consolidated statement of cash
flows of the Company and Capital Lease Obligations that are on
the consolidated balance sheet of the Company and its
Subsidiaries, in each case in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the
Company means, for any period, the ratio of (i) the sum of
Consolidated Adjusted Net Income, Consolidated Interest Expense,
Consolidated Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Adjusted Net Income, in each
case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, to
(ii) the sum of such Consolidated Interest Expense for such
period; provided that, in making such computation, the
Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the
date of computation had been the applicable rate for the entire
period; provided, further, that in making any calculation prior
to the first anniversary date of the Recapitalization, the
Recapitalization shall be deemed to have taken place on the first
day of such period.
"Consolidated Interest Expense" means, for any period,
the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a
consolidated statement of earnings of the Company and its
Subsidiaries for such period minus the aggregate amount for such
period of interest imputed on future liabilities of the Company
and its Subsidiaries, other than Indebtedness, recorded at
present value. Consolidated Interest Expense shall include
accruals in respect of Interest Rate Hedge Arrangements (but
shall exclude any such accruals in the nature of amortization of
front-end fees or other similar payments).
"Consolidated Non-cash Charges" of the Company means,
for any period, the aggregate depreciation, amortization and
other non-cash charges of the Company and its consolidated
Subsidiaries for such period, as determined in accordance with
GAAP (excluding any such non-cash charge which requires an
accrual of or reserve for cash charges for any future period).
"Consolidated Tax Expense" of the Company means, for any
period, as applied to the Company, the provision for federal,
state, local and foreign income taxes of the Company and its
consolidated Subsidiaries for such period as determined in
accordance with GAAP.
- 6-
<PAGE>
"Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business
shall be principally administered, which office at the date of
execution of this Indenture is located at 114 West 47th Street,
New York, New York 10036.
"Corporation" includes corporations, associations,
partnerships, companies and business trusts.
"Day Count Fraction" means the number of days from the
Redemption Date to (but excluding) the next scheduled Interest
Payment Date divided by 360 (which assumes a year composed of
twelve 30-day months).
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Deferred Coupon Notes" means the Junior Subordinated
Deferred Coupon Notes due 2003 of the Company in aggregate
principal amount at final maturity of $225,250,000.
"Equitable Investors" means The Equitable Life Assurance
Society of the United States and any of its Affiliates that
beneficially own, directly or indirectly, shares of Capital Stock
of SMG-II, Holdings, Newco or the Company.
"Event of Default" has the meaning specified in Article
Five.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Assets" means the assets and other property
held by the Company (and not its subsidiaries) as of the last day
of the Company's last fiscal quarter prior to the date hereof,
adjusted by excluding any assets and other property transferred
to Newco in the Spin-Off, plus any assets held by the Company
(and not its subsidiaries) irrevocably designated from time to
time by the Company as Existing Assets.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's
length transaction between an informed and willing seller under
no compulsion to sell and an informed and willing buyer.
"Federal Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time.
- 7-
<PAGE>
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to
time; provided, however, that with respect to the obligations of
any Person under Articles Eight and Ten and the definitions
applicable thereto, "GAAP" means generally accepted accounting
principles in the United States as in effect on the date hereof.
"Guaranteed Debt" of any Person means, without
duplication, all Indebtedness of any other Person referred to in
the definition of Indebtedness contained in this Section 101
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) other than with respect to the Logistical
Services Agreement or any Spin-Off Agreement, to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) other than with respect to the
Logistical Services Agreement or any Spin-Off Agreement, to
supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services to be
acquired by such debtor irrespective of whether such property is
received or such services are rendered), (iv) to maintain working
capital or equity capital of the debtor, or otherwise to maintain
the net worth, solvency or other financial condition of the
debtor or (v) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case in the ordinary course
of business, or any obligation or liability of such Person in
respect of leasehold interests assigned by such Person to any
other Person.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation, and any successor thereto.
"Holdings Intercompany Notes" means the 11-5/8%
subordinated note and the 12-5/8% subordinated debenture each
issued by the Company to Holdings in the forms attached hereto as
Appendix B and in aggregate principal amount not in excess of the
principal amounts outstanding on the date hereof.
"Holdings Preferred Stock" means Holdings' Cumulative
Exchangeable Redeemable Preferred Stock, par value $.01 per
- 8-
<PAGE>
share, having a liquidation preference of $25 per share and
maturing on December 31, 2007, that is outstanding on the date
hereof.
"Indebtedness" means with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables, import
letters of credit and other accrued current liabilities incurred
in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such
Person in connection with any standby letters of credit and
acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the
rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of
such property), but excluding trade accounts payable arising in
the ordinary course of business, (iv) all Capital Lease
Obligations of such Person, (v) all Indebtedness referred to in
(but not excluded from) clause (i), (ii), (iii) or (iv) above of
other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness, (vi) all Guaranteed Debt of such Person, (vii)
all Redeemable Capital Stock issued by such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends and (viii) all
obligations under interest rate hedge contracts of such Person.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value to be determined
in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from
time to time be supplemented or amended by one or
- 9-
<PAGE>
more indentures supplemental hereto entered into pursuant to the
applicable provisions hereof.
"Intercompany Agreement" means the agreement in the form
attached hereto as Appendix A, as amended or modified in
accordance with the terms of this Indenture.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Hedge Arrangement" means any rate swap
transaction under a rate swap agreement to which the Company is a
party or beneficiary, or becomes a party or beneficiary, and any
interest rate protection agreement, interest rate future,
interest rate option or other interest rate hedge arrangement to
or under which the Company is a party or a beneficiary, or
becomes a party or a beneficiary, or to or under which any
Subsidiary of the Company is or becomes such a party or
beneficiary if the obligations of such Subsidiary thereunder are
guaranteed by the Company.
"Investments" of any Person means, directly or
indirectly, any advance, loan or other extension of credit or
capital contribution by such Person to (by means of any transfer
of cash or other property to others or any payment for property
or services for the account or use of others) any other Person,
or any purchase or acquisition by such Person of any stock,
bonds, notes, debentures or other securities issued or owned by
any other Person. For the purpose of making any calculations
hereunder, (i) Investment shall include the Fair Market Value of
the net assets of any Subsidiary at the time that such Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the
Fair Market Value of the net assets of any Unrestricted
Subsidiary that is designated a Subsidiary and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued
at Fair Market Value at the time of such transfer; provided that
in each case, the Fair Market Value of an asset or property shall
be as determined by the Board of Directors of the Company in good
faith.
"Lien" means any mortgage, charge, pledge, lien,
privilege, security interest or encumbrance of any kind.
"Logistical Services Agreement" means the Logistical
Services Agreement dated as of October 26, 1993 between Plainbridge
and the Company, as amended or modified in accordance with the
provisions hereof.
"Majority-owned Subsidiary" means a Subsidiary at least
50% of the equity ownership or the Voting Stock of which
- 10-
<PAGE>
is at the time owned, directly or indirectly, by the Company or
by one or more of the Subsidiaries, or the Company and one or
more of the Subsidiaries, provided that Majority-owned Subsidiary
shall not include any such Subsidiary if the equity ownership or
the Voting Stock of such Subsidiary not owned by the Company
and/or one or more of the Subsidiaries is owned by Holdings
and/or one or more Affiliates of Holdings other than the
Company and its Subsidiaries.
"Management Investors" means the officers and other
members of the management of the Company who at any particular
date shall beneficially own, directly or indirectly, Voting Stock
of the Company.
"Material Subsidiary" means, at any particular time, any
Subsidiary of the Company that, together with the Subsidiaries of
such Subsidiary, (a) accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries for the
most recently completed fiscal year of the Company or (b) was the
owner of more than l0% of the consolidated assets of the Company
and its Subsidiaries as at the end of such fiscal year, all as
shown on the consolidated financial statements of the Company and
its Subsidiaries for such fiscal year.
"Maturity" when used with respect to any Security means
the date on which the principal of such Security becomes due and
payable as therein or herein provided, whether at Stated
Maturity, Change in Control Purchase Date or Redemption Date and
whether by declaration of acceleration, Change in Control, call
for redemption or otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation
Partnership No. IX, L.P., a Delaware partnership, ML Offshore LBO
Partnership No. IX, a Cayman Islands partnership, ML Employees
LBO Partnership No. I, L.P., a Delaware partnership, Merrill
Lynch Interfunding Inc., a Delaware corporation, Merchant Banking
L.P. No. I, a Delaware partnership, Merrill Lynch KECALP L.P., a
Delaware partnership, Merrill Lynch Capital Appreciation
Partnership No. B-X, L.P., a Delaware partnership, ML Offshore
LBO Partnership No. B-X, a Cayman Islands partnership, MLCP
Associates, L.P. No. II, a Delaware partnership, Merrill Lynch
Venture Capital, Inc., a Delaware corporation and any Affiliates
of the foregoing that beneficially own, directly or indirectly,
shares of Capital Stock of SMG-II.
"Newco" means PTK Holdings, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
- 11-
<PAGE>
"Officers' Certificate" means a certificate signed by
(i) the Chairman, a Vice Chairman, the President, a Vice
President or the Treasurer of the Company and (ii) the Secretary
or an Assistant Secretary of the Company and delivered to the
Trustee; provided, however, that such certificate may be signed
by two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable
to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent
applicable.
"Outstanding" when used with respect to Securities
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment,
redemption or purchase money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and the
Trustee or such Paying Agent is not prohibited from paying
such money to the Holders on that date pursuant to the terms
of Article Thirteen of this Indenture; provided that, if such
Securities are to be redeemed, notice of such redemption has
been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(c) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Fourteen; and
(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
- 12-
<PAGE>
provided, however, that, in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, notice, direction,
consent or waiver hereunder, Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the
Company, or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, notice, direction, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company that is pari passu in right of payment to the Securities.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (or premium, if any) or interest
on any Securities on behalf of the Company.
"Permitted Holders" means ML Funds, the Management
Investors and the Equitable Investors, provided that the
Equitable Investors shall not be a Permitted Holder if they are a
member of a "group" (as such term is used in Section 13(d) of the
Exchange Act) in respect of the Company which does not include
the Management Investors and the ML Funds.
"Permitted Indebtedness" means any of the following
Indebtedness of the Company or any Subsidiary, as the case may
be:
(i) Indebtedness under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to
exceed $575,000,000;
(ii) Indebtedness under the Securities in an aggregate
principal amount at any one time outstanding not to exceed
$197,567,000;
(iii) Indebtedness outstanding on the date hereof and
listed on Schedule I hereto;
(iv) Indebtedness under the Subordinated Notes, the
Subordinated Debentures, and the Deferred Coupon Notes;
- 13-
<PAGE>
(v) obligations pursuant to interest rate hedge
contracts;
(vi) (A) Indebtedness under Capital Lease Obligations
and (B) Purchase Money Mortgages;
(vii) Indebtedness in respect of trade letters of credit
and standby letters of credit incurred in the ordinary course
of business;
(viii) Indebtedness of the Company or any Subsidiary to
any one or the other of them; provided that the obligation of
the obligor of such Indebtedness is subject to the
Intercompany Agreement;
(ix) Indebtedness of any Subsidiary made in accordance
with the applicable provisions of Section 1013 or Section
1014;
(x) Indebtedness consisting of guarantees, indemnities
or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets;
(xi) any obligation or liability in respect of leasehold
interests assigned by the Company or any Subsidiary to any
other Person;
(xii) Indebtedness under the Holdings Intercompany Notes;
(xiii) Indebtedness represented by letters of credit not
exceeding an aggregate amount of $45,000,000 at any one time
outstanding (other than those permitted by clause (vii)
above);
(xiv) Indebtedness incurred to finance Consolidated
Capital Expenditures (including Acquired Indebtedness to the
extent that, in conformity with GAAP, assets acquired in
conjunction with such Acquired Indebtedness are included in
the property, plant or equipment reflected on the
Consolidated balance sheet of the Company and its
Subsidiaries);
(xv) Indebtedness in addition to that described in
clauses (i) through (xiv) of this definition of "Permitted
Indebtedness", and any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, not to
exceed $75,000,000 outstanding at any one time in the
aggregate; and
- 14-
<PAGE>
(xvi) any renewals, extensions, substitutions,
refinancings or replacements (each, for purposes of this
clause, a "refinancing") of any Indebtedness described in
clauses (ii), (iii), (iv) and (xiv), including any successive
refinancings so long as the aggregate amount of
Indebtedness represented thereby is in a principal amount
that does not exceed the principal amount so refinanced plus
the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium
reasonably determined by the Company as necessary to
accomplish such refinancing plus the amount of expenses of
the Company incurred in connection with such refinancing;
provided that for purposes of this clause, the principal
amount of any Indebtedness shall be deemed to mean the
principal amount thereof or, if such Indebtedness provides
for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination and such
refinancing does not reduce the Average Life to Stated
Maturity or the final Stated Maturity of such Indebtedness.
"Permitted Investment" means any of the following:
(i) any Investment in any Majority-owned Subsidiary by the
Company or any other Majority-owned Subsidiary, any Investment
in any Person by the Company or any Majority-owned Subsidiary as
a result of which such Person becomes a Majority-owned Subsidiary
or any Investment in the Company by any Majority-owned Subsidiary;
(ii) any Temporary Cash Investment; (iii) intercompany Indebtedness to the
extent permitted under clause (viii) of the definition of
"Permitted Indebtedness" contained in this Section 101;
(iv) Investments in existence on the date hereof and any
Investment with respect to which the Company or any Subsidiary is
legally committed to make, but only if such commitment was in
existence on the date hereof in each case, other than any
Investment in any Unrestricted Subsidiary; (v) sales of goods on
trade credit terms consistent with the Company's past practices
or as otherwise consistent with trade credit terms in common use
in the industry; (vi) Investments pursuant to the Logistical
Services Agreement or Spin-Off Agreements; (vii) any Investment
in any Person acquired or retained in connection with any asset
sale or other disposition of assets; (viii) loans or advances to
employees made in the ordinary course of business; and (ix) in
addition to "Permitted Investments" described in the foregoing
clauses (i) through (viii), Investments in the aggregate amount
of $45,000,000 at any one time outstanding.
"Permitted Payment" has the meaning specified in Section
1008.
- 15-
<PAGE>
"Person" means any individual, corporation, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plainbridge" means Plainbridge, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for a mutilated Security
or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's preferred or preference
stock whether now outstanding or issued after the date hereof,
and includes, without limitation, all classes and series of
preferred or preference stock.
"Purchase Money Mortgages" means Indebtedness of the
Company or any Subsidiary (i) issued to finance or refinance the
purchase or construction of any assets of the Company or any
Subsidiary or (ii) secured by a Lien on any assets of the Company
or any Subsidiary where the lender's sole recourse is to the
assets so encumbered, in either case (a) to the extent the
purchase or construction prices for such assets are or should be
included in "addition to property, plant or equipment" in
accordance with GAAP and (b) if the purchase or construction of
such assets is not part of any acquisition of a Person or
business unit.
"Qualified Capital Stock" of any Person means any and
all Capital Stock of such Person other than Redeemable Capital
Stock.
"Recapitalization" means the Recapitalization described
in the Amended and Restated Prospectus relating to the issuance
of the Securities.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms, by the terms of any security into which it
is convertible or exchangeable or otherwise, is or upon the
happening of an event or passage of time would be required to be
redeemed prior to the final Stated Maturity of
- 16-
<PAGE>
the Securities or is redeemable at the option of the holder
thereof at any time prior to such final Stated Maturity, or is
convertible into or exchangeable for debt securities at any time
prior to such final Stated Maturity.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the April 15 or October 15 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Responsible Officer", when used with respect to the
Trustee, means any officer assigned to the Corporate Trust
Administration of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers or assigned by the Trustee
to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning specified in
Section 1008.
"Security" and "Securities" have the meaning set forth
in the second paragraph of this Indenture.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on (such interest on Senior Indebtedness,
wherever referred to in this Indenture, being deemed to include
interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or
event of default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law) any Indebtedness of the
Company (other than as otherwise provided in this
- 17-
<PAGE>
definition), whether outstanding on the date hereof or thereafter
created, incurred or assumed in accordance with the provisions
of this Indenture, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if
any, and interest on (including interest accruing after the
occurrence of an event of default) all obligations of every
nature of the Company from time to time owed under the Bank
Credit Agreement, including, without limitation, principal of and
interest on, and all fees, expenses, indemnities, payments for
early termination of Interest Rate Hedge Arrangements and
reimbursement obligations under letters of credit payable under
the Bank Credit Agreement. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (i) Indebtedness
evidenced by the Securities, the Subordinated Notes, the
Subordinated Debentures and the Deferred Coupon Notes or
Indebtedness that is subordinate or junior in right of payment to
any Indebtedness of the Company, except for subordination as a
result of intercreditor arrangements with respect to collateral,
(ii) Indebtedness that when incurred, and without respect to any
election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company, (iii) Indebtedness that is
represented by Redeemable Capital Stock, (iv) Indebtedness of the
Company to a subsidiary of the Company or any other Affiliate of
the Company or any of such Affiliate's subsidiaries, including
the Holdings Intercompany Notes and (v) that portion of any
Indebtedness (other than any Indebtedness provided by any lender
pursuant to the Bank Credit Agreement, except to the extent such
Indebtedness is provided with actual knowledge on the part of any
such lender that the incurrence thereof by the Company is a
violation of this Indenture) which at the time of issuance is
issued in violation of this Indenture.
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation, and any successor thereto.
"Special Record Date" means a date fixed by the Trustee
for the payment of any Defaulted Interest pursuant to Section
307.
"Specified Senior Indebtedness" means (i) all Senior
Indebtedness under the Bank Credit Agreement, and (ii) any other
issue of Senior Indebtedness or refinancings thereof permitted by
said definition having a principal amount of at least
$100,000,000 and is specifically designated in the
- 18-
<PAGE>
instrument evidencing such Senior Indebtedness as "Specified
Senior Indebtedness" by the Company. For purposes of this
definition: (a) the amount of the Indebtedness of the Company
with respect to any Interest Rate Hedge Arrangement shall be
deemed to be the lesser of (x) 25% of the notional amount of such
Interest Rate Hedge Arrangement, or (y) the maximum amount the
Company could be required to pay under such Interest Rate Hedge
Arrangement; and (b) a refinancing of any such Indebtedness shall
be treated as such only if it ranks or would rank pari passu with
the Indebtedness refinanced.
"Spin-Off Agreements" means (i) the Distribution and
Transfer Agreement dated as of May 3, 1993 among the Company,
Holdings and Chefmark; (ii) the Distribution and Transfer
Agreement dated as of October 26, 1993 among the Company, Newco
and Plainbridge; (iii) the Blair Services Agreement dated as of
October 26, 1993 between the Company and Plainbridge; (iv) the
Rickel Services Agreement dated as of October 26, 1993 between
the Company and Plainbridge; (v) the Chefmark Services Agreement
dated as of May 3, 1993 between the Company and Chefmark;
(vi) the Tax Sharing Agreement; (vii) leases between the Company
as lessee and Plainbridge as lessor entered into on the date of
this Indenture; and (viii) the Chefmark Supply Agreement dated as
of May 3, 1993 between Chefmark and the Company, in each case as
amended or modified in accordance with the provisions hereof.
"Spin-Off" means the contribution by the Company to Plainbridge of
the Rickel home center business, the warehouse, distribution and
transportation operations and the inventory therein that service
the Pathmark supermarkets and drug stores and certain other
assets and the distribution of the shares of Plainbridge to Newco.
"Stated Maturity", when used with respect to any
Indebtedness or any installment of interest thereon, means the
date specified in such Indebtedness as the fixed date on which
the principal of such Indebtedness or such installment of
interest is due and payable.
"Subordinated Debentures" means the Company's 12-5/8%
Subordinated Debentures due 2002 in aggregate principal amount
not in excess of the aggregate principal amount outstanding on
the date of this Indenture.
"Subordinated Indebtedness" means Indebtedness of the
Company subordinated in right of payment to the Securities.
"Subordinated Notes" means the Company's 11-5/8%
Subordinated Notes due 2002 in aggregate principal amount not in
excess of the aggregate principal amount outstanding on the date
of this Indenture.
- 19-
<PAGE>
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries; provided that an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of this Indenture.
"Tax Sharing Agreement" means the Tax Sharing Agreement
dated as of the date of the Spin-off by and between SMG-II and the
Company, as amended or modified in accordance with the provisions
hereof.
"Temporary Cash Investment" means (i) any evidence of
Indebtedness, maturing not more than 180 days after the date of
acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than
180 days after the date of acquisition, issued by, or time
deposit of, a commercial banking institution that has combined
capital and surplus of not less than $300,000,000, whose debt is
rated at the time as of which any investment therein is made, of
"A" (or higher) according to Moody's Investors Service, Inc.
("Moody's"), or "A" (or higher) according to Standard & Poor's
Corporation ("S&P"), (iii) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United
States of America, with a rating, at the time as of which any
investment therein is made, of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P, (iv) any
short-term, tax-exempt investment in indebtedness issued by a
municipality existing under the laws of the United States of
America with a rating, at the time as of which any investment
therein is made, of "A" (or higher) according to Moody's or "A"
(or higher) according to S&P, and (v) any money market deposit
accounts issued or offered by any domestic commercial bank having
capital and surplus in excess of $300,000,000.
"Treasury Rate" means the yield to maturity at the time
of computation of United States Treasury securities with a
constant mauturity (as compiled by, and published in, the most
recent Federal Reserve Statistical Release H.15 (5-19) which has
become publicly available at least two business days prior to the
date fixed for redemption of the Securities following a Change in
Control (or, if such Statistical Release is no longer published,
any publicly available source of similar market data)) most
nearly equal to the then remaining Average Life to Stated
Maturity of the Securities; provided, however, that if
- 20-
<PAGE>
the Average Life to Stated Maturity of the Securities is not
equal to the constant maturity of a United States Tresury
security for which a weekly average yield is given, the Treasury
Rate shall be obtained by linear interpolation (rounded, if
necessary, to four decimal places) from the weekly average yields
of United States Treasury securities for which such yields are
given, except that if the Average Life to Stated Maturity of the
Securities is less than one year, the weekly average yield on
actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this
instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Unrestricted Subsidiary" means (i) any subsidiary of
the Company that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors
of the Company, as provided below) and (ii) any subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company
may designate any subsidiary of the Company (including any newly
acquired or newly formed subsidiary) to be an Unrestricted
Subsidiary if all of the following conditions apply: (a) such
subsidiary is not liable, directly or indirectly, with respect to
any Indebtedness other than Unrestricted Subsidiary Indebtedness
and (b) any Investment in such subsidiary made as a result of
designating such subsidiary an Unrestricted Subsidiary shall not
violate the provisions of Section 1016. Any such designation by
the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving
effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing
conditions. The Board of Directors of the Company may designate
any Unrestricted Subsidiary as a Subsidiary; provided that
immediately after giving effect to such designation, the Company
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the restrictions of Section
1007.
"Unrestricted Subsidiary Indebtedness" of any
Unrestricted Subsidiary means Indebtedness of such Unrestricted
Subsidiary (i) as to which neither the Company nor any
- 21-
<PAGE>
Subsidiary is directly or indirectly liable (by virtue of the
Company or any such Subsidiary being the primary obligor on,
guarantor of, or otherwise liable in any respect to, such
Indebtedness), except Guaranteed Debt of the Company or any
Subsidiary to any Affiliate, in which case (unless the incurrence
of such Guaranteed Debt resulted in a Restricted Payment at the
time of incurrence) the Company shall be deemed to have made a
Restricted Payment (as defined in Section 1008) equal to the
principal amount of any such Indebtedness to the extent
guaranteed at the time such Affiliate is designated an
Unrestricted Subsidiary and (ii) which, upon the occurrence of a
default with respect thereto, does not result in, or permit any
holder of any Indebtedness of the Company or any Subsidiary to
declare, a default on such Indebtedness of the Company or any
Subsidiary or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason
of the happening of any contingency).
Section 102. Other Definitions.
Defined in
Term Section
"Act"............................................. 105
"Change in Control Notice" ....................... 1011
"Change in Control Offer" ........................ 1011
"Change in Control Purchase Date" ................ 1011
"Change in Control Purchase Notice" .............. 1011
"Change in Control Purchase Price" ............... 1011
"covenant defeasance" ............................ 1403
"Defaulted Interest" ............................. 307
"defeasance" ..................................... l402
"incorporated provision" ......................... 108
"Notice of Default" .............................. 501
"Security Register" .............................. 305
"Security Registrar" ............................. 305
"Surviving Entity" ............................... 801
"U.S. Government Obligations" .................... 1404
- 22-
<PAGE>
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion (other than the
certificates required by Section 1018(a)) with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters,
- 23-
<PAGE>
and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
- 24-
<PAGE>
(d) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not more than 30
days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation
is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for this purpose the Securities then
Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six
months after the record date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such
Security.
Section 106. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder, any Representative or
the Company shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or
- 25-
<PAGE>
with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
delivered in writing or mailed, first-class postage prepaid,
to the Company addressed to it c/o Pathmark Stores, Inc., 301
Blair Road, Woodbridge, New Jersey 07095, Attention:
President, or at any other address furnished in writing to the
Trustee by the Company.
The Company shall provide the Trustee in writing with
the name and address of the agent bank under the Bank Credit
Agreement as of the effective date of this Indenture and shall
promptly provide the Trustee in writing with any change in such
information.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register, not
later that the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice when mailed to a
Holder in the aforesaid manner shall be conclusively deemed to
have been received by such Holder whether or not actually
received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to
be a sufficient giving of such notice.
- 26-
<PAGE>
Section 108. Conflict of any Provision of Indenture
with Trust Indenture Act.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 318, inclusive, of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by
operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its respective successors and assigns, whether
so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the
Holders and the holders of Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles
thereof.
- 27-
<PAGE>
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to Section
307, or any Maturity with respect to any Security shall not be a
Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal
(and premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, or date
established for payment of Defaulted Interest pursuant to Section
307, or Maturity, and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment
Date, or date established for payment of Defaulted Interest
pursuant to Section 307, or Maturity, as the case may be, to the
next succeeding Business Day.
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations
of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as
evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Security.
- 28-
<PAGE>
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
The form of the face of the Securities shall be
substantially as follows:
PATHMARK STORES, INC.
9 5/8% Senior Subordinated Note
due 2003
No. $
Pathmark Stores, Inc., a Delaware corporation (herein
called the "Company", which term includes any successor entity
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to or registered assigns, the
principal sum of Dollars on May 1, 2003, at the
office or agency of the Company referred to below, and to pay
interest thereon on May 1, 1994 and semiannually thereafter on
May 1 and November 1 in each year and at Stated Maturity, from
October 26, 1993 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, at the rate
of 9 5/8% per annum, until the principal hereof is paid or duly
provided for.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided for, and interest on such defaulted interest at the then
applicable interest rate borne by the Securities, to the extent
lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any
- 29-
<PAGE>
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and
upon such notice as may be required by such exchange, all as more
fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: PATHMARK STORES, INC.
By
Attest:
By
[SEAL]
Authorized Signature
- 30-
<PAGE>
Section 203. Form of Reverse of Security.
The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
securities of the Company designated as its 9 5/8% Senior
Subordinated Notes due 2003 (herein called the "Securities"),
limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount to $440,000,000, which
may be issued under an indenture (herein called the "Indenture")
dated as of October 26, 1993, between the Company and United States
Trust Company of New York, as trustee (herein called the
"Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties, obligations and
immunities thereunder of the Company, the Trustee and the Holders
of the Securities, and of the terms upon which the Securities
are, and are to be, authenticated and delivered.
The Securities are subject to redemption upon not less
than 21 nor more than 60 days' notice, in amounts of $1,000 or an
integral multiple of $1,000, at any time on or after ,
1998, as a whole or in part, at the election of the Company, at a
Redemption Price equal to the percentage of the principal amount
set forth below if redeemed during the 12-month period beginning
of the years indicated below:
Year Redemption Price
1998 104.82%
1999 102.41%
and thereafter at 100% of the principal amount, together in the
case of any such redemption with accrued interest, if any, to the
Redemption Date (subject to the right of Holders of record on
relevant Regular Record Dates to receive interest due on a
Interest Payment Date), all as provided in the Indenture.
Notwithstanding the foregoing, on or prior to November 1, 1996,
the Company may redeem, on not less than 21 nor more than 60
days' prior notice in amounts of $1,000 or an integral multiple
of $1,000, in the aggregate up to 35% of the initial principal
amount of the Securities with the net proceeds of any issuance of
Qualified Capital Stock of the Company or Newco at a Redemption
Price of 109% of the principal amount thereof, together with
accrued interest, if any, to the Redemption Date (subject to the
right of Holders of Record on relevant Regular
- 31-
<PAGE>
Record Dates to receive interest due on an Interest Payment
Date).
The Securities will be subject to redemption, at the
option of the Company, prior to November 1, 1998, in whole or in
part, at any time within 180 days after a Change in Control on
not less than 21 nor more than 60 days' prior notice to each
Holder of the Securities to be redeemed in amounts of $1,000 or
an integral multiple thereof, at a redemption price equal to the
sum of (i) the principal amount thereof plus (ii) accrued and
unpaid interest, if any, to the Redemption Date (subject to the
right of Holders of record on relevant record dates to receive
interest due on an Interest Payment Date) plus (iii) the
Applicable Premium.
In the event that a Change in Control occurs, each
Holder shall have the right to require that the Company
repurchase such Holder's Securities in whole or in part in
integral multiples of $1,000 at a purchase price in cash in an
amount equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase. Within 30
days following a Change in Control, the Company covenants to
either (i) repay in full all Indebtedness under the Bank Credit
Agreement and permanently reduce the commitments of the lenders
thereunder or offer to repay in full all such Indebtedness and
permanently reduce such commitments and repay the Indebtedness
and permanently reduce the commitment of each lender that
accepted such offer or (ii) obtain the requisite consent under
the Bank Credit Agreement to permit the repurchase of the
Securities.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on
the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default shall occur and be continuing,
the principal of all the Securities may be declared due and
payable in the manner and with the effect provided in the
Indenture.
- 32-
<PAGE>
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on this
Security and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply
to this Security.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security
shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The indebtedness evidenced by the Securities is
subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be
bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary
or appropriate to effectuate the subordination provided for in
the Indenture and appoints the Trustee his attorney-in-fact for
such purpose; provided that the indebtedness evidenced by this
Security shall cease to be so subordinate and subject in right of
payment upon any defeasance of this Security as provided in the
Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
- 33-
<PAGE>
registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges payable in connection with any registration of transfer
or exchange.
Prior to the time of due presentment of this Security
for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
- 34-
<PAGE>
I/We assign and transfer this Security to
Insert assignee's soc. sec. or tax ID no. ........
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer
this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
(Sign exactly as your name appears on the other side of this Security.)
Signature Guaranteed:
(Signature must be guaranteed by a member firm of a principal stock
exchange or a commercial bank or trust company.)
Section 204. Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
UNITED STATES TRUST
COMPANY OF NEW YORK
as Trustee
By
Authorized Signatory
- 35-
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited to
$440,000,000, except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 906,
1012 or 1108.
The Securities shall be known and designated as the
"9 5/8% Senior Subordinated Notes due 2003" of the Company.
Their Stated Maturity shall be May 1, 2003, and they shall bear
interest at the rate of 9 5/8% per annum from October 26, 1993
or the most recent Interest Payment Date to which interest has
been paid or duly provided for, as the case may be, payable on
May 1, 1994 and semi-annually thereafter on May 1 and November 1
in each year and at said Stated Maturity, until the
principal thereof is paid or duly provided for. Subject to
Article Thirteen, interest on any overdue amount of principal,
interest (to the extent lawful) or premium, if any, shall be
payable on demand.
The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the
Company maintained for such purpose in The City of New York, or
at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall
appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
The Indebtedness evidenced by the Securities shall be
subordinated in right of payment to Senior Indebtedness as
provided in Article Thirteen.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any
integral multiple thereof.
Section 303. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the
Company by any two of the following: its Chairman, one of its
- 36-
<PAGE>
Vice Chairmen, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal
amount of up to $440,000,000. At any time and from time to time
after the execution and delivery of this Indenture, the Company
may deliver Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee
in accordance with such Company Order shall authenticate and
deliver such Securities as provided in this Indenture and not
otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee by manual signature of one of its duly authorized
signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of substantially all
of its properties and assets to any Person, and the successor
Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee
pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at
the request of the successor Person, be exchanged for other
Securities executed in
- 37-
<PAGE>
the name of the successor Person with such changes in phraseology
and form as may be appropriate, but otherwise in substance of
like tenor as the Securities surrendered for such exchange and of
like principal amount; and the Trustee, upon Company Order of the
successor Person, shall authenticate and deliver Securities as
specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in
any new name of a successor Person pursuant to this Section in
exchange or substitution for or upon registration of transfer of
any Securities, such successor Person, at the option of any
Holder but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such
Holder for Securities authenticated and delivered in such new
name.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as
- 38-
<PAGE>
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities.
The Trustee (and any other office or agency so designated) is
hereby initially appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 1002 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations and of
a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denomination or
denominations of a like aggregate principal amount upon surrender
of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in connection with any registration
of transfer or exchange of Securities, other than exchanges
pursuant to Section 303, 304, 306, 906, l0l2 or 1108 not
involving any transfer.
- 39-
<PAGE>
The Company shall not be required (a) to issue, register
the transfer of or exchange any Security during a period
beginning at the opening of business (i) 15 days before the
mailing of a notice of redemption of the Securities selected for
redemption under Section 1104 and ending at the close of business
on the day of such mailing or (ii) 15 days before an Interest
Payment Date and ending on the close of business on the Interest
Payment Date, or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except
the unredeemed portion of Securities being redeemed in part.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save
each of them and any agent of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a replacement
Security of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under
this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute a contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities duly issued hereunder.
- 40-
<PAGE>
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the applicable
interest rate borne by the Securities, to the extent lawful (such
defaulted interest (and such interest thereon) herein
collectively called "Defaulted Interest"), shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder; and such Defaulted Interest
may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall notify
the Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Subsection provided. Thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special
Record Date. In the name and at the expense of the Company,
the Trustee shall cause notice
- 41-
<PAGE>
of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears
in the Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be
paid to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered
at the close of business on such Special Record Date and
shall no longer be payable pursuant to the following
Subsection (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption or
registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and
shall be promptly cancelled by it. The Company shall deliver to
the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all
- 42-
<PAGE>
Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on demand of and at the expense of the
Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(l) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the
- 43-
<PAGE>
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (2)(i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
cash in U.S. Dollars or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that (i) all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606
and, if money shall have been deposited with the Trustee pursuant
to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section l003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the
provisions of Article Thirteen of this Indenture. If the Trustee
or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's
- 44-
<PAGE>
obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant
to Section 401; provided that if the Company has made any payment
of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether or not it shall be occasioned or prohibited
by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by the operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body):
(a) default in the payment of any interest on any
Security when such interest becomes due and payable and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(c) default in the performance, or breach, of any
covenant or agreement of the Company hereunder (other than a
default in the performance, or breach, of a covenant or
agreement that is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written
notice specifying such default or breach and stating that
such notice is a "Notice of Default" hereunder; or
(d) (i) an event of default shall have occurred under
any mortgage, bond, indenture, loan agreement or other
document evidencing any issue of Indebtedness of the Company
or any Material Subsidiary for money borrowed, which issue
has an aggregate outstanding principal amount of not less
than $50,000,000, and such default shall result
- 45-
<PAGE>
in such Indebtedness becoming, whether by declaration or
otherwise, due and payable prior to the date on which it
would otherwise become due and payable or (ii) a default in
any payment when due at final maturity of any such
Indebtedness; or
(e) final judgments or orders not covered by insurance
or a bond rendered against the Company or any Material
Subsidiary which require the payment in money, either
individually or in an aggregate amount, that is more
than $30,000,000 and such judgment or order shall remain
unsatisfied or unstayed for 60 days; or
(f) the entry of a decree or order by a court having
jurisdiction in the premises (i) for relief in respect of the
Company or any Material Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other
federal or state bankruptcy, insolvency, reorganization or
similar law or (ii) adjudging the Company or any Material
Subsidiary a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Material Subsidiary under
the Federal Bankruptcy Code or any other applicable federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other
similar official) of the Company or any Material
Subsidiary or of any substantial part of any of their
properties, or ordering the winding up or liquidation of any
of their affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive
days; or
(g) the institution by the Company or any Material
Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or
state law or any other case or proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
Material Subsidiary to the entry of a decree or order for
relief in respect of the Company or any Material Subsidiary
in any involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law
or to the institution of bankruptcy or insolvency proceedings
against the Company or any Material Subsidiary, or the filing
by the Company or any Material Subsidiary of a petition or
answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code or any other applicable federal or
state law, or the consent by it to the filing of any such
petition or to the appointment of or taking possession by a
custodian, receiver, liquidator, assignee, trustee,
sequestrator (or
- 46-
<PAGE>
other similar official) of any of the Company or any Material
Subsidiary or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors,
or the admission by it in writing of its inability to pay its
debts generally as they become due or taking of corporate
action by the Company or any Material Subsidiary in
furtherance of any such action; or
(h) default in the performance or breach of any of the
provisions of Article Eight.
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than as specified in
Section 50l(f) or 501(g)) occurs and is continuing, the Trustee
or the Holders of at least 25% of the principal amount of the
Securities then Outstanding may, and the Trustee at the request
of such Holders shall, declare all unpaid principal of, premium,
if any, and accrued interest on all the Securities to be due and
payable immediately, by a notice in writing to the Company (and
to the Trustee if given by the Holders); provided that so long as
the Bank Credit Agreement shall be in force and effect, if any
such Event of Default shall have occurred and be continuing, any
such acceleration shall not be effective until the earlier of
(a) five Business Days following a notice of acceleration given
to the Company and the agent bank under the Bank Credit Agreement
and only if upon such fifth Business Day such Event of Default
shall be continuing or (b) the acceleration of any Indebtedness
under the Bank Credit Agreement. If an Event of Default
specified in Section 501(f) or 501(g) occurs and is continuing,
the amounts described above shall ipso facto become and be
immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder thereof.
After a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in aggregate
principal amount of the Securities outstanding, by written notice
to the Company and the Trustee, may annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, (ii) all overdue interest on all Securities, (iii) the
principal of and premium, if any, on any Securities which have
become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Securities, and (iv) to
the extent that payment of such interest is lawful, interest upon
overdue interest at the
- 47-
<PAGE>
rate borne by the Securities; and (b) all Events of Default,
other than the non-payment of principal of the Securities which
have become due solely by the declaration of acceleration, have
been waived as provided in Section 513 or cured. No such
rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of
a declaration of acceleration in respect of the Securities,
because an Event of Default specified in Section 501(d) shall
have occurred and be continuing, such declaration of acceleration
shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or the
holders thereof have rescinded their declaration of acceleration
in respect of such Indebtedness, and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any
payment or other transfer or grant, or any promise or other
undertaking to pay or otherwise transfer or grant, any tangible
or intangible property or right to such holders in connection
with such rescission, and written notice of such discharge or
rescission, as the case may be, shall have been given to the
Trustee by the Company and by the holders of such Indebtedness or
a trustee, fiduciary or agent for such holders, within 60 days
after such declaration of acceleration in respect of the
Securities, and (x) no other Event of Default has occurred during
such 60-day period, and (y) no Default arising from such
discharge has occurred during such 60-day period, which, in
either case, has not been cured or waived during such period.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if
any) and interest, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Securities;
- 48-
<PAGE>
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; provided that in the
event that proof of such claim and such other papers or
documents have not been so filed by the thirtieth day prior
to the final date on which such claim may be filed, the
holders of Specified Senior
- 49-
<PAGE>
Indebtedness or their representatives shall be permitted to
file such proof of claim and other papers and documents for
and on behalf of the Holders of the Securities; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section
606.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any proposal, plan of reorganization,
arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money, securities or
other property collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest,
upon presentation of the Securities and the notation
- 50-
<PAGE>
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 606;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal (and premium, if
any) and interest, in respect of which or for the benefit
of which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts
due and payable on such Securities for principal (and
premium, if any) and interest; and
THIRD: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by
the Holders of a majority in principal amount of the
Outstanding Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or
- 51-
<PAGE>
to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture except in the manner
provided in this Indenture and for the equal and ratable benefit
of all the Holders.
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest on
such Security on the respective due dates expressed in such
Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
- 52-
<PAGE>
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in principal
amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to
personal liability, and
(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal
amount of the Outstanding Securities may on behalf of the Holders
of all Outstanding Securities waive any past Default or Event of
Default hereunder and its consequences, except a Default or Event
of Default
(a) in the payment of the principal of, premium, if
any, or interest on any Security, or
(b) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other Default or impair
any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this
- 53-
<PAGE>
Indenture, or in any suit against the Trustee for any action
taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than
10% in principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment
of the principal of (or premium, if any) or interest on any
Security on or after the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on or after the
Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 516. Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any Holder
of any Security to receive payment of the principal of, premium,
if any, and interest on such Security on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
- 54-
<PAGE>
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 60 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, notice of such Default
hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of (or premium, if
any) or interest on any Security, the Trustee shall be protected
in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the
interest of the Holders; and provided further that, in the case
of any default or breach of the character specified in Section
501(c), no such notice to Holders shall be given until at least
30 days after the occurrence thereof.
Section 602. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no
covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the
requirements of this Indenture; provided that the
Trustee shall examine the certificates and opinions to
determine whether or not they conform to the
requirements of this Indenture.
- 55-
<PAGE>
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this subsection (c) does not limit the effect
of subsection (b) of this Section 602;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing,
and does believe, that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 602.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense,
including such reasonable advances as may be requested by the
Trustee.
(f) Subject to the foregoing subsections (a) through
(e) of this Section 602:
(i) The Trustee may rely and shall be protected in
acting or in refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the
document. Any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or a Company Order and any resolution by
the board of directors of the Company may be sufficiently
evidenced by a Board Resolution.
- 56-
<PAGE>
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of
Counsel. In addition, in determining the Company's
compliance with the financial covenants set forth herein,
the Trustee may rely on the certificate delivered to the
Trustee pursuant to Section 1018(a).
(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iv) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers.
(v) The Trustee may consult with counsel,
accountants or other experts and any advice of such
counsel, accountants or other experts shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such
advice.
Section 603. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of
Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-l supplied
to the Company are true and accurate, subject to the
qualifications set forth therein.
Section 604. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other
- 57-
<PAGE>
capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310(b) and 311, may otherwise deal
with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the
purposes for which they were received and need not be segregated
from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the
Company.
Section 606. Compensation and Reimbursement.
The Company covenants and agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and each of its officers,
directors, employees, agents and counsel for, and to hold
them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder,
including the costs and expenses of defending itself
against any claim or liability in connection with the
exercise or performance of any of its powers or duties
hereunder.
- 58-
<PAGE>
The obligation of the Company under this Section 606 to
compensate the Trustee and to pay and reimburse the Trustee for
such expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture and shall not be
subject to the provisions of Article Thirteen. If, and to the
extent that, the Trustee, its counsel, and other agents do not
receive compensation for services rendered, reimbursement of
their advances, expenses and disbursements, or indemnity, as
herein provided, as the result of allowances made in any
reorganization, bankruptcy, receivership, liquidation or other
proceeding or by any plan or reorganization or readjustment of
obligations of the Company, the Trustee shall be entitled, in
priority to the Holders of the Securities, to receive any
distributions of any securities, dividends or other disbursements
which would otherwise be made to the Holders of the Securities in
any such proceeding or proceedings and the Trustee is hereby
constituted and appointed, irrevocably, the attorney-in-fact for
the Holders of the Securities and each of them to collect and
receive, in their name, place and stead, such distributions,
dividends or other disbursements, to deduct therefrom the amounts
due to the Trustee, its counsel and other agents on account of
services rendered, advances, expenses, and disbursements made or
incurred, or indemnity, and to pay and distribute the balance,
pro rata, to the Holders of the Securities. The Trustee shall
have a lien upon any securities or other consideration to which
the Holders of the Securities may become entitled pursuant to any
such plan or reorganization or readjustment of obligations, or in
any such proceeding or proceedings; and the court or judge in any
such proceeding or proceedings may determine the terms and
conditions under which any such lien shall exist and be enforced.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Securities upon all money, securities or other
property held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular
Securities, and the Securities are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(f) or 501(g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under the Federal
Bankruptcy Code and any other applicable federal or state
bankruptcy Law.
- 59-
<PAGE>
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of Section
3l0(b) of the Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Section 310(a)(1) and which shall have a combined capital and
surplus of at least $100,000,000 and have its Corporate Trust
Office located in The City of New York (or, if its Corporate
Trust Office shall not be located in The City of New York, the
Company shall, pursuant to Section 1002, maintain an office or
agency in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be
made or served) to the extent there is such an institution
eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 610, at which time the retiring
Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security
for at least six months may, on
- 60-
<PAGE>
behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice,
if any, as it may deem proper, appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of
the Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written
request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs
for the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, the Holder of
any Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed
- 61-
<PAGE>
shall, forthwith upon its acceptance of such appointment in
accordance with Section 610, become the successor Trustee and
supersede the successor Trustee appointed by the Company. If no
successor Trustee shall have been so appointed by the Company or
the Holders of the Securities and so accepted appointment, the
Holder of any Security who has been a bona fide Holder for at
least six months may on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
provided, however, that the retiring Trustee shall continue to be
entitled to the benefit of Section 606(c); but, on request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
Upon acceptance of appointment by any successor Trustee
as provided in this Section 610, the Company shall give notice
thereof to the Holders of the Securities, by mailing such notice
to such Holders at their addresses as they shall appear on the
Security Register. If the acceptance of
- 62-
<PAGE>
appointment is substantially contemporaneous with the
resignation, then the notice called for by the preceding sentence
may be combined with the notice called for by Section 609. If
the Company fails to give such notice within 10 days after
acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be given at the expense of the
Company.
Section 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor under the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of
Holders.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be
held accountable by reason of the disclosure of any
- 63-
<PAGE>
information as to the names and addresses of the Holders in
accordance with Trust Indenture Act Section 312, regardless of
the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Trust Indenture Act
Section 312.
Section 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with
the first May 15 after the first issuance of Securities, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May
15 if required by Trust Indenture Act Section 313(a).
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section 13
or Section 15(d) of the Exchange Act; or, if the
Company is not required to file information, documents
or reports pursuant to either of such Sections, then
it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time
to time by the Commission, such of the supplementary and
periodic information, documents and reports which may be
required pursuant to Section 13 of the Exchange Act in
respect of a security listed and registered on a national
securities exchange as may be prescribed from time to
time in such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information,
documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and
regulations; and
- 64-
<PAGE>
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days
after the filing thereof with the Trustee, in the manner and
to the extent provided in Trust Indenture Act Section 313(c),
such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections
(a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on
Certain Terms.
The Company shall not consolidate or merge with or into
any other Person, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties
and assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to any Person or
permit any of its Subsidiaries to enter into any such transaction
or transactions if such transaction or transactions, in the
aggregate, would result in a transfer of all or substantially all
of the assets of the Company and its Subsidiaries on a
consolidated basis to any Person unless, at the time and after
giving effect thereto:
(i) either (a) the Company shall be the continuing
corporation, or (b) the Person (if other than the Company)
formed by such consolidation, or into which the Company is
merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or disposition the properties and
assets of the Company, substantially as an entirety (the
"Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
the Surviving Entity shall, in either case, expressly assume,
by supplemental indenture hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this
Indenture and this Indenture shall remain in full force and
effect;
(ii) immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing;
- 65-
<PAGE>
(iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Fixed Charge Coverage
Ratio of the Company (or the Surviving Entity if the Company
is not the continuing obligor under this Indenture), for the
Company's four most recently completed full fiscal quarters
is at least 1.75 to 1.0; and
(iv) the Company shall deliver or cause to be delivered
to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger,
transfer or lease and such supplemental indenture, if
one is required by this Section 801, comply with this Section
801 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale,
assignment, transfer, lease or conveyance or other disposition of
all or substantially all of the assets of the Company in
accordance with Section 801, the successor corporation formed by
such consolidation or into which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made, shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named as the Company therein. In the event of any
transaction (other than a lease) described in and complying with
the conditions listed in Section 801 in which the Company is not
the continuing corporation, the successor corporation formed or
remaining shall succeed to, and be substituted for, and may
exercise every right and power of, the Company and the Company
would be discharged from all obligations and covenants under this
Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto in form satisfactory to the Trustee, for any
of the following purposes:
- 66-
<PAGE>
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein or in the Securities conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions
with respect to matters or questions arising under this
Indenture; provided that, in each case, such provisions shall
not adversely affect the interests of the Holders;
(d) to secure the Securities pursuant to the
requirements of Section 801 or Section 1010 or otherwise;
(e) to provide for the guarantee of payment of the
Securities by any Subsidiary pursuant to the requirements of
Section 1013 or Section 1014;
(f) to comply with the requirements of the Commission
in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, as contemplated by
Section 905 or otherwise;
(g) to evidence and provide the acceptance of the
appointment of a successor Trustee hereunder; or
(h) to make any other change that does not adversely
affect the rights of any Holder.
Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by
Act of such Holders delivered to the Company and the Trustee,
each when authorized by a Board Resolution, and the Trustee may
enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving
or modifying in any manner the rights of the Holders under this
Indenture; provided, however, that no such supplemental
indenture, amendment or waiver shall, without the
- 67-
<PAGE>
consent of the Holder of each Outstanding Security affected
thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date) or modify
the obligation of the Company to make and consummate a
Change in Control Offer or modify any of the provisions or
definitions with respect thereto; or
(b) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture; or
(c) modify any of the provisions of this Section or
Section 513 or Section 1019, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(d) modify any of the provisions of Article Thirteen
hereof in a manner adverse to the Holders of the Securities;
or
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company of any
of its rights and obligations under this Indenture.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and
- 68-
<PAGE>
(subject to Trust Indenture Act Section 315(a) through 315(d) and
Section 602 hereof) shall be fully protected in relying upon, an
Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article
may, and shall if required by the Company, bear a notation in
form approved by the Company as to any matter provided for in
such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and
executed by the Company and shall be authenticated and delivered
by the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the
rights of any holders of Senior Indebtedness under Article
Thirteen unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such
supplemental indenture.
- 69-
<PAGE>
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in
accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby
appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
recission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or recission and
any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
- 70-
<PAGE>
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any
Securities, deposit with a Paying Agent a sum in same day funds
(or New York Clearing House funds if such deposit is made prior
to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal (and premium, if any) or
interest;
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and obligations of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the
- 71-
<PAGE>
Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment
by any Paying Agent to the Trustee, such Paying Agent shall be
released from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication,
any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and that of each
Material Subsidiary of the Company and the corporate rights
(charter and statutory), corporate licenses and corporate
franchises of the Company and its Material Subsidiaries, except
where a failure to do so, singly or in the aggregate, is not
likely to have a materially adverse effect upon the business,
assets, financial conditions or results of operations of the
Company and the Material Subsidiaries taken as a whole determined
on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be
required to preserve any such existence (except of the Company),
right, licenses or franchise if the Board of Directors of the
Company, or of the Material Subsidiary concerned, shall determine
that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such Material
Subsidiary and that the loss thereof is not disadvantageous in
any material respect to the Holders.
- 72-
<PAGE>
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or
property of the Company or any of its Subsidiaries and (b) all
material lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a lien upon the property of the
Company or any of its Subsidiaries that could produce a material
adverse effect on the consolidated financial condition of the
Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings and in respect of which appropriate
reserves (in the good faith judgment of management of the
Company) are being maintained in accordance with GAAP.
Section l006. Maintenance of Properties.
The Company shall cause all material properties owned by
or leased to it or any Material Subsidiary of the Company and
necessary in the conduct of its business or the business of such
Material Subsidiary to be maintained and kept in normal
condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section shall prevent the
Company or any Material Subsidiary of the Company from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is, in the judgment of the Board of Directors of the
Company or the Material Subsidiary concerned, or of any officer
(or other agent employed by the Company or any Material
Subsidiary of the Company) of the Company or such Material
Subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company
or any Material Subsidiary of the Company and if such
discontinuance or disposal is not adverse in any material respect
to the Securityholders.
The Company shall provide or cause to be provided, for
itself and any Material Subsidiaries of the Company, insurance
(including appropriate self-insurance) against loss or damage of
the kinds customarily insured against by corporations similarly
situated and owning like properties in the same general areas in
which the Company or such Material Subsidiaries operate.
- 73-
<PAGE>
Section 1007. Limitation on Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume, or directly or indirectly
guarantee or in any other manner become directly or indirectly
liable for the payment of, any Indebtedness (including any
Acquired Indebtedness, but excluding Permitted Indebtedness)
unless, at the time of such event and after giving effect thereto
on a pro forma basis, the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately
preceding such event, taken as one period and calculated on the
assumption that such Indebtedness had been incurred on the first
day of such four-quarter period and on the assumption that, in
connection with the incurrence of any such Indebtedness, any
related acquisition (whether by means of purchase, merger or
otherwise) and any related repayment of Indebtedness also had
occurred on such date with the appropriate adjustments with
respect to such acquisition and repayment being included in
such pro forma calculation, would have been at least equal
to 1.75 to 1.0.
Section 1008. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions
payable in shares of its Qualified Capital Stock or in
options, warrants or other rights to purchase such
Qualified Capital Stock),
(ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any
Affiliate thereof (other than Capital Stock of (x) any
Subsidiary held by the Company or any of its
Majority-owned Subsidiaries and (y) any Majority-owned
Subsidiary of the Company) or any options, warrants or
other rights to acquire such Capital Stock,
(iii) make any principal payment on or redeem,
repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, any
Indebtedness of the Company which is pari passu with or
expressly subordinate in right of payment to the
Securities,
- 74-
<PAGE>
(iv) declare or pay any dividend or distribution on
any Capital Stock of any Subsidiary to any Person (other
than the Company or any of its Majority-owned
Subsidiaries) or purchase, redeem or otherwise acquire
or retire for value any Capital Stock of any Subsidiary
held by any Person (other than the Company or any of its
Majority-owned Subsidiaries), or
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate of the Company (other than
a Majority-owned Subsidiary of the Company) or make any
Investment (other than any Permitted Investment) in any
Person, including any Unrestricted Subsidiary
(such payments or other actions described in the foregoing
clauses (i) through (v), other than any such action that is a
Permitted Payment, are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted
Payment, if other than cash, as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing and (2) the
aggregate amount of all Restricted Payments (plus Permitted
Payments set forth in Sections 1008(b)(vi), (xi) and (xii) below)
declared or made after the date hereof (including Investments in
Unrestricted Subsidiaries pursuant to the provisions of
Section 1017) shall not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated
Adjusted Net Income of the Company accrued on a
cumulative basis during the period beginning on
October 31, 1993 and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Adjusted Net Income shall be a
loss, minus 100% of such loss), plus
(B) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company as capital
contributions to the Company, plus
(C) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors,
- 75-
<PAGE>
whose determination shall be conclusive), received
after the date hereof by the Company from the
issuance or sale (other than to any of its
Subsidiaries) of shares of Qualified Capital Stock of
the Company or warrants, options or rights to
purchase shares (other than issuances permitted by
clause (v) of the definition of Permitted Payments
contained in Section 1008(b)) of Qualified Capital
Stock of the Company, plus
(D) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received by the
Company (other than from any of its Subsidiaries) upon
the exercise of options, warrants or rights to purchase
shares of Qualified Capital Stock of the Company, plus
(E) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company from the issue or sale
of debt securities that have been converted into or
exchanged for Qualified Capital Stock of the Company,
together with the aggregate cash received by the
Company at the time of such conversion or exchange.
(b) Section 1008(a) to the contrary notwithstanding,
the Company and its Subsidiaries may take the following actions
(clauses (i) through (xii) being referred to as "Permitted
Payments") so long as, in the case of clauses (vi), (ix), (xi)
and (xii), no Default or Event of Default has occurred and is
continuing:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at such
declaration date such declaration complied with the
provisions of Section 1008(a) (in which event such
dividend shall be deemed to have been paid on such date
of declaration thereof for purposes of Section 1008(a));
(ii) the repurchase, redemption or other
acquisition or retirement of any shares of any class of
Capital Stock of the Company or any Affiliate of the
Company, in exchange for (including any such exchange
pursuant to the exercise of a conversion
- 76-
<PAGE>
right or privilege in connection with which cash is paid
in lieu of the issuance of fractional shares or scrip)
or out of the net cash proceeds of a substantially
concurrent issue and sale (other than to a Subsidiary)
of shares of Qualified Capital Stock of the Company;
(iii) payments by the Company to SMG-II pursuant to
the Tax Sharing Agreement;
(iv) dividends or distributions in an aggregate
amount not to exceed the amount of dividends or
distributions paid to the Company or its Subsidiaries by
Unrestricted Subsidiaries since the date of this
Indenture;
(v) the redemption, defeasance, repurchase or
acquisition or retirement for value (each, for purposes
of this clause, a "refinancing") of any Indebtedness of
the Company (other than Redeemable Capital Stock) which
is pari passu with or expressly subordinate in right
of payment to the Securities through the issuance of
(A) new Indebtedness of the Company or (B) shares of
Qualified Capital Stock of the Company or Newco, provided
that, with respect to clause (A), any such new Indebtedness
(1) has a principal amount that does not exceed the
principal amount so refinanced plus the amount of any
premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing, plus the
amount of expenses of the Company incurred in connection
with such refinancing; provided that for purposes of
this clause, the principal amount of any Indebtedness
shall be deemed to mean the principal amount thereof or,
if such Indebtedness provides for an amount less than
the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount
as of the date of determination, (2) has an Average Life
to Stated Maturity that is equal to or greater than the
remaining Average Life to Stated Maturity of the
Securities, (3) has a final Stated Maturity that exceeds
the final Stated Maturity of principal of the
Securities, and (4) is pari passu with or expressly
subordinated in right of payment to the Securities at
least to the same extent as the Indebtedness refinanced;
- 77-
<PAGE>
(vi) dividends, loans or advances by the Company to
Holdings or Newco to enable Holdings to pay cash
dividends on the Holdings Preferred Stock; provided that
on the date of payment of such dividend, the Company,
after giving pro forma effect to such dividend, loan or
advance, would be able to incur $1.00 of additional
Indebtedness under the provisions of Section 1007 (other
than Permitted Indebtedness), assuming a market rate of
interest on such Indebtedness;
(vii) the redemption, repurchase, defeasance or
acquisition or retirement for value of any Pari Passu
Indebtedness (other than the Subordinated Debentures);
provided that the Company shall redeem, pursuant to
the optional redemption provisions in Article Eleven and
the Securities, the principal amount of Securities bearing
the same proportion to the aggregate amount of such Pari
Passu Indebtedness being redeemed, repurchased, defeased
or acquired or retired for value that the aggregate outstanding
principal amount of such Securities bears to the aggregate
outstanding principal amount of such Pari Passu
Indebtedness (without giving effect to such
redemption, repurchase, defeasance, acquisition or
retirement);
(viii) the declaration or payment of any dividend or
distribution on any Capital Stock of any Subsidiary, or
the purchase, redemption, acquisition or retirement for
value of any Capital Stock of any Subsidiary; provided
that such declaration, payment, purchase, redemption,
acquisition or retirement is made pro rata among all
holders of such Capital Stock of such Subsidiary;
(ix) payments or other actions described in clauses
(i) through (v) of Section 1008(a) that would otherwise
be Restricted Payments in an aggregate amount not to
exceed $35,000,000;
(x) the dividend or distribution of the capital
stock of Plainbridge to Newco;
(xi) the repurchase of any Indebtedness of the
Company which is pari passu with or expressly
subordinate in right of payment to the Securities at a
purchase price not greater than 101% of the principal
amount of such Indebtedness in the event of a Change in
Control (as defined in this Indenture) pursuant to a
provision similar to
- 78-
<PAGE>
Section 1011; provided that prior to such repurchase the
Company has made the Change in Control Offer as provided
in such covenant and has repurchased all Securities
validly tendered for payment in connection with such
Change in Control Offer; and
(xii) the redemption, repurchase, defeasance or
acquisition or retirement for value of the Holdings
Intercompany Notes remaining outstanding following the
Recapitalization (other than a scheduled principal
payment, scheduled sinking fund payment or at maturity).
Except as provided in this Section 1008(b) and
Section 1008(a)(2), nothing in this Section 1008 limits or
restricts the making of any Permitted Payment and a Permitted
Payment will not be treated as a Restricted Payment.
(c) In computing Consolidated Adjusted Net Income of
the Company under clause (A) of Section 1008(a), (l) the Company
shall use audited financial statements for the portions of the
relevant period for which audited financial statements are
available on the date of determination and unaudited financial
statements and other current financial data based on the books
and records of the Company for the remaining portion of such
period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data
derived from the books and records of the Company that are
available on the date of determination. If the Company makes a
Restricted Payment which, at the time of the making of such
Restricted Payment would in the good faith determination of the
Company be permitted under the requirements of this Section 1008,
such Restricted Payment shall be deemed to have been made in
compliance with such provisions notwithstanding any subsequent
adjustments made in good faith to the Company's financial
statements affecting Consolidated Adjusted Net Income of the
Company for any period.
Section 1009. Limitation on Transactions with
Affiliates.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Company (other
than a wholly owned Subsidiary thereof) unless (i) such
transaction or series of transactions is or are on terms that are
no less favorable to the Company or such Subsidiary, as the case
may be, than those that could have been obtained at the time of
such transaction or transactions in a comparable transaction in
arm's-length dealings with an unaffiliated third party and (ii)
(A) with respect to any transaction or series of transactions
involving aggregate payments in excess of $1,000,000, but less
than $10,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or transactions
complies with clause (i) above and
- 79-
<PAGE>
(B) with respect to a transaction or series of transactions,
involving aggregate payments equal to or greater than
$10,000,000, (1) such transaction or transactions shall have
received the approval of a majority of the disinterested
directors of the Board of Directors of the Company if Plainbridge
is a party to such transaction or series of transactions or (2)
if Plainbridge is not a party to such transaction or series of
transactions, such transactions or series of transactions shall
have received either the approval of a majority of the
disinterested directors of the Board of Directors of the Company
or the Company shall deliver to the Trustee a written opinion of a
nationally recognized investment banking firm stating that such
transaction is fair to the Company from a financial point of
view; provided, however, that the foregoing restriction shall not
apply to (1) the payment of fees to Merrill Lynch Capital
Partners, Inc. or Merrill Lynch, Pierce, Fenner & Smith
Incorporated or any of their Affiliates for consulting,
investment banking or financial advisory services rendered by
such Person to the Company or any Subsidiary of the Company,
(2) the payment of reasonable and customary regular fees to
directors of the Company, Newco, SMG-II, Holdings or any of their
respective subsidiaries or parents who are not employees of any
of such Persons, (3) the Logistical Services Agreement and
transactions pursuant thereto and (4) the Spin-Off Agreements and
transactions pursuant thereto. For purposes of this Section
1009(a), any transaction or series of related transactions
between the Company or any Subsidiary and any Affiliate of the
Company that is approved as being on the terms required by clause
(i) in the prior sentence by a majority of the disinterested
directors of the Board of Directors of the Company shall be
deemed to be on terms as favorable as those that might be
obtained at the time of such transaction or series of
transactions in a comparable transaction in arm's-length dealings
with an unaffiliated third party, and thus shall be permitted
under this Section 1009(a).
(b) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, or in any way alter the terms
of the Intercompany Agreement, the Logistical Services Agreement
or the Spin-Off Agreements in a manner materially adverse to the
Company other than (i) by adding new Subsidiaries and (ii) in the
case of the Logistical Services Agreement and the Spin-Off
Agreements, any amendments or modifications that are approved by a
majority of the disinterested directors of the Board of Directors
of the Company.
- 80-
<PAGE>
Section 1010. Limitation on Liens.
The Company will not, and will not permit any Subsidiary
to, create, incur, affirm or suffer to exist any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated Indebtedness
(including any assumption, guarantee or other liability with
respect thereto by any Subsidiary) upon any property or assets
(including any intercompany notes) of the Company or any
Subsidiary owned on the date hereof or acquired after the date
hereof, or any income or profits therefrom, unless the Securities
are directly secured equally and ratably with (or prior to in the
case of Subordinated Indebtedness) the obligation or liability
secured by such Lien, and except for any Lien securing Acquired
Indebtedness created prior to the incurrence of such Indebtedness
by the Company or any Subsidiary, provided that any such Lien
only extends to the assets that were subject to such Lien
securing such Acquired Indebtedness prior to the related
acquisition by the Company or its Subsidiaries.
Section 1011. Purchase of Securities Upon Change
in Control.
(a) If there shall have occurred a Change in
Control, Securities shall be purchased by the Company, at the
option of the Holder thereof, in whole or in part in integral
multiples of $1,000, on a date which shall be a Business Day that
is not earlier than 45 days nor later than 60 days from the date
the Change in Control Notice referred to below is given to
Holders or such later date as may be necessary for the Company to
comply with requirements under the Exchange Act (such date, or
such later date, being the "Change in Control Purchase Date"), at
a purchase price in cash (the "Change in Control Purchase Price")
in an amount equal to 101% of the principal amount of such Securities,
plus accrued and unpaid interest (including any Defaulted Interest), if
any, to the Change in Control Purchase Date, subject to satisfaction
by or on behalf of the Holder of the requirements set forth in
Section 1011(c).
(b) Within 30 days following a Change in Control
and prior to the mailing of the Change in Control Notice to
Holders provided for in paragraph (c) below, the Company
covenants to either (1) repay in full all Indebtedness under the
Bank Credit Agreement and permanently reduce the commitments of
the lenders thereunder or offer to repay in full all such
Indebtedness and permanently reduce such commitments and repay
the Indebtedness and permanently reduce the commitment of each
lender who has accepted such offer or (2) obtain the requisite
consent under the Bank Credit Agreement to
- 81-
<PAGE>
permit the repurchase of the Securities as provided for in this
Section 1011. The Company shall first comply with the provisions
of this subsection (b) before it shall be required to repurchase
the Securities pursuant to this Section 1011, and any failure to
comply with this subsection (b) shall constitute a default of a
covenant for purposes of Section 501(c).
(c) Within 30 days after the occurrence of a
Change in Control, the Company shall give written notice of such
Change in Control (a "Change in Control Notice") and of its offer
(the "Change in Control Offer") to purchase Securities as
specified herein to the Trustee, and to each Holder of the
Securities at his address appearing on the Security Register, by
first-class mail, postage prepaid. The Trustee shall be under no
obligation to ascertain the occurrence of a Change in Control.
The Change in Control Notice shall contain all instructions and
materials necessary to enable such Holders to tender Securities,
shall include a form of Change in Control Purchase Notice to be
completed by the Holder and shall state:
(i) (A) the events causing the Change in Control
and the date such Change in Control is deemed to have
occurred for purposes of this Section 1011, and (B) a
description of any material developments in the
Company's business since the latest annual or quarterly
report filed with the Trustee pursuant to
Section 1018(c) or 1018(d) and, if material, any
appropriate pro forma financial information;
(ii) the date by which a Holder must give a Change
in Control Purchase Notice;
(iii) the Change in Control Purchase Price;
(iv) the Change in Control Purchase Date;
(v) that any Security not purchased will continue
to accrue interest;
(vi) that Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable
at the Change in Control Purchase Price and from and
after such date (unless the Company shall default in the
payment of the Change in Control Purchase Price) such
Securities shall cease to bear interest; and
(vii) the procedures a holder must follow to
exercise rights under this Section 1011 and a brief
- 82-
<PAGE>
description of those rights and the procedures for
withdrawing a Change in Control Purchase Notice.
(d) A Holder may exercise its rights specified in
Section 1011(a) upon (i) delivery to any Paying Agent a written
notice (a "Change in Control Purchase Notice") at any time on or
prior to one Business Day before the Change in Control Purchase
Date, stating (A) the certificate number of the Security that the
Holder will deliver to be purchased and (B) the portion of the
principal amount of the Security that the holder will deliver to
be purchased, which portion must be $1,000 or an integral
multiple thereof and (ii) delivery of such Security to such
Paying Agent at such office prior to, on or after the Change in
Control Purchase Date (together with all necessary endorsements),
such delivery being a condition to receipt by the Holder of the
Change in Control Purchase Price therefor. If a Holder has
elected to deliver to the Company for purchase a portion of a
Security, and if the principal amount of such portion is $1,000
or an integral multiple of $1,000, the Company shall purchase
such portion from the Holder thereof pursuant to this Section
1011. Provisions of this Indenture that apply to the purchase of
all of a Security also apply to the purchase of a portion of such
Security. Each Paying Agent shall promptly notify the Company of
the receipt by the former of any and all Change in Control
Purchase Notices and any and all written notices of withdrawal
thereof.
(e) Upon receipt by any Paying Agent of a Change in
Control Purchase Notice, the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall
(unless such Change in Control Purchase Notice is withdrawn
pursuant to Section 1011(j)) thereafter be entitled to receive
solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of the Business Day
following the Change in Control Purchase Date (provided the
conditions in Section 1011(d) have been satisfied) and the time
of delivery of such Security to the relevant Paying Agent at the
office of such Paying Agent by the Holder thereof in the manner
required by Section 1011(d).
(f) On or prior to the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
in same day funds (or New York Clearing House funds if such
deposit is made prior to the Change in Control Purchase Date)
sufficient to pay the Change in Control Purchase Price of, and
(except if the Change in Control Purchase Date shall be an Interest
- 83 -
<PAGE>
Payment Date) accrued interest on, all the Securities or portions
thereof which are to be purchased on that date.
(g) Upon a Change in Control Purchase Notice having
been given as aforesaid, Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable at the
Change in Control Purchase Price and from and after such date
(unless the Company shall default in the payment of the Change in
Control Purchase Price) such Securities shall cease to bear
interest. Upon surrender of any such Security for purchase in
accordance with the foregoing provisions, such Security shall be
paid by the Company at the Change in Control Purchase Price;
provided, however, that installments of interest whose Stated
Maturity is on or prior to the Change in Control Purchase Date
shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant
Regular Record Dates according to the terms and the provisions of
Section 307. If any Security tendered for purchase shall not be
so paid upon surrender thereof, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from
the Change in Control Purchase Date at the rate borne by such
Security.
(h) Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such
Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in a principal amount
equal to, and in exchange for, the portion of the principal
amount of the Security so surrendered that is not purchased.
(i) The Company shall comply with the applicable tender
offer rules, including Rule l4e-l under the Exchange Act, in
connection with a Change in Control Offer.
(j) A Change in Control Purchase Notice may be
withdrawn before or after delivery by the Holder to the relevant
Paying Agent at the office of such Paying Agent of the Security
to which such Change in Control Purchase Notice relates, by means
of a written notice of withdrawal (by facsimile transmission or
letter) received by such Paying Agent at such office not later
than one Business Day prior to the Change in Control Purchase
Date, specifying, as applicable:
- 84 -
<PAGE>
(i) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(ii) the principal amount of the Security with
respect to which such notice of withdrawal is being
submitted; and
(iii) the principal amount, if any, of the Security
that remains subject to the original Change in Control
Purchase Notice and that has been or will be delivered
for purchase by the Company.
A written notice of withdrawal may be in the form set
forth in the preceding paragraph. Each Paying Agent will
promptly return to the prospective Holders thereof any Securities
with respect to which a Change in Control Purchase Notice has
been withdrawn in compliance with this Indenture.
Section 1012. Restrictions on Preferred Stock of
Subsidiaries.
The Company will not permit any of its Subsidiaries to
issue any Preferred Stock (other than to the Company or a
Majority-owned Subsidiary of the Company), or permit any Person
(other than the Company or a Majority-owned Subsidiary of the
Company) to own or hold an interest in any Preferred Stock of any
such Subsidiary previously held by the Company or a
Majority-owned Subsidiary of the Company unless such Subsidiary
would be entitled to incur Indebtedness pursuant to the
provisions of Section 1007 in the aggregate principal amount
equal to the aggregate liquidation value of such Preferred Stock
assuming a market rate of interest (as determined by the Company)
for such Preferred Stock as of the date of issuance or transfer.
Section 1013. Limitations on Issuances of Guarantees of
Indebtedness.
The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become
liable with respect to any Pari Passu Indebtedness or
Subordinated Indebtedness, unless such Subsidiary simultaneously
executes and delivers a supplemental indenture hereto providing
for a guarantee of the Securities; provided that, in the case of a
Subsidiary's guarantee, assumption or other liability with
respect to Subordinated Indebtedness, such guarantee, assumption
or other liability shall be subordinated to such Subsidiary's
- 85 -
<PAGE>
guarantee of the Securities to the same extent as such Subordinated
Indebtedness is subordinated to the Securities; and provided further
that this Section 1014 shall not be applicable to any guarantee, assumption
or other liability of any Subsidiary of the Company that (i) existed at the
time such Person became a Subsidiary of the Company and (ii) was not
incurred in connection with, or in contemplation of, such Person
becoming a Subsidiary of the Company. Any such guarantee of the
Securities by a Subsidiary shall provide by its terms that it
shall be automatically and unconditionally released and
discharged upon either (A) the release or discharge of such
guarantee of such Pari Passu Indebtedness or Subordinated
Indebtedness, as the case may be, except a discharge by or as a
result of payment under such guarantee or (B) any sale, exchange
or transfer, to any Person not an Affiliate of the Company, of
all the Company's stock in, or all or substantially all the
assets of, such Subsidiary, which sale, exchange or transfer is
made in compliance with the applicable provisions of this
Indenture.
Section 1014. Restriction on Transfer of Assets.
The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its Subsidiaries,
except for (i) sales, conveyances, transfers or other
dispositions of assets or property acquired by the Company after
the date hereof; (ii) sales, conveyances, transfers or other
dispositions of Existing Assets (a) made in the ordinary course
of business; (b) made outside the ordinary course of business
with a net book value that, when aggregated with all other such
transfers by the Company since the date of this Indenture, less
the net book value of Existing Assets transferred to the Company
from its Subsidiaries, would not exceed 10% of the Consolidated
Assets of the Company; or (c) to any Subsidiary if such
Subsidiary simultaneously with such transfer executes and
delivers a supplemental indenture hereto providing for the
guarantee of payment of the Securities by such Subsidiary, which
guarantee shall be subordinated to any guarantee of such
Subsidiary of Senior Indebtedness of the Company and shall be
subordinated to any other Indebtedness of such Subsidiary (which
is not subordinated to any other Indebtedness of such Subsidiary,
in each case to the same extent as the Securities are
subordinated to Senior Indebtedness of the Company under this
Indenture and (iii) sales, conveyances, transfers or other
dispositions of Existing Assets made pursuant to the Spin-Off.
Notwithstanding the foregoing, any such guarantee of a Subsidiary
of the Securities shall provide by its terms that it shall be
automatically and unconditionally released and discharged
- 86 -
<PAGE>
(i) on the date that the net book value of the Existing Assets
held by the Company is greater than 90% of Consolidated Assets or
(ii) upon any sale, exchange or transfer to any Person not an
Affiliate of the Company of all of the Company's stock in, or all
or substantially all the assets of, such Subsidiary, which sale,
exchange or transfer is made in compliance with the terms of this
Indenture.
Section 1015. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any
Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any
kind, on the ability of any Subsidiary to (a) pay dividends or
make any other distribution on its Capital Stock, (b) pay any
Indebtedness owed to the Company or any Subsidiary, (c) make
loans or advances to the Company or any Subsidiary, or
(d) transfer any of its property or assets to the Company or any
Subsidiary, except (i) any encumbrance or restriction pursuant to
an agreement in effect at or entered into on the date hereof;
(ii) any encumbrance or restriction, with respect to a Subsidiary
that is not a Subsidiary of the Company on the date hereof, in
existence at the time such Person becomes a Subsidiary of the
Company or created on the date it becomes a Subsidiary; (iii) any
encumbrance or restriction on the ability of any Subsidiary whose
assets consist substantially only of fee or leasehold interests
in real property and improvements thereon to transfer any such
interests which are acquired after the date hereof or any
unimproved real property acquired on or prior to the date hereof
to the Company or any Subsidiary, which encumbrance or
restriction is required by a lender to, or purchaser of any
indebtedness of, such Subsidiary in connection with a financing
or refinancing permitted hereunder; and (iv) any encumbrance or
restriction pursuant to any agreement that extends, refinances,
renews or replaces any agreement containing any of the
restrictions described in the foregoing clauses (i)-(iii),
provided that the terms and conditions of any such restrictions
are not materially less favorable to the Holders of the
Securities than those under or pursuant to the agreement
extended, refinanced, renewed or replaced.
Section 1016. Limitation on Unrestricted Subsidiaries.
The Company will not make, and will not permit any of
its Subsidiaries to make, any Investments in Unrestricted
- 87 -
<PAGE>
Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments
then permitted to be made pursuant to Section 1008. Any
Investments in Unrestricted Subsidiaries permitted to be made
pursuant to this Section 1016 (i) will be treated as the payment
of a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or
property.
Section 1017. Limitation on Other Senior Subordinated
Indebtedness.
The Company will not create, incur, assume, guarantee or
in any other manner become liable with respect to any
Indebtedness (other than the Securities) that is subordinate in
right of payment to any Senior Indebtedness unless such
Indebtedness is also pari passu with, or subordinate in right of
payment to, the Securities, pursuant to subordination provisions
substantially similar to those contained in Article Thirteen.
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial Statements.
(a) The Company will deliver to the Trustee, within 120
days after the end of each fiscal year ending after the date
hereof, a brief certificate of its principal executive officer,
principal financial officer or principal accounting officer
stating whether, to such officer's knowledge, the Company is in
compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1018,
such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
(b) If a Default has occurred and is continuing, or if
the Trustee, any Holder or the trustee for or the holder of any
other evidence of Indebtedness of the Company (other than
Indebtedness in the aggregate principal amount of less than
$50,000,000) gives any notice or takes any other action with
respect to a claimed Default, the Company shall deliver to the
Trustee an Officers' Certificate specifying such Default, notice
or other action within 5 Business Days of its occurrence.
(c) The Company shall supply without cost to each
Holder of the Securities, and file with the Trustee within l5
days after the Company is required to file the same with the
Commission, copies of the annual reports and quarterly reports
and of the information, documents and other reports which the
Company may be required to file with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act.
- 88 -
<PAGE>
(d) If the Company is not required to file with the
Commission such reports and other information referred to in
Section 1018(c), the Company shall furnish without cost to each
Holder of the Securities and file with the Trustee (i) within 105
days after the end of each fiscal year, annual reports containing
the information required to be contained in Items 1, 2, 3, 5, 6,
7, 8, 9, 10, 11, 12 and 13 of Form 10-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in comparable items of any successor form, (ii)
within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, quarterly reports containing the
information required to be contained in Form 10-Q promulgated
under the Exchange Act, or substantially the same information
required to be contained in any successor form and (iii) promptly
from the time after the occurrence of an event required to be
therein reported, such other reports containing information
required to be contained in Form 8-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in any successor form. The Company shall also make
such reports available to prospective purchasers of the
Securities, securities analysts and broker-dealers upon their
request.
Section 1019. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any covenant or condition set forth in Sections 1007
through 1018 (other than Section 1011) if, before or after the
time for such compliance, the Holders of not less than a majority
in aggregate principal amount of the Securities at the time
Outstanding shall, by Act of such Holders, waive such compliance
in such instance with such covenant or condition, but no such
waiver shall extend to or affect such covenant or condition
except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed at the election of the
Company, at any time, as a whole or in part subject to the
- 89 -
<PAGE>
conditions and at the Redemption Prices specified in the form of
Security, together with accrued interest to the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company
or otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board
Resolution. In case of any redemption at the election of the
Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities to be
redeemed.
Section 1104. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be
selected not more than 60 days and not less than 30 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, either pro rata,
by lot or, by any other method the Trustee shall deem fair and
reasonable, and the amounts to be redeemed may be equal to $1,000
or any integral multiple thereof.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed or
to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
Section ll05. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 21 nor more than 60
- 90 -
<PAGE>
days prior to the Redemption Date, to each Holder of Securities
to be redeemed, at his address appearing in the Security
Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a Security
to be redeemed in part, the principal amount) of the
particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or
portion thereof, and that (unless the Company shall default
in payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(g) the CUSIP number, if any, relating to such
Securities; and
(h) in the case of a Security to be redeemed in part,
the principal amount of such Security to be redeemed and that
after the Redemption Date upon surrender of such Security,
new Security or Securities in the aggregate principal amount
equal to the unredeemed portion thereof will be issued.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at its
request, by the Trustee in the name and at the expense of the
Company.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold
- 91 -
<PAGE>
in trust as provided in Section 1003) an amount of money in same
day funds (or New York Clearing House funds if such deposit is
made prior to the applicable Redemption Date) sufficient to pay
the Redemption Price of, and (except if the Redemption Date shall
be an Interest Payment Date) accrued interest on, all the
Securities or portions thereof which are to be redeemed on that
date.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal thereof
(and premium, if any, thereon) shall, until paid, bear interest
from the Redemption Date at the rate borne by such Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall
be surrendered at the office or agency of the Company maintained
for such purpose pursuant to Section 1002 (with, if the Company,
the Security Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so
surrendered.
- 92 -
<PAGE>
ARTICLE TWELVE
[INTENTIONALLY OMITTED]
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if
any, and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the
prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness (including any interest accruing after the
occurrence of an Event of Default under Section 501(f) or (g)).
This Article Thirteen shall constitute a continuing
offer to all persons who become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit
of the holders of Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event:
(1) the holders of all Senior Indebtedness shall be
entitled to receive payment in full, in cash or cash
equivalents, of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision shall
be made for such payment in cash or cash equivalents, before
the Holders of the Securities are entitled to receive any
- 93 -
<PAGE>
payment on account of principal of (or premium, if any)
or interest on the Securities; and
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but
for the provisions of this Article Thirteen, including
any such payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of the Securities (except, so long as the effect
of this parenthetical clause is not to cause the
Securities to be treated in any case or proceeding or
similar event described in Subsection (a), (b) or (c) of
this Section 1302 as part of the same class of claims as
the Senior Indebtedness or any class of claims on a
parity with or senior to the Senior Indebtedness, for
any such payment or distribution (x) authorized by an
order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of
the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law, or
(y) of securities that (A) are unsecured (except to the extent
the Securities are secured), (B) have an Average Life to Stated
Maturity and final maturity which are no shorter than
the Average Life to Stated Maturity of the Securities or
any securities issued to the holders of the Senior
Indebtedness under the Bank Credit Agreement pursuant to
a plan of reorganization or readjustment, (C) are
subordinated, to at least the same extent as the
Securities, to the payment of all Senior Indebtedness
then outstanding and (D) are not guaranteed by any
Subsidiary of the Company (except to the extent the
Securities are so guaranteed)), shall be paid by the
liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of Senior Indebtedness or their
Representative or Representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any
of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account
of the principal of, and premium, if any, and interest on, and
other amounts due or in connection with, the Senior Indebtedness
held or represented by each, to the extent necessary to make
- 94 -
<PAGE>
payment in full, in cash or cash equivalents, of all
Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of
any Security shall have received any such payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities,
including any such payment or distribution which may be
payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to
the payment of the Securities, before all Senior
Indebtedness is paid in full, in cash or cash
equivalents, then and in such event such payment or
distribution shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company
for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, in cash or cash
equivalents, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another corporation upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by
such consolidation or into which the Company is merged or the
corporation which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case
may be, shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions set
forth in Article Eight.
Section 1303. No Payment When Specified Senior
Indebtedness in Default.
(a) (i) In the event of and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Specified Senior Indebtedness beyond any
- 95 -
<PAGE>
applicable grace period with respect thereto, or (ii) in the
event that any other event of default with respect to any
Specified Senior Indebtedness shall have occurred and be
continuing and shall have resulted in such Specified Senior
Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
or (b) in the event that any event of default (other than a
default described in clause (a)) with respect to any Specified
Senior Indebtedness shall have occurred and be continuing
permitting the holders of such Specified Senior Indebtedness (or a
trustee on behalf of such holders) to declare such Specified
Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, then no payment
shall be made by the Company on account of the principal of (or
premium, if any) or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities
(x) in case of any event of default described in subclause (i) of
clause (a), or an event of default described in subclause (ii) of
clause (a) resulting in an acceleration as specified in clause
(a), unless and until such payment event of default shall have
been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded or annulled or the holders
of such Specified Senior Indebtedness or their agents have waived
the benefits of this Section, or (y) in case of any event of
default specified in clause (b), from the earlier of the date the
Company or the Trustee receives written notice of such event of
default (which notice requests that no such payment be made) from
the agent with respect to any such event of default under the
Bank Credit Agreement or any other Representative of a holder of
Specified Senior Indebtedness with respect to any such event of
default under such specified Senior Indebtedness until the
earlier of (1) 179 days after such date and (2) the date, if any,
on which the Specified Senior Indebtedness to which such event of
default relates is discharged or such event of default is waived
by the holders of such Specified Senior Indebtedness (including,
if any Indebtedness under the Bank Credit Agreement is
outstanding, lenders under the Bank Credit Agreement) or
otherwise cured (provided that further written notice relating to
the same or any other event of default specified in clause (b)
above with respect to any Specified Senior Indebtedness received
by the Company or the Trustee within 12 months after such receipt
shall not be effective for purposes of this clause (y)).
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over
and delivered forthwith to the Company.
- 96 -
<PAGE>
The provisions of this Section shall not apply to any
payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company,
at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under
the conditions described in Section 1303, from making payments at
any time of principal of (and premium, if any) or interest on the
Securities.
Section 1305. Subrogation to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full, in cash or cash
equivalents, of all Senior Indebtedness, the Holders of the
Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness of the Company to
the same extent as the Securities are subordinated and which is
entitled to like rights of subrogation) to the rights of the
holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any)
and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
Section 1306. Provisions Solely to Define Relative
Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the
- 97 -
<PAGE>
Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
express limitations set forth in Article Five and to the rights,
if any, under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to
in Section 1302, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment
prohibited by such Section.
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or
- 98 -
<PAGE>
more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice,
the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at
least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to
such date.
Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the
event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate
- 99 -
<PAGE>
in such payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is
not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment.
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 602, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending,
or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article.
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
Section 1312. Article Applicable to Paying Agents.
In case at any time Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the
- 100 -
<PAGE>
Trustee; provided, however, that Section 1311 shall not apply to
the Company or any Affiliate of the Company if it or such Affiliate
acts as Paying Agent.
Section 1313. Rescission.
The provisions of this Article Thirteen shall continue to
be effective or be reinstated, as the case may be, if at any time
any payment in respect of any Senior Indebtedness is rescinded or
must otherwise be returned by the holder thereof upon the
insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
Section 1314. Application by Trustee of Assets
Deposited With It.
Any cash or U.S. Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with
Section 1401 shall be for the sole benefit of the Holders and
shall not be subject to the subordination provisions of this
Article Thirteen.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401. Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
Section 1402 or Section 1403 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in
this Article Fourteen.
Section 1402. Defeasance and Discharge.
Upon the Company's exercise under Section l401 of the
option applicable to this Section 1402, the Company shall be
deemed to have been discharged from its obligations with respect
to all Outstanding Securities on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented
by the Outstanding Securities, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this
- 101 -
<PAGE>
Indenture referred to in (A) and (B) below, and to have satisfied
all its other obligations under such Securities and this
Indenture, including its obligations under the covenants
contained in Article Thirteen (and the Trustee, on demand of and
at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder:
(A) the rights of Holders of Outstanding Securities to receive
solely from the trust fund described in Section 1404 and as more
fully set forth in such Section, payments in respect of the
principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the
Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section
1403 with respect to the Securities.
Section 1403. Covenant Defeasance.
Upon the Company's exercise under Section 1401 of the
option applicable to this Section 1403, the Company shall be
released from its obligations under the covenants contained in
Articles Eight and Thirteen and in Sections 1007 through 1018
with respect to the Outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "Outstanding" for all other
purposes hereunder (it being understood that such Securities
shall not be deemed Outstanding for financial accounting
purposes). For this purpose, such covenant defeasance means
that, with respect to the Outstanding Securities, the Company may
omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(c)
or Section 501(h), but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected
thereby. In addition, upon the Company's exercise under Section
1401 of the option applicable to Section 1403, Sections 501(c)
- 102 -
<PAGE>
through 501(h) (other than Sections 501(f) and (g)) shall not
constitute Events of Default.
Section 1404. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of
either Section 1402 or Section 1403 to the Outstanding
Securities:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such
Securities, (A) cash in U.S. Dollars in an amount, or
(B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not
later than one day before the due date of any payment,
cash in U.S. Dollars in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee,
to pay and discharge and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge, the
principal of (and premium, if any) and interest on the
Outstanding Securities on the Stated Maturity of such
principal or installment of principal (and premium, if
any) or interest and; provided that the Trustee shall
have been irrevocably instructed to apply such money or
the proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this
purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of
America for the timely payment of which its full faith
and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States
of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the
- 103 -
<PAGE>
Securities Act of 1933, as amended), as custodian with
respect to any such U.S. Government Obligation or a
specific payment of principal of or interest on any such
U.S. Government Obligation held by such custodian for
the account of the holder of such depository receipt;
provided that (except as required by law) such custodian
is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from
any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of
principal of or interest on the U.S. Government
Obligation evidenced by such depository receipt;
(2) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Securities
will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have been
the case if such defeasance had not occurred;
(3) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect
that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had
not occurred;
(4) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Subsection 501(f)
or 501(g) is concerned, at any time during the period
ending on the 91st day after the date of such deposit
(it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
- 104 -
<PAGE>
(5) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other material
agreement or instrument to which the Company is a party
or by which it is bound;
(6) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Officers' Certificate stating that the
deposit made by the Company pursuant to its election
under Section 1402 or 1403 was not made by the Company
with the intent of preferring the Holders over other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that all
conditions precedent provided for relating to either the
defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be) have been
complied with as contemplated by this Section 1404.
On and after the date the conditions set forth above are
satisfied, the United States dollars or U.S. Government
Obligations so deposited shall not be subject to the rights of
the holders of Senior Indebtedness pursuant to the provisions of
Article Thirteen.
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Section 1404 in respect
of the Outstanding Securities shall be held in trust and applied
by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to Article Thirteen.
- 105 -
<PAGE>
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
cash or U.S. Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 1404(l)), are in excess of the
amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 1406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or U.S. Government Obligations in
accordance with Section 1402 or 1403, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the
case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 1402
or 1403, as the case may be; provided, however, that, if the
Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money
held by the Trustee or Paying Agent.
* * * * *
- 106 -
<PAGE>
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
PATHMARK STORES, INC.
By: /s/ Anthony Cuti
Title: President and Chief Financial
Officer
Attest: /s/
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK
By: /s/ James E. Logan
Title: Vice President
Attest: /s/ Cynthia Chaney
Title: Assistant Vice President
- 107 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 25th day of October, 1993, before me
personally came James E. Logan, to me known, who, being by me
duly sworn, did depose and say that s/he resides at Brooklyn,
New York; that s/he is Vice President of PATHMARK
STORES, INC., one of the corporations described in and which
executed the above instrument; that s/he knows the corporate seal
of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that s/he
signed her/his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Allison Blunnie
-------------------
Notary Public
- 108 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of October, 1993, before me
personally came Anthony Cuti, to me known, who, being duly
sworn, did depose and say that s/he resides at Saddle River,
New Jersey; that s/he is President of UNITED
STATES TRUST COMPANY OF NEW YORK, one of the corporations
described in and which executed the above instrument; that s/he
knows the corporate seal of such corporation; that the seal
affixed to said instrument is such corporate seal; that it was so
affixed pursuant to authority of the Board of Directors of such
corporation; and that s/he signed her/his name thereto pursuant
to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
-------------------
Notary Public
- 109 -
<PAGE>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<TABLE>
<S> <C>
(000's OMITTED)
INDUSTRIAL REVENUE BONDS
(See details on page 2) $ 6,375
OTHER DEBT (PRIMARILY MORTGAGES)
(See details on page 2) 41,804
-------
$48,179
=======
Holdings Intercompany Note related to the Holdings Subordinated Notes in an aggregate principal amount
equal to or less than $3,361,000.
Holdings Intercompany Note related to the 13-1/8 Junior Subordinated Discount Debentures due 2003 of
Holdings in an aggregate principal amount equal to or less than $1,800,000.
</TABLE>
S-I-1
<PAGE>
<TABLE><CAPTION>
Schedule I (cont'd)
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<S> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS RATE DATE (IN THOUSANDS)
------------------------ -------- -------- --------------
Massachusetts Mutual Life 9.0% 1999 $ 243
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life 7.0 1994 1,207
Insurnace Company
200 Berkley Street
Boston, MA 02117
Re: Bridge Stuart Properties
Massachusetts Mutual Life 7.0-9.0 1993-99 480
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Pennsylvania Stuart Properties
Connecticut General Life 10.2-10.4 1997-99 855
Insurance Company
Hartford, CT 06115
Re: Jersey Stuart Properties
Prudential Insurance Company 10.5 1998 37,278
of America
10 Rockefeller Center, 15th Fl.
New York, NY
Re: SGC Mortgaged Properties
Delaware Economic Development 10.875 2003 3,000
Authority
c/o Philadelphia National Bank
P.O. Box 7010
Philadelphia, PA
Re: Lancaster Pike IRB
Industrial Revenue Bonds 10.6 2003 3,375
c/o Philadelphia National Bank
P.O. Box 7918
Philadelphia, PA
Re: Schillington IRB
Jacqueline Nallitt 11.0 1999 276
1688 Victory Blvd.
Staten Island, NY
Re: Forrest Ave. Mall Store
Mt. Vernon Urban Renewal Agency 8.0 1995 670
9 South First Ave., 9th Fl.
Mt. Vernon, NY 10550
Re: Mt. Vernon Development
AFCO 5.5 1994 795
900 Lanidex Plaza
Parsippany, NJ 07054
Re: Insurance Policy Premium ______
LONG TERM DEBT $48,179
=======
</TABLE>
S-I-2
<PAGE>
<TABLE><CAPTION>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING LIENS
----------------------
The Indebtedness listed hereon is secured only by mortgages on the properties listed opposite such
Indebtedness.
<S> <C> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
Massachusetts Mutual Life Pathmark of Hamilton 9.0% 1999 $ 243
Insurance Company 2735 S. Broad Street
1295 State Street Hamilton Township, NJ 08610
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life Pathmark of Inwood 7.0% 1994 362
Insurance Company 410 W. 207th Street
200 Berkley Street New York, NY 10034
Boston, MA 02117
Re: Bridge Stuart Properties Pathmark & Rickel of 511
Edgewater Park
2110 Rt. 130 & Wood Lane Rd.
Beverly, NJ 08010
Pathmark of Ivy Hill .344
1331 Ivy Hill Road
Springfield Township
Philadelphia, PA 19150
Massachusetts Mutual Life Former Pathmark of Whitaker 7.0-9.0 1993-99 394
Insurance Company 5520 Whitaker Avenue
1295 State Street Philadelphia, PA 19124
Springfield, MA 01101
Re: Pennsylvania Stuart Franklin Township Gas
Properties 673 Somerset Street
Somerset, NJ 08873
Paramus Gas 34
639 Route 17 South
Paramus, NJ 07652
Fairless Hills Gas 28
Route 1 and Atlantic Ave.
Fairless Hills, PA 19030
Connecticut General Life Pathmark of Belmont 10.2-10.4 1997-99 855
Insurance Company 115 Belmont Avenue
Hartford, CT 06115 Belleville, NJ 07109
Re: Jersey Stuart
Properties
Prudential Insurance Company Pathmark of Upper Darby 10.5 1998 1,710
of America 421 S. 69th Street
10 Rockefeller Center, Upper Darby, PA 19082
15th Fl.
New York, NY
Re: SGC Mortgaged Properties Pathmark & Rickel of 4,355
Glenolden
140 N. McDade Blvd.
Glenolden, PA 19036
Pathmark & Rickel of 3,078
Shillington
243A W. Lancaster Avenue
Shillington, PA 19607
</TABLE>
S-I-3
<PAGE>
<TABLE><CAPTION>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Prudential Insurance Company Pathmark of Willow Grove 4,450
of America (continued) 2545 Moreland Road
Willow Grove, PA 19090
Pathmark of Lancaster Pike 2,018
3901 Lancaster Pike
Wilmington, DE 19805
Pathmark & Rickel of East 9,633
Brunswick
50 Race Track Road
East Brunswick, NJ 08615
Rickel of Forrest Avenue 3,135
1520 Forrest Avenue
Staten Island, NY 10302
Rickel of Johnson City 2,337
540 Harry L. Drive
Johnson City, NY 13790
Pathmark Drug of Danbury 10.5 1996 2,200
100 Danbury - Newtown Road
Danbury, CT 06810
Purity Supreme Store 3,762
3375 Berlin Turnpike
Newington, CT 06111
Jacqueline Nallitt Pathmark of Forrest 11.0 1999 276
1688 Victory Blvd. Avenue
Staten Island, NY 1351 Forrest Avenue
Re: Forrest Ave. Mall Store Staten Island, NY 10302
Mt. Vernon Urban Renewal Agency Pathmark Development 8.0 1995 670
9 South First Ave., 9th Fl. One Pathmark Plaza
Mt. Vernon, NY 10550 Mt. Vernon, NY 10550
Re: Mt. Vernon Development
_______
$41,009
=======
</TABLE>
S-I-4
<PAGE>
APPENDIX A
[Form of Intercompany Agreement]
[Indebtedness of the Company or any Majority-owned
Subsidiary to any one or the other of them will qualify
as Permitted Indebtedness if, and only if, such
Indebtedness is made pursuant to and is evidenced
by an agreement in the form of a promissory
note in substantially the form as follows:]
$ , 19
Evidences of all loans or advances ("Loans") hereunder
shall be reflected on the grid attached hereto. FOR VALUE
RECEIVED, , a corporation (the
"Maker"), HEREBY PROMISES TO PAY ON DEMAND to the order of
(the "Holder") the principal sum of the aggregate
unpaid principal amount of all Loans (plus accrued interest
thereon) at any time and from time to time made hereunder.
All capitalized terms used herein that are defined in,
or by reference in, the Indenture between Pathmark Stores, Inc.
and United States Trust Company of New York, trustee, dated as of
, 1993 (the "Indenture"), have the meanings assigned to
such terms therein, or by reference therein, unless otherwise
defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01. Not Forgivable. Unless the Maker of the
Loan hereunder is the Company, the Holder may not forgive any
amounts owing under this Intercompany Note.
Section 1.02. Interest; Prepayment. (a) The interest
rate ("Interest Rate") on any Loan shall be a rate per annum
reflected on the grid attached hereto.
(b) The interest, if any, payable on each of the Loans
shall accrue from the date such Loan is made and shall be payable
upon demand of the Holder.
A-1
<PAGE>
(c) If the principal or accrued interest, if any, on
the Loans is not paid on the date demand is made, interest on the
unpaid principal and interest will accrue at a rate equal to the
Interest Rate, if any, plus 1% per annum from maturity until the
principal and interest on such Loans are fully paid.
(d) Any amounts owed hereunder may be prepaid at any
time by the Maker.
Section 1.03. Subordination. All Loans made to the
Company shall be subordinated in right of payment to the payment
and performance of the obligations of the Company and any
Subsidiary under the Indenture, the Securities, and any other
Indebtedness ranking senior to or pari passu with the Securities,
including, without limitation, any Senior Indebtedness; provided
that, with respect to a Subsidiary in any specific instance, such
Subsidiary is also an obligor under the Indenture, the Securities
or such other senior or pari passu Indebtedness, as the case may
be, whether as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If, after the date of
issuance of this Loan an Event of Default has occurred under the
Indenture, then (x) in the event the Maker is not the Company and
not a Subsidiary that is also an obligor under the Indenture or
the Securities (in the case where the Holder is not the Company),
all amounts owing under the Loans hereunder shall be immediately
due and payable (whether or not demand has been made) to the
Holder, (y) in the event the Maker is the Company, the amounts
owing under the Loans hereunder shall not be payable and (z) in
the event the Maker is a Subsidiary that is also an obligor under
the Indenture or the Securities and the Holder is not the Company
or another Subsidiary that is also an obligor under the Indenture
or the Securities, the amounts owing under the Loans hereunder
shall not be due and payable; provided, however, that, if such
Event of Default or acceleration has been waived, cured or
rescinded, such amounts shall no longer be due and payable in the
case of clause (x), and such amounts may be paid in the case of
clauses (y) and (z). If the Holder is a Subsidiary, then the
Holder hereby agrees that if it receives any payments or
distributions on any Loan from the Company, or from a Subsidiary
that is also an obligor under the Indenture or the Securities,
which payments or distributions, pursuant to clause (y) or (z) of
the prior sentence, are not payable after any Event of Default
has
A-2
<PAGE>
occurred, is continuing and has not been waived, cured or
rescinded, such Holder will pay over and deliver forthwith to the
Company or such Subsidiary, as, the case may be, all such
payments and distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement, or consent to depart
therefrom is permitted at any time for any reason, except with
the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities.
Section 3.02. Assignment. No party to this Agreement
may assign, in whole or in part, any of its rights and
obligations under this Agreement, except to its legal
successor-in-interest.
Section 3.03. Third Party Beneficiaries. The Holders
of the Securities or any other Indebtedness ranking pari passu
with, or senior to, the Securities including, without limitation,
any Senior Indebtedness, shall be third party beneficiaries to
this Agreement and shall have the right to enforce this Agreement
against the Company and the Subsidiaries.
Section 3.04. Headings. Article and Section headings
in this Agreement are included for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
Section 3.05. Entire Agreement. This Agreement sets
forth the entire agreement of the parties with respect to its
subject matter and supersedes all previous understandings,
written or oral, in respect thereof.
Section 3.06. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
Section 3.07. Waivers. The Maker hereby waives
presentment, demand for payment, notice of protest and all other
demands and notices in connection with the delivery, acceptance,
performance or enforcement hereof.
By:
A-3
<PAGE>
GRID
Amount Interest Rate
Date of of on the Notation
Advance Advance Advance Made By
<PAGE>
Appendix B-1
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 1, 1992 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture
dated as of , 1993 between the Lender and the
Trustee and the 11-5/8% Subordinated Notes due 2002 issued
thereunder (such Indenture and Notes, as supplemented, amended,
modified or waived from time to time in accordance with the terms
thereof being the "Lender Indenture" and "Lender Subordinated
Notes", respectively), together with interest on such principal
sum from the date hereof at the times and in the amounts provided
in the Lender Indenture and the Lender Subordinated Notes for the
payment of interest thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of ,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 11-5/8% Subordinated Notes due 2002
(the "Borrower Indenture"), (ii) the Borrower's 11-5/8%
Subordinated Notes due 2002 (the "Borrower Subordinated Notes")),
(iii) the Subordinated Debentures and the Deferred Coupon Notes
(as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
SUPERMARKETS GENERAL CORPORATION
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-1-2
<PAGE>
Appendix B-2
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 25, 1987 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as amended and restated as of May 15, 1992 and as
supplemented as of June 15, 1992 and the 12-5/8% Subordinated
Debentures due 2002 issued thereunder (such Indenture and Notes,
as supplemented, amended, modified or waived from time to time in
accordance with the terms thereof being the "Lender Indenture"
and "Lender Subordinated Debentures", respectively), together
with interest on such principal sum from the date hereof at the
times and in the amounts provided in the Lender Indenture and the
Lender Subordinated Debentures for the payment of interest
thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of ,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 12-5/8% Subordinated Debentures due
2002 (the "Borrower Indenture"), (ii) the Borrower's 12-5/8%
Subordinated Debentures due 2002 (the "Borrower Subordinated
Notes")), (iii) the Subordinated Notes and the Deferred Coupon
Notes (as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
SUPERMARKETS GENERAL CORPORATION
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-2-2
DRAFT - 9/15/93
8282e/8283e
(0191L/0192L)
PATHMARK STORES, INC.,
Issuer,
and
NATIONSBANK OF GEORGIA, NATIONAL ASSOCIATION,
Trustee
INDENTURE
Dated as of October 26, 1993
Junior Subordinated Deferred Coupon Notes
due 2003
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 26, 1993*
Trust Indenture Indenture
Act Section Section
Sec. 310(a)(1) ............................. 608
(a)(2) ............................. 608
(b) ............................. 607, 609
Sec. 312(c) ............................. 701
Sec. 314(a) ............................. 703
(a)(4) ............................. 1018
(c)(1) ............................. 103
(c)(2) ............................. 103
(e) ............................. 103
Sec. 315(b) ............................. 601
Sec. 316(a)(last
sentence) ............................. 101 ("Out-
standing")
(a)(1)(A) ............................. 502, 512
(a)(1)(B) ............................. 513
(b) ............................. 508
(c) ............................. 105
Sec. 317(a)(1) ............................. 503
(a)(2) ............................. 504
Sec. 318(a) ............................. 108
* This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 101. Definitions ............................ 1
Accreted Amount......................... 2
Acquired Indebtedness .................. 2
Acquisition ............................ 2
Affiliate .............................. 3
Applicable Premium...................... 3
Average Life to Stated Maturity ........ 3
Bank Credit Agreement .................. 3
Board of Directors ..................... 4
Board Resolution ....................... 4
Business Day ........................... 4
Capital Lease Obligation ............... 4
Capital Stock .......................... 4
Change in Control ...................... 4
Chefmark ............................... 4
Commission ............................. 4
Company ................................ 5
Company Request or Company Order ....... 5
Consolidated Adjusted Net Income (Loss). 5
Consolidated Assets .................... 6
Consolidated Capital Expenditures ...... 6
Consolidated Fixed Charge
Coverage Ratio ....................... 6
Consolidated Interest Expense .......... 6
Consolidated Non-cash Charges .......... 6
Consolidated Tax Expense ............... 7
Corporate Trust Office ................. 7
Corporation ............................ 7
Day Count Fraction...................... 7
Default ................................ 7
Equitable Investors .................... 7
Event of Default ....................... 7
Exchange Act ........................... 7
Existing Assets ........................ 7
Fair Market Value ...................... 7
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Federal Bankruptcy Code ................ 8
Generally Accepted Accounting
Principles or GAAP ................... 8
Guaranteed Debt ........................ 8
Holder ................................. 8
Holdings ............................... 8
Holdings Intercompany Notes............. 8
Holdings Preferred Stock ............... 9
Indebtedness ........................... 9
Indenture .............................. 10
Intercompany Agreement ................. 10
Interest Payment Date .................. 10
Interest Rate Hedge Arrangement ........ 10
Investments ............................ 10
Lien ................................... 10
Logistical Services Agreement .......... 10
Majority-owned Subsidiary .............. 11
Management Investors ................... 11
Material Subsidiary .................... 11
Maturity ............................... 11
ML Funds ............................... 11
Newco................................... 11
Officers' Certificate .................. 12
Opinion of Counsel ..................... 12
Outstanding ............................ 12
Pari Passu Indebtedness ................ 13
Paying Agent ........................... 13
Permitted Holders ...................... 13
Permitted Indebtedness ................. 13
Permitted Investment ................... 15
Permitted Payment ...................... 15
Person ................................. 16
Plainbridge ............................ 16
Predecessor Security ................... 16
Preferred Stock ........................ 16
Purchase Money Mortgages ............... 16
Qualified Capital Stock ................ 16
Recapitalization ....................... 16
Redeemable Capital Stock ............... 16
Redemption Date ........................ 17
Redemption Price ....................... 17
Regular Record Date .................... 17
Representative ......................... 17
Responsible Officer .................... 17
Restricted Payments .................... 17
-ii-
<PAGE>
PAGE
Security and Securities ................ 17
Senior Indebtedness .................... 17
Senior Subordinated Notes............... 18
SMG-II ................................. 18
Special Record Date .................... 18
Specified Senior Indebtedness .......... 18
Spin-Off Agreements .................... 19
Spin-Off ............................... 19
Stated Maturity ........................ 19
Subordinated Debentures ................ 19
Subordinated Indebtedness .............. 19
Subordinated Notes ..................... 20
Subsidiary ............................. 20
Tax Sharing Agreement .................. 20
Temporary Cash Investment .............. 20
Treasury Rate .......................... 20
Trust Indenture Act .................... 21
Trustee ................................ 21
Unrestricted Subsidiary ................ 21
Unrestricted Subsidiary Indebtedness ... 22
Voting Stock ........................... 22
Section 102. Other Definitions ...................... 22
Section 103. Compliance Certificates and Opinions ... 23
Section 104. Form of Documents Delivered to Trustee . 23
Section 105. Acts of Holders ........................ 24
Section 106. Notices, etc., to Trustee
and Company .......................... 25
Section 107. Notice to Holders; Waiver .............. 26
Section 108. Conflict of any Provision of
Indenture with Trust Indenture Act ... 27
Section 109. Effect of Headings and Table of
Contents ............................. 27
Section 110. Successors and Assigns ................. 27
Section 111. Separability Clause .................... 27
Section 112. Benefits of Indenture .................. 27
Section 113. Governing Law .......................... 27
Section 114. Legal Holidays ......................... 28
Section 115. No Recourse Against Others ............. 28
-iii-
<PAGE>
PAGE
ARTICLE TWO
Security Forms
Section 201. Forms Generally ........................ 28
Section 202. Form of Face of Security ............... 29
Section 203. Form of Reverse of Security ............ 31
Section 204. Form of Trustee's Certificate of
Authentication ....................... 36
ARTICLE THREE
The Securities
Section 301. Title and Terms ........................ 36
Section 302. Denominations .......................... 37
Section 303. Execution, Authentication, Delivery and
Dating ............................... 37
Section 304. Temporary Securities ................... 39
Section 305. Registration, Registration of Transfer
and Exchange ......................... 39
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities ........................... 40
Section 307. Payment of Interest; Interest Rights
Preserved ............................ 41
Section 308. Persons Deemed Owners .................. 43
Section 309. Cancellation ........................... 43
Section 310. Computation of Interest ................ 43
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge
of Indenture ......................... 44
Section 402. Application of Trust Money ............. 45
-iv-
<PAGE>
PAGE
ARTICLE FIVE
Remedies
Section 501. Events of Default ...................... 46
Section 502. Acceleration of Maturity; Rescission ... 48
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee ........... 49
Section 504. Trustee May File Proofs of Claim ....... 50
Section 505. Trustee May Enforce Claims Without
Possession of Securities ............. 51
Section 506. Application of Money Collected ......... 51
Section 507. Limitation on Suits .................... 52
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest ............................. 53
Section 509. Restoration of Rights and Remedies ..... 53
Section 510. Rights and Remedies Cumulative ......... 53
Section 511. Delay or Omission Not Waiver ........... 53
Section 512. Control by Holders ..................... 54
Section 513. Waiver of Past Defaults ................ 54
Section 514. Undertaking for Costs .................. 54
Section 515. Waiver of Stay, Extension or
Usury Laws ........................... 55
Section 516. Unconditional Right of Holders
to Institute Certain Suits ........... 55
ARTICLE SIX
The Trustee
Section 601. Notice of Defaults ..................... 56
Section 602. Certain Rights of Trustee .............. 56
Section 603. Not Responsible for Recitals or
Issuance of Securities ............... 59
Section 604. Trustee and Agents May Hold
Securities; Collections; etc. ........ 59
Section 605. Money Held in Trust .................... 59
Section 606. Compensation and Reimbursement ......... 60
Section 607. Conflicting Interests .................. 61
Section 608. Corporate Trustee Required;
Eligibility .......................... 61
Section 609. Resignation and Removal; Appointment
of Successor ......................... 62
-v-
<PAGE>
PAGE
Section 610. Acceptance of Appointment by
Successor ............................ 64
Section 611. Merger, Conversion, Consolidation or
Succession to Business ............... 64
Section 612. Preferential Collection of Claims
Against Company ...................... 65
ARTICLE SEVEN
Holders' Lists and Reports by
Trustee and Company
Section 701. Disclosure of Names and Addresses
of Holders ........................... 65
Section 702. Reports by Trustee ..................... 65
Section 703. Reports by Company ..................... 66
ARTICLE EIGHT
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 801. Company May Consolidate, etc.,
Only on Certain Terms ................ 67
Section 802. Successor Substituted .................. 68
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures
without Consent of Holders ........... 68
Section 902. Supplemental Indentures
with Consent of Holders .............. 69
Section 903. Execution of Supplemental Indentures ... 70
Section 904. Effect of Supplemental Indentures ...... 71
Section 905. Conformity with Trust Indenture Act .... 71
Section 906. Reference in Securities to Supplemental
Indentures ........................... 71
Section 907. Effect on Senior Indebtedness .......... 71
-vi-
<PAGE>
PAGE
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest ............................. 71
Section 1002. Maintenance of Office or Agency ........ 72
Section 1003. Money for Security Payments to Be
Held in Trust ........................ 72
Section 1004. Corporate Existence .................... 74
Section 1005. Payment of Taxes and Other Claims ...... 74
Section 1006. Maintenance of Properties .............. 75
Section 1007. Limitation on Indebtedness ............. 75
Section 1008. Limitation on Restricted Payments ...... 76
Section 1009. Limitation on Transactions with
Affiliates ........................... 81
Section 1010. Limitation on Liens .................... 82
Section 1011. Purchase of Securities Upon
Change in Control ....... ............ 83
Section 1012. Restrictions on Preferred Stock of
Subsidiaries ......................... 87
Section 1013. Limitations on Issuances of Guarantees
of Indebtedness ...................... 87
Section 1014. Restriction on Transfer of Assets ...... 88
Section 1015. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries ......................... 88
Section 1016. Limitation on Unrestricted
Subsidiaries ......................... 89
Section 1017. Statement as to Compliance; Notice of
Default; Provision of Financial
Statements ........................... 89
Section 1018. Waiver of Certain Covenants ............ 90
Section 1019. Calculation of Original Issue
Discount; Certain Information
Concerning Tax Reporting ............. 91
-vii-
<PAGE>
PAGE
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption .................... 91
Section 1102. Applicability of Article ............... 92
Section 1103. Election to Redeem; Notice to Trustee .. 92
Section 1104. Selection by Trustee of Securities to
Be Redeemed .......................... 92
Section 1105. Notice of Redemption ................... 92
Section 1106. Deposit of Redemption Price ............ 94
Section 1107. Securities Payable on Redemption Date .. 94
Section 1108. Securities Redeemed in Part ............ 94
ARTICLE TWELVE
[Intentionally Omitted]
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior
Indebtedness ......................... 95
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc. .................... 95
Section 1303. No Payment When Specified Senior
Indebtedness in Default .............. 98
Section 1304. Payment Permitted if No Default ........ 99
Section 1305. Subrogation to Rights of Holders
of Senior Indebtedness ............... 99
Section 1306. Provisions Solely to Define
Relative Rights ...................... 100
Section 1307. Trustee to Effectuate Subordination .... 100
Section 1308. No Waiver of Subordination Provisions .. 100
Section 1309. Notice to Trustee ...................... 101
Section 1310. Reliance on Judicial Order or
Certificate of Liquidating Agent ..... 102
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights ..................... 102
Section 1312. Article Applicable to Paying Agents .... 103
Section 1313. Rescission ............................. 103
Section 1314. Application by Trustee of Assets
Deposited With It .................... 103
Section 1315. Trustee's Relation to Senior
Indebtedness ......................... 103
-viii-
<PAGE>
PAGE
ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section 1401. Option to Effect Defeasance
or Covenant Defeasance ............... 104
Section 1402. Defeasance and Discharge ............... 104
Section 1403. Covenant Defeasance..................... 105
Section 1404. Conditions to Defeasance or
Covenant Defeasance .................. 105
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ....... 108
Section 1406. Reinstatement .......................... 109
TESTIMONIUM........................................... 110
SIGNATURES AND SEALS.................................. 110
ACKNOWLEDGMENTS
EXISTING INDEBTEDNESS..............................SCHEDULE I
FORM OF INTERCOMPANY AGREEMENT.....................APPENDIX A
FORM OF HOLDINGS INTERCOMPANY NOTE...............APPENDIX B-1
FORM OF HOLDINGS INTERCOMPANY NOTE...............APPENDIX B-2
-ix-
<PAGE>
INDENTURE, dated as of October 26, 1993, between PATHMARK
STORES, INC., a Delaware corporation (hereinafter called the
"Company"), and NATIONSBANK of Georgia, National Association, a
national banking association, trustee (hereinafter called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue
of its Junior Subordinated Deferred Coupon Notes due 2003
(hereinafter called the "Securities"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the
Company has duly authorized the execution and delivery of this
Indenture;
This Indenture is subject to, and shall be governed by,
the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust
Indenture Act;
All acts and things necessary have been done to make the
Securities, when executed by the Company and authenticated and
delivered hereunder and duly issued by the Company, the valid,
binding and legal obligations of the Company, and to make this
Indenture a valid agreement of the Company in accordance with its
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
<PAGE>
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United
States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Articles Five, Six,
Ten, Thirteen and Fourteen are defined in those Articles.
"Accreted Amount" means (i) as of any date of
determination prior to November 1, 1999, the sum of (a) the
initial offering price of each Security and (b) the portion of
the excess of the principal amount of each Security over such
initial offering price which shall have been amortized through
such date, such amount to be so amortized on a daily basis and
compounded semiannually on each May 1 and November 1 at the
rate of 10 3/4% per annum from the date of issuance of the Securities
through the date of determination computed on the basis of a
360-day year of twelve 30-day months and an amortization period
ending on November 1, 1999 and (ii) as of any date of determination
on or after Novvember 1, 1999, the principal amount at
final Maturity of such Security.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) (i) existing at the time
such Person becomes a Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person, other than
Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary or such acquisition, as the
case may be.
"Acquisition" means the acquisition of the Company by
Holdings completed in October 1987 pursuant to the Agreement and
Plan of Merger dated as of April 22, 1987 among Holdings, SMG
Acquisition Corporation and the Company, as amended.
- 2-
<PAGE>
"Affiliate" means, with respect to any specified Person,
(i) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person or (ii) for purposes of Section l009 only,
any other Person that owns, directly or indirectly, 10% or more
of such Person's Capital Stock or any officer or director of any
such Person or other Person or with respect to any natural
Person, any person having a relationship with such Person by
blood, marriage or adoption not more remote than first cousin.
For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Applicable Premium" means with respect to any Security
to be redeemed the greater of (i) 1.0% of the then outstanding
Accreted Amount of such Security and (ii) (a) the sum of the
present values, discounted for all full semiannual periods at a
discount rate equal to one-half multiplied by the Treasury Rate
plus 125 basis points (provided, however, that the discount rate
for the period from the Redemption Date to the next Interest
Payment Date shall equal the result of multiplying the Treasury
Rate plus 125 basis points by the Day Count Fraction), of (I)
the remaining payments of [cash] interest on such Security and
(II) the payment of the principal amount that, but for such
redemption, would have been payable on such Securities at Final
Maturity, minus (b) the then outstanding Accreted Amount of such
Security, minus (c) accrued and unpaid interest paid on the
Redemption Date.
"Average Life to Stated Maturity" means, as of the date
of determination, with respect to any Indebtedness, the quotient
obtained by dividing (i) the sum of the products of (a) the
number of years from the date of determination to the date or
dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated
as of the date hereof among the Company and the lenders
thereunder and Bankers Trust Company, as agent, as in effect on
the date hereof, and as such agreement may be amended, renewed,
extended, supplemented or otherwise modified from time to time,
and any agreement or successive agreements governing Indebtedness
incurred to refund, refinance, restructure or replace the
Indebtedness and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or other agreement.
- 3-
<PAGE>
"Board of Directors" means the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking
institutions in The City of New York, Atlanta, Georgia or the
State of Delaware are authorized or obligated by law, regulation
or executive order to close.
"Capital Lease Obligation" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated
basis under any capital lease of real or personal property which,
in accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated) of such Person's capital stock whether now
outstanding or issued after the date hereof.
"Change in Control" means an event as a result of which:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Permitted Holders is or
becomes the "beneficial owner" (as defined in Rules 13d-3 and
l3d-5 under the Exchange Act, except that a Person shall be
deemed to have "beneficial ownership" of all shares that any such
Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total Voting
Stock of the Company and (ii) such person succeeds in having its
nominees constitute a majority of the Company's Board of
Directors.
"Chefmark" means Chefmark, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
- 4-
<PAGE>
"Company" means the Person named as the "Company" in the
first paragraph of this instrument, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act Sections
3l0 through 317 as they are applicable to the Company, the term
"Company" shall include any other obligor with respect to the
Securities for the purposes of complying with such provisions.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company (i) by its
Chairman, a Vice Chairman, its President or a Vice President and
(ii) by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any
two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Consolidated Adjusted Net Income (Loss)" of the Company
means, for any period, the consolidated net income (loss) of the
Company and its consolidated Subsidiaries for such period as
determined in accordance with GAAP, adjusted by excluding (i) net
after-tax extraordinary gains or losses (less all fees and
expenses relating thereto), as the case may be, (ii) net
after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset sales, (iii) any depreciation and
amortization expense incurred by the Company and its consolidated
Subsidiaries from the date of the Acquisition to the date of
determination resulting from (a) any write-up in the book value
of any assets due to the Acquisition and (b) any goodwill due to
the Acquisition (including any write-off or accelerated
amortization of goodwill), (iv) any expenses incurred in
connection with the Acquisition and the financing thereof and the
Recapitalization, (v) any expenses relating to the incurrence or
refinancing of Indebtedness, (vi) the net income (or loss) of any
Person (including any Unrestricted Subsidiary and excluding the
Company or a Subsidiary) in which the Company or any of its
Subsidiaries has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to
the Company or its Subsidiaries by such other Person during such
period, (vii) net income (or net loss) of any Person combined
with the Company or any of its Subsidiaries in a "pooling of
interests" basis attributable to any period prior to the date of
combination and (viii) non-cash charges of the Company and its
Subsidiaries resulting from the application of Statement of
- 5-
<PAGE>
Financial Accounting Standards No. 106 ("SFAS 106") to the extent
such charges exceed the cash payments for benefits covered by
SFAS 106 for the relevant period.
"Consolidated Assets" means the net book value of the
Existing Assets shown on the balance sheet of the Company, as
determined in accordance with GAAP consistently applied, as of
the last day of the Company's last fiscal quarter prior to the
date hereof.
"Consolidated Capital Expenditures" means cash capital
expenditures reflected in the consolidated statement of cash
flows of the Company and Capital Lease Obligations that are on
the consolidated balance sheet of the Company and its
Subsidiaries, in each case in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the
Company means, for any period, the ratio of (i) the sum of
Consolidated Adjusted Net Income, Consolidated Interest Expense,
Consolidated Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Adjusted Net Income, in each
case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, to
(ii) the sum of such Consolidated Interest Expense for such
period; provided that, in making such computation, the
Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the
date of computation had been the applicable rate for the entire
period; provided, further, that in making any calculation prior
to the first anniversary date of the Recapitalization, the
Recapitalization shall be deemed to have taken place on the first
day of such period.
"Consolidated Interest Expense" means, for any period,
the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a
consolidated statement of earnings of the Company and its
Subsidiaries for such period minus the aggregate amount for such
period of interest imputed on future liabilities of the Company
and its Subsidiaries, other than Indebtedness, recorded at
present value. Consolidated Interest Expense shall include
accruals in respect of Interest Rate Hedge Arrangements (but
shall exclude any such accruals in the nature of amortization of
front-end fees or other similar payments).
"Consolidated Non-cash Charges" of the Company means,
for any period, the aggregate depreciation, amortization and
other non-cash charges of the Company and its consolidated
Subsidiaries for such period, as determined in accordance with
- 6-
<PAGE>
GAAP (excluding any such non-cash charge which requires an
accrual of or reserve for cash charges for any future period).
"Consolidated Tax Expense" of the Company means, for any
period, as applied to the Company, the provision for federal,
state, local and foreign income taxes of the Company and its
consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business
shall be principally administered, which office at the date of
execution of this Indenture is located at 600 Peachtree Street,
Suite 900, Atlanta, Georgia 30308.
"Corporation" includes corporations, associations,
partnerships, companies and business trusts.
"Day Count Fraction" means the number of days from the
Redemption Date to (but excluding) the next scheduled Interest
Payment Date divided by 360 (which assumes a 360-day year
composed of twelve 30-day months).
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Equitable Investors" means The Equitable Life Assurance
Society of the United States and any of its Affiliates that
beneficially own, directly or indirectly, shares of Capital Stock
of SMG-II, Holdings, Newco or the Company.
"Event of Default" has the meaning specified in Article
Five.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Assets" means the assets and other property
held by the Company (and not its subsidiaries) as of the last day
of the Company's last fiscal quarter prior to the date hereof,
adjusted by excluding any assets and other property transferred
to Newco in the Spin-Off, plus any assets held by the Company
(and not its subsidiaries) irrevocably designated from time to
time by the Company as Existing Assets.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's
length transaction between an informed and willing seller under
no compulsion to sell and an informed and willing buyer.
- 7-
<PAGE>
"Federal Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time.
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to
time; provided, however, that with respect to the obligations of
any Person under Articles Eight and Ten and the definitions
applicable thereto, "GAAP" means generally accepted accounting
principles in the United States as in effect on the date hereof.
"Guaranteed Debt" of any Person means, without
duplication, all Indebtedness of any other Person referred to in
the definition of Indebtedness contained in this Section 101
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) other than with respect to the Logistical
Services Agreement or any Spin-Off Agreement, to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) other than with respect to the
Logistical Services Agreement or any Spin-Off Agreement, to
supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services to be
acquired by such debtor irrespective of whether such property is
received or such services are rendered), (iv) to maintain working
capital or equity capital of the debtor, or otherwise to maintain
the net worth, solvency or other financial condition of the
debtor or (v) otherwise to assure a creditor against loss;
provided that the term "guarantee" shall not include endorsements
for collection or deposit, in either case in the ordinary course
of business, or any obligation or liability of such Person in
respect of leasehold interests assigned by such Person to any
other Person.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation, and any successor thereto.
"Holdings Intercompany Notes" means the 11-5/8%
subordinated note and the 12-5/8% subordinated debenture each
issued by the Company to Holdings in the forms attached hereto as
Appendix B and in aggregate principal amount not in excess of the
principal amounts outstanding on the date hereof.
- 8-
<PAGE>
"Holdings Preferred Stock" means Holdings' Cumulative
Exchangeable Redeemable Preferred Stock, par value $.01 per
share, having a liquidation preference of $25 per share and
maturing on December 31, 2007, that is outstanding on the date
hereof.
"Indebtedness" means with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables, import
letters of credit and other accrued current liabilities incurred
in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such
Person in connection with any standby letters of credit and
acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the
rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of
such property), but excluding trade accounts payable arising in
the ordinary course of business, (iv) all Capital Lease
Obligations of such Person, (v) all Indebtedness referred to in
(but not excluded from) clause (i), (ii), (iii) or (iv) above of
other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness, (vi) all Guaranteed Debt of such Person, (vii)
all Redeemable Capital Stock issued by such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends and (viii) all
obligations under interest rate hedge contracts of such Person.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value to be determined
in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
- 9-
<PAGE>
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Intercompany Agreement" means the agreement in the form
attached hereto as Appendix A, as amended or modified in
accordance with the terms of this Indenture.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Hedge Arrangement" means any rate swap
transaction under a rate swap agreement to which the Company is a
party or beneficiary, or becomes a party or beneficiary, and any
interest rate protection agreement, interest rate future,
interest rate option or other interest rate hedge arrangement to
or under which the Company is a party or a beneficiary, or
becomes a party or a beneficiary, or to or under which any
Subsidiary of the Company is or becomes such a party or
beneficiary if the obligations of such Subsidiary thereunder are
guaranteed by the Company.
"Investments" of any Person means, directly or
indirectly, any advance, loan or other extension of credit or
capital contribution by such Person to (by means of any transfer
of cash or other property to others or any payment for property
or services for the account or use of others) any other Person,
or any purchase or acquisition by such Person of any stock,
bonds, notes, debentures or other securities issued or owned by
any other Person. For the purpose of making any calculations
hereunder, (i) Investment shall include the Fair Market Value of
the net assets of any Subsidiary at the time that such Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the
Fair Market Value of the net assets of any Unrestricted
Subsidiary that is designated a Subsidiary and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued
at Fair Market Value at the time of such transfer; provided that
in each case, the Fair Market Value of an asset or property shall
be as determined by the Board of Directors of the Company in good
faith.
"Lien" means any mortgage, charge, pledge, lien,
privilege, security interest or encumbrance of any kind.
"Logistical Services Agreement" means the Logistical
Services Agreement dated as of , 1993 between Plainbridge
and the Company, as amended or modified in accordance with the
provisions hereof.
- 10-
<PAGE>
"Majority-owned Subsidiary" means a Subsidiary at least
50% of the equity ownership or the Voting Stock of which is at
the time owned, directly or indirectly, by the Company or by one
or more of the Subsidiaries, or the Company and one or more of
the Subsidiaries, provided that Majority-owned Subsidiary shall
not include any such Subsidiary if the equity ownership or the
Voting Stock of such Subsidiary not owned by the Company and/or
one or more of the Subsidiaries is owned by Holdings and/or one
or more Affiliates of Holdings other than the Company and its
Subsidiaries.
"Management Investors" means the officers and other
members of the management of the Company who at any particular
date shall beneficially own, directly or indirectly, Voting Stock
of the Company.
"Material Subsidiary" means, at any particular time, any
Subsidiary of the Company that, together with the Subsidiaries of
such Subsidiary, (a) accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries for the
most recently completed fiscal year of the Company or (b) was the
owner of more than l0% of the consolidated assets of the Company
and its Subsidiaries as at the end of such fiscal year, all as
shown on the consolidated financial statements of the Company and
its Subsidiaries for such fiscal year.
"Maturity" when used with respect to any Security means
the date on which the principal of any Security becomes due and
payable as therein or herein provided, whether at Stated
Maturity, Change in Control Purchase Date or Redemption Date and
whether by declaration of acceleration, Change in Control, call
for redemption or otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation
Partnership No. IX, L.P., a Delaware partnership, ML Offshore LBO
Partnership No. IX, a Cayman Islands partnership, ML Employees
LBO Partnership No. I, L.P., a Delaware partnership, Merrill
Lynch Interfunding Inc., a Delaware corporation, Merchant Banking
L.P. No. I, a Delaware partnership, Merrill Lynch KECALP L.P., a
Delaware partnership, Merrill Lynch Capital Appreciation
Partnership No. B-X, L.P., a Delaware partnership, ML Offshore
LBO Partnership No. B-X, a Cayman Islands partnership, MLCP
Associates, L.P. No. II, a Delaware partnership, Merrill Lynch
Venture Capital, Inc., a Delaware corporation and any Affiliates
of the foregoing that beneficially own, directly or indirectly,
shares of Capital Stock of SMG-II.
"Newco" means PTK Holdings, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
- 11-
<PAGE>
"Officers' Certificate" means a certificate signed by
(i) the Chairman, a Vice Chairman, the President, a Vice
President or the Treasurer of the Company and (ii) the Secretary
or an Assistant Secretary of the Company and delivered to the
Trustee; provided, however, that such certificate may be signed
by two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable
to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent
applicable.
"Outstanding" when used with respect to Securities
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment,
redemption or purchase money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and the
Trustee or such Paying Agent is not prohibited from paying
such money to the Holders on that date pursuant to the
terms of Article Thirteen of this Indenture; provided
that, if such Securities are to be redeemed, notice of
such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made;
(c) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Fourteen; and
(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
- 12-
<PAGE>
provided, however, that, in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, notice, direction,
consent or waiver hereunder, Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the
Company, or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, notice, direction, consent or waiver, only
Securities which the Trustee has actual knowledge are so owned
shall be so disregarded. Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Securities and
that the pledgee is not the Company or any other obligor upon the
Securities or any Affiliate of the Company or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company that is pari passu in right of payment to the Securities.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (or premium, if any) or interest
on any Securities on behalf of the Company.
"Permitted Holders" means ML Funds, the Management
Investors and the Equitable Investors, provided that the
Equitable Investors shall not be a Permitted Holder if they are a
member of a "group" (as such term is used in Section 13(d) of the
Exchange Act) in respect of the Company which does not include
the Management Investors and the ML Funds.
"Permitted Indebtedness" means any of the following
Indebtedness of the Company or any Subsidiary, as the case may
be:
(i) Indebtedness under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to
exceed $575,000,000;
(ii) Indebtedness under the Securities;
(iii) Indebtedness outstanding on the date hereof and
listed on Schedule I hereto;
(iv) Indebtedness under the Subordinated Notes, the
Subordinated Debentures and the Senior Subordinated Notes;
(v) obligations pursuant to interest rate hedge
contracts;
- 13-
<PAGE>
(vi) (A) Indebtedness under Capital Lease Obligations
and (B) Purchase Money Mortgages;
(vii) Indebtedness in respect of trade letters of credit
and standby letters of credit incurred in the ordinary course
of business;
(viii) Indebtedness of the Company or any Subsidiary to
any one or the other of them; provided that the obligation of
the obligor of such Indebtedness is subject to the
Intercompany Agreement;
(ix) Indebtedness of any Subsidiary made in accordance
with the applicable provisions of Section 1013 or Section
1014;
(x) Indebtedness consisting of guarantees, indemnities
or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets;
(xi) any obligation or liability in respect of leasehold
interests assigned by the Company or any Subsidiary to any
other Person;
(xii) Indebtedness under the Holdings Intercompany Notes;
(xiii) Indebtedness represented by letters of credit not
exceeding an aggregate amount of $45,000,000 at any one time
outstanding (other than those permitted by clause (vii)
above);
(xiv) Indebtedness incurred to finance Consolidated
Capital Expenditures (including Acquired Indebtedness to the
extent that, in conformity with GAAP, assets acquired in
conjunction with such Acquired Indebtedness are included in
the property, plant or equipment reflected on the
consolidated balance sheet of the Company and its
Subsidiaries);
(xv) Indebtedness in addition to that described in
clauses (i) through (xiv) of this definition of "Permitted
Indebtedness", and any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, not to
exceed $150,000,000 outstanding at any one time in the
aggregate; and
- 14-
<PAGE>
(xvi) any renewals, extensions, substitutions,
refinancings or replacements (each, for purposes of this
clause, a "refinancing") of any Indebtedness described in
clauses (ii), (iii), (iv) and (xiv), including any successive
refinancings so long as the aggregate amount of Indebtedness
represented thereby is in a principal amount that does not
exceed the principal amount so refinanced plus the amount of
any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing
plus the amount of expenses of the Company incurred in
connection with such refinancing; provided that for purposes
of this clause, the principal amount of any Indebtedness
shall be deemed to mean the principal amount thereof or, if
such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of
the date of determination and such refinancing does not
reduce the Average Life to Stated Maturity or the final
Stated Maturity of such Indebtedness.
"Permitted Investment" means any of the following:
(i) any Investment in any Majority-owned Subsidiary by the
Company or any other Majority-owned Subsidiary, any Investment in
any Person by the Company or any Majority-owned Subsidiary as a
result of which such Person becomes a Majority-owned Subsidiary
or any Investment in the Company by any Majority-owned Subsidiary; (ii) any
Temporary Cash Investment; (iii) intercompany Indebtedness to the
extent permitted under clause (viii) of the definition of
"Permitted Indebtedness" contained in this Section 101;
(iv) Investments in existence on the date hereof and any
Investment with respect to which the Company or any Subsidiary is
legally committed to make, but only if such commitment was in
existence on the date hereof in each case, other than any
Investment in any Unrestricted Subsidiary; (v) sales of goods on
trade credit terms consistent with the Company's past practices
or as otherwise consistent with trade credit terms in common use
in the industry; (vi) Investments pursuant to the Logistical
Services Agreement or Spin-Off Agreements; (vii) any Investment
in any Person acquired or retained in connection with any asset
sale or other disposition of assets; (viii) loans or advances to
employees made in the ordinary course of business; and (ix) in
addition to "Permitted Investments" described in the foregoing
clauses (i) through (viii), Investments in the aggregate amount
of $45,000,000 at any one time outstanding.
"Permitted Payment" has the meaning specified in Section
1008.
- 15-
<PAGE>
"Person" means any individual, corporation, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plainbridge" means Plainbridge, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for a mutilated Security
or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's preferred or preference
stock whether now outstanding or issued after the date hereof,
and includes, without limitation, all classes and series of
preferred or preference stock.
"Purchase Money Mortgages" means Indebtedness of the
Company or any Subsidiary (i) issued to finance or refinance the
purchase or construction of any assets of the Company or any
Subsidiary or (ii) secured by a Lien on any assets of the Company
or any Subsidiary where the lender's sole recourse is to the
assets so encumbered, in either case (a) to the extent the
purchase or construction prices for such assets are or should be
included in "addition to property, plant or equipment" in
accordance with GAAP and (b) if the purchase or construction of
such assets is not part of any acquisition of a Person or
business unit.
"Qualified Capital Stock" of any Person means any and
all Capital Stock of such Person other than Redeemable Capital
Stock.
"Recapitalization" means the Recapitalization described
in the Prospectus relating to the issuance of the Securities.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms, by the terms of any security into which it
is convertible or exchangeable or otherwise, is or upon the
happening of an event or passage of time would be required to be
redeemed prior to the final Stated Maturity of
- 16-
<PAGE>
the Securities or is redeemable at the option of the holder
thereof at any time prior to such final Stated Maturity, or is
convertible into or exchangeable for debt securities at any time
prior to such final Stated Maturity.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the or (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Responsible Officer", when used with respect to the
Trustee, means any officer assigned to the Corporate Trust
Administration of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers or assigned by the Trustee
to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning specified in
Section 1008.
"Security" and "Securities" have the meaning set forth
in the second paragraph of this Indenture.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on (such interest on Senior Indebtedness,
wherever referred to in this Indenture, being deemed to include
interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or
event of default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law) any Indebtedness of the
Company (other than as otherwise provided in this
- 17-
<PAGE>
definition), whether outstanding on the date hereof or thereafter
created, incurred or assumed in accordance with the provisions of
this Indenture, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or
pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the
respective Securities. Without limiting the generality of the
foregoing, "Senior Indebtedness" shall include the principal of,
premium, if any, and interest on (including interest accruing
after the occurrence of an event of default) all obligations of
every nature of the Company from time to time owed under the Bank
Credit Agreement, including, without limitation, principal of and
interest on, and all fees, expenses, indemnities, payments for
early termination of Interest Rate Hedge Arrangements,
reimbursement obligations under letters of credit payable under
the Bank Credit Agreement, the Senior Subordinated Notes, the
Subordinated Notes and the Subordinated Debentures.
Notwithstanding the foregoing, "Senior Indebtedness" shall not
include (i) Indebtedness that when incurred, and without respect
to any election under Section 1111(b) of Title 11, United States
Code, is without recourse to the Company, (ii) Indebtedness that
is represented by Redeemable Capital Stock, (iii) Indebtedness of
the Company to a Subsidiary of the Company or any other Affiliate
of the Company or any of such Affiliate's subsidiaries, including
the Holdings Intercompany Notes, and (iv) that portion of any
Indebtedness (other than any Indebtedness provided by any lender
pursuant to the Bank Credit Agreement, except to the extent such
Indebtedness is provided with actual knowledge on the part of any
such lender that the incurrence thereof by the Company is a
violation of this Indenture) which at the time of issuance is
issued in violation of this Indenture.
"Senior Subordinated Notes" means the Company's 9 5/8%
Senior Subordinated Notes due 2003 in an aggregate principal
amount not in excess of $440,000,000.
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation, and any successor thereto.
"Special Record Date" means a date fixed by the Trustee
for the payment of any Defaulted Interest pursuant to Section
307.
"Specified Senior Indebtedness" means (i) all Senior
Indebtedness under the Bank Credit Agreement, (ii) Senior
Indebtedness under the Senior Subordinated Notes and (iii) any
other issue of Senior Indebtedness or refinancings thereof
permitted by said definition having a principal amount of at
- 18-
<PAGE>
least $100,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Specified
Senior Indebtedness" by the Company. For purposes of this
definition: (a) the amount of the Indebtedness of the Company
with respect to any Interest Rate Hedge Arrangement shall be
deemed to be the lesser of (x) 25% of the notional amount of such
Interest Rate Hedge Arrangement, or (y) the maximum amount the
Company could be required to pay under such Interest Rate Hedge
Arrangement; and (b) a refinancing of any such Indebtedness shall
be treated as such only if it ranks or would rank pari passu with
the Indebtedness refinanced.
"Spin-Off Agreements" means (i) the Distribution and
Transfer Agreement dated as of May 3, 1993 among the Company,
Holdings and Chefmark; (ii) the Distribution and Transfer
Agreement dated as of October 26, 1993 among the Company, Newco
and Plainbridge; (iii) the Blair Services Agreement dated as of
October 26, 1993 between the Company and Plainbridge; (iv) the
Rickel Services Agreement dated as of October 26, 1993 between
the Company and Plainbridge; (v) the Chefmark Services Agreement
dated as of May 3, 1993 between the Company and Chefmark;
(vi) the Tax Sharing Agreement; (vii) leases between the Company
as lessee and Plainbridge as lessor entered into on the date of
this Indenture; and (viii) the Chefmark Supply Agreement dated as
of May 3, 1993 between Chefmark and the Company, in each case as
amended or modified in accordance with the provisions hereof.
"Spin-Off" means the contribution by the Company to
Plainbridge of the Rickel home center business, the warehouse,
distribution and transportation operations and the inventory
therein that service the Pathmark supermarkets and drug stores
and certain other assets and the distribution of the shares of
Plainbridge to Newco.
"Stated Maturity", when used with respect to any
Indebtedness or any installment of interest thereon, means the
date specified in such Indebtedness as the fixed date on which
the principal of such Indebtedness or such installment of
interest is due and payable.
"Subordinated Debentures" means the Company's 12-5/8%
Subordinated Debentures due 2002 in aggregate principal amount
not in excess of the aggregate principal amount outstanding on
the date of this Indenture.
"Subordinated Indebtedness" means Indebtedness of the
Company subordinated in right of payment to the Securities.
- 19-
<PAGE>
"Subordinated Notes" means the Company's 11-5/8%
Subordinated Notes due 2002 in aggregate principal amount not in
excess of the aggregate principal amount outstanding on the date
of this Indenture.
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries; provided that an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of this Indenture.
"Tax Sharing Agreement" means the Tax Sharing Agreement
dated as of the date of the Spin-Off, 1993 between SMG-II and the Company, as
amended or modified in accordance with the provisions hereof.
"Temporary Cash Investment" means (i) any evidence of
Indebtedness, maturing not more than 180 days after the date of
acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than
180 days after the date of acquisition, issued by, or time
deposit of, a commercial banking institution that has combined
capital and surplus of not less than $300,000,000, whose debt is
rated at the time as of which any investment therein is made, of
"A" (or higher) according to Moody's Investors Service, Inc.
("Moody's"), or "A" (or higher) according to Standard & Poor's
Corporation ("S&P"), (iii) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United
States of America, with a rating, at the time as of which any
investment therein is made, of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P, (iv) any
short-term, tax-exempt investment in indebtedness issued by a
municipality existing under the laws of the United States of
America with a rating, at the time as of which any investment
therein is made, of "A" (or higher) according to Moody's or "A"
(or higher) according to S&P, and (v) any money market deposit
accounts issued or offered by any domestic commercial bank having
capital and surplus in excess of $300,000,000.
"Treasury Rate" means the yield to maturity at the time
of computation of United States Treasury securities with a
constant maturity (as compiled by, and published in, the most
recent Federal Reserve Statistical Release H.15 (5 - 19) which
has become publicly available at least two business days prior
- 20-
<PAGE>
to the Redemption Date of the Securities following a Change in
Control (or, if such Statistical Release is no longer published,
any publicly available source of similar market data)) most
nearly equal to the then remaining Average Life to Stated
Maturity of the Securities; provided, however, that if the
Average Life to Stated Maturity of the Securities is not equal to
the constant maturity of a United States Treasury security for
which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (rounded, if necessary, to four
decimal places) from the weekly average yields of United States
Treasury securities for which such yields are given, except that
if the Average Life to Stated Maturity of the Securities is less
than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one
year shall be used.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this
instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Unrestricted Subsidiary" means (i) any subsidiary of
the Company that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors
of the Company, as provided below) and (ii) any subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company
may designate any subsidiary of the Company (including any newly
acquired or newly formed subsidiary) to be an Unrestricted
Subsidiary if all of the following conditions apply: (a) such
subsidiary is not liable, directly or indirectly, with respect to
any Indebtedness other than Unrestricted Subsidiary Indebtedness
and (b) any Investment in such subsidiary made as a result of
designating such subsidiary an Unrestricted Subsidiary shall not
violate the provisions of Section 1016. Any such designation by
the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving
effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing
conditions. The Board of Directors of the Company may designate
any Unrestricted Subsidiary as a Subsidiary; provided that
immediately after giving effect to such designation, the Company
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the restrictions of Section
1007.
- 21-
<PAGE>
"Unrestricted Subsidiary Indebtedness" of any
Unrestricted Subsidiary means Indebtedness of such Unrestricted
Subsidiary (i) as to which neither the Company nor any Subsidiary
is directly or indirectly liable (by virtue of the Company or any
such Subsidiary being the primary obligor on, guarantor of, or
otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any
Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of
incurrence) the Company shall be deemed to have made a Restricted
Payment (as defined in Section 1008) equal to the principal
amount of any such Indebtedness to the extent guaranteed at the
time such Affiliate is designated an Unrestricted Subsidiary and
(ii) which, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any
Indebtedness of the Company or any Subsidiary to declare, a
default on such Indebtedness of the Company or any Subsidiary or
cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason
of the happening of any contingency).
Section 102. Other Definitions.
Defined in
Term Section
"Act"............................................. 105
"Change in Control Notice" ....................... 1011
"Change in Control Offer" ........................ 1011
"Change in Control Purchase Date" ................ 1011
"Change in Control Purchase Notice" .............. 1011
"Change in Control Purchase Price" ............... 1011
"covenant defeasance" ............................ 1403
"Defaulted Interest" ............................. 307
"defeasance" ..................................... l402
"incorporated provision" ......................... 108
"Notice of Default" .............................. 501
"Security Register" .............................. 305
"Security Registrar" ............................. 305
"Surviving Entity" ............................... 801
"U.S. Government Obligations" .................... 1404
- 22-
<PAGE>
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion (other than the
certificates required by Section 1017(a)) with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters,
- 23-
<PAGE>
and any such Person may certify or give an opinion as to such
matters in one or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
- 24-
<PAGE>
(d) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not more than 30
days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation
is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for this purpose the Securities then
Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six
months after the record date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such
Security.
Section 106. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder, any Representative or
the Company shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or
- 25-
<PAGE>
with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
delivered in writing or mailed, first-class postage prepaid,
to the Company addressed to it c/o Pathmark Stores, Inc., 301
Blair Road, Woodbridge, New Jersey 07095, Attention:
President, or at any other address furnished in writing to the
Trustee by the Company.
The Company shall provide the Trustee in writing with
the name and address of the agent bank under the Bank Credit
Agreement as of the effective date of this Indenture and shall
promptly provide the Trustee in writing with any change in such
information. The Trustee shall be entitled to assume there has
been no change in the identity of such agent until such time as
the Trustee receives written notice of such change from the
Company.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register, not
later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice when mailed to a
Holder in the aforesaid manner shall be conclusively deemed to
have been received by such Holder whether or not actually
received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to
be a sufficient giving of such notice.
- 26-
<PAGE>
Section 108. Conflict of any Provision of Indenture
with Trust Indenture Act.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 318, inclusive, of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by
operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its respective successors and assigns, whether
so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the
Holders and the holders of Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles
thereof.
- 27-
<PAGE>
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to Section
307, or any Maturity with respect to any Security shall not be a
Business Day, then (notwithstanding any other provision of this
Indenture or of the Securities) payment of interest or principal
(and premium, if any) need not be made on such date, but may be
made on the next succeeding Business Day with the same force and
effect as if made on the Interest Payment Date, or date
established for payment of Defaulted Interest pursuant to Section
307, or Maturity, and no interest shall accrue with respect to
such payment for the period from and after such Interest Payment
Date, or date established for payment of Defaulted Interest
pursuant to Section 307, or Maturity, as the case may be, to the
next succeeding Business Day.
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations
of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as
evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Security.
- 28-
<PAGE>
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
The form of the face of the Securities shall be
substantially as follows:
PATHMARK STORES, INC.
Junior Subordinated Deferred Coupon Note
due 2003
No. $
Pathmark Stores, Inc., a Delaware corporation (herein
called the "Company", which term includes any successor entity
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to or registered assigns, the
principal sum of Dollars on November 1, 2003, at the
office or agency of the Company referred to below, and to pay
cash interest thereon on May 1, 2000 and semiannually
thereafter on May 1 and November 1 in each year and at Stated
Maturity. The issue price of this Security was $ 532.74 per
$1,000 principal amount at final Maturity, representing a yield
to final Maturity of 10 3/4% (computed on a semiannual bond
equivalent basis) calculated from October 26, 1993. Cash interest
will accrue from November 1, 1999 or from the most recent
Interest Payment Date to which interest has been paid or duly
provided for at the rate of 10 3/4% per annum, until principal
hereof is paid or duly provided for. The Accreted Amount on this
Security shall not accrue cash interest until November 1, 1999,
except in the case of a default in payment of the amount due at
Maturity, in which case, the amount then due on this Security
shall bear cash interest at the rate of 10 3/4% per annum
(to the extent lawful) from the date of such default in payment,
as provided in the Indenture.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the April 15 or October 15 (whether or not a
Business Day), as the case may be, next preceding such
- 29-
<PAGE>
Interest Payment Date. Any such interest not so punctually paid
or duly provided for, and interest on such defaulted interest at
the then applicable interest rate borne by the Securities, to the
extent lawful, shall forthwith cease to be payable to the Holder
on such Regular Record Date, and may be paid to the Person in
whose name this Security (or one or more Predecessor Securities)
is registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse hereof
or by the authenticating agent appointed as provided in the Indenture
by manual signature, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any
purpose.
- 30-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: PATHMARK STORES, INC.
By
Attest:
By
[SEAL]
Authorized Signature
Section 203. Form of Reverse of Security.
The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
securities of the Company designated as its Junior Subordinated
Deferred Coupon Notes due 2003 (herein called the "Securities"),
limited (except as otherwise provided in the Indenture referred
to below) in aggregate principal amount at final Maturity to
$225,250,000 which may be issued under an indenture (herein
called the "Indenture") dated as of October 26, 1993, between the
Company and NationsBank of Georgia, National Association, trustee
(herein called the "Trustee", which term includes any successor
trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and
delivered.
The Securities are subject to redemption during the 12-
month period beginning November 1, 1999, at the option of the
Company, in whole or in part, on not less than 21 nor more than
60 days' prior notice, in amounts of $1,000 or an integral
multiple of $1,000, at a Redemption Price (expressed as a
percentage of the Accreted Amount) of 105%
- 31-
<PAGE>
and thereafter at 100% of the Accreted Amount, together in the
case of any such redemption with accrued interest, if any, to the
Redemption Date (subject to the right of Holders of record on
relevant Regular Record Dates to receive cash interest due on an
Interest Payment Date), all as provided in the Indenture.
Notwithstanding the foregoing, on or prior to November 1,
1996, the Company may redeem, on not less than 21 nor more than 60
days' prior notice in principal amounts at final Maturity of
$1,000, Securities which represent an aggregatte principal amount
at final Maturity which shall not exceed the aggregate up to 35%
of the original aggregate principal amount at final Maturity of the
Securities with the net proceeds of any issuance of Qualified Capital
Stock of the Company or Newco at a Redemption Price of 110% of the
Accreted Amount thereof.
In addition, the Securities will be subject to
redemption, at the option of the Company, prior to November 1,
1999, in whole or in part, at any time within 180 days
after a Change in Control on not less than 21 nor more than 60 days'
prior notice to each Holder of the Securities to be redeemed in
principal amounts of $1,000 at final Maturity or an integral
multiple thereof, at a redemption price equal to the sum of (i)
the Accreted Amount as of the Redemption Date plus (ii) accrued
and unpaid interest, if any, to the Redemption Date (subject to
the right of Holders of record on relevant Regular Record Dates
to receive cash interest due on an Interest Payment Date) plus
(iii) the Applicable Premium.
In the event that a Change in Control occurs, each
Holder shall have the right to require that the Company
repurchase such Holder's Securities in whole or in part in
integral multiples of $1,000 at final Maturity at a purchase
price in cash in an amount equal to 101% of the Accreted Amount
as of the date of repurchase plus accrued and unpaid interest, if
any, to the date of purchase. Within 30 days following a Change
in Control, the Company covenants to either (i) repay in full all
Indebtedness under the Bank Credit Agreement and permanently
reduce the commitments of the lenders thereunder or offer to
repay in full all such Indebtedness and permanently reduce such
commitments and repay the Indebtedness and permanently reduce the
commitment of each lender that accepted such offer or (ii)
obtain the requisite consent under the Bank Credit Agreement to
permit the repurchase of the Securities.
- 32-
<PAGE>
In the case of any redemption of Securities, cash
interest installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on
the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the
Indenture shall cease to accrete in value or bear interest, as
the case may be, from and after the Redemption Date.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default shall occur and be continuing,
the Accreted Amount of all the Securities may be declared due and
payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on this
Security and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply
to this Security.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security
shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The indebtedness evidenced by the Securities is
subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding
- 33-
<PAGE>
on the date of the Indenture or thereafter created, incurred,
assumed or guaranteed. Each Holder by his acceptance hereof
agrees to be bound by such provisions and authorizes and
expressly directs the Trustee, on his behalf, to take such action
as may be necessary or appropriate to effectuate the
subordination provided for in the Indenture and appoints the
Trustee his attorney-in-fact for such purpose; provided that the
indebtedness evidenced by this Security shall cease to be so
subordinate and subject in right of payment upon any defeasance
of this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for
the same aggregate principal amount at final Maturity, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 at final Maturity and
any integral multiple thereof. As provided in the Indenture and
subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount at final
Maturity of Securities of a different authorized denomination, as
requested by the Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges payable in connection with any registration of transfer
or exchange.
- 34-
<PAGE>
Prior to the time of due presentment of this Security
for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
I/We assign and transfer this Security to
Insert assignee's soc. sec. or tax ID no. ........
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer
this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
(Sign exactly as your name appears on the other side of this Security.)
Signature Guaranteed:
(Signature must be guaranteed by a member firm of a principal stock
exchange or a commercial bank or trust company.)
- 35-
<PAGE>
Section 204. Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
NATIONSBANK of Georgia,
National Association,
Trustee
By
Authorized Signatory
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount at final Maturity of
Securities which may be authenticated and delivered under this
Indenture is limited to $225,250,000 except for Securities
authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other Securities pursuant to
Section 303, 304, 305, 306, 906, 1011 or 1108.
The Securities shall be known and designated as the
"Junior Subordinated Deferred Coupon Notes due 2003" of the
Company. Their Stated Maturity shall be November 1, 2003, and they
shall bear interest at the rate of 10 3/4% per annum from
November 1, 1999 or the most recent Interest Payment Date to
which interest has been paid or duly provided for, as the case
may be, payable in cash on May 1, 2000 and semi-annually
thereafter on May 1 and November 1 in each year and at said
Stated Maturity, until the principal thereof is paid or duly
provided for. The issue price of this Security was $532.74
per $1,000 principal amount at final Maturity, representing a
yield to final Maturity of 10 3/4% (computed on a semiannual bond
equivalent basis) calculated from October 26, 1993. The Accreted
Amount of the Securities shall not accrue cash interest until
Novemvber 1, 1999 except in the case of a default in payment of
the amount due at Maturity, in which case the amount due to the
Securities shall bear cash interest at a rate of 10 3/4% per annum
(to the extent lawful),
- 36-
<PAGE>
which shall accrue from the date of such default to the date the
payment of such amount has been made or duly provided. Subject
to Article Thirteen, interest on any overdue amount of principal,
interest (to the extent lawful) or premium, if any, shall be
payable on demand.
The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the
Company maintained for such purpose in The City of New York, or
at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall
appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
The Indebtedness evidenced by the Securities shall be
subordinated in right of payment to Senior Indebtedness as
provided in Article Thirteen.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 at final
Maturity and any integral multiple thereof.
Section 303. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the
Company by any two of the following: its Chairman, one of its
Vice Chairmen, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal
amount at Maturity of up to $ . At any time and
from time to time after the execution and delivery
- 37-
<PAGE>
of this Indenture, the Company may deliver Securities executed by
the Company to the Trustee for authentication, together with a
Company Order for the authentication and delivery of such
Securities; and the Trustee in accordance with such Company Order
shall authenticate and deliver such Securities as provided in
this Indenture and not otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee by manual signature of one of its duly authorized
signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of substantially all
of its properties and assets to any Person, and the successor
Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto with the Trustee
pursuant to Article Eight, any of the Securities authenticated or
delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at
the request of the successor Person, be exchanged for other
Securities executed in the name of the successor Person with such
changes in phraseology and form as may be appropriate, but
otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and
the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any
time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any
Securities, such successor Person, at the option of any Holder
but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such
Holder for Securities authenticated and delivered in such new
name.
The Trustee may appoint an authenticating agent acceptable
to the Company to authenticate Securities on behalf of the Trustee.
Unless limited by the terms of such appointment, an authenticating
agent may authenticate Securities whenever the Trustee may do so.
Each reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as any Security Registrar or Paying Agent to deal
with the Company and its Affiliates.
- 38-
<PAGE>
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities.
The Trustee (and any other office or agency so designated) is
hereby initially appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 1002 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations and of
a like aggregate principal amount.
- 39-
<PAGE>
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denomination or
denominations of a like aggregate principal amount upon surrender
of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges that may be imposed in connection with any registration
of transfer or exchange of Securities, other than exchanges
pursuant to Section 303, 304, 306, 906, l0l2 or 1108 not
involving any transfer.
The Company shall not be required (a) to issue, register
the transfer of or exchange any Security during a period
beginning at the opening of business (i) 15 days before the
mailing of a notice of redemption of the Securities selected for
redemption under Section 1104 and ending at the close of business
on the day of such mailing or (ii) 15 days before an Interest
Payment Date and ending on the close of business on the Interest
Payment Date, or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except
the unredeemed portion of Securities being redeemed in part.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
- 40-
<PAGE>
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save
each of them and any agent of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a replacement
Security of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under
this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute a contractual obligation of the Company, whether or
not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the applicable
interest rate borne by the Securities, to the extent
- 41-
<PAGE>
lawful (such defaulted interest (and such interest thereon)
herein collectively called "Defaulted Interest"), shall forthwith
cease to be payable to the Holder on the relevant Regular Record
Date by virtue of having been such Holder; and such Defaulted
Interest may be paid by the Company, at its election in each
case, as provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Subsection provided. Thereupon
the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not
more than 15 days and not less than 10 days prior to the date
of the proposed payment and not less than 10 days after the
receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such
Special Record Date. In the name and at the expense of
the Company, the Trustee shall cause notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class
postage prepaid, to each Holder at his address as it appears
in the Security Register, not less than 10 days prior
to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall
be paid to the Persons in whose names the Securities (or
their respective Predecessor Securities) are registered at
the close of business on such Special Record Date and shall
no longer be payable pursuant to the following Subsection
(b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
- 42-
<PAGE>
Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption or
registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and
shall be promptly cancelled by it. The Company shall deliver to
the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be disposed of as directed by a Company
Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a 360-day year of twelve 30-day months.
- 43-
<PAGE>
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on demand of and at the expense of the
Company shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(l) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company,
and the Company, in the case of (2)(i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with
the Trustee as trust funds in trust for the purpose an
amount in cash in U.S. Dollars or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
- 44-
<PAGE>
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that (i) all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606
and, if money shall have been deposited with the Trustee pursuant
to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section l003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the
provisions of Article Thirteen of this Indenture. If the Trustee
or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's obligations under
this Indenture and the Securities shall be revived and reinstated
as though no deposit had occurred pursuant to Section 401;
provided that if the Company has made any payment of principal
of, premium, if any, or interest on any Securities because of the
reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
- 45-
<PAGE>
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether or not it shall be occasioned or prohibited
by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by the operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body):
(a) default in the payment of any interest on any
Security when such interest becomes due and payable and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(c) default in the performance, or breach, of any
covenant or agreement of the Company hereunder (other than a
default in the performance, or breach, of a covenant or
agreement that is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in
aggregate principal amount at final Maturity of the
Outstanding Securities a written notice specifying such
default or breach and stating that such notice is a "Notice
of Default" hereunder; or
(d) (i) an event of default shall have occurred under
any mortgage, bond, indenture, loan agreement or other
document evidencing any issue of Indebtedness of the Company
or any Material Subsidiary for money borrowed, which issue
has an aggregate outstanding principal amount of not less
than $50,000,000, and such default shall result in such
Indebtedness becoming, whether by declaration or otherwise,
due and payable prior to the date on which it would
otherwise become due and payable or (ii) a default in
any payment when due at final maturity of any such
Indebtedness; or
(e) final judgments or orders not covered by insurance
or a bond rendered against the Company or any Material
Subsidiary which require the payment in money,
- 46-
<PAGE>
either individually or in an aggregate amount, that is more
than $30,000,000 and such judgment or order shall remain
unsatisfied or unstayed for 60 days; or
(f) the entry of a decree or order by a court having
jurisdiction in the premises (i) for relief in respect of the
Company or any Material Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other
federal or state bankruptcy, insolvency, reorganization or
similar law or (ii) adjudging the Company or any Material
Subsidiary a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Material Subsidiary under
the Federal Bankruptcy Code or any other applicable federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Material Subsidiary or of any
substantial part of any of their properties, or ordering the
winding up or liquidation of any of their affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(g) the institution by the Company or any Material
Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or
state law or any other case or proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
Material Subsidiary to the entry of a decree or order for
relief in respect of the Company or any Material Subsidiary
in any involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law
or to the institution of bankruptcy or insolvency proceedings
against the Company or any Material Subsidiary, or the filing
by the Company or any Material Subsidiary of a petition or
answer or consent seeking reorganization or relief under
the Federal Bankruptcy Code or any other applicable
federal or state law, or the consent by it to the
filing of any such petition or to the appointment
of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator (or other similar official)
of any of the Company or any Material Subsidiary or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as
they become due or taking of corporate action by the Company
or any Material Subsidiary in furtherance of any such action;
or
- 47-
<PAGE>
(h) default in the performance or breach of any of the
provisions of Article Eight.
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than as specified in
Section 50l(f) or 501(g)) occurs and is continuing, the Trustee
or the Holders of at least 25% of the aggregate principal amount
at final Maturity of the Securities then Outstanding may, and the
Trustee at the request of such Holders shall, declare the
Accreted Amount of, premium, if any, and accrued interest on the
Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by the
Holders); provided that so long as the Bank Credit Agreement
shall be in force and effect, if any such Event of Default shall
have occurred and be continuing, any such acceleration shall not
be effective until the earlier of (a) five Business Days
following a notice of acceleration given to the Company and the
agent bank under the Bank Credit Agreement and only if upon such
fifth Business Day such Event of Default shall be continuing or
(b) the acceleration of any Indebtedness under the Bank Credit
Agreement. If an Event of Default specified in Section 501(f) or
501(g) occurs and is continuing, then the amounts described above
shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any Holder thereof.
After a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in aggregate
principal amount at final Maturity of the Securities Outstanding,
by written notice to the Company and the Trustee, may annul such
declaration if (a) the Company has paid or deposited with the
Trustee a sum sufficient to pay (i) all sums paid or advanced by
the Trustee under this Indenture and the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, (ii) all overdue interest on all Securities, (iii)
the unpaid Accreted Amount of and premium, if any, on any
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at
the rate borne by the Securities, and (iv) to the
extent that payment of such interest is lawful, interest upon
overdue interest at the rate borne by the Securities; and (b) all
Events of Default, other than the non-payment of principal of the
Securities which have become due solely by the declaration of
acceleration, have been waived as provided in Section 513 or
cured. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
- 48-
<PAGE>
Notwithstanding the preceding paragraph, in the event of
a declaration of acceleration in respect of the Securities,
because an Event of Default specified in Section 501(d) shall
have occurred and be continuing, such declaration of acceleration
shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or the
holders thereof have rescinded their declaration of acceleration
in respect of such Indebtedness, and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any
payment or other transfer or grant, or any promise or other
undertaking to pay or otherwise transfer or grant, any tangible
or intangible property or right to such holders in connection
with such rescission, and written notice of such discharge or
rescission, as the case may be, shall have been given to the
Trustee by the Company and by the holders of such Indebtedness or
a trustee, fiduciary or agent for such holders, within 60 days
after such declaration of acceleration in respect of the
Securities, and (x) no other Event of Default has occurred during
such 60-day period, and (y) no Default arising from such
discharge has occurred during such 60-day period, which, in
either case, has not been cured or waived during such period.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if
any) and interest, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment of such interest
shall be legally enforceable, upon overdue installments of
interest, at the rate borne by the Securities; and, in addition
thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel.
- 49-
<PAGE>
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; provided that in the
event that proof of such claim and such other papers or
documents have not been so filed by the thirtieth day
prior to the final date on which such claim may be
filed, the holders of Specified Senior Indebtedness
or their representatives shall be permitted to file
such proof of claim and other papers and documents for
and on behalf of the Holders of the Securities; and
- 50-
<PAGE>
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and
to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section
606.
Nothing herein contained shall be deemed to
authorize the Trustee to authorize or consent to or accept or
adopt on behalf of any Holder any proposal, plan of
reorganization, arrangement, adjustment or composition or other
similar arrangement affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of
the claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this
Indenture or the Securities may be prosecuted and enforced by the
Trustee without the possession of any of the Securities or the
production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its
own name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money, securities
or other property collected by the Trustee pursuant to this
Article shall be applied in the following order, at the date or
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the
Trustee under Section 606;
- 51 -
<PAGE>
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal (and premium,
if any) and interest, in respect of which or for the
benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to
the amounts due and payable on such Securities for
principal (and premium, if any) and interest; and
THIRD: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written
notice to the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in aggregate
principal amount at final Maturity of the Outstanding
Securities shall have made written request to the
Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the
Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such
request;
(d) the Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed
to institute any such proceeding; and
(e) no direction inconsistent with such written
request has been given to the Trustee during such 60-day
period by the Holders of a majority in aggregate
principal amount at final Maturity of the Outstanding
Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture except in the
- 52 -
<PAGE>
manner provided in this Indenture and for the equal and ratable
benefit of all the Holders.
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and Interest.
Notwithstanding any other provision in this
Indenture, the Holder of any Security shall have the right, which
is absolute and unconditional, to receive payment of the
principal of (and premium, if any) and (subject to Section 307)
interest on such Security on the respective due dates expressed
in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any
such payment, and such rights shall not be impaired without the
consent of such Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or
remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any
Holder of any Security to exercise any right or remedy accruing
upon any Event of Default shall impair any such right or remedy
or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
- 53 -
<PAGE>
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in aggregate
principal amount at final Maturity of the Outstanding Securities
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the
Trustee, provided that
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to
personal liability, and
(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate
principal amount at final Maturity of the Outstanding Securities
may on behalf of the Holders of all Outstanding Securities waive
any past Default or Event of Default hereunder and its
consequences except a default
(a) in the payment of the principal of, premium, if
any, or interest on any Security, or
(b) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each such Security or Outstanding
Security affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action
- 54 -
<PAGE>
taken, suffered or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than
10% in aggregate principal amount at final Maturity of the
Outstanding Securities, or to any suit instituted by any Holder
for the enforcement of the payment of the principal of (or
premium, if any) or interest on any Security on or after the
respective Stated Maturities expressed in such Security (or, in
the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 516. Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any Holder
of any Security to receive payment of the principal amount (or
Accreted Amount) of, premium, if any, and interest on such
Security on or after the respective due dates expressed in such
Security, or to institute suit for the enforcement of any such
payment on or after such respective dates, shall not be impaired
or affected without the consent of such Holder.
- 55 -
<PAGE>
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 60 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, notice of such Default
hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of (or premium, if
any) or interest on any Security, the Trustee shall be protected
in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of
directors and/or Responsible Officers of the Trustee in good
faith determines that the withholding of such notice is in the
interest of the Holders; and provided further that, in the case
of any default or breach of the character specified in Section
501(c), no such notice to Holders shall be given until at least
30 days after the occurrence thereof.
The Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) a Default under
Section 501(a) or (b) so long as the Trustee is Paying Agent or
(ii) any Default or Event of Default which the Trustee shall have
received written notification or a Responsible Officer charged
with the administration of this Indenture shall have obtained
actual knowledge, and such notification shall not be deemed to
include receipt of information obtained in any report or other
documents furnished under Section 703 or Section 1017(c) or (d)
of this Indenture, which reports and documents the Trustee shall
have no duty to examine.
Section 602. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no
covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee; and
- 56 -
<PAGE>
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; provided that the Trustee shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this subsection (c) does not limit the effect
of subsection (b) of this Section 602;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing,
and does believe, that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 602.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense,
including such reasonable advances as may be requested by the
Trustee.
(f) Subject to the foregoing subsections (a) through
(e) of this Section 602:
(i) The Trustee may rely and shall be protected in
acting or in refraining from acting upon any
- 57 -
<PAGE>
document believed by it to be genuine and to have been
signed or presented by the proper person. The Trustee
need not investigate any fact or matter stated in the
document. Any request or direction of the Company
mentioned herein shall be sufficiently evidenced by a
Company Request or a Company Order and any resolution by
the board of directors of the Company may be sufficiently
evidenced by a Board Resolution.
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of
Counsel. In addition, in determining the Company's
compliance with the financial covenants set forth herein,
the Trustee may rely conclusively on the certificate
delivered to the Trustee pursuant to Section 1017(a).
(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iv) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers.
(v) The Trustee may consult with counsel,
accountants or other experts and any advice of such
counsel, accountants or other experts shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such
advice.
(vi) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this
Section.
(vii) No provision of this Indenture shall require
the Trustee to determine the maximum interest rate
permissible under applicable law.
(viii) The Trustee shall not be deemed to have
knowledge of the occurrence of a Change in Control until
receipt by the Trustee of written notice thereof from the
Company as required in Section 1011 hereof.
- 58 -
<PAGE>
(ix) The Trustee shall not be responsible for
calculating the Applicable Premium and shall be entitled
to rely on the calculation thereof by the Company.
Section 603. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of
Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-l supplied
to the Company are true and accurate, subject to the
qualifications set forth therein.
Section 604. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310(b) and 31l, may otherwise deal
with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the
purposes for which they were received and need not be segregated
from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the
Company.
- 59 -
<PAGE>
Section 606. Compensation and Reimbursement.
The Company covenants and agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and each of its officers,
directors, employees, agents and counsel for, and to hold
them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligation of the Company under this Section 606 to
compensate the Trustee and to pay and reimburse the Trustee for
such expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture and shall not be
subject to the provisions of Article Thirteen. If, and to the
extent that, the Trustee, its counsel, and other agents do not
receive compensation for services rendered, reimbursement of
their advances, expenses and disbursements, or indemnity, as
herein provided, as the result of allowances made in any
reorganization, bankruptcy, receivership, liquidation or other
proceeding or by any plan or reorganization or readjustment of
obligations of the Company, the Trustee shall be entitled, in
priority to the Holders of the Securities, to receive any
distributions of any securities, dividends or other disbursements
which would otherwise be made to the Holders of the Securities in
any such proceeding or proceedings and the Trustee is hereby
constituted and appointed, irrevocably, the attorney-in-fact for
the Holders of the Securities and each of them to collect and
receive, in their name, place and stead,
- 60 -
<PAGE>
such distributions, dividends or other disbursements, to deduct
therefrom the amounts due to the Trustee, its counsel and other
agents on account of services rendered, advances, expenses, and
disbursements made or incurred, or indemnity, and to pay and
distribute the balance, pro rata, to the Holders of the
Securities. The Trustee shall have a lien upon any securities or
other consideration to which the Holders of the Securities may
become entitled pursuant to any such plan or reorganization or
readjustment of obligations, or in any such proceeding or
proceedings; and the court or judge in any such proceeding or
proceedings may determine the terms and conditions under which
any such lien shall exist and be enforced.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Securities upon all money, securities or other
property held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular
Securities, and the Securities are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(f) or 501(g) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under the Federal
Bankruptcy Code and any other applicable federal or state
bankruptcy Law.
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of Section
3l0(b) of the Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Section 310(a)(1) and which shall have a combined capital and
surplus of at least $100,000,000 and have its Corporate Trust
Office located in The City of New York (or, if its Corporate
Trust Office shall not be located in The City of New York, the
Company shall, pursuant to Section 1002, maintain an office or
agency in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be
made or served) to the extent there is such an institution
eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
- 61 -
<PAGE>
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 610, at which time the retiring
Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper,
appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of
the Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company.
(d) If at any time:
(l) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written
request therefor by the Company or by any Holder who
- 62 -
<PAGE>
has been a bona fide Holder of a Security for at least
six months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, the Holder of
any Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with Section 610,
become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders of the Securities
and so accepted appointment, the Holder of any Security who has
been a bona fide Holder for at least six months may on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
- 63 -
<PAGE>
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
provided, however, that the retiring Trustee shall continue to be
entitled to the benefit of Section 606(c); but, on request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
Upon acceptance of appointment by any successor Trustee
as provided in this Section 610, the Company shall give notice
thereof to the Holders of the Securities, by mailing such notice
to such Holders at their addresses as they shall appear on the
Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with
the notice called for by Section 609. If the Company fails to
give such notice within 10 days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
Section 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without
- 64 -
<PAGE>
the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall
have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation
to such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor under the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of
Holders.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be
held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Trust Indenture Act Section 312.
Section 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with
the first May 15 after the first issuance of Securities, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May
l5 if required by Trust Indenture Act Section 313(a).
- 65 -
<PAGE>
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which the Company
may be required to file with the Commission pursuant to
Section l3 or Section 15(d) of the Securities Exchange Act of
1934; or, if the Company is not required to file information,
documents or reports pursuant to either of such Sections,
then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and
periodic information, documents and reports which may be
required pursuant to Section 13 of the Securities Exchange
Act of 1934 in respect of a security listed and registered on
a national securities exchange as may be prescribed from time
to time in such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information,
documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and
regulations; and
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days
after the filing thereof with the Trustee, in the manner and
to the extent provided in Trust Indenture Act Section 313(c),
such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections
(a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
- 66 -
<PAGE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on
Certain Terms.
The Company shall not consolidate or merge with or into
any other Person, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties
and assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to any Person or
permit any of its Subsidiaries to enter into any such transaction
or transactions if such transaction or transactions, in the
aggregate, would result in a transfer of all or substantially all
of the assets of the Company and its Subsidiaries on a
consolidated basis to any Person unless, at the time and after
giving effect thereto:
(i) either (a) the Company shall be the continuing
corporation, or (b) the Person (if other than the Company)
formed by such consolidation, or into which the Company is
merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or disposition the properties and
assets of the Company, substantially as an entirety (the
"Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
the Surviving Entity shall, in either case, expressly assume,
by supplemental indenture hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this
Indenture and this Indenture shall remain in full force and
effect;
(ii) immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Fixed Charge Coverage
Ratio of the Company (or the Surviving Entity if the Company
is not the continuing obligor under this Indenture), for the
Company's four most recently completed full fiscal quarters
is at least 1.75 to 1.0; and
(iv) the Company shall deliver, or cause to be delivered
to the Trustee, an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation,
- 67 -
<PAGE>
merger, transfer or lease and such supplemental indenture, if
one is required by this Section 801, comply with this Section
801 and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale,
assignment, transfer, lease or conveyance or other disposition of
all or substantially all of the assets of the Company in
accordance with Section 801, the successor corporation formed by
such consolidation or into which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made, shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor corporation
had been named as the Company therein. In the event of any
transaction (other than a lease) described in and complying with
the conditions listed in Section 801 in which the Company is not
the continuing corporation, the successor corporation formed or
remaining shall succeed to, and be substituted for, and may
exercise every right and power of, the Company and the Company
would be discharged from all obligations and covenants under this
Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto in form satisfactory to the Trustee, for any
of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein or in the Securities conferred upon the Company;
- 68 -
<PAGE>
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions
with respect to matters or questions arising under this
Indenture; provided that, in each case, such provisions shall
not adversely affect the interests of the Holders;
(d) to secure the Securities pursuant to the
requirements of Section 801 or Section 1010 or otherwise;
(e) to provide for the guarantee of payment of the
Securities by any Subsidiary pursuant to the requirements of
Section 1013 or Section 1014;
(f) to comply with the requirements of the Commission
in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, as contemplated by
Section 905 or otherwise;
(g) to evidence and provide the acceptance of the
appointment of a successor Trustee hereunder; or
(h) to make any other change that does not adversely
affect the rights of any Holder.
Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than a
majority in aggregate principal amount at final Maturity of the
Outstanding Securities, by Act of such Holders delivered to the
Company and the Trustee, each when authorized by a Board
Resolution, and the Trustee may enter into one or more indentures
supplemental hereto for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of
this Indenture or of waiving or modifying in any manner the
rights of the Holders under this Indenture; provided, however,
that no such supplemental indenture, amendment or waiver shall,
without the consent of the Holder of each Outstanding Security
affected thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment after the Stated Maturity
- 69 -
<PAGE>
thereof (or, in the case of redemption, on or after the
Redemption Date) or modify the obligation of the Company to
make and consummate a Change in Control Offer or modify any
of the provisions or definitions with respect thereto; or
(b) reduce the percentage in principal amount at final
Maturity of the Outstanding Securities, the consent of whose
Holders is required for any such supplemental indenture, or
the consent of whose Holders is required for any waiver (of
compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided
for in this Indenture; or
(c) modify any of the provisions of this Section or
Section 513 or Section 1018, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(d) modify any of the provisions of Article Thirteen
hereof in a manner adverse to the Holders of the Securities;
or
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company of any
of its rights and obligations under this Indenture.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Section 315(a) through 315(d) and Section 602
hereof) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's
own rights, duties or immunities under this Indenture or
otherwise.
- 70 -
<PAGE>
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article
may, and shall if required by the Company, bear a notation in
form approved by the Company as to any matter provided for in
such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and
executed by the Company and shall be authenticated and delivered
by the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the
rights of any holders of Senior Indebtedness under Article
Thirteen unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such
supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in
accordance with the terms of the Securities and this Indenture.
- 71 -
<PAGE>
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby
appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands. In addition, the
Company hereby appoints the Trustee as the initial Paying Agent
hereunder.
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or recission and
any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any
Securities, deposit with a Paying Agent a sum in same day funds
(or New York Clearing House funds if such deposit is made prior
- 72 -
<PAGE>
to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal (and premium, if any) or
interest;
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and obligations of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
- 73 -
<PAGE>
payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication,
any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and that of each
Material Subsidiary of the Company and the corporate rights
(charter and statutory), corporate licenses and corporate
franchises of the Company and its Material Subsidiaries, except
where a failure to do so, singly or in the aggregate, is not
likely to have a materially adverse effect upon the business,
assets, financial conditions or results of operations of the
Company and the Material Subsidiaries taken as a whole determined
on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be
required to preserve any such existence (except of the Company),
right, licenses or franchise if the Board of Directors of the
Company, or of the Material Subsidiary concerned, shall determine
that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such Material
Subsidiary and that the loss thereof is not disadvantageous in
any material respect to the Holders.
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or
property of the Company or any of its Subsidiaries and (b) all
material lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a lien upon the property of the
Company or any of its Subsidiaries that could produce a material
adverse effect on the consolidated financial
- 74 -
<PAGE>
condition of the Company; provided, however, that the Company
shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good
faith by appropriate proceedings and in respect of which
appropriate reserves (in the good faith judgment of management of
the Company) are being maintained in accordance with GAAP.
Section l006. Maintenance of Properties.
The Company shall cause all material properties owned by
or leased to it or any Material Subsidiary of the Company and
necessary in the conduct of its business or the business of such
Material Subsidiary to be maintained and kept in normal
condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section shall prevent the
Company or any Material Subsidiary of the Company from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is, in the judgment of the Board of Directors of the
Company or the Material Subsidiary concerned, or of any officer
(or other agent employed by the Company or any Material
Subsidiary of the Company) of the Company or such Material
Subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company
or any Material Subsidiary of the Company and if such
discontinuance or disposal is not adverse in any material respect
to the Securityholders.
The Company shall provide or cause to be provided, for
itself and any Material Subsidiaries of the Company, insurance
(including appropriate self-insurance) against loss or damage of
the kinds customarily insured against by corporations similarly
situated and owning like properties in the same general areas in
which the Company or such Material Subsidiaries operate.
Section 1007. Limitation on Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume, or directly or indirectly
guarantee or in any other manner become directly or indirectly
liable for the payment of, any Indebtedness (including any
Acquired Indebtedness, but excluding Permitted Indebtedness)
unless, at the time of such event and after giving effect thereto
on a pro forma basis, the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately
preceding such event, taken as one period and calculated on the
assumption that such Indebtedness had been incurred on the first
day of such four-quarter period
- 75 -
<PAGE>
and on the assumption that, in connection with the incurrence
of any such Indebtedness, any related acquisition (whether by
means of purchase, merger or otherwise) and any related repayment
of Indebtedness also had occurred on such date with the
appropriate adjustments with respect to such acquisition and
repayment being included in such pro forma calculation, would
have been at least equal to 1.75 to 1.0.
Section 1008. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions
payable in shares of its Qualified Capital Stock or in
options, warrants or other rights to purchase such
Qualified Capital Stock),
(ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any
Affiliate thereof (other than Capital Stock of (x) any
Subsidiary held by the Company or any of its
Majority-owned Subsidiaries and (y) any Majority-owned
Subsidiary of the Company) or any options, warrants or
other rights to acquire such Capital Stock,
(iii) make any principal payment on or redeem,
repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, any
Indebtedness of the Company which is pari passu with or
expressly subordinate in right of payment to the
Securities,
(iv) declare or pay any dividend or distribution on
any Capital Stock of any Subsidiary to any Person (other
than the Company or any of its Majority-owned
Subsidiaries) or purchase, redeem or otherwise acquire
or retire for value any Capital Stock of any Subsidiary
held by any Person (other than the Company or any of its
Majority-owned Subsidiaries), or
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate of the Company (other than
a Majority-owned Subsidiary of the Company) or make any
Investment (other than any Permitted Investment) in any
Person, including any Unrestricted Subsidiary
- 76 -
<PAGE>
(such payments or other actions described in the foregoing
clauses (i) through (v), other than any such action that is a
Permitted Payment, are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted
Payment, if other than cash, as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing and (2) the
aggregate amount of all Restricted Payments (plus Permitted
Payments set forth in Sections 1008(b)(vi), (xi) and (xii) below)
declared or made after the date hereof (including Investments in
Unrestricted Subsidiaries pursuant to the provisions of
Section 1016) shall not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated
Adjusted Net Income of the Company accrued on a
cumulative basis during the period beginning on
October 31, 1993 and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Adjusted Net Income shall be a
loss, minus 100% of such loss), plus
(B) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company as capital
contributions to the Company, plus
(C) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors,
whose determination shall be conclusive), received
after the date hereof by the Company from the
issuance or sale (other than to any of its
Subsidiaries) of shares of Qualified Capital Stock of
the Company or warrants, options or rights to
purchase shares (other than issuances permitted by
clause (v) of the definition of Permitted Payments
contained in Section l008(b)) of Qualified Capital
Stock of the Company, plus
(D) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received by the
Company (other than from any of its
- 77 -
<PAGE>
Subsidiaries) upon the exercise of options, warrants
or rights to purchase shares of Qualified Capital
Stock of the Company, plus
(E) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company from the issue or sale
of debt securities that have been converted into or
exchanged for Qualified Capital Stock of the Company,
together with the aggregate cash received by the
Company at the time of such conversion or exchange.
(b) Section 1008(a) to the contrary notwithstanding,
the Company and its Subsidiaries may take the following actions
(clauses (i) through (xi) being referred to as "Permitted
Payments") so long as, in the case of clauses (vi), (ix)
and (xi), no Default or Event of Default has occurred and is
continuing:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at such
declaration date such declaration complied with the
provisions of Section 1008(a) (in which event such
dividend shall be deemed to have been paid on such date
of declaration thereof for purposes of Section 1008(a));
(ii) the repurchase, redemption or other
acquisition or retirement of any shares of any class of
Capital Stock of the Company or any Affiliate of the
Company, in exchange for (including any such exchange
pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu
of the issuance of fractional shares or scrip) or out of
the net cash proceeds of a substantially concurrent
issue and sale (other than to a Subsidiary) of shares of
Qualified Capital Stock of the Company;
(iii) payments by the Company to SMG-II pursuant to
the Tax Sharing Agreement;
(iv) dividends or distributions in an aggregate
amount not to exceed the amount of dividends or
distributions paid to the Company or its Subsidiaries by
Unrestricted Subsidiaries since the date of this
Indenture;
- 78 -
<PAGE>
(v) the redemption, defeasance, repurchase or
acquisition or retirement for value (each, for purposes
of this clause, a "refinancing") of any Indebtedness of
the Company (other than Redeemable Capital Stock) which
is pari passu with or expressly subordinate in right of
payment to the Securities through the issuance of (A)
new Indebtedness of the Company or (B) shares of
Qualified Capital Stock of the Company or Newco,
provided that, with respect to clause (A), any such new
Indebtedness (1) has a principal amount that does not
exceed the principal amount so refinanced plus the
amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium
reasonably determined by the Company as necessary to
accomplish such refinancing, plus the amount of expenses
of the Company incurred in connection with such
refinancing; provided that for purposes of this clause,
the principal amount of any Indebtedness shall be deemed
to mean the principal amount thereof or, if such
Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount
as of the date of determination, (2) has an Average Life
to Stated Maturity that is equal to or greater than the
remaining Average Life to Stated Maturity of the
Securities, (3) has a final Stated Maturity that exceeds
the final Stated Maturity of principal of the
Securities, and (4) is pari passu with or expressly
subordinated in right of payment to the Securities at
least to the same extent as the Indebtedness refinanced;
(vi) dividends, loans or advances by the Company to
Holdings or Newco to enable Holdings to pay cash
dividends on the Holdings Preferred Stock; provided that
on the date of payment of such dividend, the Company,
after giving pro forma effect to such dividend, loan or
advance, would be able to incur $1.00 of additional
Indebtedness under the provisions of Section 1007 (other
than Permitted Indebtedness), assuming a market rate of
interest on such Indebtedness;
(vii) the redemption, repurchase, defeasance or
acquisition or retirement for value of any Pari Passu
Indebtedness; provided that the Company shall redeem,
pursuant to the optional redemption provisions in
Article Eleven and the Securities, the principal
- 79 -
<PAGE>
amount of Securities bearing the same proportion to the
aggregate amount of such Pari Passu Indebtedness being
redeemed, repurchased, defeased or acquired or retired
for value that the aggregate outstanding principal
amount of such Securities bears to the aggregate
outstanding principal amount of such Pari Passu
Indebtedness (without giving effect to such redemption,
repurchase, defeasance, acquisition or retirement);
(viii) the declaration or payment of any dividend or
distribution on any Capital Stock of any Subsidiary, or
the purchase, redemption, acquisition or retirement for
value of any Capital Stock of any Subsidiary; provided
that such declaration, payment, purchase, redemption,
acquisition or retirement is made pro rata among all
holders of such Capital Stock of such Subsidiary;
(ix) payments or other actions described in clauses
(i) through (v) of Section 1008(a) that would otherwise
be Restricted Payments in an aggregate amount not to
exceed $35,000,000;
(x) the dividend or distribution of the Capital
Stock of Plainbridge to Newco;
(xi) the repurchase of any Indebtedness of the
Company which is pari passu with or expressly
subordinate in right of payment to the Securities at a
purchase price not greater than 101% of the principal
amount of such Indebtedness in the event of a Change in
Control pursuant to a provision similar to Section 1011;
provided that prior to such repurchase the Company has
made the Change in Control Offer as provided in such
covenant and has repurchased all Securities validly
tendered for payment in connection with such Change in
Control Offer;
Except as provided in this Section 1008(b) and
Section 1008(a)(2), nothing in this Section 1008 limits or
restricts the making of any Permitted Payment and a Permitted
Payment will not be treated as a Restricted Payment.
(c) In computing Consolidated Adjusted Net Income of
the Company under clause (A) of Section 1008(a), (l) the Company
shall use audited financial statements for the portions of the
relevant period for which audited financial statements are
available on the date of determination and unaudited financial
statements and other current financial data based on
- 80 -
<PAGE>
the books and records of the Company for the remaining portion of
such period and (2) the Company shall be permitted to rely in
good faith on the financial statements and other financial data
derived from the books and records of the Company that are
available on the date of determination. If the Company makes a
Restricted Payment which, at the time of the making of such
Restricted Payment would in the good faith determination of the
Company be permitted under the requirements of this Section 1008,
such Restricted Payment shall be deemed to have been made in
compliance with such provisions notwithstanding any subsequent
adjustments made in good faith to the Company's financial
statements affecting Consolidated Adjusted Net Income of the
Company for any period.
Section 1009. Limitation on Transactions with
Affiliates.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Company (other
than a wholly owned Subsidiary thereof) unless (i) such
transaction or series of transactions is or are on terms that are
no less favorable to the Company or such Subsidiary, as the case
may be, than those that could have been obtained at the time of
such transaction or transactions in a comparable transaction in
arm's-length dealings with an unaffiliated third party and (ii)
(A) with respect to any transaction or series of transactions
involving aggregate payments in excess of $1,000,000, but less
than $10,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or transactions
complies with clause (i) above and (B) with respect to a
transaction or series of transactions, involving aggregate
payments equal to or greater than $10,000,000, (1) such
transaction or transactions shall have received the approval of a
majority of the disinterested directors of the Board of Directors
of the Company if Plainbridge is a party to such transaction or
series of transactions or (2) if Plainbridge is not a party to
such transaction or series of transactions, such transactions or
series of transactions shall have received either the approval of
a majority of the disinterested directors of the Board of
Directors of the Company or the Company shall deliver to the
Trustee a written opinion of a nationally recognized investment
banking firm stating that such transaction is fair to the Company
from a financial point of view; provided, however, that the
foregoing restriction shall not apply to (1) the payment of fees
to Merrill Lynch Capital Partners, Inc. or Merrill Lynch, Pierce,
Fenner & Smith Incorporated or any of their Affiliates
- 81 -
<PAGE>
for consulting, investment banking or financial advisory services
rendered by such Person to the Company or any Subsidiary of the
Company, (2) the payment of reasonable and customary regular fees
to directors of the Company, Newco, SMG-II, Holdings or any of
their respective subsidiaries or parents who are not employees of
any of such Persons, (3) the Logistical Services Agreement and
transactions pursuant thereto and (4) the Spin-Off Agreements and
transactions pursuant thereto. For purposes of this Section
1009(a), any transaction or series of related transactions
between the Company or any Subsidiary and any Affiliate of the
Company that is approved as being on the terms required by clause
(i) in the prior sentence by a majority of the disinterested
directors of the Board of Directors of the Company shall be
deemed to be on terms as favorable as those that might be
obtained at the time of such transaction or series of
transactions in a comparable transaction in arm's-length dealings
with an unaffiliated third party, and thus shall be permitted
under this Section 1009(a).
(b) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, or in any way alter the terms
of the Intercompany Agreement, the Logistical Services Agreement
or the Spin-Off Agreements in a manner materially adverse to the
Company other than (i) by adding new Subsidiaries and (ii) in the
case of the Logistical Services Agreement and the Spin-Off
Agreements, any amendments or modifications that are approved by a
majority of the disinterested directors of the Board of Directors
of the Company.
Section 1010. Limitation on Liens.
The Company will not, and will not permit any Subsidiary
to, create, incur, affirm or suffer to exist any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated Indebtedness
(including any assumption, guarantee or other liability with
respect thereto by any Subsidiary) upon any property or assets
(including any intercompany notes) of the Company or any
Subsidiary owned on the date hereof or acquired after the date
hereof, or any income or profits therefrom, unless the Securities
are directly secured equally and ratably with (or prior to in the
case of Subordinated Indebtedness) the obligation or liability
secured by such Lien, and except for any Lien securing Acquired
Indebtedness created prior to the incurrence of such Indebtedness
by the Company or any Subsidiary, provided that any such Lien
only extends to the assets that were subject to such Lien
securing such Acquired Indebtedness prior to the related
acquisition by the Company or its Subsidiaries.
- 82 -
<PAGE>
Section 1011. Purchase of Securities Upon Change in
Control.
(a) If there shall have occurred a Change in
Control, Securities shall be purchased by the Company, at the
option of the Holder thereof, in whole or in part in integral
multiples of $1,000 at final Maturity, on a date which shall be a
Business Day that is not earlier than 45 days nor later than 60
days from the date the Change in Control Notice referred to below
is given to Holders or such later date as may be necessary for
the Company to comply with requirements under the Exchange Act
(such date, or such later date, being the "Change in Control
Purchase Date"), at a purchase price in cash (the "Change in
Control Purchase Price") in an amount equal to 101% of the
Accreted Amount of such Securities on the Change in Control
Purchase Date, subject to satisfaction by or on behalf of the
Holder of the requirements set forth in Section 1011(c).
(b) Within 30 days after the occurrence of a
Change in Control and prior to the mailing of the Change in
Control Notice to Holders provided for in paragraph (c) below,
the Company covenants to either (1) repay in full all
Indebtedness under the Bank Credit Agreement and permanently
reduce the commitments of the lenders thereunder or offer to
repay in full all such Indebtedness and permanently reduce such
commitments and repay the Indebtedness and permanently reduce the
commitment of each lender who has accepted such offer or (2)
obtain the requisite consent under the Bank Credit Agreement to
permit the repurchase of the Securities as provided for in this
Section 1011. The Company shall first comply with the provisions
of this subsection (b) before it shall be required to repurchase
the Securities pursuant to this Section 1011, and any failure to
comply with this subsection (b) shall constitute a default of a
covenant for purposes of Section 501(c).
(c) Within 30 days following any Change in
Control, the Company shall give written notice of such Change in
Control (a "Change in Control Notice") and of its offer (the
"Change in Control Offer") to purchase Securities as specified
herein to the Trustee, and to each Holder of the Securities at
his address appearing on the Security Register, by first-class
mail, postage prepaid. The Trustee shall be under no obligation
to ascertain the occurrence of a Change in Control. The Change
in Control Notice shall contain all instructions and materials
necessary to enable such Holders to tender
- 83 -
<PAGE>
Securities, shall include a form of Change in Control Purchase
Notice to be completed by the Holder and shall state:
(i) (A) the events causing the Change in Control
and the date such Change in Control is deemed to have
occurred for purposes of this Section 1011, and (B) a
description of any material developments in the
Company's business since the latest annual or quarterly
report filed with the Trustee pursuant to
Section 1017(c) or 1017(d) and, if material, any
appropriate pro forma financial information;
(ii) the date by which a Holder must give a Change
in Control Purchase Notice;
(iii) the Change in Control Purchase Price;
(iv) the Change in Control Purchase Date;
(v) that any Security not purchased will continue
to accrete in value or accrue interest, as the case may
be;
(vi) that Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable
at the Change in Control Purchase Price and from and
after such date (unless the Company shall default
in the payment of the Change in Control Purchase
Price) such Securities shall cease to accrete in value
or accrue interest, as the case may be; and
(vii) the procedures a holder must follow to
exercise rights under this Section 1011 and a brief
description of those rights and the procedures for
withdrawing a Change in Control Purchase Notice.
(d) A Holder may exercise its rights specified in
Section 1011(a) upon (i) delivery to any Paying Agent a written
notice (a "Change in Control Purchase Notice") at any time on or
prior to one Business Day before the Change in Control Purchase
Date, stating (A) the certificate number of the Security that the
Holder will deliver to be purchased and (B) the portion of the
principal amount at final Maturity of the Security that the
holder will deliver to be purchased, which portion must be $1,000
at final Maturity or an integral multiple thereof and (ii)
delivery of such Security to such Paying Agent at such office
prior to, on or after the Change in Control Purchase Date
(together with all necessary endorsements), such delivery being a
condition to receipt by the Holder of the Change in Control
Purchase Price therefor.
- 84 -
<PAGE>
If a Holder has elected to deliver to the Company for purchase a
portion of a Security, and if the principal amount at final
Maturity of such portion is $1,000 or an integral multiple of
$1,000, the Company shall purchase such portion from the Holder
thereof pursuant to this Section 1011. Provisions of this
Indenture that apply to the purchase of all of a Security also
apply to the purchase of a portion of such Security. Each Paying
Agent shall promptly notify the Company of the receipt by the
former of any and all Change in Control Purchase Notices and any
and all written notices of withdrawal thereof.
(e) Upon receipt by any Paying Agent of a Change in
Control Purchase Notice, the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall
(unless such Change in Control Purchase Notice is withdrawn
pursuant to Section 1011(j)) thereafter be entitled to receive
solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of the Business Day
following the Change in Control Purchase Date (provided the
conditions in Section 1011(d) have been satisfied) and the time
of delivery of such Security to the relevant Paying Agent at the
office of such Paying Agent by the Holder thereof in the manner
required by Section 1011(d).
(f) On or prior to the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
in same day funds (or New York Clearing House funds if such
deposit is made prior to the Change in Control Purchase Date)
sufficient to pay the Change in Control Purchase Price of, and
(except if the Change in Control Purchase Date shall be an
Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be purchased on that date.
(g) Upon a Change in Control Purchase Notice having
been given as aforesaid, Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable at the
Change in Control Purchase Price and from and after such date
(unless the Company shall default in the payment of the Change in
Control Purchase Price) such Securities shall cease to accrete in
value or bear interest. Upon surrender of any such Security for
purchase in accordance with the foregoing provisions, such
Security shall be paid by the Company at the Change in Control
Purchase Price; provided, however, that installments of interest
whose Stated Maturity is on or prior to the Change in Control
Purchase Date shall be payable to the Holders of such Securities,
or one or more Predecessor
- 85 -
<PAGE>
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security tendered for purchase shall not be so paid upon
surrender thereof, the Accreted Amount thereof (and premium, if
any, thereon) shall, until paid, bear interest from the Change in
Control Purchase Date at the rate borne by such Security.
(h) Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such
Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in a principal amount at
final Maturity equal to, and in exchange for, the portion of the
principal amount at final Maturity of the Security so surrendered
that is not purchased.
(i) The Company shall comply with the applicable tender
offer rules, including Rule l4e-l under the Exchange Act, in
connection with a Change in Control Offer.
(j) A Change in Control Purchase Notice may be
withdrawn before or after delivery by the Holder to the relevant
Paying Agent at the office of such Paying Agent of the Security
to which such Change in Control Purchase Notice relates, by means
of a written notice of withdrawal (by facsimile transmission or
letter) received by such Paying Agent at such office not later
than one Business Day prior to the Change in Control Purchase
Date, specifying, as applicable:
(i) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(ii) the principal amount at final Maturity of the
Security with respect to which such notice of withdrawal
is being submitted; and
(iii) the principal amount at final Maturity, if
any, of the Security that remains subject to the
original Change in Control Purchase Notice and that has
been or will be delivered for purchase by the Company.
- 86 -
<PAGE>
A written notice of withdrawal may be in the form set
forth in the preceding paragraph. Each Paying Agent will
promptly return to the prospective Holders thereof any Securities
with respect to which a Change in Control Purchase Notice has
been withdrawn in compliance with this Indenture.
Section 1012. Restrictions on Preferred Stock of
Subsidiaries.
The Company will not permit any of its Subsidiaries to
issue any Preferred Stock (other than to the Company or a
Majority-owned Subsidiary of the Company), or permit any Person
(other than the Company or a Majority-owned Subsidiary of the
Company) to own or hold an interest in any Preferred Stock of any
such Subsidiary previously held by the Company or a
Majority-owned Subsidiary of the Company unless such Subsidiary
would be entitled to incur Indebtedness pursuant to the
provisions of Section 1007 in the aggregate principal amount
equal to the aggregate liquidation value of such Preferred Stock
assuming a market rate of interest (as determined by the Company)
for such Preferred Stock as of the date of issuance or transfer.
Section 1013. Limitations on Issuances of Guarantees of
Indebtedness.
The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become
liable with respect to any Pari Passu Indebtedness or
Subordinated Indebtedness, unless such Subsidiary simultaneously
executes and delivers a supplemental indenture hereto providing
for a guarantee of the Securities; provided that, in the case of a
Subsidiary's guarantee, assumption or other liability with
respect to Subordinated Indebtedness, such guarantee, assumption
or other liability shall be subordinated to such Subsidiary's
guarantee of the Securities to the same extent as such
Subordinated Indebtedness is subordinated to the Securities; and
provided further that this Section 1013 shall not be applicable
to any guarantee, assumption or other liability of any Subsidiary
of the Company that (i) existed at the time such Person became a
Subsidiary of the Company and (ii) was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary
of the Company. Any such guarantee of the Securities by a
Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon
either (A) the release or discharge of such guarantee of such
Pari Passu Indebtedness or Subordinated Indebtedness, as the case
may be, except a discharge by or as a result of payment under
such guarantee or (B) any sale, exchange or transfer, to any
Person not an
- 87 -
<PAGE>
Affiliate of the Company, of all the Company's stock in, or all
or substantially all the assets of, such Subsidiary, which sale,
exchange or transfer is made in compliance with the applicable
provisions of this Indenture.
Section 1014. Restriction on Transfer of Assets.
The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its Subsidiaries,
except for (i) sales, conveyances, transfers or other
dispositions of assets or property acquired by the Company after
the date hereof; (ii) sales, conveyances, transfers or other
dispositions of Existing Assets (a) made in the ordinary course
of business; (b) made outside the ordinary course of business
with a net book value that, when aggregated with all other such
transfers by the Company since the date of this Indenture, less
the net book value of Existing Assets transferred to the Company
from its Subsidiaries, would not exceed 10% of the Consolidated
Assets of the Company; or (c) to any Subsidiary if such
Subsidiary simultaneously with such transfer executes and
delivers a supplemental indenture hereto providing for the
guarantee of payment of the Securities by such Subsidiary, which
guarantee shall be subordinated to any guarantee of such
Subsidiary of Senior Indebtedness of the Company and shall be
subordinated to any other Indebtedness of such Subsidiary (which
is not subordinated to any other Indebtedness of such Subsidiary
or which is designated by such Subsidiary as being senior in
right of payment to such guarantee), in each case to the same
extent as the Securities are subordinated to Senior Indebtedness
of the Company under this Indenture and (iii) sales, conveyances,
transfers or other dispositions of Existing Assets made pursuant
to the Spin-Off. Notwithstanding the foregoing, any such
guarantee of a Subsidiary of the Securities shall provide by its
terms that it shall be automatically and unconditionally released
and discharged (i) on the date that the net book value of the
Existing Assets held by the Company is greater than 90% of
Consolidated Assets or (ii) upon any sale, exchange or transfer
to any Person not an Affiliate of the Company of all of the
Company's stock in, or all or substantially all the assets of,
such Subsidiary, which sale, exchange or transfer is made in
compliance with the terms of this Indenture.
Section 1015. Limitation on Dividends and Other
Payment Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any
Subsidiary to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any
kind, on the ability of any Subsidiary to (a) pay dividends
- 88 -
<PAGE>
or make any other distribution on its Capital Stock, (b) pay any
Indebtedness owed to the Company or any Subsidiary, (c) make
loans or advances to the Company or any Subsidiary, or
(d) transfer any of its property or assets to the Company or any
Subsidiary, except (i) any encumbrance or restriction pursuant to
an agreement in effect at or entered into on the date hereof;
(ii) any encumbrance or restriction, with respect to a Subsidiary
that is not a Subsidiary of the Company on the date hereof, in
existence at the time such Person becomes a Subsidiary of the
Company or created on the date it becomes a Subsidiary; (iii) any
encumbrance or restriction on the ability of any Subsidiary whose
assets consist substantially only of fee or leasehold interests
in real property and improvements thereon to transfer any such
interests which are acquired after the date hereof or any
unimproved real property acquired on or prior to the date hereof
to the Company or any Subsidiary, which encumbrance or
restriction is required by a lender to, or purchaser of any
indebtedness of, such Subsidiary in connection with a financing
or refinancing permitted hereunder; and (iv) any encumbrance or
restriction pursuant to any agreement that extends, refinances,
renews or replaces any agreement containing any of the
restrictions described in the foregoing clauses (i)-(iii),
provided that the terms and conditions of any such restrictions
are not materially less favorable to the Holders of the
Securities than those under or pursuant to the agreement
extended, refinanced, renewed or replaced.
Section 1016. Limitation on Unrestricted
Subsidiaries.
The Company will not make, and will not permit any
of its Subsidiaries to make, any Investments in Unrestricted
Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments
then permitted to be made pursuant to Section 1008. Any
Investments in Unrestricted Subsidiaries permitted to be made
pursuant to this Section 1016 (i) will be treated as the payment
of a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or
property.
Section 1017. Statement as to Compliance; Notice
of Default; Provision of Financial Statements.
(a) The Company will deliver to the Trustee,
within 120 days after the end of each fiscal year ending after
the date hereof, a brief certificate of its principal executive
officer, principal financial officer or principal accounting
officer stating whether, to such officer's knowledge, the Company
is in compliance with all covenants and conditions to
- 89 -
<PAGE>
be complied with by it under this Indenture. For purposes of
this Section 1017, such compliance shall be determined without
regard to any period of grace or requirement of notice under this
Indenture.
(b) If a Default has occurred and is continuing,
or if the Trustee, any Holder or the trustee for or the holder of
any other evidence of Indebtedness of the Company (other than
Indebtedness in the aggregate principal amount of less than
$50,000,000) gives any notice or takes any other action with
respect to a claimed Default, the Company shall deliver to the
Trustee an Officers' Certificate specifying such Default, notice
or other action within 5 Business Days of its occurrence.
(c) The Company shall supply without cost to each
Holder of the Securities, and file with the Trustee within l5
days after the Company is required to file the same with the
Commission, copies of the annual reports and quarterly reports
and of the information, documents and other reports which the
Company may be required to file with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act.
(d) If the Company is not required to file with
the Commission such reports and other information referred to in
Section 1017(c), the Company shall furnish without cost to each
Holder of the Securities and file with the Trustee (i) within 105
days after the end of each fiscal year, annual reports containing
the information required to be contained in Items 1, 2, 3, 5, 6,
7, 8, 9, 10, 11, 12 and 13 of Form 10-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in comparable items of any successor form, (ii)
within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, quarterly reports containing the
information required to be contained in Form 10-Q promulgated
under the Exchange Act, or substantially the same information
required to be contained in any successor form and (iii) promptly
from the time after the occurrence of an event required to be
therein reported, such other reports containing information
required to be contained in Form 8-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in any successor form. The Company shall also make
such reports available to prospective purchasers of the
Securities, securities analysts and broker-dealers upon their
request.
Section 1018. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any covenant or condition set forth in Sections 1007
through 1017 (other than Section 1011) if, before or after
- 90 -
<PAGE>
the time for such compliance, the Holders of not less than a
majority in aggregate principal amount of the Securities at the
time Outstanding shall, by Act of such Holders, waive such
compliance in such instance with such covenant or condition, but
no such waiver shall extend to or affect such covenant or
condition except to the extent so expressly waived, and, until
such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such
covenant or condition shall remain in full force and effect.
Section 1019. Calculation of Original Issue
Discount; Certain Information Concerning Tax Reporting.
The Company will deliver to the Trustee, within
40 days of the date of original issuance of the Securities, an
Officer's Certificate, setting forth (i) the amount of the
original issue discount on the Securities, expressed as a U.S.
Dollar amount per $1,000 of principal amount at final Maturity,
(ii) the yield to maturity for the Securities, and (iii) a table
of the amount of the original issue discount on the Securities
expressed as a U.S. Dollar amount per $1,000 of principal amount
at final Maturity accrued for each day from the date of original
issuance of the Securities to November 1, 1999.
On or before December 15 of each year during which any
Securities are Outstanding, the Company shall furnish to the
Trustee such information as may be reasonably requested by the
Trustee in order that the Trustee may prepare the information
which it is required to report for each year on Internal Revenue
Service Forms 1096 and 1099 pursuant to Section 6049 of the
Internal Revenue Code of 1986, as amended. Such information
shall include the amount of original issue discount includable in
income for each $1,000 of principal amount at final Maturity of
Outstanding Securities during such year.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed at the election of
the Company, at any time, as a whole or in part subject to the
conditions and at the Redemption Prices specified in the form of
Security, together with accrued interest to the Redemption Date.
- 91 -
<PAGE>
Section 1102. Applicability of Article.
Redemption of Securities at the election of the
Company or otherwise, as permitted or required by any provision
of this Indenture, shall be made in accordance with such
provision and this Article.
Section 1103. Election to Redeem; Notice to
Trustee.
The election of the Company to redeem any
Securities pursuant to Section 1101 shall be evidenced by a Board
Resolution. In case of any redemption at the election of the
Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the Accreted Amount and principal amount
at final Maturity of Securities to be redeemed.
Section 1104. Selection by Trustee of Securities
to Be Redeemed.
If less than all the Securities are to be redeemed,
the particular Securities or portions thereof to be redeemed
shall be selected not more than 60 days and not less than 30 days
prior to the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, either pro rata,
by lot or, by any other method the Trustee shall deem fair and
reasonable, and the amounts to be redeemed may be equal to $1,000
at final Maturity or any integral multiple thereof.
The Trustee shall promptly notify the Company and
the Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the
context otherwise requires, all provisions relating to redemption
of Securities shall relate, in the case of any Security redeemed
or to be redeemed only in part, to the portion of the principal
amount at final Maturity of such Security which has been or is to
be redeemed.
Section ll05. Notice of Redemption.
Notice of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 21 nor more than 60
days prior to the Redemption Date, to each Holder
- 92 -
<PAGE>
of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to
be redeemed, the identification (and, in the case of a
Security to be redeemed in part, the principal amount at
final Maturity) of the particular Securities to be
redeemed;
(d) that on the Redemption Date the Redemption
Price will become due and payable upon each such
Security or portion thereof, and that (unless the
Company shall default in payment of the Redemption
Price) such Security shall cease to accrete in value or
accrue interest, as the case may be, on and after said
date;
(e) the place or places where such Securities are
to be surrendered for payment of the Redemption Price;
(f) that Securities called for redemption must be
surrendered to the Paying Agent to collect the
Redemption Price;
(g) the CUSIP number, if any, relating to such
Securities; and
(h) in the case of a Security to be redeemed in
part, the principal amount of such Security to be
redeemed and that after the Redemption Date upon
surrender of such Security, new Security or Securities
in the aggregate principal amount at final Maturity
equal to the unredeemed portion thereof will be issued.
Notice of redemption of Securities to be redeemed
at the election of the Company shall be given by the Company or,
at its request, by the Trustee in the name and at the expense of
the Company.
- 93 -
<PAGE>
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company
shall deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in same day
funds (or New York Clearing House funds if such deposit is made
prior to the applicable Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be
an Interest Payment Date) accrued interest on, all the Securities
or portions thereof which are to be redeemed on that date.
Section 1107. Securities Payable on Redemption
Date.
Notice of redemption having been given as
aforesaid, the Securities so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price
therein specified and from and after such date (unless the
Company shall default in the payment of the Redemption Price and
accrued interest) such Securities shall cease to accrete in value
or bear interest, as the case may be. Upon surrender of any such
Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be
so paid upon surrender thereof for redemption, the principal
thereof (and premium, if any, thereon) shall, until paid, accrete
in value or bear interest, as the case may be, from the
Redemption Date at the rate borne by such Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part
shall be surrendered at the office or agency of the Company
maintained for such purpose pursuant to Section 1002 (with, if
the Company, the Security Registrar or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of
- 94 -
<PAGE>
such Security without service charge, a new Security or
Securities, of any authorized denomination as requested by such
Holder in aggregate principal amount at final Maturity equal to
and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
[INTENTIONALLY OMITTED]
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if
any, and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the
prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness (including any interest accruing after the
occurrence of an Event of Default under Section 501(f) or (g)).
This Article Thirteen shall constitute a continuing
offer to all persons who become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit
of the holders of Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment
- 95 -
<PAGE>
for the benefit of creditors or any other marshalling of assets
and liabilities of the Company, then and in any such event:
(1) the holders of all Senior Indebtedness shall be
entitled to receive payment in full, in cash or cash
equivalents, of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision
shall be made for such payment in cash or cash
equivalents, before the Holders of the Securities are
entitled to receive any payment on account of principal
of (or premium, if any) or interest on the Securities;
and
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but
for the provisions of this Article Thirteen, including
any such payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of the Securities (except, so long as the effect
of this parenthetical clause is not to cause the
Securities to be treated in any case or proceeding or
similar event described in Subsection (a), (b) or (c) of
this Section 1302 as part of the same class of claims as
the Senior Indebtedness or any class of claims on a
parity with or senior to the Senior Indebtedness, for
any such payment or distribution (x) authorized by an
order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of
the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law, or
(y) of securities that (A) are unsecured (except to the
extent the Securities are secured), (B) have an Average
Life to Stated Maturity and final maturity which are no
shorter than the Average Life to Stated Maturity of the
Securities or any securities issued to the holders of
the Senior Indebtedness under the Bank Credit Agreement
pursuant to a plan of reorganization or readjustment,
(C) are subordinated, to at least the same extent as the
Securities, to the payment of all Senior Indebtedness
then outstanding and (D) are not guaranteed by any
Subsidiary of the Company (except to the extent the
Securities are so guaranteed)), shall be paid by the
liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
- 96 -
<PAGE>
otherwise, directly to the holders of Senior
Indebtedness or their Representative or Representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the
principal of, and premium, if any, and interest on, and
other amounts due or in connection with, the Senior
Indebtedness held or represented by each, to the
extent necessary to make payment in full, in cash
or cash equivalents, of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent
payment or distribution to the holders of such Senior
Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of
any Security shall have received any such payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities,
including any such payment or distribution which may be
payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to
the payment of the Securities, before all Senior
Indebtedness is paid in full, in cash or cash
equivalents, then and in such event such payment or
distribution shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company
for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, in cash or cash
equivalents, after giving effect to any concurrent
payment or distribution to or for the holders of Senior
Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another corporation upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by
such consolidation or into which the Company is merged or the
corporation which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case
may be, shall, as a
- 97 -
<PAGE>
part of such consolidation, merger, conveyance, transfer or
lease, comply with the conditions set forth in Article Eight.
Section 1303. No Payment When Specified Senior
Indebtedness in Default.
(a) (i) In the event of and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Specified Senior Indebtedness beyond any
applicable grace period with respect thereto, or (ii) in the
event that any other event of default with respect to any
Specified Senior Indebtedness shall have occurred and be
continuing and shall have resulted in such Specified Senior
Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
or (b) in the event that any event of default (other than a
default described in clause (a)) with respect to any Specified
Senior Indebtedness shall have occurred and be continuing
permitting the holders of such Specified Senior Indebtedness (or a
trustee on behalf of such holders) to declare such Specified
Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, then no payment
shall be made by the Company on account of the principal of (or
premium, if any) or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities
(x) in case of any event of default described in subclause (i) of
clause (a), or an event of default described in subclause (ii) of
clause (a) resulting in an acceleration as specified in clause
(a), unless and until such payment event of default shall have
been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded or annulled or the holders
of such Specified Senior Indebtedness or their agents have waived
the benefits of this Section, or (y) in case of any event of
default specified in clause (b), from the earlier of the date the
Company or the Trustee receives written notice of such event of
default (which notice requests that no such payment be made) from
the agent with respect to any such event of default under the
Bank Credit Agreement or any other Representative of a holder of
Specified Senior Indebtedness with respect to any such event of
default under such specified Senior Indebtedness until the
earlier of (1) 179 days after such date and (2) the date, if any,
on which the Specified Senior Indebtedness to which such event of
default relates is discharged or such event of default is waived
by the holders of such Specified Senior Indebtedness (including,
if any Indebtedness under the Bank Credit Agreement is
outstanding, lenders under the Bank Credit Agreement) or
otherwise cured (provided that further written notice relating to
the same or any other event of default specified in clause (b)
above with respect to any Specified Senior Indebtedness
- 98 -
<PAGE>
received by the Company or the Trustee within 12 months after
such receipt shall not be effective for purposes of this
clause (y)).
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over
and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company,
at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under
the conditions described in Section 1303, from making payments at
any time of principal of (and premium, if any) or interest on the
Securities.
Section 1305. Subrogation to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full, in cash or cash
equivalents, of all Senior Indebtedness, the Holders of the
Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness of the Company to
the same extent as the Securities are subordinated and which is
entitled to like rights of subrogation) to the rights of the
holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any)
and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
- 99 -
<PAGE>
Section 1306. Provisions Solely to Define Relative
Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the
Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
express limitations set forth in Article Five and to the rights,
if any, under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to
in Section 1302, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment
prohibited by such Section.
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
- 100 -
<PAGE>
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or
more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice,
the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at
least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to
such date.
Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of
- 101 -
<PAGE>
Senior Indebtedness (or a trustee, fiduciary or agent therefor).
In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness to participate in any
payment or distribution pursuant to this Article, the Trustee may
request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior
Indebtedness held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under this
Article, and if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination
as to the right of such Person to receive such payment.
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 602, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending,
or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article.
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
- 102 -
<PAGE>
Section 1312. Article Applicable to Paying Agents.
In case at any time Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 1311 shall not apply to
the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
Section 1313. Rescission.
The provisions of this Article Thirteen shall continue
to be effective or be reinstated, as the case may be, if at any
time any payment in respect of any Senior Indebtedness is
rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
Section 1314. Application by Trustee of Assets
Deposited With It.
Any cash or U.S. Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with
Section 1401 shall be for the sole benefit of the Holders and
shall not be subject to the subordination provisions of this
Article Thirteen.
Section 1315. Trustee's Relation to Senior
Indebtedness.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article Thirteen, and no implied covenants or obligations with
respect to the holders of Senior Indebtedness shall be read into
this Article against the Trustee. The Trustee shall not be
deemed to owe any fiduciary duty to the holders of Senior
Indebtedness. The Trustee shall not be liable to any holder of
Senior Indebtedness if it shall mistakenly pay over or deliver to
Holders, the Company or any other Person moneys or assets to
which any holder of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
- 103 -
<PAGE>
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401. Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
Section 1402 or Section 1403 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in
this Article Fourteen.
Section 1402. Defeasance and Discharge.
Upon the Company's exercise under Section l401 of the
option applicable to this Section 1402, the Company shall be
deemed to have been discharged from its obligations with respect
to all Outstanding Securities on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented
by the Outstanding Securities, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such
Securities and this Indenture, including its obligations under
the covenants contained in Article Thirteen (and the Trustee, on
demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities
to receive solely from the trust fund described in Section 1404
and as more fully set forth in such Section, payments in respect
of the principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the
Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section
1403 with respect to the Securities.
- 104 -
<PAGE>
Section 1403. Covenant Defeasance.
Upon the Company's exercise under Section 1401 of the
option applicable to this Section 1403, the Company shall be
released from its obligations under the covenants contained in
Articles Eight and Thirteen and in Sections 1007 through 1017
with respect to the Outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "Outstanding" for all other
purposes hereunder (it being understood that such Securities
shall not be deemed Outstanding for financial accounting
purposes). For this purpose, such covenant defeasance means
that, with respect to the Outstanding Securities, the Company may
omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any
reference in any such covenant to any other provision herein or
in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(c)
or Section 501(h), but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected
thereby. In addition, upon the Company's exercise under Section
1401 of the option applicable to Section 1403, Sections 501(c)
through 501(h) (other than Sections 501(f) and (g)) shall not
constitute Events of Default.
Section 1404. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of
either Section 1402 or Section 1403 to the Outstanding
Securities:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such
Securities, (A) cash in U.S. Dollars in an amount, or
(B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect
thereof in accordance with their
- 105 -
<PAGE>
terms will provide, not later than one day before the
due date of any payment, cash in U.S. Dollars in an
amount, or (C) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent
public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge
and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal
of (and premium, if any) and interest on the Outstanding
Securities on the Stated Maturity of such principal or
installment of principal (and premium, if any) or
interest and; provided that the Trustee shall have been
irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this
purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of
America for the timely payment of which its full faith
and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States
of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of
1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of
the holder of such depository receipt; provided that
(except as required by law) such custodian is not
authorized to make any deduction from the amount
payable to the holder of such depository receipt
from any amount received by the custodian in
respect of the U.S. Government Obligation or the
specific payment of principal of or interest on the U.S.
Government Obligation evidenced by such depository
receipt;
(2) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to
the effect that, and based
- 106 -
<PAGE>
thereon such opinion shall confirm that, the Holders of
the Outstanding Securities will not recognize income,
gain or loss for federal income tax purposes as a result
of such defeasance and will be subject to federal income
tax on the same amounts, in the same manner and at the
same times as would have been the case if such
defeasance had not occurred;
(3) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect
that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had
not occurred;
(4) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Subsection
501(f) or 501(g) is concerned, at any time during the
period ending on the 91st day after the date of such
deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such
period);
(5) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other material
agreement or instrument to which the Company is a party
or by which it is bound;
(6) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Officers' Certificate stating that the
deposit made by the Company pursuant to its election
under Section 1402 or 1403 was not made by the Company
with the intent of preferring the Holders over other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that all
conditions precedent provided for relating to either the
defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be)
- 107 -
<PAGE>
have been complied with as contemplated by this Section
1404.
On and after the date the conditions set forth above are
satisfied, the United States dollars or U.S. Government
Obligations so deposited shall not be subject to the rights of
the holders of Senior Indebtedness pursuant to the provisions of
Article Thirteen.
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Section 1404 in respect
of the Outstanding Securities shall be held in trust and applied
by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to Article Thirteen.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
cash or U.S. Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 1404(l)), are in excess of the
amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
- 108 -
<PAGE>
Section 1406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or U.S. Government Obligations in
accordance with Section 1402 or 1403, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the
case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 1402
or 1403, as the case may be; provided, however, that, if the
Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money
held by the Trustee or Paying Agent.
* * * * *
- 109 -
<PAGE>
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
PATHMARK STORES, INC.
By: /s/ Anthony Cuti
Title:
Attest: /s/
Title:
NATIONSBANK of Georgia,
National Association
By: /s/ Elizabeth Tulley
Title: Trust Officer
Attest:
Title:
- 110 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of October, 1993, before me
personally came Elizabeth Tulley, to me known, who, being by me
duly sworn, did depose and say that s/he resides at Atlanta
Georgia; that s/he is Trust Officer of PATHMARK STORES, INC.,
one of the corporations described in and which executed the above
instrument; that s/he knows the corporate seal of such corporation;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of
Directors of such corporation; and that s/he signed her/his name
thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
-------------------------
Notary Public
- 111 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of October, 1993, before me
personally came Anthony Cuti, to me known, who, being duly
sworn, did depose and say that s/he resides at Saddle River,
New Jersey; that s/he is President of NATIONSBANK of Georgia,
National Association, one of the corporations described in and
which executed the above instrument; that s/he knows the corporate
seal of such corporation; that the seal affixed to said instrument
is such corporate seal; that it was so affixed pursuant to
authority of the Board of Directors of such corporation; and that
s/he signed her/his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
-------------------------
Notary Public
- 112 -
<PAGE>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<TABLE>
<S> <C>
(000's OMITTED)
INDUSTRIAL REVENUE BONDS
(See details on page 2) $ 6,375
OTHER DEBT (PRIMARILY MORTGAGES)
(See details on page 2) 41,804
-------
$48,179
=======
Holdings Intercompany Note related to the Holdings Subordinated Notes in an aggregate principal amount
equal to or less than $3,361,000.
Holdings Intercompany Note related to the 13-1/8 Junior Subordinated Discount Debentures due 2003 of
Holdings in an aggregate principal amount equal to or less than $1,800,000.
</TABLE>
S-I-1
<PAGE>
<TABLE><CAPTION>
Schedule I (cont'd)
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<S> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS RATE DATE (IN THOUSANDS)
------------------------ -------- -------- --------------
Massachusetts Mutual Life 9.0% 1999 $ 243
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life 7.0 1994 1,207
Insurnace Company
200 Berkley Street
Boston, MA 02117
Re: Bridge Stuart Properties
Massachusetts Mutual Life 7.0-9.0 1993-99 480
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Pennsylvania Stuart Properties
Connecticut General Life 10.2-10.4 1997-99 855
Insurance Company
Hartford, CT 06115
Re: Jersey Stuart Properties
Prudential Insurance Company 10.5 1998 37,278
of America
10 Rockefeller Center, 15th Fl.
New York, NY
Re: SGC Mortgaged Properties
Delaware Economic Development 10.875 2003 3,000
Authority
c/o Philadelphia National Bank
P.O. Box 7010
Philadelphia, PA
Re: Lancaster Pike IRB
Industrial Revenue Bonds 10.6 2003 3,375
c/o Philadelphia National Bank
P.O. Box 7918
Philadelphia, PA
Re: Schillington IRB
Jacqueline Nallitt 11.0 1999 276
1688 Victory Blvd.
Staten Island, NY
Re: Forrest Ave. Mall Store
Mt. Vernon Urban Renewal Agency 8.0 1995 670
9 South First Ave., 9th Fl.
Mt. Vernon, NY 10550
Re: Mt. Vernon Development
AFCO 5.5 1994 795
900 Lanidex Plaza
Parsippany, NJ 07054
Re: Insurance Policy Premium ______
LONG TERM DEBT $48,179
=======
</TABLE>
S-I-2
<PAGE>
<TABLE><CAPTION>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING LIENS
----------------------
The Indebtedness listed hereon is secured only by mortgages on the properties listed opposite such
Indebtedness.
<S> <C> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
Massachusetts Mutual Life Pathmark of Hamilton 9.0% 1999 $ 243
Insurance Company 2735 S. Broad Street
1295 State Street Hamilton Township, NJ 08610
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life Pathmark of Inwood 7.0% 1994 362
Insurance Company 410 W. 207th Street
200 Berkley Street New York, NY 10034
Boston, MA 02117
Re: Bridge Stuart Properties Pathmark & Rickel of 511
Edgewater Park
2110 Rt. 130 & Wood Lane Rd.
Beverly, NJ 08010
Pathmark of Ivy Hill .344
1331 Ivy Hill Road
Springfield Township
Philadelphia, PA 19150
Massachusetts Mutual Life Former Pathmark of Whitaker 7.0-9.0 1993-99 394
Insurance Company 5520 Whitaker Avenue
1295 State Street Philadelphia, PA 19124
Springfield, MA 01101
Re: Pennsylvania Stuart Franklin Township Gas
Properties 673 Somerset Street
Somerset, NJ 08873
Paramus Gas 34
639 Route 17 South
Paramus, NJ 07652
Fairless Hills Gas 28
Route 1 and Atlantic Ave.
Fairless Hills, PA 19030
Connecticut General Life Pathmark of Belmont 10.2-10.4 1997-99 855
Insurance Company 115 Belmont Avenue
Hartford, CT 06115 Belleville, NJ 07109
Re: Jersey Stuart
Properties
Prudential Insurance Company Pathmark of Upper Darby 10.5 1998 1,710
of America 421 S. 69th Street
10 Rockefeller Center, Upper Darby, PA 19082
15th Fl.
New York, NY
Re: SGC Mortgaged Properties Pathmark & Rickel of 4,355
Glenolden
140 N. McDade Blvd.
Glenolden, PA 19036
Pathmark & Rickel of 3,078
Shillington
243A W. Lancaster Avenue
Shillington, PA 19607
</TABLE>
S-I-3
<PAGE>
<TABLE><CAPTION>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Prudential Insurance Company Pathmark of Willow Grove 4,450
of America (continued) 2545 Moreland Road
Willow Grove, PA 19090
Pathmark of Lancaster Pike 2,018
3901 Lancaster Pike
Wilmington, DE 19805
Pathmark & Rickel of East 9,633
Brunswick
50 Race Track Road
East Brunswick, NJ 08615
Rickel of Forrest Avenue 3,135
1520 Forrest Avenue
Staten Island, NY 10302
Rickel of Johnson City 2,337
540 Harry L. Drive
Johnson City, NY 13790
Pathmark Drug of Danbury 10.5 1996 2,200
100 Danbury - Newtown Road
Danbury, CT 06810
Purity Supreme Store 3,762
3375 Berlin Turnpike
Newington, CT 06111
Jacqueline Nallitt Pathmark of Forrest 11.0 1999 276
1688 Victory Blvd. Avenue
Staten Island, NY 1351 Forrest Avenue
Re: Forrest Ave. Mall Store Staten Island, NY 10302
Mt. Vernon Urban Renewal Agency Pathmark Development 8.0 1995 670
9 South First Ave., 9th Fl. One Pathmark Plaza
Mt. Vernon, NY 10550 Mt. Vernon, NY 10550
Re: Mt. Vernon Development
_______
$41,009
=======
</TABLE>
S-I-4
<PAGE>
APPENDIX A
[Form of Intercompany Agreement]
[Indebtedness of the Company or any Majority-owned
Subsidiary to any one or the other of them will qualify
as Permitted Indebtedness if, and only if, such
Indebtedness is made pursuant to and is evidenced
by an agreement in the form of a promissory
note in substantially the form as follows:]
$ , 19
Evidences of all loans or advances ("Loans") hereunder
shall be reflected on the grid attached hereto. FOR VALUE
RECEIVED, , a corporation (the
"Maker"), HEREBY PROMISES TO PAY ON DEMAND to the order of
(the "Holder") the principal sum of the aggregate
unpaid principal amount of all Loans (plus accrued interest
thereon) at any time and from time to time made hereunder.
All capitalized terms used herein that are defined in,
or by reference in, the Indenture between Pathmark Stores, Inc.
and , trustee, dated as of
, 1993 (the "Indenture"), have the meanings assigned to
such terms therein, or by reference therein, unless otherwise
defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01. Not Forgivable. Unless the Maker of the
Loan hereunder is the Company, the Holder may not forgive any
amounts owing under this Intercompany Note.
Section 1.02. Interest; Prepayment. (a) The interest
rate ("Interest Rate") on any Loan shall be a rate per annum
reflected on the grid attached hereto.
(b) The interest, if any, payable on each of the Loans
shall accrue from the date such Loan is made and shall be payable
upon demand of the Holder.
A-1
<PAGE>
(c) If the principal or accrued interest, if any, on
the Loans is not paid on the date demand is made, interest on the
unpaid principal and interest will accrue at a rate equal to the
Interest Rate, if any, plus 1% per annum from maturity until the
principal and interest on such Loans are fully paid.
(d) Any amounts owed hereunder may be prepaid at any
time by the Maker.
Section 1.03. Subordination. All Loans made to the
Company shall be subordinated in right of payment to the payment
and performance of the obligations of the Company and any
Subsidiary under the Indenture, the Securities, and any other
Indebtedness ranking senior to or pari passu with the Securities,
including, without limitation, any Senior Indebtedness; provided
that, with respect to a Subsidiary in any specific instance, such
Subsidiary is also an obligor under the Indenture, the Securities
or such other senior or pari passu Indebtedness, as the case may
be, whether as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If, after the date of
issuance of this Loan an Event of Default has occurred under the
Indenture, then (x) in the event the Maker is not the Company and
not a Subsidiary that is also an obligor under the Indenture or
the Securities (in the case where the Holder is not the Company),
all amounts owing under the Loans hereunder shall be immediately
due and payable (whether or not demand has been made) to the
Holder, (y) in the event the Maker is the Company, the amounts
owing under the Loans hereunder shall not be payable and (z) in
the event the Maker is a Subsidiary that is also an obligor under
the Indenture or the Securities and the Holder is not the Company
or another Subsidiary that is also an obligor under the Indenture
or the Securities, the amounts owing under the Loans hereunder
shall not be due and payable; provided, however, that, if such
Event of Default or acceleration has been waived, cured or
rescinded, such amounts shall no longer be due and payable in the
case of clause (x), and such amounts may be paid in the case of
clauses (y) and (z). If the Holder is a Subsidiary, then the
Holder hereby agrees that if it receives any payments or
distributions on any Loan from the Company, or from a Subsidiary
that is also an obligor under the Indenture or the Securities,
which payments or distributions, pursuant to clause (y) or (z) of
the prior sentence, are not payable after any Event of Default
has
A-2
<PAGE>
occurred, is continuing and has not been waived, cured or
rescinded, such Holder will pay over and deliver forthwith to the
Company or such Subsidiary, as, the case may be, all such
payments and distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement, or consent to depart
therefrom is permitted at any time for any reason, except with
the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities.
Section 3.02. Assignment. No party to this Agreement
may assign, in whole or in part, any of its rights and
obligations under this Agreement, except to its legal
successor-in-interest.
Section 3.03. Third Party Beneficiaries. The Holders
of the Securities or any other Indebtedness ranking pari passu
with, or senior to, the Securities including, without limitation,
any Senior Indebtedness, shall be third party beneficiaries to
this Agreement and shall have the right to enforce this Agreement
against the Company and the Subsidiaries.
Section 3.04. Headings. Article and Section headings
in this Agreement are included for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
Section 3.05. Entire Agreement. This Agreement sets
forth the entire agreement of the parties with respect to its
subject matter and supersedes all previous understandings,
written or oral, in respect thereof.
Section 3.06. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
Section 3.07. Waivers. The Maker hereby waives
presentment, demand for payment, notice of protest and all other
demands and notices in connection with the delivery, acceptance,
performance or enforcement hereof.
By:
A-3
<PAGE>
GRID
Amount Interest Rate
Date of of on the Notation
Advance Advance Advance Made By
<PAGE>
Appendix B-1
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Pathmark Stores Inc.
(the "Borrower"), HEREBY PROMISES TO PAY to the order of Supermarkets
General Holdings Corporation (the "Lender") the principal sum of
United States Dollars (U.S. $ ) at the times and in the
amounts provided for the payment of principal thereof or thereunder
(and any premiums) in the Indenture dated as of May 1, 1992 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture
dated as of October 5, 1993 between the Lender and the
Trustee and the 11-5/8% Subordinated Notes due 2002 issued
thereunder (such Indenture and Notes, as supplemented, amended,
modified or waived from time to time in accordance with the terms
thereof being the "Lender Indenture" and "Lender Subordinated
Notes", respectively), together with interest on such principal
sum from the date hereof at the times and in the amounts provided
in the Lender Indenture and the Lender Subordinated Notes for the
payment of interest thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of October 26,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 11-5/8% Subordinated Notes due 2002
(the "Borrower Indenture"), (ii) the Borrower's 11-5/8%
Subordinated Notes due 2002 (the "Borrower Subordinated Notes")),
(iii) the Subordinated Debentures and the Deferred Coupon Notes
(as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
PATHMARK STORES, INC.
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-1-2
<PAGE>
Appendix B-2
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Pathmark Stores, Inc.
(the "Borrower"), HEREBY PROMISES TO PAY to the order of Supermarkets
General Holdings Corporation (the "Lender") the principal sum of
United States Dollars (U.S. $ ) at the times and
amounts provided for the payment of principal thereof or thereunder
(and any premiums) in the Indenture dated as of May 25, 1987 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as amended and restated as of May 15, 1992 and as
supplemented as of June 15, 1992 and the 12-5/8% Subordinated
Debentures due 2002 issued thereunder (such Indenture and Notes,
as supplemented, amended, modified or waived from time to time in
accordance with the terms thereof being the "Lender Indenture"
and "Lender Subordinated Debentures", respectively), together
with interest on such principal sum from the date hereof at the
times and in the amounts provided in the Lender Indenture and the
Lender Subordinated Debentures for the payment of interest
thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of October 5,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 12-5/8% Subordinated Debentures due
2002 (the "Borrower Indenture"), (ii) the Borrower's 12-5/8%
Subordinated Debentures due 2002 (the "Borrower Subordinated
Notes")), (iii) the Subordinated Notes and the Deferred Coupon
Notes (as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
PATHMARK STORES, INC.
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-2-2
DRAFT - 8/23/93
5754M/6878M
1260J/1264J
PATHMARK STORES, INC.,
Issuer,
and
WILMINGTON TRUST COMPANY,
Trustee
INDENTURE
Dated as of October 26, 1993
11-5/8% Subordinated Notes
due 2002
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 26, 1993*
Trust Indenture Indenture
Act Section Section
Sec. 310(a)(1) ............................. 608
(a)(2) ............................. 608
(b) ............................. 607, 609
Sec. 312(c) ............................. 701
Sec. 314(a) ............................. 703
(a)(4) ............................. 1018
(c)(1) ............................. 103
(c)(2) ............................. 103
(e) ............................. 103
Sec. 315(b) ............................. 601
Sec. 316(a)(last
sentence) ............................. 101 ("Out-
standing")
(a)(1)(A) ............................. 502, 512
(a)(1)(B) ............................. 513
(b) ............................. 508
(c) ............................. 105
Sec. 317(a)(1) ............................. 503
(a)(2) ............................. 504
Sec. 318(a) ............................. 108
* This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 101. Definitions ............................ 1
Acquired Indebtedness .................. 2
Acquisition ............................ 2
Affiliate .............................. 2
Average Life to Stated Maturity ........ 3
Bank Credit Agreement .................. 3
Board of Directors ..................... 3
Board Resolution ....................... 3
Business Day ........................... 3
Capital Lease Obligation ............... 3
Capital Stock .......................... 3
Change in Control ...................... 3
Chefmark ............................... 4
Commission ............................. 4
Company ................................ 4
Company Request or Company Order ....... 4
Consolidated Adjusted Net Income (Loss). 4
Consolidated Assets .................... 5
Consolidated Capital Expenditures ...... 5
Consolidated Fixed Charge
Coverage Ratio ....................... 5
Consolidated Interest Expense .......... 6
Consolidated Non-cash Charges .......... 6
Consolidated Tax Expense ............... 6
Corporate Trust Office ................. 6
Corporation ............................ 6
Default ................................ 6
Deferred Coupon Notes................... 6
Equitable Investors .................... 6
Event of Default ....................... 7
Exchange Act ........................... 7
Existing Assets ........................ 7
Fair Market Value ...................... 7
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Federal Bankruptcy Code ................ 7
Generally Accepted Accounting
Principles or GAAP ................... 7
Guaranteed Debt ........................ 7
Holder ................................. 8
Holdings ............................... 8
Holdings Intercompany Notes ............ 8
Holdings Preferred Stock ............... 8
Indebtedness ........................... 8
Indenture .............................. 9
Intercompany Agreement ................. 9
Interest Payment Date .................. 9
Interest Rate Hedge Arrangement ........ 9
Investments ............................ 9
Lien ................................... 10
Logistical Services Agreement .......... 10
Majority-owned Subsidiary .............. 10
Management Investors ................... 10
Material Subsidiary .................... 10
Maturity ............................... 10
ML Funds ............................... 11
Newco .................................. 11
Officers' Certificate .................. 11
Opinion of Counsel ..................... 11
Outstanding ............................ 11
Pari Passu Indebtedness ................ 12
Paying Agent ........................... 12
Permitted Holders ...................... 13
Permitted Indebtedness ................. 13
Permitted Investment ................... 14
Permitted Payment ...................... 15
Permitted Senior Subordinated
Indebtedness ......................... 15
Person ................................. 15
Plainbridge ............................ 16
Predecessor Security ................... 16
Preferred Stock ........................ 16
Purchase Money Mortgages ............... 16
Qualified Capital Stock ................ 16
Recapitalization ....................... 16
Redeemable Capital Stock ............... 16
-ii-
<PAGE>
PAGE
Redemption Date ........................ 17
Redemption Price ....................... 17
Regular Record Date .................... 17
Representative ......................... 17
Responsible Officer .................... 17
Restricted Payments .................... 17
Security and Securities ................ 17
Senior Indebtedness .................... 17
Senior Subordinated Notes .............. 18
SMG-II ................................. 18
Special Record Date .................... 18
Specified Senior Indebtedness .......... 18
Spin-Off Agreements .................... 19
Spin-Off ............................... 19
Stated Maturity ........................ 19
Subordinated Debentures ................ 19
Subordinated Indebtedness .............. 20
Subsidiary ............................. 20
Tax Sharing Agreement .................. 20
Temporary Cash Investment .............. 20
Trust Indenture Act .................... 20
Trustee ................................ 20
Unrestricted Subsidiary ................ 21
Unrestricted Subsidiary Indebtedness ... 21
Voting Stock ........................... 21
Section 102. Other Definitions ...................... 22
Section 103. Compliance Certificates and Opinions ... 22
Section 104. Form of Documents Delivered to Trustee . 23
Section 105. Acts of Holders ........................ 24
Section 106. Notices, etc., to Trustee
and Company .......................... 25
Section 107. Notice to Holders; Waiver .............. 25
Section 108. Conflict of any Provision of
Indenture with Trust Indenture Act ... 26
Section 109. Effect of Headings and Table of
Contents ............................. 26
Section 110. Successors and Assigns ................. 27
Section 111. Separability Clause .................... 27
Section 112. Benefits of Indenture .................. 27
Section 113. Governing Law .......................... 27
Section 114. Legal Holidays ......................... 27
Section 115. No Recourse Against Others ............. 27
-iii-
<PAGE>
PAGE
ARTICLE TWO
Security Forms
Section 201. Forms Generally ........................ 28
Section 202. Form of Face of Security ............... 28
Section 203. Form of Reverse of Security ............ 30
Section 204. Form of Trustee's Certificate of
Authentication ....................... 34
ARTICLE THREE
The Securities
Section 301. Title and Terms ........................ 35
Section 302. Denominations .......................... 35
Section 303. Execution, Authentication, Delivery and
Dating ............................... 36
Section 304. Temporary Securities ................... 37
Section 305. Registration, Registration of Transfer
and Exchange ......................... 38
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities ........................... 39
Section 307. Payment of Interest; Interest Rights
Preserved ............................ 40
Section 308. Persons Deemed Owners .................. 41
Section 309. Cancellation ........................... 41
Section 310. Computation of Interest ................ 42
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge
of Indenture ......................... 42
Section 402. Application of Trust Money ............. 43
ARTICLE FIVE
Remedies
Section 501. Events of Default ...................... 44
Section 502. Acceleration of Maturity; Rescission ... 46
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee ........... 47
-iv-
<PAGE>
PAGE
Section 504. Trustee May File Proofs of Claim ....... 48
Section 505. Trustee May Enforce Claims Without
Possession of Securities ............. 49
Section 506. Application of Money Collected ......... 49
Section 507. Limitation on Suits .................... 50
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest ............................. 51
Section 509. Restoration of Rights and Remedies ..... 51
Section 510. Rights and Remedies Cumulative ......... 51
Section 511. Delay or Omission Not Waiver ........... 51
Section 512. Control by Holders ..................... 52
Section 513. Waiver of Past Defaults ................ 52
Section 514. Undertaking for Costs .................. 52
Section 515. Waiver of Stay, Extension or
Usury Laws ........................... 53
Section 516. Unconditional Right of Holders
to Institute Certain Suits ........... 53
ARTICLE SIX
The Trustee
Section 601. Notice of Defaults ..................... 53
Section 602. Certain Rights of Trustee .............. 54
Section 603. Not Responsible for Recitals or
Issuance of Securities ............... 56
Section 604. Trustee and Agents May Hold
Securities; Collections; etc. ........ 56
Section 605. Money Held in Trust .................... 57
Section 606. Compensation and Reimbursement ......... 57
Section 607. Conflicting Interests .................. 58
Section 608. Corporate Trustee Required;
Eligibility .......................... 58
Section 609. Resignation and Removal; Appointment
of Successor ......................... 59
Section 610. Acceptance of Appointment by
Successor ............................ 61
Section 611. Merger, Conversion, Consolidation or
Succession to Business ............... 61
Section 612. Preferential Collection of Claims
Against Company ...................... 62
-v-
<PAGE>
PAGE
ARTICLE SEVEN
Holders' Lists and Reports by
Trustee and Company
Section 701. Disclosure of Names and Addresses
of Holders ........................... 62
Section 702. Reports by Trustee ..................... 62
Section 703. Reports by Company ..................... 63
ARTICLE EIGHT
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 801. Company May Consolidate, etc.,
Only on Certain Terms ................ 63
Section 802. Successor Substituted .................. 64
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures
without Consent of Holders ........... 65
Section 902. Supplemental Indentures
with Consent of Holders .............. 66
Section 903. Execution of Supplemental Indentures ... 67
Section 904. Effect of Supplemental Indentures ...... 67
Section 905. Conformity with Trust Indenture Act .... 67
Section 906. Reference in Securities to Supplemental
Indentures ........................... 67
Section 907. Effect on Senior Indebtedness .......... 68
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest ............................. 68
Section 1002. Maintenance of Office or Agency ........ 68
Section 1003. Money for Security Payments to Be
Held in Trust ........................ 69
Section 1004. Corporate Existence .................... 70
Section 1005. Payment of Taxes and Other Claims ...... 71
Section 1006. Maintenance of Properties .............. 71
-vi-
<PAGE>
PAGE
Section 1007. Limitation on Indebtedness ............. 72
Section 1008. Limitation on Restricted Payments ...... 72
Section 1009. Limitation on Transactions with
Affiliates ........................... 77
Section 1010. Limitation on Liens .................... 79
Section 1011. Limitation on Other Senior
Subordinated Indebtedness ............ 79
Section 1012. Purchase of Securities Upon Change in
Control .............................. 79
Section 1013. Restrictions on Preferred Stock of
Subsidiaries ......................... 83
Section 1014. Limitations on Issuances of Guarantees
of Indebtedness ...................... 83
Section 1015. Restriction on Transfer of Assets ...... 84
Section 1016. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries ......................... 85
Section 1017. Limitation on Unrestricted
Subsidiaries ......................... 85
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial
Statements ........................... 86
Section 1019. Waiver of Certain Covenants ............ 87
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption .................... 87
Section 1102. Applicability of Article ............... 87
Section 1103. Election to Redeem; Notice to Trustee .. 88
Section 1104. Selection by Trustee of Securities to
Be Redeemed .......................... 88
Section 1105. Notice of Redemption ................... 88
Section 1106. Deposit of Redemption Price ............ 89
Section 1107. Securities Payable on Redemption Date .. 89
Section 1108. Securities Redeemed in Part ............ 90
ARTICLE TWELVE
Sinking Fund
Section 1201. Mandatory Sinking Fund Payments ........ 90
Section 1202. Satisfaction of Sinking Fund
Payments with Securities ............. 91
Section 1203. Redemption of Securities for
Sinking Fund ......................... 91
-vii-
<PAGE>
PAGE
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior
Indebtedness ......................... 92
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc. .................... 92
Section 1303. No Payment When Specified Senior
Indebtedness in Default .............. 94
Section 1304. Payment Permitted if No Default ........ 96
Section 1305. Subrogation to Rights of Holders
of Senior Indebtedness ............... 96
Section 1306. Provisions Solely to Define
Relative Rights ...................... 96
Section 1307. Trustee to Effectuate Subordination .... 97
Section 1308. No Waiver of Subordination Provisions .. 97
Section 1309. Notice to Trustee ...................... 98
Section 1310. Reliance on Judicial Order or
Certificate of Liquidating Agent ..... 99
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights ..................... 99
Section 1312. Article Applicable to Paying Agents .... 99
Section 1313. Rescission ............................. 100
Section 1314. Application by Trustee of Assets
Deposited With It .................... 100
ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section 1401. Option to Effect Defeasance
or Covenant Defeasance ............... 100
Section 1402. Defeasance and Discharge ............... 100
Section 1403. Covenant Defeasance..................... 101
Section 1404. Conditions to Defeasance or
Covenant Defeasance .................. 102
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ....... 104
Section 1406. Reinstatement .......................... 105
TESTIMONIUM........................................... 106
SIGNATURES AND SEALS.................................. 106
-viii-
<PAGE>
ACKNOWLEDGMENTS
EXISTING INDEBTEDNESS..............................SCHEDULE I
FORM OF INTERCOMPANY AGREEMENT.....................APPENDIX A
FORM OF HOLDINGS INTERCOMPANY NOTE.................APPENDIX B
-ix-
<PAGE>
INDENTURE, dated as of October 26, 1993, between PATHMARK
STORES, INC., a Delaware corporation (hereinafter called the
"Company"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an
issue of its 11-5/8% Subordinated Notes due 2002 (hereinafter
called the "Securities"), of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has
duly authorized the execution and delivery of this Indenture;
This Indenture is subject to, and shall be governed by,
the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust
Indenture Act;
All acts and things necessary have been done to make
the Securities, when executed by the Company and authenticated
and delivered hereunder and duly issued by the Company, the
valid, binding and legal obligations of the Company, and to make
this Indenture a valid agreement of the Company in accordance
with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
<PAGE>
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United
States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Articles Five, Six,
Ten, Thirteen and Fourteen are defined in those Articles.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) (i) existing at the time
such Person becomes a Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person, other than
Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary or such acquisition, as the
case may be.
"Acquisition" means the acquisition of the Company by
Holdings completed in October 1987, pursuant to the Agreement and
Plan of Merger dated as of April 22, 1987 among the Company, SMG
Acquisition Corporation and Holdings, as amended.
"Affiliate" means, with respect to any specified Person,
(i) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person or (ii) for purposes of Section l009 only,
any other Person that owns, directly or indirectly, 10% or more
of such Person's Capital Stock or any officer or director of any
such Person or other Person or with respect to any natural
Person, any person having a relationship with such Person by
blood, marriage or adoption not more remote than first cousin.
For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
- 2-
<PAGE>
"Average Life to Stated Maturity" means, as of the date
of determination, with respect to any Indebtedness, the quotient
obtained by dividing (i) the sum of the products of (a) the
number of years from the date of determination to the date or
dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated
as of the date hereof among the Company and the lenders
thereunder and Bankers Trust Company, as agent, as in effect on
the date hereof, and as such agreement may be amended, renewed,
extended, supplemented or otherwise modified from time to time,
and any agreement or successive agreements governing Indebtedness
incurred to refund, refinance, restructure or replace the
Indebtedness and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or other agreement.
"Board of Directors" means the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking
institutions in The City of New York or the State of Delaware are
authorized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated
basis under any capital lease of real or personal property which,
in accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated) of such Person's capital stock whether now
outstanding or issued after the date hereof.
"Change in Control" means an event as a result of which:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Permitted Holders is or
becomes the "beneficial owner" (as
- 3-
<PAGE>
defined in Rules 13d-3 and l3d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
Voting Stock of the Company and (ii) such person succeeds in
having its nominees constitute a majority of the Company's Board
of Directors.
"Chefmark" means Chefmark, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act
Sections 3l0 through 317 as they are applicable to the Company,
the term "Company" shall include any other obligor with respect
to the Securities for the purposes of complying with such
provisions.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company (i) by its
Chairman, a Vice Chairman, its President or a Vice President and
(ii) by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any
two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Consolidated Adjusted Net Income (Loss)" of the Company
means, for any period, the consolidated net income (loss) of the
Company and its consolidated Subsidiaries for such period as
determined in accordance with GAAP, adjusted by excluding (i) net
after-tax extraordinary gains or losses (less all fees and
expenses relating thereto), as the case may be, (ii) net
after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset sales, (iii) any
- 4-
<PAGE>
depreciation and amortization expense incurred by the Company and
its consolidated Subsidiaries from the date of the Acquisition to
the date of determination resulting from (a) any write-up in the
book value of any assets due to the Acquisition and (b) any
goodwill due to the Acquisition (including any write-off or
accelerated amortization of goodwill), (iv) any expenses incurred
in connection with the Acquisition and the financing thereof and
the Recapitalization, (v) any expenses relating to the incurrence
or refinancing of Indebtedness, (vi) the net income (or loss) of
any Person (including any Unrestricted Subsidiary and excluding
the Company or a Subsidiary) in which the Company or any of its
Subsidiaries has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to
the Company or its Subsidiaries by such other Person during such
period, (vii) net income (or net loss) of any Person combined
with the Company or any of its Subsidiaries in a "pooling of
interests" basis attributable to any period prior to the date of
combination and (viii) non-cash charges of the Company and its
Subsidiaries resulting from the application of Statement of
Financial Accounting Standards No. 106 ("SFAS 106") to the extent
such charges exceed the cash payments for benefits covered by
SFAS 106 for the relevant period.
"Consolidated Assets" means the net book value of the
Existing Assets shown on the balance sheet of the Company, as
determined in accordance with GAAP consistently applied, as of
the last day of the Company's last fiscal quarter prior to the
date hereof.
"Consolidated Capital Expenditures" means cash capital
expenditures reflected in the consolidated statement of cash
flows of the Company and Capital Lease Obligations that are on
the consolidated balance sheet of the Company and its
Subsidiaries, in each case in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the
Company means, for any period, the ratio of (i) the sum of
Consolidated Adjusted Net Income, Consolidated Interest Expense,
Consolidated Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Adjusted Net Income, in each
case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, to
(ii) the sum of such Consolidated Interest Expense for such
period; provided that, in making such computation, the
Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the
date of computation had been the applicable rate for the entire
period; provided, further, that
- 5-
<PAGE>
in making any calculation prior to the first anniversary date of
the Recapitalization, the Recapitalization shall be deemed to
have taken place on the first day of such period.
"Consolidated Interest Expense" means, for any period,
the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a
consolidated statement of earnings of the Company and its
Subsidiaries for such period minus the aggregate amount for such
period of interest imputed on future liabilities of the Company
and its Subsidiaries, other than Indebtedness, recorded at
present value. Consolidated Interest Expense shall include
accruals in respect of Interest Rate Hedge Arrangements (but
shall exclude any such accruals in the nature of amortization of
front-end fees or other similar payments).
"Consolidated Non-cash Charges" of the Company means,
for any period, the aggregate depreciation, amortization and
other non-cash charges of the Company and its consolidated
Subsidiaries for such period, as determined in accordance with
GAAP (excluding any such non-cash charge which requires an
accrual of or reserve for cash charges for any future period).
"Consolidated Tax Expense" of the Company means, for any
period, as applied to the Company, the provision for federal,
state, local and foreign income taxes of the Company and its
consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business
shall be principally administered, which office at the date of
execution of this Indenture is located at Rodney Square North,
Wilmington, Delaware 19890.
"Corporation" includes corporations, associations,
partnerships, companies and business trusts.
"Default" means any event that is, or after notice or
passage of time or both would be, an Event of Default.
"Deferred Coupon Notes" means the Junior Subordinated
Deferred Coupon Notes due 2003 of the Company in aggregate
principal amount at maturity of $225,250,000.
"Equitable Investors" means The Equitable Life Assurance
Society of the United States and any of its Affiliates that
beneficially own, directly or indirectly, shares of Capital Stock
of SMG-II, Holdings, Newco or the Company.
- 6-
<PAGE>
"Event of Default" has the meaning specified in Article
Five.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Assets" means the assets and other property
held by the Company (and not its subsidiaries) as of the last day
of the Company's last fiscal quarter prior to the date hereof,
adjusted by excluding any assets and other property transferred
to Newco in the Spin-Off, plus any assets held by the Company
(and not its subsidiaries) irrevocably designated from time to
time by the Company as Existing Assets.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's
length transaction between an informed and willing seller under
no compulsion to sell and an informed and willing buyer.
"Federal Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time.
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to
time; provided, however, that with respect to the obligations of
any Person under Articles Eight and Ten and the definitions
applicable thereto, "GAAP" means generally accepted accounting
principles in the United States as in effect on the date hereof.
"Guaranteed Debt" of any Person means, without
duplication, all Indebtedness of any other Person referred to in
the definition of Indebtedness contained in this Section 101
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) other than with respect to the Logistical
Services Agreement or any Spin-Off Agreement, to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) other than with respect to the
Logistical Services Agreement or any Spin-Off Agreement, to
supply funds to, or in any other manner invest in, the debtor
(including any agreement to pay for property or services to be
acquired by such debtor irrespective of whether such property is
received or such
- 7-
<PAGE>
services are rendered) or (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net
worth, solvency or other financial condition of the debtor or (v)
otherwise to assure a creditor against loss; provided that the
term "guarantee" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or
any obligation or liability of such Person in respect of
leasehold interests assigned by such Person to any other Person.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation, and any successor thereto.
"Holdings Intercompany Notes" means the 11-5/8%
subordinated note and the 12-5/8% subordinated debenture each
issued by the Company to Holdings in the forms attached hereto as
Appendix B and in aggregate principal amounts not in excess of
the principal amounts outstanding on the date hereof.
"Holdings Preferred Stock" means Holdings' Cumulative
Exchangeable Redeemable Preferred Stock, par value $.01 per
share, having a liquidation preference of $25 per share and
maturing on December 31, 2007, that is outstanding on the date
hereof.
"Indebtedness" means with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables, import
letters of credit and other accrued current liabilities incurred
in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such
Person in connection with any standby letters of credit and
acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the
rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of
such property), but excluding trade accounts payable arising in
the ordinary course of business, (iv) all Capital Lease
Obligations of such Person, (v) all Indebtedness referred to in
(but not excluded from) clause (i), (ii), (iii) or (iv) above of
other Persons and all dividends of other Persons, the payment of
which is secured by (or for which
- 8-
<PAGE>
the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien, upon or in property
(including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, (vi) all
Guaranteed Debt of such Person, (vii) all Redeemable Capital
Stock issued by such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus
accrued and unpaid dividends and (viii) all obligations under
interest rate hedge contracts of such Person. For purposes
hereof, the "maximum fixed repurchase price" of any Redeemable
Capital Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Redeemable
Capital Stock as if such Redeemable Capital Stock were purchased
on any date on which Indebtedness shall be required to be
determined pursuant to this Indenture, and if such price is based
upon, or measured by, the fair market value of such Redeemable
Capital Stock, such fair market value to be determined in good
faith by the board of directors of the issuer of such Redeemable
Capital Stock.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable
provisions hereof.
"Intercompany Agreement" means the agreement in the form
attached hereto as Appendix A, as amended or modified in
accordance with the terms of this Indenture.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Hedge Arrangement" means any rate swap
transaction under a rate swap agreement to which the Company is a
party or beneficiary, or becomes a party or beneficiary, and any
interest rate protection agreement, interest rate future,
interest rate option or other interest rate hedge arrangement to
or under which the Company is a party or a beneficiary, or
becomes a party or a beneficiary, or to or under which any
Subsidiary of the Company is or becomes such a party or
beneficiary if the obligations of such Subsidiary thereunder are
guaranteed by the Company.
"Investments" of any Person means, directly or
indirectly, any advance, loan or other extension of credit or
capital contribution by such Person to (by means of any transfer
of cash or other property to others or any payment for property
or services for the account or use of others) any
- 9-
<PAGE>
other Person, or any purchase or acquisition by such Person of
any stock, bonds, notes, debentures or other securities issued or
owned by any other Person. For the purpose of making any
calculations hereunder, (i) Investment shall include the Fair
Market Value of the net assets of any Subsidiary at the time that
such Subsidiary is designated an Unrestricted Subsidiary and
shall exclude the Fair Market Value of the net assets of any
Unrestricted Subsidiary that is designated a Subsidiary and
(ii) any property transferred to or from an Unrestricted
Subsidiary shall be valued at Fair Market Value at the time of
such transfer; provided that in each case, the Fair Market Value
of an asset or property shall be as determined by the Board of
Directors of the Company in good faith.
"Lien" means any mortgage, charge, pledge, lien,
privilege, security interest or encumbrance of any kind.
"Logistical Services Agreement" means the Logistical
Services Agreement dated as of October 26, 1993 between the Company
and Plainbridge, as amended or modified in accordance with the
provisions hereof.
"Majority-owned Subsidiary" means a Subsidiary at least
50% of the equity ownership or the Voting Stock of which is at
the time owned, directly or indirectly, by the Company or by one
or more of the Subsidiaries, or the Company and one or more of
the Subsidiaries, provided that Majority-owned Subsidiary shall
not include any such Subsidiary if the equity ownership or the
Voting Stock of such Subsidiary not owned by the Company and/or
one or more of the Subsidiaries is owned by Holdings and/or one
or more Affiliates of Holdings other than the Company and its
Subsidiaries.
"Management Investors" means the officers and other
members of the management of the Company who at any particular
date shall beneficially own, directly or indirectly, Voting Stock
of the Company.
"Material Subsidiary" means, at any particular time, any
Subsidiary of the Company that, together with the Subsidiaries of
such Subsidiary, (a) accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries for the
most recently completed fiscal year of the Company or (b) was the
owner of more than l0% of the consolidated assets of the Company
and its Subsidiaries as at the end of such fiscal year, all as
shown on the consolidated financial statements of the Company and
its Subsidiaries for such fiscal year.
"Maturity" when used with respect to any Security means
the date on which the principal of such Security becomes
- 10-
<PAGE>
due and payable as therein or herein provided, whether at Stated
Maturity, Change in Control Purchase Date or Redemption Date and
whether by declaration of acceleration, Change in Control, call
for redemption or otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation
Partnership No. IX, L.P., a Delaware partnership, ML Offshore LBO
Partnership No. IX, a Cayman Islands partnership, ML Employees
LBO Partnership No. I, L.P., a Delaware partnership, Merrill
Lynch Interfunding Inc., a Delaware corporation, Merchant Banking
L.P. No. I, a Delaware partnership, Merrill Lynch KECALP L.P., a
Delaware partnership, Merrill Lynch Capital Appreciation
Partnership No. B-X, L.P., a Delaware partnership, ML Offshore
LBO Partnership No. B-X, a Cayman Islands partnership, MLCP
Associates, L.P. No. II, a Delaware partnership, Merrill Lynch
Venture Capital, Inc., a Delaware corporation and any Affiliates
of the foregoing that beneficially own, directly or indirectly,
shares of Capital Stock of SMG-II.
"Newco" means PTK Holdings, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Officers' Certificate" means a certificate signed by
(i) the Chairman, a Vice Chairman, the President, a Vice
President or the Treasurer of the Company and (ii) the Secretary
or an Assistant Secretary of the Company and delivered to the
Trustee; provided, however, that such certificate may be signed
by two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable
to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent
applicable.
"Outstanding" when used with respect to Securities
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment,
redemption or purchase money in the necessary
- 11-
<PAGE>
amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside
and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the Holders of such
Securities and the Trustee or such Paying Agent is not
prohibited from paying such money to the Holders on that date
pursuant to the terms of Article Thirteen of this Indenture;
provided that, if such Securities are to be redeemed, notice
of such redemption has been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee
has been made;
(c) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Fourteen; and
(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
provided, however, that, in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, notice, direction,
consent or waiver hereunder, Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the
Company, or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, notice, direction, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company that is pari passu in right of payment to the Securities.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (or premium, if any) or interest
on any Securities on behalf of the Company.
- 12 -
<PAGE>
"Permitted Holders" means ML Funds, the Management
Investors and the Equitable Investors, provided that the
Equitable Investors shall not be a Permitted Holder if they are a
member of a "group" (as such term is used in Section 13(d) of the
Exchange Act) in respect of the Company which does not include
the Management Investors and the ML Funds.
"Permitted Indebtedness" means any of the following
Indebtedness of the Company or any Subsidiary, as the case may
be:
(i) Indebtedness under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to
exceed $575,000,000;
(ii) Indebtedness under the Securities in an aggregate
principal amount at any one time outstanding not to exceed
$197,567,000;
(iii) Indebtedness outstanding on the date hereof and
listed on Schedule I hereto;
(iv) Indebtedness under the Senior Subordinated Notes,
the Subordinated Debentures and the Deferred Coupon Notes;
(v) obligations pursuant to interest rate hedge
contracts;
(vi) (A) Indebtedness under Capital Lease Obligations
and (B) Purchase Money Mortgages;
(vii) Indebtedness in respect of trade letters of credit
and standby letters of credit incurred in the ordinary course
of business;
(viii) Indebtedness of the Company or any Subsidiary to
any one or the other of them; provided that the obligation of
the obligor of such Indebtedness is subject to the
Intercompany Agreement;
(ix) Indebtedness of any Subsidiary made in accordance
with the applicable provisions of Section 1014 or
Section 1015;
(x) Indebtedness consisting of guarantees, indemnities
or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets;
(xi) any obligation or liability in respect of leasehold
interests assigned by the Company or any Subsidiary to any
other Person;
- 13-
<PAGE>
(xii) Indebtedness under the Holdings Intercompany Notes;
(xiii) Indebtedness represented by letters of credit not
exceeding an aggregate amount of $45,000,000 at any one time
outstanding (other than those permitted by clause (vii)
above);
(xiv) Indebtedness incurred to finance Consolidated
Capital Expenditures (including Acquired Indebtedness to the
extent that, in conformity with GAAP, assets acquired in
conjunction with such Acquired Indebtedness are included in
the property, plant or equipment reflected on the
consolidated balance sheet of the Company and its
Subsidiaries);
(xv) Indebtedness in addition to that described in
clauses (i) through (xiv) of this definition of "Permitted
Indebtedness", and any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, not to
exceed $75,000,000 outstanding at any one time in the
aggregate; and
(xvi) any renewals, extensions, substitutions,
refinancings or replacements (each, for purposes of this
clause, a "refinancing") of any Indebtedness described in
clauses (ii), (iii), (iv) and (xiv)), including any
successive refinancings so long as the aggregate amount of
Indebtedness represented thereby is in a principal amount
that does not exceed the principal amount so refinanced plus
the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium
reasonably determined by the Company as necessary to
accomplish such refinancing, plus the amount of expenses of
the Company incurred in connection with such refinancing;
provided that for purposes of this clause, the principal
amount of any Indebtedness shall be deemed to mean the
principal amount thereof or, if such Indebtedness provides
for an amount less than the principal amount thereof to be
due and payable upon a declaration of acceleration thereof,
such lesser amount as of the date of determination and such
refinancing does not reduce the Average Life to Stated
Maturity or the final Stated Maturity of such Indebtedness.
"Permitted Investment" means any of the following: (i)
any Investment in any Majority-owned Subsidiary by the Company or
any other Majority-owned Subsidiary, any Investment in any Person
by the Company or any Majority-owned Subsidiary as a result of
which such Person becomes a Majority-owned Subsidiary or any
Investment in the Company by any Majority-owned Subsidiary;
(ii) any Temporary Cash Investment; (iii) intercompany
- 14-
<PAGE>
Indebtedness to the extent permitted under clause (viii) of the
definition of "Permitted Indebtedness" contained in this
Section 101; (iv) Investments in existence on the date hereof and
any Investment with respect to which the Company or any
Subsidiary is legally committed to make, but only if such
commitment was in existence on the date hereof in each case,
other than any Investment in any Unrestricted Subsidiary;
(v) sales of goods on trade credit terms consistent with the
Company's past practices or as otherwise consistent with trade
credit terms in common use in the industry; (vi) Investments
pursuant to the Logistical Services Agreement or Spin-Off
Agreements; (vii) any Investment in any Person acquired or
retained in connection with any asset sale or other disposition
of assets; (viii) loans or advances to employees made in the
ordinary course of business; and (ix) in addition to "Permitted
Investments" described in the foregoing clauses (i) through
(viii), Investments in the aggregate amount of $45,000,000 at any
one time outstanding.
"Permitted Payment" has the meaning specified in
Section 1008.
"Permitted Senior Subordinated Indebtedness" means
(i) the Senior Subordinated Notes, (ii) in addition to (i), other
Indebtedness of the Company in an aggregate principal amount not
to exceed $200,000,000 at any one time outstanding and (iii) any
renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this definition, a "refinancing") of any
Indebtedness described in the foregoing clause (i), including any
successive refinancings, so long as the aggregate amount of
Indebtedness represented thereby in a principal amount that does
not exceed the principal amount so refinanced plus the amount of
any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness refinanced
or the amount of any premium reasonably determined by the Company
as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such
refinancing; provided that for purposes of this clause, the
principal amount of any Indebtedness shall be deemed to mean the
principal amount thereof or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination.
"Person" means any individual, corporation, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
- 15-
<PAGE>
"Plainbridge" means Plainbridge, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for a mutilated Security
or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost,
destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's preferred or preference
stock whether now outstanding or issued after the date hereof,
and includes, without limitation, all classes and series of
preferred or preference stock.
"Purchase Money Mortgages" means Indebtedness of the
Company or any Subsidiary (i) issued to finance or refinance the
purchase or construction of any assets of the Company or any
Subsidiary or (ii) secured by a Lien on any assets of the Company
or any Subsidiary where the lender's sole recourse is to the
assets so encumbered, in either case (a) to the extent the
purchase or construction prices for such assets are or should be
included in "addition to property, plant or equipment" in
accordance with GAAP and (b) if the purchase or construction of
such assets is not part of any acquisition of a Person or
business unit.
"Qualified Capital Stock" of any Person means any and
all Capital Stock of such Person other than Redeemable Capital
Stock.
"Recapitalization" means the Recapitalization described
in the Amended and Restated Prospectus and Consent Solicitation,
as amended or supplemented, relating to the issuance of the
Securities.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms, by the terms of any security into which it
is convertible or exchangeable or otherwise, is or upon the
happening of an event or passage of time would be required to be
redeemed prior to the final Stated Maturity of the Securities or
is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final
Stated Maturity.
- 16-
<PAGE>
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 1 or December 1 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Responsible Officer", when used with respect to the
Trustee, means any officer assigned to the Corporate Trust
Administration of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers or assigned by the Trustee
to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning specified in
Section 1008.
"Security" and "Securities" have the meaning set forth
in the second paragraph of this Indenture.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on (such interest on Senior Indebtedness,
wherever referred to in this Indenture, being deemed to include
interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or
event of default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law) any Indebtedness of the
Company (other than as otherwise provided in this definition),
whether outstanding on the date hereof or thereafter created,
incurred or assumed in accordance with the provisions of this
Indenture, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly
- 17-
<PAGE>
provides that such Indebtedness shall not be senior in right of
payment to the Securities. Without limiting the generality of
the foregoing, "Senior Indebtedness" shall include the principal
of, premium, if any, and interest on (including interest accruing
after the occurrence of an event of default) all obligations of
every nature of the Company from time to time owed under
Permitted Senior Subordinated Indebtedness and under the Bank
Credit Agreement, including, without limitation, principal of and
interest on, and all fees, expenses, indemnities, payments for
early termination of Interest Rate Hedge Arrangements and
reimbursement obligations under letters of credit payable under
the Bank Credit Agreement. Notwithstanding the foregoing,
"Senior Indebtedness" shall not include (i) Indebtedness
evidenced by the Securities, the Subordinated Debentures and the
Deferred Coupon Notes, (ii) Indebtedness that is subordinate or
junior in right of payment to any Indebtedness of the Company
(other than Permitted Senior Subordinated Indebtedness), except
for subordination as a result of intercreditor arrangements with
respect to collateral, (iii) Indebtedness that when incurred, and
without respect to any election under Section 1111(b) of
Title 11, United States Code, is without recourse to the Company,
(iv) Indebtedness that is represented by Redeemable Capital
Stock, (v) Indebtedness of the Company to a subsidiary of the
Company or any other Affiliate of the Company or any of such
Affiliate's subsidiaries, including the Holdings Intercompany
Notes and (vi) that portion of any Indebtedness (other than any
Indebtedness provided by any lender pursuant to the Bank Credit
Agreement, except to the extent such Indebtedness is provided
with actual knowledge on the part of any such lender that the
incurrence thereof by the Company is a violation of this
Indenture) which at the time of issuance is issued in violation
of this Indenture.
"Senior Subordinated Notes" means the Company's 11 5/8%
Senior Subordinated Notes due 2003 in aggregate principal amount
not in excess of $440,000,000.
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation, and any successor thereto.
"Special Record Date" means a date fixed by the Trustee
for the payment of any Defaulted Interest pursuant to
Section 307.
"Specified Senior Indebtedness" means (i) all Senior
Indebtedness under the Bank Credit Agreement, (ii) all Senior
- 18-
<PAGE>
Indebtedness under the Senior Subordinated Notes and (iii) any
other issue of Senior Indebtedness or refinancings thereof
permitted by said definition having a principal amount of at
least $100,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Specified
Senior Indebtedness" by the Company. For purposes of this
definition: (a) the amount of the Indebtedness of the Company
with respect to any Interest Rate Hedge Arrangement shall be
deemed to be the lesser of (x) 25% of the notional amount of such
Interest Rate Hedge Arrangement, or (y) the maximum amount the
Company could be required to pay under such Interest Rate Hedge
Arrangement; and (b) a refinancing of any such Indebtedness shall
be treated as such only if it ranks or would rank pari passu with
the Indebtedness refinanced.
"Spin-Off Agreements" means (i) the Distribution and
Transfer Agreement dated as of May 3, 1993 among the Company,
Holdings and Chefmark; (ii) the Distribution and Transfer
Agreement dated as of October 26, 1993 among the Company, Newco and
Plainbridge; (iii) the Blair Services Agreement dated as of
October 26, 1993 between the Company and Plainbridge; (iv) the
Rickel Services Agreement dated as of October 26, 1993 between
the Company and Plainbridge; (v) the Chefmark Services Agreement
dated as of May 3, 1993 between the Company and Chefmark;
(vi) the Tax Sharing Agreement; (vii) the Chefmark Supply
Agreement dated May 3, 1993 between the Company and Chefmark; and
(viii) leases between the Company as lessee and Plainbridge as
lessor entered into on the date of this Indenture, in each case
as amended or modified in accordance with the provisions hereof.
"Spin-Off" means the contribution by the Company to Plainbridge of
the Rickel home center business, the warehouse, distribution and
transportation operations and the inventory therein that service
the Pathmark supermarkets and drug stores and certain other
assets and the distribution of the shares of Plainbridge to Newco.
"Stated Maturity", when used with respect to any
Indebtedness or any installment of interest thereon, means the
date specified in such Indebtedness as the fixed date on which
the principal of such Indebtedness or such installment of
interest is due and payable.
"Subordinated Debentures" means the 12-5/8% Subordinated
Debentures due 2002 of the Company in aggregate principal amount
not in excess of the aggregate principal amount outstanding on
the date hereof.
- 19-
<PAGE>
"Subordinated Indebtedness" means Indebtedness of the
Company subordinated in right of payment to the Securities.
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries; provided that an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of this Indenture.
"Tax Sharing Agreement" means the Tax Sharing Agreement
dated as of the date of the Spin-Off between the Company and SMG-II, as
amended or modified in accordance with the provisions hereof.
"Temporary Cash Investment" means (i) any evidence of
Indebtedness, maturing not more than 180 days after the date of
acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than
180 days after the date of acquisition, issued by, or time
deposit of, a commercial banking institution that has combined
capital and surplus of not less than $300,000,000, whose debt is
rated at the time as of which any investment therein is made, of
"A" (or higher) according to Moody's Investors Service, Inc.
("Moody's"), or "A" (or higher) according to Standard & Poor's
Corporation ("S&P"), (iii) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United
States of America, with a rating, at the time as of which any
investment therein is made, of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P, (iv) any
short-term, tax-exempt investment in indebtedness issued by a
municipality existing under the laws of the United States of
America with a rating, at the time as of which any investment
therein is made, of "A" (or higher) according to Moody's or "A"
(or higher) according to S&P, and (v) any money market deposit
accounts issued or offered by any domestic commercial bank having
capital and surplus in excess of $300,000,000.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this
instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee
shall have become such pursuant to the applicable
- 20-
<PAGE>
provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Trustee.
"Unrestricted Subsidiary" means (i) any subsidiary of
the Company that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors
of the Company, as provided below) and (ii) any subsidiary of an
Unrestricted Subsidiary. The Board of Directors of the Company
may designate any subsidiary of the Company (including any newly
acquired or newly formed subsidiary) to be an Unrestricted
Subsidiary if all of the following conditions apply: (a) such
subsidiary is not liable, directly or indirectly, with respect to
any Indebtedness other than Unrestricted Subsidiary Indebtedness
and (b) any Investment in such subsidiary made as a result of
designating such subsidiary an Unrestricted Subsidiary shall not
violate the provisions of Section 1017. Any such designation by
the Board of Directors of the Company shall be evidenced to the
Trustee by filing with the Trustee a Board Resolution giving
effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing
conditions. The Board of Directors of the Company may designate
any Unrestricted Subsidiary as a Subsidiary; provided that
immediately after giving effect to such designation, the Company
could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the restrictions of
Section 1007.
"Unrestricted Subsidiary Indebtedness" of any
Unrestricted Subsidiary means Indebtedness of such Unrestricted
Subsidiary (i) as to which neither the Company nor any Subsidiary
is directly or indirectly liable (by virtue of the Company or any
such Subsidiary being the primary obligor on, guarantor of, or
otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any
Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of
incurrence) the Company shall be deemed to have made a Restricted
Payment (as defined in Section 1008) equal to the principal
amount of any such Indebtedness to the extent guaranteed at the
time such Affiliate is designated an Unrestricted Subsidiary and
(ii) which, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any
Indebtedness of the Company or any Subsidiary to declare, a
default on such Indebtedness of the Company or any Subsidiary or
cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting
- 21-
<PAGE>
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason
of the happening of any contingency).
Section 102. Other Definitions.
Defined in
Term Section
"Act"............................................. 105
"Change in Control Notice" ....................... 1012
"Change in Control Offer" ........................ 1012
"Change in Control Purchase Date" ................ 1012
"Change in Control Purchase Notice" .............. 1012
"Change in Control Purchase Price" ............... 10l2
"covenant defeasance" ............................ 1403
"Defaulted Interest" ............................. 307
"defeasance" ..................................... l402
"incorporated provision" ......................... 108
"Notice of Default" .............................. 501
"Security Register" .............................. 305
"Security Registrar" ............................. 305
"Surviving Entity" ............................... 801
"U.S. Government Obligations" .................... 1404
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion (other than the
certificates required by Section 1018(a)) with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
- 22-
<PAGE>
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of a officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
- 23-
<PAGE>
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not more than 30
days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation
is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then
- 24-
<PAGE>
Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for this purpose the Securities then
Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective
pursuant to the provisions of this Indenture not later than six
months after the record date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such
Security.
Section 106. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder, any Representative or
the Company shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or
with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
delivered in writing or mailed, first-class postage prepaid,
to the Company addressed to it c/o Pathmark Stores, Inc., 301
Blair Road, Woodbridge, New Jersey 07095, Attention:
President, or at ay other address furnished in writing to the
Trustee by the Company.
The Company shall provide the Trustee in writing with
the name and address of the agent bank under the Bank Credit
Agreement as of the effective date of this Indenture and shall
promptly provide the Trustee in writing with any change in such
information.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
- 25-
<PAGE>
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register, not
later that the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case
where notice to Holders is given by mail, neither the failure to
mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Any notice when mailed to a
Holder in the aforesaid manner shall be conclusively deemed to
have been received by such Holder whether or not actually
received by such Holder. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to
be a sufficient giving of such notice.
Section 108. Conflict of any Provision of Indenture
with Trust Indenture Act.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 318, inclusive, of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by
operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
- 26-
<PAGE>
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its respective successors and assigns, whether
so expressed or not.
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the
Holders and the holders of Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles
thereof.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to
Section 307, or any Maturity with respect to any Security shall
not be a Business Day, then (notwithstanding any other provision
of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, or date
established for payment of Defaulted Interest pursuant to
Section 307, or Maturity, and no interest shall accrue with
respect to such payment for the period from and after such
Interest Payment Date, or date established for payment of
Defaulted Interest pursuant to Section 307, or Maturity, as the
case may be, to the next succeeding Business Day.
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations
- 27-
<PAGE>
of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as
evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
The form of the face of the Securities shall be
substantially as follows:
PATHMARK STORES, INC.
ll-5/8% Subordinated Note
due 2002
No. $
Pathmark Stores, Inc., a Delaware corporation (herein
called the "Company", which term includes any successor entity
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to or registered assigns, the
principal sum of Dollars on June 15, 2002, at the
office or agency of the Company referred to below,
- 28-
<PAGE>
and to pay interest thereon on December 15, 1993 and semiannually
thereafter on June 15 and December 15 in each year and at Stated
Maturity, from June 15, 1993 or from the most recent Interest
Payment Date to which interest has been paid or duly provided
for, at the rate of 11-5/8% per annum, until the principal hereof
is paid or duly provided for.
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided for, and interest on such defaulted interest at the then
applicable interest rate borne by the Securities, to the extent
lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse
- 29-
<PAGE>
hereof by manual signature, this Security shall not be entitled
to any benefit under the Indenture, or be valid or obligatory for
any purpose.
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: PATHMARK STORES, INC.
By
Attest:
By
[SEAL]
Authorized Signature
Section 203. Form of Reverse of Security.
The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
securities of the Company designated as its 11-5/8% Subordinated
Notes due 2002 (herein called the "Securities"), limited (except
as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $ , which may be issued
under an indenture (herein called the "Indenture") dated as of
, 1993, between the Company and Wilmington Trust Company,
as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a
statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the
Trustee and the Holders of the Securities, and of the terms upon
which the Securities are, and are to be, authenticated and
delivered.
The Securities are subject to redemption otherwise than
through the operation of the sinking fund (as described below)
upon not less than 21 nor more than 60 days' notice, in amounts
of $1,000 or an integral multiple of $1,000, at any time on or
after June 15, 1997, as a whole or in part, at the election of
the Company, at a Redemption Price equal to the percentage of the
principal amount set forth below if redeemed
- 30-
<PAGE>
during the 12-month period beginning June 15 of the years
indicated below:
Year Redemption Price
1997 105.8125%
1998 103.8750%
1999 101.9375%
and thereafter at 100% of the principal amount, together in the
case of any such redemption with accrued interest, if any, to the
Redemption Date (subject to the right of Holders of record on
relevant Regular Record Dates to receive interest due on a
Interest Payment Date), all as provided in the Indenture.
In the event that a Change in Control occurs, each
Holder shall have the right to require that the Company
repurchase such Holder's Securities in whole or in part in
integral multiples of $1,000 at a purchase price in cash in an
amount equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase. Within 30
days following a Change in Control, the Company covenants to
either (i) repay in full all Indebtedness under the Bank Credit
Agreement and permanently reduce the commitments of the lenders
thereunder or offer to repay in full all such Indebtedness and
permanently reduce such commitments and repay the Indebtedness
and permanently reduce the commitment of each lender that
accepted such offer or (ii) obtain the requisite consent under
the Bank Credit Agreement to permit the repurchase of the
Securities.
The Securities are also subject to redemption on June 15
in each of the years 2000 and 2001 through the operation of a
sinking fund, at a Redemption Price equal to 100% of the
principal amount, together with accrued and unpaid interest, if
any, to the Redemption Date, all as provided in the Indenture.
The Company may, at its option, receive a credit against the
sinking fund obligation equal to the aggregate principal amount
of Securities acquired by the Company and surrendered to the
Trustee for cancellation and of Securities redeemed or called for
redemption otherwise than through operation of the sinking fund
that have not previously been so credited for such purpose by the
Trustee.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on
the face hereof. Securities (or portions thereof) for whose
- 31-
<PAGE>
redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
If an Event of Default shall occur and be continuing,
the principal of all the Securities may be declared due and
payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on this
Security and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply
to this Security.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security
shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The indebtedness evidenced by the Securities is
subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be
bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary
or appropriate to effectuate the subordination provided for in
the Indenture and appoints the
- 32-
<PAGE>
Trustee his attorney-in-fact for such purpose; provided that the
indebtedness evidenced by this Security shall cease to be so
subordinate and subject in right of payment upon any defeasance
of this Security as provided in the Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges payable in connection with any registration of transfer
or exchange.
Prior to the time of due presentment of this Security
for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
- 33-
<PAGE>
Customary abbreviations may be used in the name of a
Holder or a assignee, such as: TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
I/We assign and transfer this Security to
Insert assignee's soc. sec. or tax ID no. ........
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer
this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
(Sign exactly as your name appears on the other side of this Security.)
Signature Guaranteed:
(Signature must be guaranteed by a member firm of a principal stock
exchange or a
commercial bank or trust company.)
Section 204. Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY
as Trustee
By
Authorized Signatory
- 34-
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited to
$ , except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 906,
1012 or 1108.
The Securities shall be known and designated as the
"11-5/8% Subordinated Notes due 2002" of the Company. Their
Stated Maturity shall be June 15, 2002, and they shall bear
interest at the rate of 11-5/8% per annum from June 15, 1993 or
the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable on
December 15, 1993 and semi-annually thereafter on June 15 and
December 15 in each year and at said Stated Maturity, until the
principal thereof is paid or duly provided for. Subject to
Article Thirteen, interest on any overdue amount of principal,
interest (to the extent lawful) or premium, if any, shall be
payable on demand.
The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the
Company maintained for such purpose in The City of New York, or
at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall
appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
The Securities shall be entitled to the benefits, and
shall be redeemable through the operation, of the sinking fund as
provided in Article Twelve.
The Indebtedness evidenced by the Securities shall be
subordinated in right of payment to Senior Indebtedness as
provided in Article Thirteen.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any
integral multiple thereof.
- 35-
<PAGE>
Section 303. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the
Company by any two of the following: its Chairman, one of its
Vice Chairmen, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal
amount of up to $197,567,000. At any time and from time to time
after the execution and delivery of this Indenture, the Company
may deliver Securities executed by the Company to the Trustee for
authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee
in accordance with such Company Order shall authenticate and
deliver such Securities as provided in this Indenture and not
otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee by manual signature of one of its duly authorized
signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of substantially all
of its properties and assets to any Person, and the successor
Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance,
transfer, lease or other disposition as aforesaid, shall have
executed an indenture supplemental hereto
- 36-
<PAGE>
with the Trustee pursuant to Article Eight, any of the Securities
authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time
to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person
with such changes in phraseology and form as may be appropriate,
but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and
the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any
time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any
Securities, such successor Person, at the option of any Holder
but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such
Holder for Securities authenticated and delivered in such new
name.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
- 37-
<PAGE>
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities.
The Trustee (and any other office or agency so designated) is
hereby initially appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 1002 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations and of
a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denomination or
denominations of a like aggregate principal amount upon surrender
of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other
- 38-
<PAGE>
governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 306, 906, l0l2 or 1108
not involving any transfer.
The Company shall not be required (a) to issue, register
the transfer of or exchange any Security during a period
beginning at the opening of business (i) 15 days before the
mailing of a notice of redemption of the Securities selected for
redemption under Section 1104 or l203 and ending at the close of
business on the day of such mailing or (ii) 15 days before an
Interest Payment Date and ending on the close of business on the
Interest Payment Date, or (b) to register the transfer of or
exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of Securities being redeemed
in part.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save
each of them and any agent of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a replacement
Security of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under
this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute
a contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at anytime enforceable by anyone and
shall be entitled to all benefits of this Indenture equally and proportionately
with any and all other Securities duly issued hereunder.
- 39-
<PAGE>
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the applicable
interest rate borne by the Securities, to the extent lawful (such
defaulted interest (and such interest thereon) herein
collectively called "Defaulted Interest"), shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder; and such Defaulted Interest
may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Subsection provided. Thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt
by the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the
- 40-
<PAGE>
Company of such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no
longer be payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange or for credit against any
sinking fund payment pursuant to Section l202 shall, if
surrendered to any Person other than the Trustee, be delivered to
the Trustee and shall be promptly cancelled by it. The Company
shall deliver to the Trustee for cancellation any
- 41-
<PAGE>
Securities previously authenticated and delivered hereunder which
the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly cancelled by the
Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities cancelled as provided in this
Section, except as expressly permitted by this Indenture. All
cancelled Securities held by the Trustee shall be disposed of as
directed by a Company Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on demand of and at the expense of the
Company shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(1) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
(iii) are to be called for redemption within one
year under arrangements satisfactory to the
- 42-
<PAGE>
Trustee for the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (2)(i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
cash in U.S. Dollars or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that (i) all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606
and, if money shall have been deposited with the Trustee pursuant
to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section l003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the
provisions of Article Thirteen of this Indenture. If the Trustee
or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 401 by reason of any legal
proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise
prohibiting such application, the Company's
- 43-
<PAGE>
obligations under this Indenture and the Securities shall be
revived and reinstated as though no deposit had occurred pursuant
to Section 401; provided that if the Company has made any payment
of principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether or not it shall be occasioned or prohibited
by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by the operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body):
(a) default in the payment of any interest on any
Security when such interest becomes due and payable and
continuance of such default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(c) default in the deposit of any sinking fund payment,
when and as due by the terms of Article Twelve hereof or the
Securities; or
(d) default in the performance, or breach, of any
covenant or agreement of the Company hereunder (other than a
default in the performance, or breach, of a covenant or
agreement that is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written
notice specifying such default or breach and stating that
such notice is a "Notice of Default" hereunder; or
(e)(i) an event of default shall have occurred under
any mortgage, bond, indenture, loan agreement or other
document evidencing any issue of Indebtedness of the
- 44-
<PAGE>
Company or any Material Subsidiary for money borrowed, which
issue has an aggregate outstanding principal amount of not
less than $50,000,000, and such default shall result in such
Indebtedness becoming, whether by declaration or otherwise,
due and payable prior to the date on which it would otherwise
become due and payable or (ii) a default in any payment when
due at final maturity of any such Indebtedness; or
(f) final judgments or orders not covered by insurance
or a bond rendered against the Company or any Material
Subsidiary which require the payment in money, either
individually or in an aggregate amount, that is more than
$30,000,000 and such judgment or order shall remain
unsatisfied or unstayed for 60 days; or
(g) the entry of a decree or order by a court having
jurisdiction in the premises (i) for relief in respect of the
Company or any Material Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other
federal or state bankruptcy, insolvency, reorganization or
similar law or (ii) adjudging the Company or any Material
Subsidiary a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Material Subsidiary under
the Federal Bankruptcy Code or any other applicable federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Material Subsidiary or of any
substantial part of any of their properties, or ordering the
winding up or liquidation of any of their affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(h) the institution by the Company or any Material
Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or
state law or any other case or proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
Material Subsidiary to the entry of a decree or order for
relief in respect of the Company or any Material Subsidiary
in any involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law
or to the institution of bankruptcy or insolvency proceedings
against the Company or any Material Subsidiary, or the filing
by the Company or any Material Subsidiary of a petition or
answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code or any other applicable federal or
state law, or the consent by it to the filing of any such
petition or to the
- 45-
<PAGE>
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of any of the Company or any Material Subsidiary or
of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by
the Company or any Material Subsidiary in furtherance of any
such action; or
(i) default in the performance or breach of any of the
provisions of Article Eight.
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than an Event of Default
specified in Section 50l(g) or 501(h)) occurs and is continuing,
the Trustee or the Holders of at least 25% of the principal
amount of the Securities then Outstanding may, and the Trustee at
the request of such Holders shall, declare all unpaid principal
of, premium, if any, and accrued interest on all the Securities
to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders); provided
that so long as the Bank Credit Agreement shall be in force and
effect, if any such Event of Default shall have occurred and be
continuing, any such acceleration shall not be effective until
the earlier of (a) five Business Days following a notice of
acceleration given to the Company and the agent bank under the
Bank Credit Agreement and only if upon such fifth Business Day
such Event of Default shall be continuing or (b) the acceleration
of any Indebtedness under the Bank Credit Agreement. If an Event
of Default specified in Section 501(g) or 501(h) occurs and is
continuing, the amounts described above shall ipso facto become
and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in aggregate
principal amount of the Securities outstanding, by written notice
to the Company and the Trustee, may annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, (ii) all overdue interest on all Securities, (iii) the
principal of and premium, if any, on any Securities which have
become due otherwise than by such
- 46-
<PAGE>
declaration of acceleration and interest thereon at the rate
borne by the Securities, and (iv) to the extent that payment of
such interest is lawful, interest upon overdue interest at the
rate borne by the Securities; and (b) all Events of Default,
other than the non-payment of principal of the Securities which
have become due solely by the declaration of acceleration, have
been waived as provided in Section 513 or cured. No such
rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of
a declaration of acceleration in respect of the Securities,
because an Event of Default specified in Section 501(e) shall
have occurred and be continuing, such declaration of acceleration
shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or the
holders thereof have rescinded their declaration of acceleration
in respect of such Indebtedness, and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any
payment or other transfer or grant, or any promise or other
undertaking to pay or otherwise transfer or grant, any tangible
or intangible property or right to such holders in connection
with such rescission, and written notice of such discharge or
rescission, as the case may be, shall have been given to the
Trustee by the Company and by the holders of such Indebtedness or
a trustee, fiduciary or agent for such holders, within 60 days
after such declaration of acceleration in respect of the
Securities, and (x) no other Event of Default has occurred during
such 60-day period, and (y) no Default arising from such
discharge has occurred during such 60-day period, which, in
either case, has not been cured or waived during such period.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount then
due and payable on such Securities for principal (and premium, if
any) and interest, with interest upon the overdue principal (and
premium, if any) and, to the extent that payment
- 47-
<PAGE>
of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities;
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel) and of the Holders
allowed in such judicial proceeding; provided that in the event
that proof of such claim and such other papers or documents
have not been so filed by the thirtieth day prior to the final
date on which
- 48-
<PAGE>
such claim may be filed, the holders of Specified Senior
Indebtedness or their representatives shall be permitted to
file such proof of claim and other papers and documents for
and on behalf of the Holders of the Securities; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under
Section 606.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any proposal, plan of reorganization,
arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money, securities or
other property collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such
money on account of principal (or premium, if any) or interest,
upon presentation of the Securities and the notation
- 49-
<PAGE>
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 606;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal (and premium, if
any) and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts
due and payable on such Securities for principal (and
premium, if any) and interest; and
THIRD: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by
the Holders of a majority in principal amount of the
Outstanding Securities;
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other Holders
- 50-
<PAGE>
or to enforce any right under this Indenture except in the manner
provided in this Indenture and for the equal and ratable benefit
of all the Holders.
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest on
such Security on the respective due dates expressed in such
Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
- 51-
<PAGE>
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in principal
amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to
personal liability, and
(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal
amount of the Outstanding Securities may on behalf of the Holders
of all the Securities waive any past Default or Event of Default
hereunder and its consequences, except a Default or Event of
Default
(a) in the payment of the principal of (or premium, if
any) or interest on any Security, or
(b) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs
- 52-
<PAGE>
of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to
any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than
10% in principal amount of the Outstanding Securities, or to any
suit instituted by any Holder for the enforcement of the payment
of the principal of (or premium, if any) or interest on any
Security on or after the respective Stated Maturities expressed
in such Security (or, in the case of redemption, on or after the
Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 516. Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any Holder
of any Security to receive payment of the principal of, premium,
if any, and interest on such Security on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 60 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, notice of
- 53-
<PAGE>
such Default hereunder known to the Trustee, unless such default
shall have been cured or waived; provided, however, that, except
in the case of a default in the payment of the principal of (or
premium, if any) or interest on any Security or in the payment of
any sinking fund installment, the Trustee shall be protected in
withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders;
and provided further that, in the case of any default or breach
of the character specified in Section 501(d), no such notice to
Holders shall be given until at least 30 days after the
occurrence thereof.
Section 602. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no
covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; provided that the Trustee shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this subsection (c) does not limit the effect
of subsection (b) of this Section 602;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer,
- 54-
<PAGE>
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing,
and does believe, that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 602.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense,
including such reasonable advances as may be requested by the
Trustee.
(f) Subject to the foregoing subsections (a) through
(e) of this Section 602:
(i) The Trustee may rely and shall be protected in
acting or in refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or a
Company Order and any resolution by the board of
directors of the Company may be sufficiently evidenced by
a Board Resolution.
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an
Opinion of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of
Counsel. In addition, in determining the Company's
compliance with the financial covenants set forth herein,
the Trustee may rely on the certificate delivered to the
Trustee pursuant to Section 1018(a).
- 55-
<PAGE>
(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iv) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers.
(v) The Trustee may consult with counsel,
accountants or other experts and any advice of such
counsel, accountants or other experts shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such
advice.
Section 603. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of
Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-l supplied
to the Company are true and accurate, subject to the
qualifications set forth therein.
Section 604. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities with the
same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310(b) and 31l, may otherwise deal
with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
- 56-
<PAGE>
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the
purposes for which they were received and need not be segregated
from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the
Company.
Section 606. Compensation and Reimbursement.
The Company covenants and agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and each of its officers,
directors, employees, agents and counsel for, and to hold
them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligation of the Company under this Section 606 to
compensate the Trustee and to pay and reimburse the Trustee for
such expenses, disbursements and advances shall constitute
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture and shall not be
subject to the provisions of Article Thirteen. If, and to the
extent that, the Trustee, its counsel, and other agents do not
receive compensation for services rendered, reimbursement of
their advances, expenses and disbursements, or indemnity, as
herein provided, as the result of allowances made in any
- 57-
<PAGE>
reorganization, bankruptcy, receivership, liquidation or other
proceeding or by any plan or reorganization or readjustment of
obligations of the Company, the Trustee shall be entitled, in
priority to the Holders of the Securities, to receive any
distributions of any securities, dividends or other disbursements
which would otherwise be made to the Holders of the Securities in
any such proceeding or proceedings and the Trustee is hereby
constituted and appointed, irrevocably, the attorney-in-fact for
the Holders of the Securities and each of them to collect and
receive, in their name, place and stead, such distributions,
dividends or other disbursements, to deduct therefrom the amounts
due to the Trustee, its counsel and other agents on account of
services rendered, advances, expenses, and disbursements made or
incurred, or indemnity, and to pay and distribute the balance,
pro rata, to the Holders of the Securities. The Trustee shall
have a lien upon any securities or other consideration to which
the Holders of the Securities may become entitled pursuant to any
such plan or reorganization or readjustment of obligations, or in
any such proceeding or proceedings; and the court or judge in any
such proceeding or proceedings may determine the terms and
conditions under which any such lien shall exist and be enforced.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Securities upon all money, securities or other
property held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular
Securities, and the Securities are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(g) or 501(h) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under the Federal
Bankruptcy Code and any other applicable federal or state
bankruptcy Law.
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of
Section 3l0(b) of the Trust Indenture Act.
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Section 310(a)(1) and which shall have a combined capital and
surplus of at least $100,000,000 and have its Corporate Trust
Office located in The City of New York (or, if its Corporate
Trust Office shall not be located in The City of New York, the
- 58-
<PAGE>
Company shall, pursuant to Section 1002, maintain an office or
agency in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be
made or served) to the extent there is such an institution
eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 610, at which time the retiring
Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper,
appoint a successor Trustee.
(c) The Trustee may be removed at any time by an Act of
the Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
- 59-
<PAGE>
written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written
request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, the Holder of
any Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with Section 610,
become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders of the Securities
and so accepted appointment, the Holder of any Security who has
been a bona fide Holder for at least six months may on behalf of
himself and all others similarly situated, petition any court of
competent jurisdiction for the appointment of a successor
Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Security Register.
- 60-
<PAGE>
Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
provided, however, that the retiring Trustee shall continue to be
entitled to the benefit of Section 606(c); but, on request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
Upon acceptance of appointment by any successor Trustee
as provided in this Section 610, the Company shall give notice
thereof to the Holders of the Securities, by mailing such notice
to such Holders at their addresses as they shall appear on the
Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with
the notice called for by Section 609. If the Company fails to
give such notice within 10 days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
Section 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
- 61-
<PAGE>
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor under the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of
Holders.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be
held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Trust Indenture Act Section 312.
Section 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with
the first May 15 after the first issuance of Securities, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May
l5 if required by Trust Indenture Act Section 313(a).
- 62-
<PAGE>
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section l3
or Section 15(d) of the Securities Exchange Act of 1934; or,
if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it shall
file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic
information, documents and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of 1934
in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in
such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information,
documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and
regulations; and
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days
after the filing thereof with the Trustee, in the manner and
to the extent provided in Trust Indenture Act Section 313(c),
such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections
(a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on
Certain Terms.
The Company shall not consolidate or merge with or into
any other Person, or sell, assign, transfer, lease, convey
- 63-
<PAGE>
or otherwise dispose of all or substantially all of its
properties and assets (as an entirety or substantially as an
entirety in one transaction or series of related transactions) to
any Person or permit any of its Subsidiaries to enter into any
such transaction or transactions if such transaction or
transactions, in the aggregate, would result in a transfer of all
or substantially all of the assets of the Company and its
Subsidiaries on a consolidated basis to any Person unless, at the
time and after giving effect thereto:
(i) either (a) the Company shall be the continuing
corporation, or (b) the Person (if other than the Company)
formed by such consolidation, or into which the Company is
merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or disposition the properties and
assets of the Company, substantially as an entirety (the
"Surviving Entity") shall be a corporation duly organized and
validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
the Surviving Entity shall, in either case, expressly assume
by supplemental indenture hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this
Indenture and this Indenture shall remain in full force and
effect;
(ii) immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Fixed Charge Coverage
Ratio of the Company (or the Surviving Entity if the Company
is not the continuing obligor under this Indenture), for the
Company's four most recently completed full fiscal quarters
is at least 1.75 to 1.0; and
(iv) the Company has delivered or caused to be delivered
to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, lease
or transfer and such supplemental indenture, if one is
required by this Section 801, comply with this Section 801
and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale,
assignment, transfer, lease or conveyance or other disposition of
all or substantially all of the assets of the Company in
accordance with Section 801, the successor Person formed by
- 64-
<PAGE>
such consolidation or into which the Company is merged or to
which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had
been named as the Company herein. In the event of any
transaction (other than a lease) described in and complying with
the conditions listed in Section 8.01 in which the Company is not
the continuing corporation, the successor Person formed or
remaining shall succeed to, and be substituted for, and may
exercise every right and power, of the Company and the Company
would be discharged from all obligations and covenants under this
Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto in form satisfactory to the Trustee, for any
of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein or in the Securities conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions
with respect to matters or questions arising under this
Indenture; provided that, in each case, such provisions
shall not adversely affect the interests of the
Holders;
(d) to secure the Securities pursuant to the
requirements of Section 801 or Section 1010 or otherwise;
(e) to provide for the guarantee of payment of the
Securities by any Subsidiary pursuant to the requirements of
Section 1014 or Section 1015;
- 65-
<PAGE>
(f) to comply with the requirements of the Commission
in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, as contemplated by
Section 905 or otherwise;
(g) to evidence and provide the acceptance of the
appointment of a successor Trustee hereunder; or
(h) to make any other change that does not adversely
affect the rights of any Holder.
Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by
Act of such Holders delivered to the Company and the Trustee,
each when authorized by a Board Resolution, and the Trustee may
enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving
or modifying in any manner the rights of the Holders under this
Indenture; provided, however, that no such supplemental
indenture, amendment or waiver shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date) or modify the
obligation of the Company to make and consummate a Change in
Control Offer or modify any of the provisions or definitions
with respect thereto; or
(b) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture; or
(c) modify any of the provisions of this Section or
Section 513 or Section 1019, except to increase any such
percentage or to provide that certain other provisions of
- 66-
<PAGE>
this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(d) modify any of the provisions of Article Thirteen
hereof in a manner adverse to the Holders of the Securities;
or
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company of any
of its rights and obligations under this Indenture.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Section 315(a) through 315(d) and Section 602
hereof) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's
own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this
- 67-
<PAGE>
Article may, and shall if required by the Company, bear a
notation in form approved by the Company as to any matter
provided for in such supplemental indenture. If the Company
shall so determine, new Securities so modified as to conform, in
the opinion of the Company, to any such supplemental indenture
may be prepared and executed by the Company and shall be
authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the
rights of any holders of Senior Indebtedness under Article
Thirteen unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such
supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in
accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company,
unless the Company shall designate and maintain some other office
or agency for one or more of such purposes. The Company will
give prompt written notice to the Trustee of any change in the
location of any such office or agency. If at any time the
Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby
appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
- 68-
<PAGE>
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
recission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or recission and
any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any
Securities, deposit with a Paying Agent a sum in same day funds
(or New York Clearing House funds if such deposit is made prior
to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument in
which such Paying Agent shall agree with the Trustee, subject to
the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
- 69-
<PAGE>
making of any payment of principal (and premium, if any) or
interest;
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and obligations of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that
the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal
(national edition), notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication,
any unclaimed balance of such money then remaining will be repaid
to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and that of each
Material Subsidiary of the Company and the corporate rights
- 70-
<PAGE>
(charter and statutory), corporate licenses and corporate
franchises of the Company and its Material Subsidiaries, except
where a failure to do so, singly or in the aggregate, is not
likely to have a materially adverse effect upon the business,
assets, financial conditions or results of operations of the
Company and the Material Subsidiaries taken as a whole determined
on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be
required to preserve any such existence (except of the Company),
right, licenses or franchise if the Board of Directors of the
Company, or of the Material Subsidiary concerned, shall determine
that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such Material
Subsidiary and that the loss thereof is not disadvantageous in
any material respect to the Holders.
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or
property of the Company or any of its Subsidiaries and (b) all
material lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a lien upon the property of the
Company or any of its Subsidiaries that could produce a material
adverse effect on the consolidated financial condition of the
Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings and in respect of which appropriate
reserves (in the good faith judgment of management of the
Company) are being maintained in accordance with GAAP.
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by
or leased to it or any Material Subsidiary of the Company and
necessary in the conduct of its business or the business of such
Material Subsidiary to be maintained and kept in normal
condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section shall prevent the
Company or any Material Subsidiary of the Company from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is, in the judgment of the Board of Directors of the
Company or the Material Subsidiary concerned, or of any officer
(or other agent employed by the Company or any Material
Subsidiary of the Company) of the Company or such Material
Subsidiary having managerial responsibility for any such
- 71-
<PAGE>
property, desirable in the conduct of the business of the Company
or any Material Subsidiary of the Company and if such
discontinuance or disposal is not adverse in any material respect
to the Securityholders.
The Company shall provide or cause to be provided, for
itself and any Material Subsidiaries of the Company, insurance
(including appropriate self-insurance) against loss or damage of
the kinds customarily insured against by corporations similarly
situated and owning like properties in the same general areas in
which the Company or such Material Subsidiaries operate.
Section 1007. Limitation on Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume, or directly or indirectly
guarantee or in any other manner become directly or indirectly
liable for the payment of, any Indebtedness (including any
Acquired Indebtedness, but excluding Permitted Indebtedness)
unless, at the time of such event and after giving effect thereto
on a pro forma basis, the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately
preceding such event, taken as one period and calculated on the
assumption that such Indebtedness had been incurred on the first
day of such four-quarter period and on the assumption that, in
connection with the incurrence of any such Indebtedness, any
related acquisition (whether by means of purchase, merger or
otherwise) and any related repayment of Indebtedness also had
occurred on such date with the appropriate adjustments with
respect to such acquisition and repayment being included in such
pro forma calculation, would have been at least equal to 1.75 to
1.0.
Section 1008. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions
payable in shares of its Qualified Capital Stock or in
options, warrants or other rights to purchase such
Qualified Capital Stock),
(ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any
Affiliate thereof (other than Capital Stock of (x) any
Subsidiary held by the Company or any of its
Majority-owned Subsidiaries and (y) any Majority-owned
- 72-
<PAGE>
Subsidiary of the Company) or any options, warrants or
other rights to acquire such Capital Stock,
(iii) make any principal payment on or redeem,
repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment,
scheduled sinking fund payment or maturity, any
Indebtedness of the Company which is pari passu with or
expressly subordinate in right of payment to the
Securities,
(iv) declare or pay any dividend or distribution on
any Capital Stock of any Subsidiary to any Person (other
than the Company or any of its Majority-owned
Subsidiaries) or purchase, redeem or otherwise acquire
or retire for value any Capital Stock of any Subsidiary
held by any Person (other than the Company or any of its
Majority-owned Subsidiaries), or
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate of the Company (other than
a Majority-owned Subsidiary of the Company) or make any
Investment (other than any Permitted Investment) in any
Person, including any Unrestricted Subsidiary
(such payments or other actions described in the foregoing
clauses (i) through (v), other than any such action that is a
Permitted Payment, are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted
Payment, if other than cash, as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and evidenced by a Board Resolution), (1) no Default or Event of
Default shall have occurred and be continuing and (2) the
aggregate amount of all Restricted Payments (plus Permitted
Payments set forth in Sections 1008(b)(vi), (xi) and (xiii)) declared or
made after the date hereof (including Investments in Unrestricted
Subsidiaries pursuant to the provisions of Section 1017) shall
not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated
Adjusted Net Income of the Company accrued on a
cumulative basis during the period beginning on
October 31, 1993 and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Adjusted Net Income shall be a
loss, minus 100% of such loss), plus
- 73-
<PAGE>
(B) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company as capital
contributions to the Company, plus
(C) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company from the issuance or
sale (other than to any of its Subsidiaries) of
shares of Qualified Capital Stock of the Company or
warrants, options or rights to purchase shares (other
than issuances permitted by clause (v) of the
definition of Permitted Payments contained in
Section l008(b)) of Qualified Capital Stock of the
Company, plus
(D) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received by the
Company (other than from any of its Subsidiaries)
upon the exercise of options, warrants or rights to
purchase shares of Qualified Capital Stock of the
Company, plus
(E) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company from the issue or sale
of debt securities that have been converted into or
exchanged for Qualified Capital Stock of the Company,
together with the aggregate cash received by the Company
at the time of such conversion or exchange.
(b) Section 1008(a) to the contrary notwithstanding,
the Company and its Subsidiaries may take the following actions
(clauses (i) through (xiii) being referred to as "Permitted
Payments") so long as, in the case of clauses (vi), (ix),
(xi) and (xiii), no Default or Event of Default has occurred
and is continuing:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at such
declaration date such declaration complied with the
provisions of Section 1008(a) (in which event such
- 74-
<PAGE>
dividend shall be deemed to have been paid on such date
of declaration thereof for purposes of Section 1008(a));
(ii) the repurchase, redemption or other
acquisition or retirement of any shares of any class of
Capital Stock of the Company or any Affiliate of the
Company, in exchange for (including any such exchange
pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu
of the issuance of fractional shares or scrip) or out of
the net cash proceeds of a substantially concurrent
issue and sale (other than to a Subsidiary) of shares of
Qualified Capital Stock of the Company;
(iii) payments by the Company to SMG-II pursuant to
the Tax Sharing Agreement;
(iv) dividends or distributions in an aggregate
amount not to exceed the amount of dividends or
distributions paid to the Company or its Subsidiaries by
Unrestricted Subsidiaries since the date of this
Indenture;
(v) the redemption, defeasance, repurchase or
acquisition or retirement for value (each, for purposes
of this clause, a "refinancing") of any Indebtedness of
the Company (other than Redeemable Capital Stock) which
is pari passu with or expressly subordinate in right of
payment to the Securities through the issuance of (A)
new Indebtedness of the Company or (B) shares of
Qualified Capital Stock of the Company or Newco,
provided that, with respect to clause (A), any such new
Indebtedness (1) has a principal amount that does not
exceed the principal amount so refinanced plus the
amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of the
Indebtedness refinanced or the amount of any premium
reasonably determined by the Company as necessary to
accomplish such refinancing, plus the amount of expenses
of the Company incurred in connection with such
refinancing; provided that for purposes of this clause,
the principal amount of any Indebtedness shall be deemed
to mean the principal amount thereof or, if such
Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount
as of the date of determination, (2) has an Average Life
to Stated Maturity that is equal to or
- 75-
<PAGE>
greater than the remaining Average Life to Stated
Maturity of the Securities, (3) has a final Stated
Maturity that exceeds the final Stated Maturity of
principal of the Securities, and (4) is pari passu with
or expressly subordinated in right of payment to the
Securities at least to the same extent as the
Indebtedness refinanced;
(vi) dividends, loans or advances by the Company to
Holdings to enable Holdings or Newco to pay cash
dividends on the Holdings Preferred Stock; provided that
on the date of payment of such dividend, the Company,
after giving pro forma effect to such dividend, loan or
advance, would be able to incur $1.00 of additional
Indebtedness under the provisions of Section 1007 (other
than Permitted Indebtedness), assuming a market rate of
interest on such Indebtedness;
(vii) the redemption, repurchase, defeasance or
acquisition or retirement for value of any Pari Passu
Indebtedness (other than the Subordinated Debentures);
provided that the Company shall redeem, pursuant to the
optional redemption provisions in Article Eleven and the
Securities, the principal amount of Securities bearing
the same proportion to the aggregate amount of such Pari
Passu Indebtedness being redeemed, repurchased, defeased
or acquired or retired for value that the aggregate
outstanding principal amount of the Securities bears to
the aggregate outstanding principal amount of such Pari
Passu Indebtedness (without giving effect to such
redemption, repurchase, defeasance, acquisition or
retirement);
(viii) the declaration or payment of any dividend or
distribution on any Capital Stock of any Subsidiary, or
the purchase, redemption, acquisition or retirement for
value of any Capital Stock of any Subsidiary; provided
that such declaration, payment, purchase, redemption,
acquisition or retirement is made pro rata among all
holders of such Capital Stock of such Subsidiary;
(ix) payments or other actions described in clauses
(i) through (v) of Section 1008(a) that would otherwise
be Restricted Payments in an aggregate amount not to
exceed $35,000,000;
(x) the dividend or distribution of the Capital
stock of Plainbridge to Newco;
(xi) the repurchase of any Indebtedness of the
Company which is pari passu with or expressly
- 76-
<PAGE>
subordinate in right of payment to the Securities at a
purchase price not greater than 101% of the principal
amount of such Indebtedness in the event of a Change in
Control (as defined in this Indenture) pursuant to a
provision similar to Section 1012; provided that prior
to such repurchase the Company has made the Change in
Control Offer as provided in Section 1012 and has
repurchased all Securities validly tendered for payment
in connection with such Change in Control Offer;
(xii) the redemption, repurchase, defeasance or
acquisition or retirement for value of the Subordinated
Debentures, provided that, in the case of a redemption,
repurchase, defeasance or acquisition or retirement for
value with the proceeds of other Indebtedness, the
applicable provisions of clause (v) above are complied
with; and
(xiii) the redemption, repurchase, defeasance or
acquisition or retirement for value of the Holdings
Intercompany Notes remaining outstanding following the
Recapitalization (other than a scheduled principal
payment, scheduled sinking fund payment or at maturity).
Except as provided in this Section 1008(b) and
Section 1008(a)(2), nothing in this Section 1008 limits or
restricts the making of any Permitted Payment and a Permitted
Payment will not be treated as a Restricted Payment.
(c) In computing Consolidated Adjusted Net Income of
the Company under clause (A) of Section 1008(a), (l) the Company
shall use audited financial statements for the portions of the
relevant period for which audited financial statements are
available on the date of determination and unaudited financial
statements and other current financial data based on the books
and records of the Company for the remaining portion of such
period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data
derived from the books and records of the Company that are
available on the date of determination. If the Company makes a
Restricted Payment which, at the time of the making of such
Restricted Payment would in the good faith determination of the
Company be permitted under the applicable provisions of this
Section 1008, such Restricted Payment shall be deemed to have
been made in compliance with such provisions notwithstanding any
subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Adjusted Net Income
of the Company for any period.
Section 1009. Limitation on Transactions with
Affiliates.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of
- 77-
<PAGE>
assets, property or services) with any Affiliate of the Company
(other than a wholly owned Subsidiary thereof) unless (i) such
transaction or series of transactions is or are on terms that are
no less favorable to the Company or such Subsidiary, as the case
may be, than those that could have been obtained at the time of
such transaction or transactions in a comparable transaction in
arm's-length dealings with an unaffiliated third party and (ii)
(A) with respect to any transaction or series of transactions
involving aggregate payments in excess of $1,000,000, but less
than $10,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or transactions
complies with clause (i) above and (B) with respect to a
transaction or series of transactions, involving aggregate
payments equal to or greater than $10,000,000, (1) such
transaction or transactions shall have received the approval of a
majority of the disinterested directors of the Board of Directors
of the Company if Plainbridge is a party to such transaction or
series of transactions or (2) if Plainbridge is not a party to
such transaction or series of transactions, such transactions or
series of transactions shall have received either the approval of
a majority of the disinterested directors of the Board of
Directors of the Company or the Company shall deliver to the
Trustee a written opinion of a nationally recognized investment
banking firm stating that such transaction is fair to the Company
from a financial point of view; provided, however, that the
foregoing restriction shall not apply to (1) the payment of fees
to Merrill Lynch Capital Partners, Inc. or Merrill Lynch, Pierce,
Fenner & Smith Incorporated or any of their Affiliates for
consulting, investment banking or financial advisory services
rendered by such Person to the Company or any Subsidiary of the
Company, (2) the payment of reasonable and customary regular fees
to directors of the Company, Newco, SMG-II, Holdings or any of
their respective subsidiaries or parents who are not employees of
any of such Persons, (3) the Logistical Services Agreement and
transactions pursuant thereto and (4) the Spin-Off Agreements and
transactions pursuant thereto. For purposes of this
Section 1009(a), any transaction or series of related
transactions between the Company or any Subsidiary and any
Affiliate of the Company that is approved as being on the terms
required by clause (i) above by a majority of the disinterested
directors of the Board of Directors of the Company shall be
deemed to be on terms as favorable as those that might be
obtained at the time of such transaction or series of
transactions in a comparable transaction in arm's-length dealings
with an unaffiliated third party, and thus shall be permitted
under this Section 1009(a).
(b) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, or in any way alter the terms
of the Intercompany Agreement, the Logistical Services Agreement
or the Spin-Off Agreements in a manner materially
- 78-
<PAGE>
adverse to the Company, other than (i) by adding new Subsidiaries
and (ii) in the case of the Logistical Services Agreement and the
Spin-Off Agreements, any amendments or modifications that are
approved by a majority of the disinterested directors of the
Board of Directors of the Company.
Section 1010. Limitation on Liens.
The Company will not, and will not permit any Subsidiary
to, create, incur, affirm or suffer to exist any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated Indebtedness
(including any assumption, guarantee or other liability with
respect thereto by any Subsidiary) upon any property or assets
(including any intercompany notes) of the Company or any
Subsidiary owned on the date hereof or acquired after the date
hereof, or any income or profits therefrom, unless the Securities
are directly secured equally and ratably with (or prior to in the
case of Subordinated Indebtedness) the obligation or liability
secured by such Lien, and except for any Lien securing Acquired
Indebtedness created prior to the incurrence of such Indebtedness
by the Company or any Subsidiary, provided that any such Lien
only extends to the assets that were subject to such Lien securing
such Acquired Indebtedness prior to the related acquisition by the
Company or its Subsidiaries.
Section 1011. Limitation on Other Senior Subordinated
Indebtedness.
The Company will not create, incur, assume, guarantee or
in any other manner become liable with respect to any
Indebtedness (other than Permitted Senior Subordinated
Indebtedness) that is subordinate in right of payment to any
Senior Indebtedness unless such Indebtedness is also pari passu
with, or subordinate in right of payment to, the Securities,
pursuant to subordination provisions substantially similar to
those contained in Article Thirteen.
Section l0l2. Purchase of Securities Upon Change in
Control.
(a) If there shall have occurred a Change in Control,
Securities shall be purchased by the Company, at the option of
the Holder thereof, in whole or in part in integral multiples of
$1,000, on a date which shall be a Business Day that is not
earlier than 45 days nor later than 60 days from the date the
Change in Control Notice referred to below is given to Holders or
such later date as may be necessary for the Company to comply
with requirements under the Exchange Act (such date, or such
later date, being the "Change in Control Purchase Date"), at a
purchase price in cash (the "Change in Control Purchase
- 79-
<PAGE>
Price") in an amount equal to 101% of the principal amount of
such Securities, plus accrued and unpaid interest (including any
Defaulted Interest), if any, to the Change in Control Purchase
Date, subject to satisfaction by or on behalf of the Holder of
the requirements set forth in Section 1012(c).
(b) Within 30 days following a Change in Control and
prior to the mailing of the Change in Control Notice to Holders
provided for in paragraph (c) below, the Company covenants to
either (1) repay in full all Indebtedness under the Bank Credit
Agreement and permanently reduce the commitments of the lenders
thereunder or offer to repay in full all such Indebtedness and
permanently reduce such commitments and repay the Indebtedness
and permanently reduce the commitment of each lender who has
accepted such offer or (2) obtain the requisite consent under the
Bank Credit Agreement to permit the repurchase of the Securities
as provided for in this Section 1012. The Company shall first
comply with this subsection (b) before it shall be required to
repurchase the Securities pursuant to this Section 1012, and any
failure to comply with this subsection (b) shall constitute a
default of a covenant for purposes of Section 501(d).
(c) Within 30 days after the occurrence of a Change in
Control, the Company shall give written notice of such Change in
Control (a "Change in Control Notice") and of its offer (the
"Change in Control Offer") to purchase Securities as specified
herein to the Trustee, and to each Holder of the Securities at
his address appearing on the Security Register, by first-class
mail, postage prepaid. The Trustee shall be under no obligation
to ascertain the occurrence of a Change in Control. The Change
in Control Notice shall contain all instructions and materials
necessary to enable such Holders to tender Securities, shall
include a form of Change in Control Purchase Notice to be
completed by the Holder and shall state:
(i) (A) the events causing the Change in Control
and the date such Change in Control is deemed to have
occurred for purposes of this Section 1012, and (B) a
description of any material developments in the
Company's business since the latest annual or quarterly
report filed with the Trustee pursuant to
Section 1018(c) or 1018(d) and, if material, any
appropriate pro forma financial information;
(ii) the date by which a Holder must give a Change
in Control Purchase Notice;
(iii) the Change in Control Purchase Price;
- 80-
<PAGE>
(iv) the Change in Control Purchase Date;
(v) that any Security not purchased will continue
to accrue interest;
(vi) that Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable
at the Change in Control Purchase Price and from and
after such date (unless the Company shall default in the
payment of the Change in Control Purchase Price) such
Securities shall cease to bear interest; and
(vii) the procedures a holder must follow to
exercise rights under this Section 1012 and a brief
description of those rights and the procedures for
withdrawing a Change in Control Purchase Notice.
(d) A Holder may exercise its rights specified in
Section 1012(a) upon (i) delivery to any Paying Agent a written
notice (a "Change in Control Purchase Notice") at any time on or
prior to one Business Day before the Change in Control Purchase
Date, stating (A) the certificate number of the Security that the
Holder will deliver to be purchased and (B) the portion of the
principal amount of the Security that the holder will deliver to
be purchased, which portion must be $1,000 or an integral
multiple thereof and (ii) delivery of such Security to such
Paying Agent at such office prior to, on or after the Change in
Control Purchase Date (together with all necessary endorsements),
such delivery being a condition to receipt by the Holder of the
Change in Control Purchase Price therefor. If a Holder has
elected to deliver to the Company for purchase a portion of a
Security, and if the principal amount of such portion is $1,000
or an integral multiple of $1,000, the Company shall purchase
such portion from the Holder thereof pursuant to this Section
1012. Provisions of this Indenture that apply to the purchase of
all of a Security also apply to the purchase of a portion of such
Security. Each Paying Agent shall promptly notify the Company of
the receipt by the former of any and all Change in Control
Purchase Notices and any and all written notices of withdrawal
thereof.
(e) Upon receipt by any Paying Agent of a Change in
Control Purchase Notice, the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall
(unless such Change in Control Purchase Notice is withdrawn
pursuant to Section 1012(j)) thereafter be entitled to receive
solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of the Business Day
following the Change in Control Purchase Date
- 81-
<PAGE>
(provided the conditions in Section 1012(d) have been satisfied)
and the time of delivery of such Security to the relevant Paying
Agent at the office of such Paying Agent by the Holder thereof in
the manner required by Section 1012(d).
(f) On or prior to the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
in same day funds (or New York Clearing House funds if such
deposit is made prior to the Change in Control Purchase Date)
sufficient to pay the Change in Control Purchase Price of, and
(except if the Change in Control Purchase Date shall be an
Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be purchased on that date.
(g) Upon a Change in Control Purchase Notice having
been given as aforesaid, Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable at the
Change in Control Purchase Price and from and after such date
(unless the Company shall default in the payment of the Change in
Control Purchase Price) such Securities shall cease to bear
interest. Upon surrender of any such Security for purchase in
accordance with the foregoing provisions, such Security shall be
paid by the Company at the Change in Control Purchase Price;
provided, however, that installments of interest whose Stated
Maturity is on or prior to the Change in Control Purchase Date
shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant
Regular Record Dates according to the terms and the provisions of
Section 307. If any Security tendered for purchase shall not be
so paid upon surrender thereof, the principal thereof (and
premium, if any, thereon) shall, until paid, bear interest from
the Change in Control Purchase Date at the rate borne by such
Security.
(h) Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such
Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate
principal amount equal to, and in exchange for, the portion of
the principal amount of the Security so surrendered that is not
purchased.
- 82-
<PAGE>
(i) The Company shall comply with the applicable tender
offer rules, including Rule l4e-l under the Exchange Act, in
connection with a Change in Control Offer.
(j) A Change in Control Purchase Notice may be
withdrawn before or after delivery by the Holder to the relevant
Paying Agent at the office of such Paying Agent of the Security
to which such Change in Control Purchase Notice relates, by means
of a written notice of withdrawal (by facsimile transmission or
letter) received by such Paying Agent at such office not later
than one Business Day prior to the Change in Control Purchase
Date, specifying, as applicable:
(i) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(ii) the principal amount of the Security with
respect to which such notice of withdrawal is being
submitted; and
(iii) the principal amount, if any, of the Security
that remains subject to the original Change in Control
Purchase Notice and that has been or will be delivered
for purchase by the Company.
A written notice of withdrawal may be in the form set
forth in the preceding paragraph. Each Paying Agent will
promptly return to the prospective Holders thereof any Securities
with respect to which a Change in Control Purchase Notice has
been withdrawn in compliance with this Indenture.
Section 1013. Restrictions on Preferred Stock of
Subsidiaries.
The Company will not permit any of its Subsidiaries to
issue any Preferred Stock (other than to the Company or a
Majority-owned Subsidiary of the Company), or permit any Person
(other than the Company or a Majority-owned Subsidiary of the
Company) to own or hold an interest in any Preferred Stock of any
such Subsidiary, previously held by the Company or a
Majority-owned Subsidiary of the Company unless such Subsidiary
would be entitled to incur Indebtedness in accordance with the
provisions of Section 1007 in the aggregate principal amount
equal to the aggregate liquidation value of such Preferred Stock
assuming a market rate of interest (as determined by the Company)
for such Preferred Stock as of the date of issuance or transfer.
Section 1014. Limitations on Issuances of Guarantees of
Indebtedness.
The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become
liable with respect to any Pari Passu Indebtedness or
- 83-
<PAGE>
Subordinated Indebtedness, unless such Subsidiary simultaneously
executes and delivers a supplemental indenture hereto providing
for a guarantee of the Securities; provided that, in the case of a
Subsidiary's guarantee, assumption or other liability with
respect to Subordinated Indebtedness, such guarantee, assumption
or other liability shall be subordinated to such Subsidiary's
guarantee of the Securities to the same extent as such
Subordinated Indebtedness is subordinated to the Securities; and
provided further that this Section 1014 shall not be applicable
to any guarantee, assumption or other liability of any Subsidiary
of the Company that (i) existed at the time such Person became a
Subsidiary of the Company and (ii) was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary
of the Company. Any such guarantee of the Securities by a
Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon
either (A) the release or discharge of such guarantee of such
Pari Passu Indebtedness or Subordinated Indebtedness, as the case
may be, except a discharge by or as a result of payment under
such guarantee or (B) any sale, exchange or transfer, to any
Person not an Affiliate of the Company, of all the Company's
stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in
compliance with the applicable provisions of this Indenture.
Section 1015. Restriction on Transfer of Assets.
The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its Subsidiaries,
except for (i) sales, conveyances, transfers or other
dispositions of assets or property acquired by the Company after
the date hereof; (ii) sales, conveyances, transfers or other
dispositions of Existing Assets (a) made in the ordinary course
of business; (b) made outside the ordinary course of business
with a net book value that, when aggregated with all other such
transfers by the Company since the date of this Indenture, less
the net book value of Existing Assets transferred to the Company
from its Subsidiaries, would not exceed 25% of the Consolidated
Assets of the Company; or (c) to any Subsidiary if such
Subsidiary simultaneously with such transfer executes and
delivers a supplemental indenture hereto providing for the
guarantee of payment of the Securities by such Subsidiary, which
guarantee shall be subordinated to any guarantee of such
Subsidiary of Senior Indebtedness of the Company and shall be
subordinated to any other Indebtedness of such Subsidiary (which
is not subordinated to any other Indebtedness of such Subsidiary
or which is designated by such Subsidiary as being senior in
right of payment to such guarantee), in each case to the same
extent as the Securities are subordinated to the Senior
Indebtedness of the Company
- 84-
<PAGE>
under this Indenture and (iii) sales, conveyances, transfers or
other dispositions of Existing Assets made pursuant to the
Spin-Off. Notwithstanding the foregoing, any such guarantee of a
Subsidiary of the Securities shall provide by its terms that it
shall be automatically and unconditionally released and
discharged (i) on the date that the net book value of the
Existing Assets held by the Company is greater than 75% of
Consolidated Assets or (ii) upon any sale, exchange or transfer
to any Person not an Affiliate of the Company of all of the
Company's stock in, or all or substantially all the assets of,
such Subsidiary, which sale, exchange or transfer is made in
compliance with the terms of this Indenture.
Section 1016. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any Subsidiary
to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind,
on the ability of any Subsidiary to (a) pay dividends or make any
other distribution on its Capital Stock, (b) pay any Indebtedness
owed to the Company or any Subsidiary, (c) make loans or advances
to the Company or any Subsidiary, or (d) transfer any of its
property or assets to the Company or any Subsidiary, except (i)
any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the date hereof; (ii) any encumbrance or
restriction, with respect to a Subsidiary that is not a
Subsidiary of the Company on the date hereof, in existence at the
time such Person becomes a Subsidiary of the Company or created
on the date it becomes a Subsidiary; (iii) any encumbrance or
restriction on the ability of any Subsidiary whose assets consist
substantially only of fee or leasehold interests in real property
and improvements thereon to transfer any such interests which are
acquired after the date hereof or any unimproved real property
acquired on or prior to the date hereof to the Company or any
Subsidiary, which encumbrance or restriction is required by a
lender to, or purchaser of any indebtedness of, such Subsidiary
in connection with a financing or refinancing permitted
hereunder; and (iv) any encumbrance or restriction pursuant to
any agreement that extends, refinances, renews or replaces any
agreement containing any of the restrictions described in the
foregoing clauses (i)-(iii), provided that the terms and
conditions of any such restrictions are not materially less
favorable to the Holders of the Securities than those under or
pursuant to the agreement extended, refinanced, renewed or
replaced.
Section 1017. Limitation on Unrestricted Subsidiaries.
The Company will not make, and will not permit any of
its Subsidiaries to make, any Investments in Unrestricted
- 85-
<PAGE>
Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments
then permitted to be made pursuant to Section 1008. Any
Investments in Unrestricted Subsidiaries permitted to be made
pursuant to this Section 1017 (i) will be treated as the payment
of a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or
property.
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial Statements.
(a) The Company will deliver to the Trustee, within 120
days after the end of each fiscal year ending after the date
hereof, a brief certificate of its principal executive officer,
principal financial officer or principal accounting officer
stating whether, to such officer's knowledge, the Company is in
compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1018,
such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
(b) If a Default has occurred and is continuing, or if
the Trustee, any Holder or the trustee for or the holder of any
other evidence of Indebtedness of the Company (other than
Indebtedness in the aggregate principal amount of less than
$50,000,000) gives any notice or takes any other action with
respect to a claimed Default, the Company shall deliver to the
Trustee an Officers' Certificate specifying such Default, notice
or other action within 5 Business Days of its occurrence.
(c) The Company shall supply without cost to each
Holder of the Securities, and file with the Trustee within l5
days after the Company is required to file the same with the
Commission, copies of the annual reports and quarterly reports
and of the information, documents and other reports which the
Company may be required to file with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act.
(d) If the Company is not required to file with the
Commission such reports and other information referred to in
Section 1018(c), the Company shall furnish without cost to each
Holder of the Securities and file with the Trustee (i) within 105
days after the end of each fiscal year, annual reports containing
the information required to be contained in Items 1, 2, 3, 5, 6,
7, 8, 9, 10, 11, 12 and 13 of Form 10-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in comparable items of any successor form, (ii)
within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, quarterly reports
- 86-
<PAGE>
containing the information required to be contained in Form 10-Q
promulgated under the Exchange Act, or substantially the same
information required to be contained in any successor form and
(iii) promptly from the time after the occurrence of an event
required to be therein reported, such other reports containing
information required to be contained in Form 8-K promulgated
under the Exchange Act, or substantially the same information
required to be contained in any successor form. The Company
shall also make such reports available to prospective purchasers
of the Securities, securities analysts and broker-dealers upon
their request.
Section 1019. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any covenant or condition set forth in Sections 1007
through 1018 (other than Section 1012) if, before or after the
time for such compliance, the Holders of not less than a majority
in aggregate principal amount of the Securities at the time
Outstanding shall, by Act of such Holders, waive such compliance
in such instance with such covenant or condition, but no such
waiver shall extend to or affect such covenant or condition
except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed, otherwise than through
the operation of the sinking fund provided for in Article Twelve,
at the election of the Company at any time, as a whole or in part
subject to the conditions and at the Redemption Prices specified
in the form of Security, together with accrued interest to the
Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company
or otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board
- 87-
<PAGE>
Resolution. In case of any redemption at the election of the
Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities to be
redeemed.
Section 1104. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be
selected not more than 60 days and not less than 30 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, either pro rata,
by lot or, by any other method the Trustee shall deem fair and
reasonable, and the amounts to be redeemed may be equal to $1,000
or any integral multiple thereof.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed or
to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 21 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a
- 88-
<PAGE>
Security to be redeemed in part, the principal amount) of the
particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or
portion thereof, and that (unless the Company shall default
in payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) if applicable, that such redemption is for the
sinking fund provided in Article Twelve;
(g) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(h) the CUSIP number, if any, relating to such
Securities; and
(i) in the case of a Security to be redeemed in part,
the principal amount of such Security to be redeemed and that
after the Redemption Date upon surrender of such Security,
new Security or Securities in the aggregate principal amount
equal to the unredeemed portion thereof will be issued.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at its
request, by the Trustee in the name and at the expense of the
Company.
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in same day
funds (or New York Clearing House funds if such deposit is made
prior to the applicable Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be
an Interest Payment Date) accrued interest on, all the Securities
or portions thereof which are to be redeemed on that date.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
- 89-
<PAGE>
become due and payable at the Redemption Price therein specified
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal thereof
(and premium, if any, thereon) shall, until paid, bear interest
from the Redemption Date at the rate borne by such Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall
be surrendered at the office or agency of the Company maintained
for such purpose pursuant to Section 1002 (with, if the Company,
the Security Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
SINKING FUND
Section 1201. Mandatory Sinking Fund Payments.
As a mandatory sinking fund for the retirement of the
Securities, the Company will, until all of the Securities shall
have been paid, or payment thereof duly provided for, pay to the
Trustee, on or prior to June 15, 2000 and on or prior to June 15,
2001, an amount in same day funds (or New York Clearing House
funds if such payment is made prior to the applicable June 15)
sufficient to redeem 25% of original aggregate principal
- 90-
<PAGE>
amount of Securities at the Redemption Price specified in the
form of Security hereinbefore set forth. The cash amount of any
sinking fund payment is subject to reduction as provided in
Section 1202. Each sinking fund payment shall be applied to the
redemption of Securities on such June 15 as herein provided.
Section 1202. Satisfaction of Sinking Fund Payments
with Securities.
The Company (a) may deliver Outstanding Securities
(other than any previously called for redemption pursuant to this
Article Twelve) theretofore purchased or otherwise acquired by
the Company and (b) may apply as a credit Securities which have
been redeemed at the election of the Company pursuant to Section
1101, in each case in satisfaction of all or any part of any
sinking fund payment required to be made pursuant to Section
1201; provided that such Securities have not been previously so
credited. Each such Security shall be received and credited for
such purpose by the Trustee at the Redemption Price specified in
the form of Security set forth in Article Two for redemption
through operation of the sinking fund and the amount of such
sinking fund payment shall be reduced accordingly.
Section 1203. Redemption of Securities for Sinking
Fund.
On or before April l5, 2000 and April 15, 2001, the
Company will deliver to the Trustee an Officers' Certificate
specifying the portion of the mandatory sinking fund payment in
Section 1201, if any, which is to be satisfied by payment of cash
and the portion thereof, if any, which is to be satisfied by
delivering or crediting Securities pursuant to Section l202 and
will also deliver, if not previously delivered, to the Trustee
any Securities to be so delivered. Such certificate shall be
irrevocable and upon its delivery the Company shall be obligated
to make the cash payment or payments therein referred to, if any,
on or before the next succeeding sinking fund payment date. In
the case of the failure of the Company to deliver such
certificate, the sinking fund payment due on the next succeeding
sinking fund payment date for the Securities shall be paid
entirely in cash and shall be sufficient to redeem the principal
amount of such Securities subject to a mandatory sinking fund
payment without the option to deliver or credit Securities as
provided in Section 1202. Before May 1 in each such year the
Trustee shall select the Securities to be redeemed upon the next
ensuing June 15 in the manner specified in Section 1104 and cause
notice of the redemption thereof to be given in the name of and
at the expense of the Company in the manner provided in Section
1105. Such notice having been duly given, the redemption of such
Securities shall be made
- 91-
<PAGE>
upon the terms and in the manner stated in Sections 1107 and
1108.
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if
any, and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the
prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness (including any interest accruing after the
occurrence of an Event of Default under Section 501(g) or (h)).
This Article Thirteen shall constitute a continuing
offer to all persons who become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit
of the holders of Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event:
(1) the holders of all Senior Indebtedness shall be
entitled to receive payment in full, in cash or cash
equivalents, of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision
shall be made for such payment in cash or cash equivalents,
before the Holders of the Securities are entitled to receive
any payment on account of
- 92-
<PAGE>
principal of (or premium, if any) or interest on the
Securities; and
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but
for the provisions of this Article Thirteen, including
any such payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of the Securities (except, so long as the effect
of this parenthetical clause is not to cause the
Securities to be treated in any case or proceeding or
similar event described in Subsection (a), (b) or (c) of
this Section 1302 as part of the same class of claims as
the Senior Indebtedness or any class of claims on a
parity with or senior to the Senior Indebtedness, for
any such payment or distribution (x) authorized by an
order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of
the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law, or (y) of
securities that (A) are unsecured (except to the extent the
Securities are secured), (B) have an Average Life to Stated
Maturity and final maturity which are no shorter than
the Average Life to Stated Maturity of the Securities or
any securities issued to the holders of the Senior
Indebtedness under the Bank Credit Agreement pursuant to
a plan of reorganization or readjustment, (C) are
subordinated, to at least the same extent as the
Securities, to the payment of all Senior Indebtedness
then outstanding and (D) are not guaranteed by any
Subsidiary of the Company (except to the extent the
Securities are so guaranteed)), shall be paid by the
liquidating trustee or agent or other person making such
payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior
Indebtedness or their Representative or Representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and premium, if
any, and interest on, and other amounts due or in
connection with, the Senior Indebtedness held or
represented by each, to the extent necessary to make
- 93-
<PAGE>
payment in full, in cash or cash equivalents, of all
Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the
holders of such Senior Indebtedness; and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of
any Security shall have received any such payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities,
including any such payment or distribution which may be
payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to
the payment of the Securities, before all Senior
Indebtedness is paid in full, in cash or cash
equivalents, then and in such event such payment or
distribution shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company
for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, in cash or cash
equivalents, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another corporation upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by
such consolidation or into which the Company is merged or the
corporation which acquires by conveyance, transfer or lease such
properties and assets substantially as an entirety, as the case
may be, shall, as a part of such consolidation, merger,
conveyance, transfer or lease, comply with the conditions set
forth in Article Eight.
Section 1303. No Payment When Specified Senior
Indebtedness in Default.
(a) (i) In the event of and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Specified Senior Indebtedness beyond any
applicable grace period with respect thereto, or (ii) in the
- 94-
<PAGE>
event that any other event of default with respect to any
Specified Senior Indebtedness shall have occurred and be
continuing and shall have resulted in such Specified Senior
Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
or (b) in the event that any event of default (other than a
default described in clause (a)) with respect to any Specified
Senior Indebtedness shall have occurred and be continuing
permitting the holders of such Specified Senior Indebtedness (or a
trustee on behalf of such holders) to declare such Specified
Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, then no payment
shall be made by the Company on account of the principal of (or
premium, if any) or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities
(x) in case of any event of default described in subclause (i) of
clause (a), or an event of default described in subclause (ii) of
clause (a) resulting in an acceleration as specified in clause
(a), unless and until such payment event of default shall have
been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded or annulled or the holders
of such Specified Senior Indebtedness or their agents have waived
the benefits of this Section, or (y) in case of any event of
default specified in clause (b), from the earlier of the date the
Company or the Trustee receives written notice of such event of
default (which notice requests that no such payment be made) from
the agent with respect to any such event of default under the
Bank Credit Agreement or any other Representative of a holder of
Specified Senior Indebtedness with respect to any such event of
default under such Specified Senior Indebtedness until the
earlier of (1) 179 days after such date and (2) the date, if any,
on which the Specified Senior Indebtedness to which such event of
default relates is discharged or such event of default is waived
by the holders of such Specified Senior Indebtedness (including,
if any Indebtedness under the Bank Credit Agreement is
outstanding, lenders under the Bank Credit Agreement) or
otherwise cured (provided that further written notice relating to
the same or any other event of default specified in clause (b)
above with respect to any Specified Senior Indebtedness received
by the Company or the Trustee within 12 months after such receipt
shall not be effective for purposes of this clause (y)).
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over
and delivered forthwith to the Company.
- 95-
<PAGE>
The provisions of this Section shall not apply to any
payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company,
at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under
the conditions described in Section 1303, from making payments at
any time of principal of (and premium, if any) or interest on the
Securities.
Section 1305. Subrogation to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full, in cash or cash
equivalents, of all Senior Indebtedness, the Holders of the
Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness of the Company to
the same extent as the Securities are subordinated and which is
entitled to like rights of subrogation) to the rights of the
holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any)
and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or distribution by the
Company to or on account of the Senior Indebtedness.
Section 1306. Provisions Solely to Define Relative
Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the
- 96-
<PAGE>
Company, its creditors other than holders of Senior Indebtedness
and the Holders of the Securities, the obligation of the Company,
which is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
express limitations set forth in Article Five and to the rights,
if any, under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to
in Section 1302, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment
prohibited by such Section.
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or
- 97-
<PAGE>
more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice,
the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at
least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to
such date.
Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the
event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness held by such
Person, the
- 98-
<PAGE>
extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the
rights of such Person under this Article, and if such evidence is
not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to
receive such payment.
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 602, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending,
or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article.
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
Section 1312. Article Applicable to Paying Agents.
In case at any time Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or
- 99-
<PAGE>
in place of the Trustee; provided, however, that Section 1311
shall not apply to the Company or any Affiliate of the Company if
it or such Affiliate acts as Paying Agent.
Section 1313. Rescission.
The provisions of this Article Thirteen shall continue
to be effective or be reinstated, as the case may be, if at any
time any payment in respect of any Senior Indebtedness is
rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
Section 1314. Application by Trustee of Assets
Deposited With It.
Any cash or U.S. Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with
Section 1401 shall be for the sole benefit of the Holders and
shall not be subject to the subordination provisions of this
Article Thirteen.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401. Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
Section 1402 or Section 1403 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in
this Article Fourteen.
Section 1402. Defeasance and Discharge.
Upon the Company's exercise under Section l401 of the
option applicable to this Section 1402, the Company shall be
deemed to have been discharged from its obligations with respect
to all Outstanding Securities on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented
by the Outstanding Securities, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this Indenture referred to in (A) and (B)
below, and to have
- 100 -
<PAGE>
satisfied all its other obligations under such Securities and
this Indenture, including its obligations under the covenants
contained in Article Thirteen (and the Trustee, on demand of and
at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder:
(A) the rights of Holders of Outstanding Securities to receive
solely from the trust fund described in Section 1404 and as more
fully set forth in such Section, payments in respect of the
principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the
Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section
1403 with respect to the Securities.
Section 1403. Covenant Defeasance.
Upon the Company's exercise under Section 1401 of the
option applicable to this Section 1403, the Company shall be
released from its obligations under the covenants contained in
Articles Eight and Thirteen and in Sections 1007 through 1018
with respect to the Outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "Outstanding" for all other purposes
hereunder (it being understood that such Securities shall not be
deemed Outstanding for financial accounting purposes). For this
purpose, such covenant defeasance means that, with respect to the
Outstanding Securities, the Company may omit to comply with and shall
have no liability in respect of any terms, condition or limitation
set forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by
reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply shall not
constitute a default or an Event of Default under Section 501(d)
or Section 501(i), but, except as specified above, the remainder
of this Indenture and such Securities shall be unaffected
thereby. In addition, upon the Company's exercise under Section
1401 of the option applicable to Section 1403, Sections 501(d)
through 501(i) (other than Sections 501(g) and (h)) shall not
constitute Events of Default.
- 101 -
<PAGE>
Section 1404. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of
either Section 1402 or Section 1403 to the Outstanding
Securities:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such
Securities, (A) cash in U.S. Dollars in an amount, or
(B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not
later than one day before the due date of any payment,
cash in U.S. Dollars in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to
pay and discharge, (i) the principal of (and premium, if
any) and interest on the Outstanding Securities on the Stated
Maturity of such principal or installment of principal (and premium,
if any) or interest and (ii) any mandatory sinking fund
payments or analogous payments applicable to the
Outstanding Securities on the day on which such payments
are due and payable in accordance with the terms of this
Indenture and of such Securities; provided that the
Trustee shall have been irrevocably instructed to apply
such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the
Securities. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct
obligations of the United States of America for the
timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality
of the United States of America the timely payment of
which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America,
which, in either case, are not callable or redeemable at
the option of the issuer thereof, and shall also include
a depository receipt issued by a bank (as
- 102 -
<PAGE>
defined in Section 3(a)(2) of the Securities Act of
1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except
as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder
of such depository receipt from any amount received by
the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by
such depository receipt;
(2) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Securities
will not recognize income, gain or loss for federal income
tax purposes as a result of such defeasance and will be subject
to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such
defeasance had not occurred;
(3) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect
that the Holders of the Outstanding Securities will not
recognize income, gain or loss for federal income tax
purposes as a result of such covenant defeasance and
will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had
not occurred;
(4) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Subsection
501(g) or 501(h) is concerned, at any time during the
period ending on the 91st day after the date of such
deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such
period);
- 103 -
<PAGE>
(5) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other material
agreement or instrument to which the Company is a party
or by which it is bound;
(6) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Officers' Certificate stating that the
deposit made by the Company pursuant to its election
under Section 1402 or 1403 was not made by the Company
with the intent of preferring the Holders over other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that all
conditions precedent provided for relating to either the
defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be) have been
complied with as contemplated by this Section 1404.
On and after the date the conditions set forth above are
satisfied, the United States dollars or U.S. Government
Obligations so deposited shall not be subject to the rights of
the holders of Senior Indebtedness pursuant to the provisions of
Article Thirteen.
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Section 1404 in respect
of the Outstanding Securities shall be held in trust and applied
by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to Article Thirteen.
- 104 -
<PAGE>
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
cash or U.S. Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 1404(l)), are in excess of the
amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 1406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or U.S. Government Obligations in
accordance with Section 1402 or 1403, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the
case may be, until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 1402
or 1403, as the case may be; provided, however, that, if the
Company makes any payment of principal of (or premium, if any) or
interest on any Security following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Securities to receive such payment from the money
held by the Trustee or Paying Agent.
* * * * *
- 105 -
<PAGE>
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
PATHMARK STORES, INC.
By: /s/ Anthony Cuti
Title: President and Chief
Financial Officer
Attest: /s/
Title:
WILMINGTON TRUST COMPANY
By: /s/ Donald G. MacKelcan
Title: Financial Services
Officer
Attest:
Title:
- 106 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of October, 1993, before me
personally came Anthony Cuti, to me known, who, being by me
duly sworn, did depose and say that s/he resides at Saddle River,
New Jersey; that s/he is President of PATHMARK STORES, INC., one
of the corporations described in and which executed the above
instrument; that s/he knows the corporate seal of such corporation;
that the seal affixed to said instrument is such corporate seal;
that it was so affixed pursuant to authority of the Board of
Directors of such corporation; and that s/he signed her/his name
thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
--------------------------
Notary Public
- 107 -
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 26th day of October, 1993, before me
personally came Donald B. MacKelcan, to me known, who, being duly
sworn, did depose and say that s/he resides at Wilmington,
Delaware; that s/he is Financial Services Officer of WILMINGTON
TRUST COMPANY, one of the corporations described in and which
executed the above instrument; that s/he knows the corporate seal
of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that s/he
signed her/his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
--------------------------
- 108 -
<PAGE>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<TABLE>
<S> <C>
(000's OMITTED)
INDUSTRIAL REVENUE BONDS
(See details on page 2) $ 6,375
OTHER DEBT (PRIMARILY MORTGAGES)
(See details on page 2) 41,804
-------
$48,179
=======
Holdings Intercompany Note related to the Holdings Subordinated Notes in an aggregate principal amount
equal to or less than $3,361,000.
Holdings Intercompany Note related to the 13-1/8 Junior Subordinated Discount Debentures due 2003 of
Holdings in an aggregate principal amount equal to or less than $1,800,000.
</TABLE>
S-I-1
<PAGE>
<TABLE><CAPTION>
Schedule I (cont'd)
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<S> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS RATE DATE (IN THOUSANDS)
------------------------ -------- -------- --------------
Massachusetts Mutual Life 9.0% 1999 $ 243
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life 7.0 1994 1,207
Insurnace Company
200 Berkley Street
Boston, MA 02117
Re: Bridge Stuart Properties
Massachusetts Mutual Life 7.0-9.0 1993-99 480
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Pennsylvania Stuart Properties
Connecticut General Life 10.2-10.4 1997-99 855
Insurance Company
Hartford, CT 06115
Re: Jersey Stuart Properties
Prudential Insurance Company 10.5 1998 37,278
of America
10 Rockefeller Center, 15th Fl.
New York, NY
Re: SGC Mortgaged Properties
Delaware Economic Development 10.875 2003 3,000
Authority
c/o Philadelphia National Bank
P.O. Box 7010
Philadelphia, PA
Re: Lancaster Pike IRB
Industrial Revenue Bonds 10.6 2003 3,375
c/o Philadelphia National Bank
P.O. Box 7918
Philadelphia, PA
Re: Schillington IRB
Jacqueline Nallitt 11.0 1999 276
1688 Victory Blvd.
Staten Island, NY
Re: Forrest Ave. Mall Store
Mt. Vernon Urban Renewal Agency 8.0 1995 670
9 South First Ave., 9th Fl.
Mt. Vernon, NY 10550
Re: Mt. Vernon Development
AFCO 5.5 1994 795
900 Lanidex Plaza
Parsippany, NJ 07054
Re: Insurance Policy Premium ______
LONG TERM DEBT $48,179
=======
</TABLE>
S-I-2
<PAGE>
<TABLE><CAPTION>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING LIENS
----------------------
The Indebtedness listed hereon is secured only by mortgages on the properties listed opposite such
Indebtedness.
<S> <C> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
Massachusetts Mutual Life Pathmark of Hamilton 9.0% 1999 $ 243
Insurance Company 2735 S. Broad Street
1295 State Street Hamilton Township, NJ 08610
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life Pathmark of Inwood 7.0% 1994 362
Insurance Company 410 W. 207th Street
200 Berkley Street New York, NY 10034
Boston, MA 02117
Re: Bridge Stuart Properties Pathmark & Rickel of 511
Edgewater Park
2110 Rt. 130 & Wood Lane Rd.
Beverly, NJ 08010
Pathmark of Ivy Hill .344
1331 Ivy Hill Road
Springfield Township
Philadelphia, PA 19150
Massachusetts Mutual Life Former Pathmark of Whitaker 7.0-9.0 1993-99 394
Insurance Company 5520 Whitaker Avenue
1295 State Street Philadelphia, PA 19124
Springfield, MA 01101
Re: Pennsylvania Stuart Franklin Township Gas
Properties 673 Somerset Street
Somerset, NJ 08873
Paramus Gas 34
639 Route 17 South
Paramus, NJ 07652
Fairless Hills Gas 28
Route 1 and Atlantic Ave.
Fairless Hills, PA 19030
Connecticut General Life Pathmark of Belmont 10.2-10.4 1997-99 855
Insurance Company 115 Belmont Avenue
Hartford, CT 06115 Belleville, NJ 07109
Re: Jersey Stuart
Properties
Prudential Insurance Company Pathmark of Upper Darby 10.5 1998 1,710
of America 421 S. 69th Street
10 Rockefeller Center, Upper Darby, PA 19082
15th Fl.
New York, NY
Re: SGC Mortgaged Properties Pathmark & Rickel of 4,355
Glenolden
140 N. McDade Blvd.
Glenolden, PA 19036
Pathmark & Rickel of 3,078
Shillington
243A W. Lancaster Avenue
Shillington, PA 19607
</TABLE>
S-I-3
<PAGE>
<TABLE><CAPTION>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Prudential Insurance Company Pathmark of Willow Grove 4,450
of America (continued) 2545 Moreland Road
Willow Grove, PA 19090
Pathmark of Lancaster Pike 2,018
3901 Lancaster Pike
Wilmington, DE 19805
Pathmark & Rickel of East 9,633
Brunswick
50 Race Track Road
East Brunswick, NJ 08615
Rickel of Forrest Avenue 3,135
1520 Forrest Avenue
Staten Island, NY 10302
Rickel of Johnson City 2,337
540 Harry L. Drive
Johnson City, NY 13790
Pathmark Drug of Danbury 10.5 1996 2,200
100 Danbury - Newtown Road
Danbury, CT 06810
Purity Supreme Store 3,762
3375 Berlin Turnpike
Newington, CT 06111
Jacqueline Nallitt Pathmark of Forrest 11.0 1999 276
1688 Victory Blvd. Avenue
Staten Island, NY 1351 Forrest Avenue
Re: Forrest Ave. Mall Store Staten Island, NY 10302
Mt. Vernon Urban Renewal Agency Pathmark Development 8.0 1995 670
9 South First Ave., 9th Fl. One Pathmark Plaza
Mt. Vernon, NY 10550 Mt. Vernon, NY 10550
Re: Mt. Vernon Development
_______
$41,009
=======
</TABLE>
S-I-4
<PAGE>
APPENDIX A
[Form of Intercompany Agreement]
[Indebtedness of the Company or any Majority-owned
Subsidiary to any one or the other of them will qualify
as Permitted Indebtedness if, and only if, such
Indebtedness is made pursuant to and is evidenced
by an agreement in the form of a promissory
note in substantially the form as follows:]
$ , 19
Evidences of all loans or advances ("Loans") hereunder
shall be reflected on the grid attached hereto. FOR VALUE
RECEIVED, , a corporation (the
"Maker"), HEREBY PROMISES TO PAY ON DEMAND to the order of
(the "Holder") the principal sum of the aggregate
unpaid principal amount of all Loans (plus accrued interest
thereon) at any time and from time to time made hereunder.
All capitalized terms used herein that are defined in,
or by reference in, the Indenture between Pathmark Stores, Inc.
and Wilmington Trust Company, trustee, dated as of , 1993
with respect to the 11-5/8% Subordinated Notes, due 2002 (the
"Indenture"), have the meanings assigned to such terms therein,
or by reference therein, unless otherwise defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01. Not Forgivable. Unless the Maker of the
Loan hereunder is the Company, the Holder may not forgive any
amounts owing under this Intercompany Note.
A-1
<PAGE>
Section 1.02. Interest; Prepayment. (a) The interest
rate ("Interest Rate") on any Loan shall be a rate per annum
reflected on the grid attached hereto.
(b) The interest, if any, payable on each of the Loans
shall accrue from the date such Loan is made and shall be payable
upon demand of the Holder.
(c) If the principal or accrued interest, if any, on
the Loans is not paid on the date demand is made, interest on the
unpaid principal and interest will accrue at a rate equal to the
Interest Rate, if any, plus 1% per annum from maturity until the
principal and interest on such Loans are fully paid.
(d) Any amounts owed hereunder may be prepaid at any
time by the Maker.
Section 1.03. Subordination. All Loans made to the
Company shall be subordinated in right of payment to the payment
and performance of the obligations of the Company and any
Subsidiary under the Indenture, the Securities, and any other
Indebtedness ranking senior to or pari passu with the Securities,
including, without limitation, any Senior Indebtedness; provided
that, with respect to a Subsidiary in any specific instance, such
Subsidiary is also an obligor under the Indenture, the Securities
or such other senior or pari passu Indebtedness, as the case may
be, whether as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If, after the date of
issuance of this Loan an Event of Default has occurred under the
Indenture, then (x) in the event the Maker is not the Company and
not a Subsidiary that is also an obligor under the Indenture or
the Securities (in the case where the Holder is not the Company),
all amounts owing under the Loans hereunder shall be immediately
due and payable (whether or not demand has been made) to the
Holder, (y) in the event the Maker is the Company, the amounts
owing under the Loans hereunder shall not be payable and (z) in
the event the Maker is a Subsidiary that is also an obligor under
the Indenture or the Securities and the Holder is not the Company
or another Subsidiary that is also an obligor under the Indenture
or the Securities, the amounts owing under the Loans hereunder
shall not be due and payable; provided, however, that, if such
Event of Default or acceleration has been waived, cured or
rescinded, such amounts
A-2
<PAGE>
shall no longer be due and payable in the case of clause (x), and
such amounts may be paid in the case of clauses (y) and (z). If
the Holder is a Subsidiary, then the Holder hereby agrees that if
it receives any payments or distributions on any Loan from the
Company, or from a Subsidiary that is also an obligor under the
Indenture or the Securities, which payments or distributions,
pursuant to clause (y) or (z) of the prior sentence, are not
payable after any Event of Default has occurred, is continuing
and has not been waived, cured or rescinded, such Holder will pay
over and deliver forthwith to the Company or such Subsidiary, as,
the case may be, all such payments and distributions.
ARTICLE III
MISCELLANEOUS
Section 3.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement, or consent to depart
therefrom is permitted at any time for any reason, except with
the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities.
Section 3.02. Assignment. No party to this Agreement
may assign, in whole or in part, any of its rights and
obligations under this Agreement, except to its legal
successor-in-interest.
Section 3.03. Third Party Beneficiaries. The Holders
of the Securities or any other Indebtedness ranking pari passu
with, or senior to, the Securities including, without limitation,
any Senior Indebtedness, shall be third party beneficiaries to
this Agreement and shall have the right to enforce this Agreement
against the Company and the Subsidiaries.
Section 3.04. Headings. Article and Section headings
in this Agreement are included for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
Section 3.05. Entire Agreement. This Agreement sets
forth the entire agreement of the parties with respect to its
subject matter and supersedes all previous understandings,
written or oral, in respect thereof.
Section 3.06. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
A-3
<PAGE>
Section 3.07. Waivers. The Maker hereby waives
presentment, demand for payment, notice of protest and all other
demands and notices in connection with the delivery, acceptance,
performance or enforcement hereof.
By:
A-4
<PAGE>
GRID
Amount Interest Rate
Date of of on the Notation
Advance Advance Advance Made By
<PAGE>
Appendix B-1
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 1, 1992 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture
dated as of , 1993 between the Lender and the
Trustee and the 11-5/8% Subordinated Notes due 2002 issued
thereunder (such Indenture and Notes, as supplemented, amended,
modified or waived from time to time in accordance with the terms
thereof being the "Lender Indenture" and "Lender Subordinated
Notes", respectively), together with interest on such principal
sum from the date hereof at the times and in the amounts provided
in the Lender Indenture and the Lender Subordinated Notes for the
payment of interest thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of ,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 11-5/8% Subordinated Notes due 2002
(the "Borrower Indenture"), (ii) the Borrower's 11-5/8%
Subordinated Notes due 2002 (the "Borrower Subordinated Notes")),
(iii) the Subordinated Debentures and the Deferred Coupon Notes
(as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
SUPERMARKETS GENERAL CORPORATION
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-1-2
<PAGE>
Appendix B-2
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 25, 1987 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as amended and restated as of May 15, 1992 and as
supplemented as of June 15, 1992 and the 12-5/8% Subordinated
Debentures due 2002 issued thereunder (such Indenture and Notes,
as supplemented, amended, modified or waived from time to time in
accordance with the terms thereof being the "Lender Indenture"
and "Lender Subordinated Debentures", respectively), together
with interest on such principal sum from the date hereof at the
times and in the amounts provided in the Lender Indenture and the
Lender Subordinated Debentures for the payment of interest
thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of ,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 12-5/8% Subordinated Debentures due
2002 (the "Borrower Indenture"), (ii) the Borrower's 12-5/8%
Subordinated Debentures due 2002 (the "Borrower Subordinated
Notes")), (iii) the Subordinated Notes and the Deferred Coupon
Notes (as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
SUPERMARKETS GENERAL CORPORATION
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-2-2
DRAFT - 8/23/93
8280e/8281e
0296L/0300L
PATHMARK STORES, INC.,
Issuer,
and
WILMINGTON TRUST COMPANY,
Trustee
INDENTURE
Dated as of October 26, 1993
12-5/8% Subordinated Debentures
due 2002
<PAGE>
Reconciliation and tie between Trust Indenture Act
of 1939 and Indenture, dated as of October 26, 1993*
Trust Indenture Indenture
Act Section Section
Sec. 310(a)(1) ............................. 608
(a)(2) ............................. 608
(b) ............................. 607, 609
Sec. 312(c) ............................. 701
Sec. 314(a) ............................. 703
(a)(4) ............................. 1018
(c)(1) ............................. 103
(c)(2) ............................. 103
(e) ............................. 103
Sec. 315(b) ............................. 601
Sec. 316(a)(last
sentence) ............................. 101 ("Out-
standing")
(a)(1)(A) ............................. 502, 512
(a)(1)(B) ............................. 513
(b) ............................. 508
(c) ............................. 105
Sec. 317(a)(1) ............................. 503
(a)(2) ............................. 504
Sec. 318(a) ............................. 108
* This reconciliation and tie shall not, for any purpose, be
deemed to be part of the Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE ONE
Definitions and Other Provisions of
General Application
Section 101. Definitions ............................ 1
Acquired Indebtedness .................. 2
Acquisition ............................ 2
Affiliate .............................. 2
Average Life to Stated Maturity ........ 3
Bank Credit Agreement .................. 3
Board of Directors ..................... 3
Board Resolution ....................... 3
Business Day ........................... 3
Capital Lease Obligation ............... 3
Capital Stock .......................... 3
Change in Control ...................... 3
Chefmark ............................... 4
Commission ............................. 4
Company ................................ 4
Company Request or Company Order ....... 4
Consolidated Adjusted Net Income (Loss). 4
Consolidated Assets .................... 5
Consolidated Capital Expenditures ...... 5
Consolidated Fixed Charge
Coverage Ratio ....................... 5
Consolidated Interest Expense .......... 6
Consolidated Non-cash Charges .......... 6
Consolidated Tax Expense ............... 6
Corporate Trust Office ................. 6
Corporation ............................ 6
Default ................................ 6
Deferred Coupon Notes................... 6
Equitable Investors .................... 6
Event of Default ....................... 7
Exchange Act ........................... 7
Existing Assets ........................ 7
Fair Market Value ...................... 7
Note: This table of contents shall not, for any purpose, be
deemed to be a part of this Indenture.
<PAGE>
PAGE
Federal Bankruptcy Code ................ 7
Generally Accepted Accounting
Principles or GAAP ................... 7
Guaranteed Debt ........................ 7
Holder ................................. 8
Holdings ............................... 8
Holdings Intercompany Notes ............ 8
Holdings Majority-owned Subsidiary...... 8
Holdings Preferred Stock ............... 8
Holdings Subsidiary..................... 8
Indebtedness ........................... 9
Indenture .............................. 9
Intercompany Agreement ................. 10
Interest Payment Date .................. 10
Interest Rate Hedge Arrangement ........ 10
Investments ............................ 10
Lien ................................... 10
Logistical Services Agreement .......... 10
Majority-owned Subsidiary .............. 11
Management Investors ................... 11
Material Subsidiary .................... 11
Maturity ............................... 11
ML Funds ............................... 11
Newco................................... 12
Officers' Certificate .................. 12
Opinion of Counsel ..................... 12
Outstanding ............................ 12
Pari Passu Indebtedness ................ 13
Paying Agent ........................... 13
Permitted Holders ...................... 13
Permitted Indebtedness ................. 13
Permitted Investment ................... 15
Permitted Payment ...................... 16
Permitted Senior Subordinated
Indebtedness ......................... 16
Person ................................. 16
Plainbridge ............................ 16
Predecessor Security ................... 16
Preferred Stock ........................ 17
Purchase Money Mortgages ............... 17
Qualified Capital Stock ................ 17
Recapitalization ....................... 17
Redeemable Capital Stock ............... 17
-ii-
<PAGE>
PAGE
Redemption Date ........................ 17
Redemption Price ....................... 17
Regular Record Date .................... 18
Representative ......................... 18
Responsible Officer .................... 18
Restricted Payments .................... 18
Security and Securities ................ 18
Senior Indebtedness .................... 18
Senior Subordinated Notes .............. 19
SMG-II ................................. 19
Special Record Date .................... 19
Specified Senior Indebtedness .......... 19
Spin-Off Agreements .................... 20
Spin-Off .............................. 20
Stated Maturity ........................ 20
Subordinated Indebtedness .............. 20
Subordinated Notes...................... 20
Subsidiary ............................. 20
Tax Sharing Agreement .................. 21
Temporary Cash Investment .............. 21
Trust Indenture Act .................... 21
Trustee ................................ 21
Unrestricted Subsidiary ................ 21
Unrestricted Subsidiary Indebtedness ... 22
Voting Stock ........................... 22
Section 102. Other Definitions ...................... 23
Section 103. Compliance Certificates and Opinions ... 23
Section 104. Form of Documents Delivered to Trustee . 24
Section 105. Acts of Holders ........................ 24
Section 106. Notices, etc., to Trustee
and Company .......................... 26
Section 107. Notice to Holders; Waiver .............. 26
Section 108. Conflict of any Provision of
Indenture with Trust Indenture Act ... 27
Section 109. Effect of Headings and Table of
Contents ............................. 27
Section 110. Successors and Assigns ................. 27
Section 111. Separability Clause .................... 28
Section 112. Benefits of Indenture .................. 28
Section 113. Governing Law .......................... 28
Section 114. Legal Holidays ......................... 28
Section 115. No Recourse Against Others ............. 28
-iii-
<PAGE>
PAGE
ARTICLE TWO
Security Forms
Section 201. Forms Generally ........................ 29
Section 202. Form of Face of Security ............... 29
Section 203. Form of Reverse of Security ............ 31
Section 204. Form of Trustee's Certificate of
Authentication ....................... 35
ARTICLE THREE
The Securities
Section 301. Title and Terms ........................ 36
Section 302. Denominations .......................... 36
Section 303. Execution, Authentication, Delivery and
Dating ............................... 37
Section 304. Temporary Securities ................... 38
Section 305. Registration, Registration of Transfer
and Exchange ......................... 39
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities ........................... 40
Section 307. Payment of Interest; Interest Rights
Preserved ............................ 41
Section 308. Persons Deemed Owners .................. 42
Section 309. Cancellation ........................... 42
Section 310. Computation of Interest ................ 43
ARTICLE FOUR
Satisfaction and Discharge
Section 401. Satisfaction and Discharge
of Indenture ......................... 43
Section 402. Application of Trust Money ............. 44
ARTICLE FIVE
Remedies
Section 501. Events of Default ...................... 45
Section 502. Acceleration of Maturity; Rescission ... 47
Section 503. Collection of Indebtedness and Suits
for Enforcement by Trustee ........... 48
-iv-
<PAGE>
PAGE
Section 504. Trustee May File Proofs of Claim ....... 49
Section 505. Trustee May Enforce Claims Without
Possession of Securities ............. 50
Section 506. Application of Money Collected ......... 50
Section 507. Limitation on Suits .................... 51
Section 508. Unconditional Right of Holders to
Receive Principal, Premium and
Interest ............................. 52
Section 509. Restoration of Rights and Remedies ..... 52
Section 510. Rights and Remedies Cumulative ......... 52
Section 511. Delay or Omission Not Waiver ........... 53
Section 512. Control by Holders ..................... 53
Section 513. Waiver of Past Defaults ................ 53
Section 514. Undertaking for Costs .................. 54
Section 515. Waiver of Stay, Extension or
Usury Laws ........................... 54
Section 516. Unconditional Right of Holders
to Institute Certain Suits ........... 54
ARTICLE SIX
The Trustee
Section 601. Notice of Defaults ..................... 55
Section 602. Certain Rights of Trustee .............. 55
Section 603. Not Responsible for Recitals or
Issuance of Securities ............... 57
Section 604. Trustee and Agents May Hold
Securities; Collections; etc. ........ 57
Section 605. Money Held in Trust .................... 58
Section 606. Compensation and Reimbursement ......... 58
Section 607. Conflicting Interests .................. 59
Section 608. Corporate Trustee Required;
Eligibility .......................... 60
Section 609. Resignation and Removal; Appointment
of Successor ......................... 60
Section 610. Acceptance of Appointment by
Successor ............................ 62
Section 611. Merger, Conversion, Consolidation or
Succession to Business ............... 63
Section 612. Preferential Collection of Claims
Against Company ...................... 63
-v-
<PAGE>
PAGE
ARTICLE SEVEN
Holders' Lists and Reports by
Trustee and Company
Section 701. Disclosure of Names and Addresses
of Holders ........................... 63
Section 702. Reports by Trustee ..................... 64
Section 703. Reports by Company ..................... 64
ARTICLE EIGHT
Consolidation, Merger, Conveyance,
Transfer or Lease
Section 801. Company May Consolidate, etc.,
Only on Certain Terms ................ 65
Section 802. Successor Substituted .................. 66
ARTICLE NINE
Supplemental Indentures
Section 901. Supplemental Indentures
without Consent of Holders ........... 66
Section 902. Supplemental Indentures
with Consent of Holders .............. 67
Section 903. Execution of Supplemental Indentures ... 68
Section 904. Effect of Supplemental Indentures ...... 68
Section 905. Conformity with Trust Indenture Act .... 69
Section 906. Reference in Securities to Supplemental
Indentures ........................... 69
Section 907. Effect on Senior Indebtedness .......... 69
ARTICLE TEN
Covenants
Section 1001. Payment of Principal, Premium and
Interest ............................. 69
Section 1002. Maintenance of Office or Agency ........ 69
Section 1003. Money for Security Payments to Be
Held in Trust ........................ 70
Section 1004. Corporate Existence .................... 72
-vi-
<PAGE>
PAGE
Section 1005. Payment of Taxes and Other Claims ...... 72
Section 1006. Maintenance of Properties .............. 73
Section 1007. Limitation on Indebtedness ............. 73
Section 1008. Limitation on Restricted Payments ...... 74
Section 1009. Limitation on Transactions with
Affiliates ........................... 79
Section 1010. Limitation on Liens .................... 80
Section 1011. Limitation on Other Senior
Subordinated Indebtedness ............ 80
Section 1012. Purchase of Securities Upon Change in
Control .............................. 81
Section 1013. Restrictions on Preferred Stock of
Subsidiaries ......................... 85
Section 1014. Limitations on Issuances of Guarantees
of Indebtedness ...................... 85
Section 1015. Restriction on Transfer of Assets ...... 85
Section 1016. Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries ......................... 86
Section 1017. Limitation on Unrestricted
Subsidiaries ......................... 87
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial
Statements ........................... 87
Section 1019. Waiver of Certain Covenants ............ 88
ARTICLE ELEVEN
Redemption of Securities
Section 1101. Right of Redemption .................... 89
Section 1102. Applicability of Article ............... 89
Section 1103. Election to Redeem; Notice to Trustee .. 89
Section 1104. Selection by Trustee of Securities to
Be Redeemed .......................... 89
Section 1105. Notice of Redemption ................... 90
Section 1106. Deposit of Redemption Price ............ 91
Section 1107. Securities Payable on Redemption Date .. 91
Section 1108. Securities Redeemed in Part ............ 91
ARTICLE TWELVE
[Intentionally omitted]
-vii-
<PAGE>
PAGE
ARTICLE THIRTEEN
Subordination of Securities
Section 1301. Securities Subordinate to Senior
Indebtedness ......................... 92
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc. .................... 92
Section 1303. No Payment When Specified Senior
Indebtedness in Default .............. 95
Section 1304. Payment Permitted if No Default ........ 96
Section 1305. Subrogation to Rights of Holders
of Senior Indebtedness ............... 96
Section 1306. Provisions Solely to Define
Relative Rights ...................... 97
Section 1307. Trustee to Effectuate Subordination .... 97
Section 1308. No Waiver of Subordination Provisions .. 97
Section 1309. Notice to Trustee ...................... 98
Section 1310. Reliance on Judicial Order or
Certificate of Liquidating Agent ..... 99
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of
Trustee's Rights ..................... 99
Section 1312. Article Applicable to Paying Agents .... 100
Section 1313. Rescission ............................. 100
Section 1314. Application by Trustee of Assets
Deposited With It .................... 100
ARTICLE FOURTEEN
Defeasance and Covenant Defeasance
Section 1401. Option to Effect Defeasance
or Covenant Defeasance ............... 100
Section 1402. Defeasance and Discharge ............... 101
Section 1403. Covenant Defeasance..................... 101
Section 1404. Conditions to Defeasance or
Covenant Defeasance .................. 102
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust;
Other Miscellaneous Provisions ....... 105
Section 1406. Reinstatement .......................... 105
-viii-
<PAGE>
TESTIMONIUM........................................... 106
SIGNATURES AND SEALS.................................. 106
ACKNOWLEDGMENTS
EXISTING INDEBTEDNESS..............................SCHEDULE I
FORM OF INTERCOMPANY AGREEMENT.....................APPENDIX A
FORM OF HOLDINGS INTERCOMPANY NOTE.................APPENDIX B
-ix-
<PAGE>
INDENTURE, dated as of October 26, 1993, between PATHMARK
STORES, INC., a Delaware corporation (hereinafter called the
"Company"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (hereinafter called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an
issue of its 12-5/8% Subordinated Debentures due 2002
(hereinafter called the "Securities"), of substantially the tenor
and amount hereinafter set forth, and to provide therefor the
Company has duly authorized the execution and delivery of this
Indenture;
This Indenture is subject to, and shall be governed by,
the provisions of the Trust Indenture Act that are required to be
part of and to govern indentures qualified under the Trust
Indenture Act;
All acts and things necessary have been done to make
the Securities, when executed by the Company and authenticated
and delivered hereunder and duly issued by the Company, the
valid, binding and legal obligations of the Company, and to make
this Indenture a valid agreement of the Company in accordance
with its terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
covenanted and agreed, for the equal and proportionate benefit of
all Holders of the Securities, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 101. Definitions.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
<PAGE>
(b) all other terms used herein which are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles and, except as
otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any
computation required or permitted hereunder shall mean such
accounting principles as are generally accepted in the United
States as of the date hereof; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
Certain terms, used principally in Articles Five, Six,
Ten, Thirteen and Fourteen are defined in those Articles.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary) (i) existing at the time
such Person becomes a Subsidiary or (ii) assumed in connection
with the acquisition of assets from such Person, other than
Indebtedness incurred in connection with, or in contemplation of,
such Person becoming a Subsidiary or such acquisition, as the
case may be.
"Acquisition" means the acquisition of the Company by
Holdings completed in October 1987, pursuant to the Agreement and
Plan of Merger dated as of April 22, 1987 among the Company, SMG
Acquisition Corporation and Holdings, as amended.
"Affiliate" means, with respect to any specified Person,
(i) any other Person directly or indirectly controlling or
controlled by or under direct or indirect common control with
such specified Person or (ii) for purposes of Section l009 only,
any other Person that owns, directly or indirectly, 10% or more
of such Person's Capital Stock or any officer or director of any
such Person or other Person or with respect to any natural
Person, any person having a relationship with such Person by
blood, marriage or adoption not more remote than first cousin.
For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly,
whether through the ownership of Voting Stock, by contract or
otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
- 2-
<PAGE>
"Average Life to Stated Maturity" means, as of the date
of determination, with respect to any Indebtedness, the quotient
obtained by dividing (i) the sum of the products of (a) the
number of years from the date of determination to the date or
dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal
payment by (ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated
as of the date hereof among the Company and the lenders
thereunder and Bankers Trust Company, as agent, as in effect on
the date hereof, and as such agreement may be amended, renewed,
extended, supplemented or otherwise modified from time to time,
and any agreement or successive agreements governing Indebtedness
incurred to refund, refinance, restructure or replace the
Indebtedness and commitments then outstanding or permitted to be
outstanding under such Credit Agreement or other agreement.
"Board of Directors" means the board of directors of the
Company or any duly authorized committee of such board.
"Board Resolution" means a copy of a resolution
certified by the Secretary or an Assistant Secretary of the
Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification
and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking
institutions in The City of New York or the State of Delaware are
authorized or obligated by law, regulation or executive order to
close.
"Capital Lease Obligation" of any Person means any
obligations of such Person and its Subsidiaries on a consolidated
basis under any capital lease of real or personal property which,
in accordance with GAAP, has been recorded as a capitalized lease
obligation.
"Capital Stock" of any Person means any and all shares,
interests, participations, or other equivalents (however
designated) of such Person's capital stock whether now
outstanding or issued after the date hereof.
"Change in Control" means an event as a result of which:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) other than Permitted Holders is or
becomes the "beneficial owner" (as
- 3-
<PAGE>
defined in Rules 13d-3 and l3d-5 under the Exchange Act, except
that a Person shall be deemed to have "beneficial ownership" of
all shares that any such Person has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
Voting Stock of the Company and (ii) such person succeeds in
having its nominees constitute a majority of the Company's Board
of Directors.
"Chefmark" means Chefmark, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Commission" means the Securities and Exchange
Commission, as from time to time constituted, created under the
Exchange Act or, if at any time after the execution of this
Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Company" means the Person named as the "Company" in the
first paragraph of this instrument, until a successor Person
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Company" shall mean such
successor Person. To the extent necessary to comply with the
requirements of the provisions of Trust Indenture Act
Sections 3l0 through 317 as they are applicable to the Company,
the term "Company" shall include any other obligor with respect
to the Securities for the purposes of complying with such
provisions.
"Company Request" or "Company Order" means a written
request or order signed in the name of the Company (i) by its
Chairman, a Vice Chairman, its President or a Vice President and
(ii) by its Treasurer, an Assistant Treasurer, its Secretary or
an Assistant Secretary and delivered to the Trustee; provided,
however, that such written request or order may be signed by any
two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Consolidated Adjusted Net Income (Loss)" of the Company
means, for any period, the consolidated net income (loss) of the
Company and its consolidated Subsidiaries for such period as
determined in accordance with GAAP, adjusted by excluding (i) net
after-tax extraordinary gains or losses (less all fees and
expenses relating thereto), as the case may be, (ii) net
after-tax gains or losses (less all fees and expenses relating
thereto) attributable to asset sales, (iii) any
- 4-
<PAGE>
depreciation and amortization expense incurred by the Company and
its consolidated Subsidiaries from the date of the Acquisition to
the date of determination resulting from (a) any write-up in the
book value of any assets due to the Acquisition and (b) any
goodwill due to the Acquisition (including any write-off or
accelerated amortization of goodwill), (iv) any expenses incurred
in connection with the Acquisition and the financing thereof and
the Recapitalization, (v) any expenses relating to the incurrence
or refinancing of Indebtedness, (vi) the net income (or loss) of
any Person (including any Unrestricted Subsidiary and excluding
the Company or a Subsidiary) in which the Company or any of its
Subsidiaries has an ownership interest, except to the extent of
the amount of dividends or other distributions actually paid to
the Company or its Subsidiaries by such other Person during such
period, (vii) net income (or net loss) of any Person combined
with the Company or any of its Subsidiaries in a "pooling of
interests" basis attributable to any period prior to the date of
combination and (viii) non-cash charges of the Company and its
Subsidiaries resulting from the application of Statement of
Financial Accounting Standards No. 106 ("SFAS 106") to the extent
such charges exceed the cash payments for benefits covered by
SFAS 106 for the relevant period.
"Consolidated Assets" means the net book value of the
Existing Assets shown on the balance sheet of the Company, as
determined in accordance with GAAP consistently applied, as of
the last day of the Company's last fiscal quarter prior to the
date hereof.
"Consolidated Capital Expenditures" means cash capital
expenditures reflected in the consolidated statement of cash
flows of the Company and Capital Lease Obligations that are on
the consolidated balance sheet of the Company and its
Subsidiaries, in each case in conformity with GAAP.
"Consolidated Fixed Charge Coverage Ratio" of the
Company means, for any period, the ratio of (i) the sum of
Consolidated Adjusted Net Income, Consolidated Interest Expense,
Consolidated Tax Expense and Consolidated Non-cash Charges
deducted in computing Consolidated Adjusted Net Income, in each
case, for such period, of the Company and its Subsidiaries on a
consolidated basis, all determined in accordance with GAAP, to
(ii) the sum of such Consolidated Interest Expense for such
period; provided that, in making such computation, the
Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and bearing a floating
interest rate shall be computed as if the rate in effect on the
date of computation had been the applicable rate for the entire
period; provided, further, that
- 5-
<PAGE>
in making any calculation prior to the first anniversary date of
the Recapitalization, the Recapitalization shall be deemed to
have taken place on the first day of such period.
"Consolidated Interest Expense" means, for any period,
the amount which, in conformity with GAAP, would be set forth
opposite the caption "interest expense" (or any like caption) on a
consolidated statement of earnings of the Company and its
Subsidiaries for such period minus the aggregate amount for such
period of interest imputed on future liabilities of the Company
and its Subsidiaries, other than Indebtedness, recorded at
present value. Consolidated Interest Expense shall include
accruals in respect of Interest Rate Hedge Arrangements (but
shall exclude any such accruals in the nature of amortization of
front-end fees or other similar payments).
"Consolidated Non-cash Charges" of the Company means,
for any period, the aggregate depreciation, amortization and
other non-cash charges of the Company and its consolidated
Subsidiaries for such period, as determined in accordance with
GAAP (excluding any such non-cash charge which requires an
accrual of or reserve for cash charges for any future period).
"Consolidated Tax Expense" of the Company means, for any
period, as applied to the Company, the provision for federal,
state, local and foreign income taxes of the Company and its
consolidated Subsidiaries for such period as determined in
accordance with GAAP.
"Corporate Trust Office" means the office of the Trustee
at which at any particular time its corporate trust business
shall be principally administered, which office at the date of
execution of this Indenture is located at Rodney Square North,
Wilmington, Delaware 19890.
"Corporation" includes corporations, associations,
partnerships, companies and business trusts.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Deferred Coupon Notes" means the Junior Subordinated
Deferred Coupon Notes due 2003 of the Company in aggregate
principal amount at final maturity not in excess of the aggregate
principal amount at final maturity on the date of this Indenture.
"Equitable Investors" means The Equitable Life Assurance
Society of the United States and any of its
- 6-
<PAGE>
Affiliates that beneficially own, directly or indirectly, shares
of Capital Stock of SMG-II, Holdings, Newco or the Company.
"Event of Default" has the meaning specified in Article
Five.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Existing Assets" means the assets and other property
held by the Company (and not its subsidiaries) as of the last day
of the Company's last fiscal quarter prior to the date hereof,
adjusted by excluding any assets and other property transferred
to Newco in the Spin-Off, plus any assets held by the Company
(and not its subsidiaries) irrevocably designated from time to
time by the Company as Existing Assets.
"Fair Market Value" means, with respect to any asset or
property, the sale value that would be obtained in an arm's
length transaction between an informed and willing seller under
no compulsion to sell and an informed and willing buyer.
"Federal Bankruptcy Code" means the Bankruptcy Act of
Title 11 of the United States Code, as amended from time to time.
"Generally Accepted Accounting Principles" or "GAAP"
means generally accepted accounting principles in the United
States, consistently applied, that are in effect from time to
time; provided, however, that with respect to the obligations of
any Person under Articles Eight and Ten and the definitions
applicable thereto, "GAAP" means generally accepted accounting
principles in the United States as in effect on the date hereof.
"Guaranteed Debt" of any Person means, without
duplication, all Indebtedness of any other Person referred to in
the definition of Indebtedness contained in this Section 101
guaranteed directly or indirectly in any manner by such Person,
or in effect guaranteed directly or indirectly by such Person
through an agreement (i) to pay or purchase such Indebtedness or
to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) other than with respect to the Logistical
Services Agreement or any Spin-Off Agreement, to purchase, sell
or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to
make payment of such Indebtedness or to assure the holder of such
Indebtedness against loss, (iii) other than with respect to the
Logistical Services Agreement or any Spin-Off Agreement, to
supply funds to, or in
- 7-
<PAGE>
any other manner invest in, the debtor (including any agreement
to pay for property or services to be acquired by such debtor
irrespective of whether such property is received or such
services are rendered) or (iv) to maintain working capital or
equity capital of the debtor, or otherwise to maintain the net
worth, solvency or other financial condition of the debtor or (v)
otherwise to assure a creditor against loss; provided that the
term "guarantee" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or
any obligation or liability of such Person in respect of
leasehold interests assigned by such Person to any other Person.
"Holder" means a Person in whose name a Security is
registered in the Security Register.
"Holdings" means Supermarkets General Holdings
Corporation, a Delaware corporation, and any successor thereto.
"Holdings Intercompany Notes" means the 11-5/8%
subordinated note and the 12-5/8% subordinated debenture each
issued by the Company to Holdings in the forms attached hereto as
Appendix B and in aggregate principal amounts not in excess of
the principal amounts outstanding on the date hereof.
"Holdings Majority-owned Subsidiary" means a Holdings
Subsidiary of at least 80% of the equity ownership or the Voting
Stock of which is at the time owned, directly or indirectly, by
Holdings or by one or more of the Holdings Subsidiaries, or
Holdings and one or more of the Holdings Subsidiaries.
"Holdings Preferred Stock" means Holdings' Cumulative
Exchangeable Redeemable Preferred Stock, par value $.01 per
share, having a liquidation preference of $25 per share and
maturing on December 31, 2007, that is outstanding on the date
hereof.
"Holdings Subsidiary" means any Person a majority of the
equity ownership or the Voting Stock of which is at the time
owned, directly or indirectly, by Holdings or by one or more
other Holdings Subsidiaries, or by Holdings and one or more other
Holdings Subsidiaries.
- 8-
<PAGE>
"Indebtedness" means with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed
money (including overdrafts) or for the deferred purchase price
of property or services, excluding any trade payables, import
letters of credit and other accrued current liabilities incurred
in the ordinary course of business, but including, without
limitation, all obligations, contingent or otherwise, of such
Person in connection with any standby letters of credit and
acceptances issued under letter of credit facilities, acceptance
facilities or other similar facilities, (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other
similar instruments, (iii) all indebtedness created or arising
under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even if the
rights and remedies of the seller or lender under such agreement
in the event of default are limited to repossession or sale of
such property), but excluding trade accounts payable arising in
the ordinary course of business, (iv) all Capital Lease
Obligations of such Person, (v) all Indebtedness referred to in
(but not excluded from) clause (i), (ii), (iii) or (iv) above of
other Persons and all dividends of other Persons, the payment of
which is secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by)
any Lien, upon or in property (including, without limitation,
accounts and contract rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of
such Indebtedness, (vi) all Guaranteed Debt of such Person, (vii)
all Redeemable Capital Stock issued by such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase
price plus accrued and unpaid dividends and (viii) all
obligations under interest rate hedge contracts of such Person.
For purposes hereof, the "maximum fixed repurchase price" of any
Redeemable Capital Stock which does not have a fixed repurchase
price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the fair market value of such
Redeemable Capital Stock, such fair market value to be determined
in good faith by the board of directors of the issuer of such
Redeemable Capital Stock.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from
time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable
provisions hereof.
- 9-
<PAGE>
"Intercompany Agreement" means the agreement in the form
attached hereto as Appendix A, as amended or modified in
accordance with the terms of this Indenture.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate Hedge Arrangement" means any rate swap
transaction under a rate swap agreement to which the Company is a
party or beneficiary, or becomes a party or beneficiary, and any
interest rate protection agreement, interest rate future,
interest rate option or other interest rate hedge arrangement to
or under which the Company is a party or a beneficiary, or
becomes a party or a beneficiary, or to or under which any
Subsidiary of the Company is or becomes such a party or
beneficiary if the obligations of such Subsidiary thereunder are
guaranteed by the Company.
"Investments" of any Person means, directly or
indirectly, any advance, loan or other extension of credit or
capital contribution by such Person to (by means of any transfer
of cash or other property to others or any payment for property
or services for the account or use of others) any other Person,
or any purchase or acquisition by such Person of any stock,
bonds, notes, debentures or other securities issued or owned by
any other Person. For the purpose of making any calculations
hereunder, (i) Investment shall include the Fair Market Value of
the net assets of any Subsidiary at the time that such Subsidiary
is designated an Unrestricted Subsidiary and shall exclude the
Fair Market Value of the net assets of any Unrestricted
Subsidiary that is designated a Subsidiary and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued
at Fair Market Value at the time of such transfer; provided that
in each case, the Fair Market Value of an asset or property shall
be as determined by the Board of Directors of the Company in good
faith.
"Lien" means any mortgage, charge, pledge, lien,
privilege, security interest or encumbrance of any kind.
"Logistical Services Agreement" means the Logistical
Services Agreement dated as of October 26, 1993 between the Company
and Plainbridge, as amended or modified in accordance with the
provisions hereof.
- 10-
<PAGE>
"Majority-owned Subsidiary" means a Subsidiary at least
50% of the equity ownership or the Voting Stock of which is at
the time owned, directly or indirectly, by the Company or by one
or more of the Subsidiaries, or the Company and one or more of
the Subsidiaries, provided that Majority-owned Subsidiary shall
not include any such Subsidiary if the equity ownership or the
Voting Stock of such Subsidiary not owned by the Company and/or
one or more of the Subsidiaries is owned by Holdings and/or one
or more Affiliates of Holdings other than the Company and its
Subsidiaries.
"Management Investors" means the officers and other
members of the management of the Company who at any particular
date shall beneficially own, directly or indirectly, Voting Stock
of the Company.
"Material Subsidiary" means, at any particular time, any
Subsidiary of the Company that, together with the Subsidiaries of
such Subsidiary, (a) accounted for more than 10% of the
consolidated revenues of the Company and its Subsidiaries for the
most recently completed fiscal year of the Company or (b) was the
owner of more than l0% of the consolidated assets of the Company
and its Subsidiaries as at the end of such fiscal year, all as
shown on the consolidated financial statements of the Company and
its Subsidiaries for such fiscal year.
"Maturity" when used with respect to any Security means
the date on which the principal of the Securities becomes due and
payable as therein or herein provided, whether at Stated
Maturity, Change in Control Purchase Date or Redemption Date and
whether by declaration of acceleration, Change in Control, call
for redemption or otherwise.
"ML Funds" means Merrill Lynch Capital Appreciation
Partnership No. IX, L.P., a Delaware partnership, ML Offshore LBO
Partnership No. IX, a Cayman Islands partnership, ML Employees
LBO Partnership No. I, L.P., a Delaware partnership, Merrill
Lynch Interfunding Inc., a Delaware corporation, Merchant Banking
L.P. No. I, a Delaware partnership, Merrill Lynch KECALP L.P., a
Delaware partnership, Merrill Lynch Capital Appreciation
Partnership No. B-X, L.P., a Delaware partnership, ML Offshore
LBO Partnership No. B-X, a Cayman Islands partnership, MLCP
Associates, L.P. No. II, a Delaware partnership, Merrill Lynch
Venture Capital, Inc., a Delaware corporation and any Affiliates
of the foregoing that beneficially own, directly or indirectly,
shares of Capital Stock of SMG-II.
- 11-
<PAGE>
"Newco" means PTK Holdings, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Officers' Certificate" means a certificate signed by
(i) the Chairman, a Vice Chairman, the President, a Vice
President or the Treasurer of the Company and (ii) the Secretary
or an Assistant Secretary of the Company and delivered to the
Trustee; provided, however, that such certificate may be signed
by two of the officers or directors listed in clause (i) above in
lieu of being signed by one of such officers or directors listed
in such clause (i) and one of the officers listed in clause (ii)
above.
"Opinion of Counsel" means a written opinion of counsel,
who may be counsel for the Company, and who shall be acceptable
to the Trustee. Each such opinion shall include the statements
provided for in Trust Indenture Act Section 314(e) to the extent
applicable.
"Outstanding" when used with respect to Securities
means, as of the date of determination, all Securities
theretofore authenticated and delivered under this Indenture,
except:
(a) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for whose payment,
redemption or purchase money in the necessary amount has been
theretofore deposited with the Trustee or any Paying Agent
(other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities and the Trustee
or such Paying Agent is not prohibited from paying such money to
the Holders on that date pursuant to the terms of Article Thirteen
of this Indenture; provided that, if such Securities are to be
redeemed, notice of such redemption has been duly given pursuant
to this Indenture or provision therefor satisfactory to the Trustee
has been made;
- 12-
<PAGE>
(c) Securities, except to the extent provided in
Sections 1402 and 1403, with respect to which the Company has
effected defeasance or covenant defeasance as provided in
Article Fourteen; and
(d) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to this Indenture, other than any such Securities in
respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Securities are
held by a bona fide purchaser in whose hands the Securities
are valid obligations of the Company;
provided, however, that, in determining whether the Holders of
the requisite principal amount of Outstanding Securities have
given any request, demand, authorization, notice, direction,
consent or waiver hereunder, Securities owned by the Company, or
any other obligor upon the Securities or any Affiliate of the
Company, or such other obligor shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request,
demand, authorization, notice, direction, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so
disregarded. Securities so owned which have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Securities and that the pledgee is not the
Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor.
"Pari Passu Indebtedness" means any Indebtedness of the
Company that is pari passu in right of payment to the Securities.
"Paying Agent" means any Person authorized by the
Company to pay the principal of (or premium, if any) or interest
on any Securities on behalf of the Company.
"Permitted Holders" means ML Funds, the Management
Investors and the Equitable Investors, provided that the
Equitable Investors shall not be a Permitted Holder if they are a
member of a "group" (as such term is used in Section 13(d) of the
Exchange Act) in respect of the Company which does not include
the Management Investors and the ML Funds.
"Permitted Indebtedness" means any of the following
Indebtedness of the Company or any Subsidiary, as the case may
be:
- 13-
<PAGE>
(i) Indebtedness under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to
exceed $575,000,000;
(ii) Indebtedness under the Securities;
(iii) Indebtedness outstanding on the date hereof and
listed on Schedule I hereto;
(iv) Indebtedness under the Senior Subordinated Notes,
the Subordinated Notes and the Deferred Coupon Notes;
(v) obligations pursuant to interest rate hedge
contracts;
(vi) (A) Indebtedness under Capital Lease Obligations
and (B) Purchase Money Mortgages;
(vii) Indebtedness in respect of trade letters of credit
and standby letters of credit incurred in the ordinary course
of business;
(viii) Indebtedness of the Company or any Subsidiary to
any one or the other of them; provided that the obligation of
the obligor of such Indebtedness is subject to the
Intercompany Agreement;
(ix) Indebtedness of any Subsidiary made in accordance
with the applicable provisions of Section 1014 or
Section 1015;
(x) Indebtedness consisting of guarantees, indemnities
or obligations in respect of purchase price adjustments in
connection with the acquisition or disposition of assets;
(xi) any obligation or liability in respect of leasehold
interests assigned by the Company or any Subsidiary to any
other Person;
(xii) Indebtedness under the Holdings Intercompany Notes;
(xiii) Indebtedness represented by letters of credit not
exceeding an aggregate amount of $45,000,000 at any one time
outstanding (other than those permitted by clause (vii)
above);
(xiv) Indebtedness incurred to finance Consolidated
Capital Expenditures (including Acquired Indebtedness to
- 14-
<PAGE>
the extent that, in conformity with GAAP, assets acquired in
conjunction with such Acquired Indebtedness are included in
the property, plant or equipment reflected on the
consolidated balance sheet of the Company and its
Subsidiaries);
(xv) Indebtedness in addition to that described in
clauses (i) through (xiv) of this definition of "Permitted
Indebtedness", and any renewals, extensions, substitutions,
refinancings or replacements of such Indebtedness, not to
exceed $75,000,000 outstanding at any one time in the
aggregate; and
(xvi) any renewals, extensions, substitutions,
refinancings or replacements (each, for purposes of this
clause, a "refinancing") of any Indebtedness described in
clauses (ii), (iii), (iv) and (xiv), including any successive
refinancings so long as the aggregate amount of Indebtedness
represented thereby is in a principal amount that does not
exceed the principal amount so refinanced plus the amount of
any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing,
plus the amount of expenses of the Company incurred in
connection with such refinancing; provided that for purposes
of this clause, the principal amount of any Indebtedness
shall be deemed to mean the principal amount thereof or, if
such Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount as of
the date of determination and such refinancing does not
reduce the Average Life to Stated Maturity or the final
Stated Maturity of such Indebtedness.
"Permitted Investment" means any of the following: (i)
any Investment in any Majority-owned Subsidiary by the Company or
any other Majority-owned Subsidiary, any Investment in any Person
by the Company or any Majority-owned Subsidiary as a result of which
such Person becomes a Majority-owned Subsidiary or any Investment in the
Company by any Majority-owned Subsidiary; (ii) any Temporary Cash
Investment; (iii) intercompany Indebtedness to the extent
permitted under clause (viii) of the definition of "Permitted
Indebtedness" contained in this Section 101; (iv) Investments in
existence on the date hereof and any Investment with respect to
which the Company or any Subsidiary is legally committed to make,
but only if such commitment was in existence on the date hereof
in each case, other than any Investment in any Unrestricted
Subsidiary; (v) sales of goods on trade credit terms consistent
with the Company's past practices or as otherwise consistent with
trade
- 15-
<PAGE>
credit terms in common use in the industry; (vi) Investments
pursuant to the Logistical Services Agreement or Spin-Off
Agreements; (vii) any Investment in any Person acquired or
retained in connection with any asset sale or other disposition
of assets; (viii) loans or advances to employees made in the
ordinary course of business; and (ix) in addition to "Permitted
Investments" described in the foregoing clauses (i) through
(viii), Investments in the aggregate amount of $45,000,000 at any
one time outstanding.
"Permitted Payment" has the meaning specified in
Section 1008.
"Permitted Senior Subordinated Indebtedness" means
(i) the Senior Subordinated Notes, (ii) in addition to (i), other
Indebtedness of the Company in an aggregate principal amount not
to exceed $200,000,000 at any one time outstanding and (iii) any
renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this definition, a "refinancing") of any
Indebtedness described in the foregoing clause (i), including any
successive refinancings, so long as the aggregate amount of
Indebtedness represented thereby in a principal amount that does
not exceed the principal amount so refinanced plus the amount of
any premium required to be paid in connection with such
refinancing pursuant to the terms of the Indebtedness refinanced
or the amount of any premium reasonably determined by the Company
as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such
refinancing; provided that for purposes of this clause, the
principal amount of any Indebtedness shall be deemed to mean the
principal amount thereof or, if such Indebtedness provides for an
amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof, such lesser
amount as of the date of determination.
"Person" means any individual, corporation, limited or
general partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Plainbridge" means Plainbridge, Inc., a corporation
incorporated under the laws of the State of Delaware, and any
successor thereto.
"Predecessor Security" of any particular Security means
every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security; and, for the
purposes of this definition, any Security authenticated and
delivered under Section 306 in exchange for a
- 16-
<PAGE>
mutilated Security or in lieu of a lost, destroyed or stolen
Security shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Security.
"Preferred Stock" means, with respect to any Person, any
and all shares, interests, participations or other equivalents
(however designated) of such Person's preferred or preference
stock whether now outstanding or issued after the date hereof,
and includes, without limitation, all classes and series of
preferred or preference stock.
"Purchase Money Mortgages" means Indebtedness of the
Company or any Subsidiary (i) issued to finance or refinance the
purchase or construction of any assets of the Company or any
Subsidiary or (ii) secured by a Lien on any assets of the Company
or any Subsidiary where the lender's sole recourse is to the
assets so encumbered, in either case (a) to the extent the
purchase or construction prices for such assets are or should be
included in "addition to property, plant or equipment" in
accordance with GAAP and (b) if the purchase or construction of
such assets is not part of any acquisition of a Person or
business unit.
"Qualified Capital Stock" of any Person means any and
all Capital Stock of such Person other than Redeemable Capital
Stock.
"Recapitalization" means the Recapitalization described
in the Prospectus and Consent Solicitation, as amended or
supplemented, relating to the issuance of the Securities.
"Redeemable Capital Stock" means any Capital Stock that,
either by its terms, by the terms of any security into which it
is convertible or exchangeable or otherwise, is or upon the
happening of an event or passage of time would be required to be
redeemed prior to the final Stated Maturity of the Securities or
is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or
exchangeable for debt securities at any time prior to such final
Stated Maturity.
"Redemption Date", when used with respect to any
Security to be redeemed, means the date fixed for such redemption
by or pursuant to this Indenture.
"Redemption Price", when used with respect to any
Security to be redeemed, means the price at which it is to be
redeemed pursuant to this Indenture.
- 17-
<PAGE>
"Regular Record Date" for the interest payable on any
Interest Payment Date means the June 1 or December 1 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Representative" means the indenture trustee or other
trustee, agent or representative for an issue of Senior
Indebtedness.
"Responsible Officer", when used with respect to the
Trustee, means any officer assigned to the Corporate Trust
Administration of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by
any of the above designated officers or assigned by the Trustee
to administer corporate trust matters at its Corporate Trust
Office and also means, with respect to a particular corporate
trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular
subject.
"Restricted Payments" has the meaning specified in
Section 1008.
"Security" and "Securities" have the meaning set forth
in the second paragraph of this Indenture.
"Senior Indebtedness" means the principal of, premium,
if any, and interest on (such interest on Senior Indebtedness,
wherever referred to in this Indenture, being deemed to include
interest accruing after the filing of a petition initiating any
proceeding pursuant to any bankruptcy law in accordance with and
at the rate (including any rate applicable upon any default or
event of default, to the extent lawful) specified in any document
evidencing the Senior Indebtedness, whether or not the claim for
such interest is allowed as a claim after such filing in any
proceeding under such bankruptcy law) any Indebtedness of the
Company (other than as otherwise provided in this definition),
whether outstanding on the date hereof or thereafter created,
incurred or assumed in accordance with the provisions of this
Indenture, unless, in the case of any particular Indebtedness,
the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to the
Securities. Without limiting the generality of the foregoing,
"Senior Indebtedness" shall include the principal of, premium, if
any, and interest on (including interest accruing after the
occurrence of an event of default) all obligations of every
nature of the Company from time to time owed under Permitted
Senior Subordinated Indebtedness and under the Bank Credit
Agreement, including, without limitation,
- 18-
<PAGE>
principal of and interest on, and all fees, expenses,
indemnities, payments for early termination of Interest Rate
Hedge Arrangements and reimbursement obligations under letters of
credit payable under the Bank Credit Agreement. Notwithstanding
the foregoing, "Senior Indebtedness" shall not include (i)
Indebtedness evidenced by the Securities, the Subordinated Notes
and the Deferred Coupon Notes, (ii) Indebtedness that is
subordinate or junior in right of payment to any Indebtedness of
the Company (other than Permitted Senior Subordinated
Indebtedness), except for subordination as a result of
intercreditor arrangements with respect to collateral,
(iii) Indebtedness that when incurred, and without respect to any
election under Section 1111(b) of Title 11, United States Code,
is without recourse to the Company, (iv) Indebtedness that is
represented by Redeemable Capital Stock, (v) Indebtedness of the
Company to a subsidiary of the Company or any other Affiliate of
the Company or any of such Affiliate's subsidiaries, including
the Holdings Intercompany Notes and (vi) that portion of any
Indebtedness (other than any Indebtedness provided by any lender
pursuant to the Bank Credit Agreement, except to the extent such
Indebtedness is provided with actual knowledge on the part of any
such lender that the incurrence thereof by the Company is a
violation of this Indenture) which at the time of issuance is
issued in violation of this Indenture.
"Senior Subordinated Notes" means the Company's 12 5/8%
Senior Subordinated Notes due 2003 in aggregate principal amount
not in excess of $440,000,000.
"SMG-II" means SMG-II Holdings Corporation, a Delaware
corporation.
"Special Record Date" means a date fixed by the Trustee
for the payment of any Defaulted Interest pursuant to
Section 307.
"Specified Senior Indebtedness" means (i) all Senior
Indebtedness under the Bank Credit Agreement, (ii) all Senior
Indebtedness under the Senior Subordinated Notes and (iii) any
other issue of Senior Indebtedness or refinancings thereof
permitted by said definition having a principal amount of at
least $100,000,000 and is specifically designated in the
instrument evidencing such Senior Indebtedness as "Specified
Senior Indebtedness" by the Company. For purposes of this
definition: (a) the amount of the Indebtedness of the Company
with respect to any Interest Rate Hedge Arrangement shall be
- 19-
<PAGE>
deemed to be the lesser of (x) 25% of the notional amount of such
Interest Rate Hedge Arrangement, or (y) the maximum amount the
Company could be required to pay under such Interest Rate Hedge
Arrangement; and (b) a refinancing of any such Indebtedness shall
be treated as such only if it ranks or would rank pari passu with
the Indebtedness refinanced.
"Spin-Off Agreements" means (i) the Distribution and
Transfer Agreement dated as of May 3, 1993 among the Company,
Holdings and Chefmark; (ii) the Distribution and Transfer
Agreement dated as of October 26, 1993 among the Company, Newco
and Plainbridge; (iii) the Blair Services Agreement dated as of
October 26, 1993 between the Company and Plainbridge; (iv) the
Rickel Services Agreement dated as of October 26, 1993 between
the Company and Plainbridge; (v) the Chefmark Services Agreement
dated as of May 3, 1993 between the Company and Chefmark;
(vi) the Tax Sharing Agreement; (vii) the Chefmark Supply
Agreement dated May 3, 1993 between the Company and Chefmark; and
(viii) leases between the Company as lessee and Plainbridge as
lessor entered into on the date of this Indenture, in each case
as amended or modified in accordance with the provisions hereof.
"Spin-Off" means the contribution by the Company to Plainbridge of
the Rickel home center business, the warehouse, distribution and
transportation operations and the inventory therein that service
the Pathmark supermarkets and drug stores and certain other
assets and the distribution of the shares of Plainbridge to Newco.
"Stated Maturity", when used with respect to any
Indebtedness or any installment of interest thereon, means the
date specified in such Indebtedness as the fixed date on which
the principal of such Indebtedness or such installment of
interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the
Company subordinated in right of payment to the Securities.
"Subordinated Notes" means the Company's 11-5/8%
Subordinated Notes due 2002 in an aggregate principal amount not
in excess of the aggregate principal amount outstanding on the
date hereof.
"Subsidiary" means any Person a majority of the equity
ownership or the Voting Stock of which is at the time owned,
directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
- 20-
<PAGE>
Subsidiaries; provided that an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of this Indenture.
"Tax Sharing Agreement" means the Tax Sharing Agreement
dated as of the date of the Spin-Off, 1993 between SMG-II and the
Company, as amended or modified in accordance with the provisions
hereof.
"Temporary Cash Investment" means (i) any evidence of
Indebtedness, maturing not more than 180 days after the date of
acquisition, issued by the United States of America, or an
instrumentality or agency thereof and guaranteed fully as to
principal, premium, if any, and interest by the United States of
America, (ii) any certificate of deposit, maturing not more than
180 days after the date of acquisition, issued by, or time
deposit of, a commercial banking institution that has combined
capital and surplus of not less than $300,000,000, whose debt is
rated at the time as of which any investment therein is made, of
"A" (or higher) according to Moody's Investors Service, Inc.
("Moody's"), or "A" (or higher) according to Standard & Poor's
Corporation ("S&P"), (iii) commercial paper, maturing not more
than 90 days after the date of acquisition, issued by a
corporation (other than an Affiliate or Subsidiary of the
Company) organized and existing under the laws of the United
States of America, with a rating, at the time as of which any
investment therein is made, of "P-2" (or higher) according to
Moody's or "A-2" (or higher) according to S&P, (iv) any
short-term, tax-exempt investment in indebtedness issued by a
municipality existing under the laws of the United States of
America with a rating, at the time as of which any investment
therein is made, of "A" (or higher) according to Moody's or "A"
(or higher) according to S&P, and (v) any money market deposit
accounts issued or offered by any domestic commercial bank having
capital and surplus in excess of $300,000,000.
"Trust Indenture Act" means the Trust Indenture Act of
1939, as amended, and as in force at the date as of which this
instrument was executed, except as provided in Section 905.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee
shall have become such pursuant to the applicable provisions of
this Indenture, and thereafter "Trustee" shall mean such
successor Trustee.
"Unrestricted Subsidiary" means (i) any subsidiary of
the Company that at the time of determination shall be an
Unrestricted Subsidiary (as designated by the Board of Directors
of the Company, as provided below) and (ii) any
- 21-
<PAGE>
subsidiary of an Unrestricted Subsidiary. The Board of Directors
of the Company may designate any subsidiary of the Company
(including any newly acquired or newly formed subsidiary) to be
an Unrestricted Subsidiary if all of the following conditions
apply: (a) such subsidiary is not liable, directly or
indirectly, with respect to any Indebtedness other than
Unrestricted Subsidiary Indebtedness and (b) any Investment in
such subsidiary made as a result of designating such subsidiary
an Unrestricted Subsidiary shall not violate the provisions of
Section 1017. Any such designation by the Board of Directors of
the Company shall be evidenced to the Trustee by filing with the
Trustee a Board Resolution giving effect to such designation and
an Officers' Certificate certifying that such designation
complies with the foregoing conditions. The Board of Directors
of the Company may designate any Unrestricted Subsidiary as a
Subsidiary; provided that immediately after giving effect to such
designation, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) pursuant to the
restrictions of Section 1007.
"Unrestricted Subsidiary Indebtedness" of any
Unrestricted Subsidiary means Indebtedness of such Unrestricted
Subsidiary (i) as to which neither the Company nor any Subsidiary
is directly or indirectly liable (by virtue of the Company or any
such Subsidiary being the primary obligor on, guarantor of, or
otherwise liable in any respect to, such Indebtedness), except
Guaranteed Debt of the Company or any Subsidiary to any
Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of
incurrence) the Company shall be deemed to have made a Restricted
Payment (as defined in Section 1008) equal to the principal
amount of any such Indebtedness to the extent guaranteed at the
time such Affiliate is designated an Unrestricted Subsidiary and
(ii) which, upon the occurrence of a default with respect
thereto, does not result in, or permit any holder of any
Indebtedness of the Company or any Subsidiary to declare, a
default on such Indebtedness of the Company or any Subsidiary or
cause the payment thereof to be accelerated or payable prior to
its Stated Maturity.
"Voting Stock" means stock of the class or classes
pursuant to which the holders thereof have the general voting
power under ordinary circumstances to elect at least a majority
of the board of directors, managers or trustees of a corporation
(irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason
of the happening of any contingency).
- 22-
<PAGE>
Section 102. Other Definitions.
Defined in
Term Section
"Act"............................................. 105
"Change in Control Notice" ....................... 1012
"Change in Control Offer" ........................ 1012
"Change in Control Purchase Date" ................ 1012
"Change in Control Purchase Notice" .............. 1012
"Change in Control Purchase Price" ............... 10l2
"covenant defeasance" ............................ 1403
"Defaulted Interest" ............................. 307
"defeasance" ..................................... l402
"incorporated provision" ......................... 108
"Notice of Default" .............................. 501
"Security Register" .............................. 305
"Security Registrar" ............................. 305
"Surviving Entity" ............................... 801
"U.S. Government Obligations" .................... 1404
Section 103. Compliance Certificates and Opinions.
Upon any application or request by the Company to the
Trustee to take any action under any provision of this Indenture,
the Company shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent, if any, provided for in
this Indenture (including any covenant compliance with which
constitutes a condition precedent) relating to the proposed
action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that, in the
case of any such application or request as to which the
furnishing of such documents is specifically required by any
provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need
be furnished.
Every certificate or opinion (other than the
certificates required by Section 1018(a)) with respect to
compliance with a condition or covenant provided for in this
Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements
- 23-
<PAGE>
or opinions contained in such certificate or opinion are
based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as
to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
Section 104. Form of Documents Delivered to Trustee.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of a officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company,
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Indenture,
they may, but need not, be consolidated and form one instrument.
Section 105. Acts of Holders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
- 24-
<PAGE>
Indenture to be given or taken by Holders may be embodied in and
evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agent duly appointed
in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby
expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Trust Indenture Act Section 315) conclusive in
favor of the Trustee and the Company, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved in any reasonable
manner which the Trustee deems sufficient.
(c) The ownership of Securities shall be proved by the
Security Register.
(d) If the Company shall solicit from the Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or
pursuant to a Board Resolution, fix in advance a record date for
the determination of such Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or
other Act, but the Company shall have no obligation to do so.
Notwithstanding Trust Indenture Act Section 316(c), any such
record date shall be the record date specified in or pursuant to
such Board Resolution, which shall be a date not more than 30
days prior to the first solicitation of Holders generally in
connection therewith and no later than the date such solicitation
is completed.
If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act
may be given before or after such record date, but only the
Holders of record at the close of business on such record date
shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Securities then
Outstanding have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent,
waiver or other Act, and for this purpose the Securities then
Outstanding shall be computed as of such record date; provided
that no such request, demand, authorization, direction, notice,
consent, waiver or other Act by the Holders on such record date
shall be deemed effective unless it shall become effective
- 25-
<PAGE>
pursuant to the provisions of this Indenture not later than six
months after the record date.
(e) Any request, demand, authorization, direction,
notice, consent, waiver or other Act by the Holder of any
Security shall bind every future Holder of the same Security or
the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof, in
respect of anything done, suffered or omitted to be done by the
Trustee, any Paying Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such
Security.
Section 106. Notices, etc., to Trustee and Company.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished
to, or filed with,
(a) the Trustee by any Holder, any Representative or
the Company shall be sufficient for every purpose hereunder
if made, given, furnished or delivered, in writing, to or
with the Trustee at its Corporate Trust Office, Attention:
Corporate Trust Administration; or
(b) the Company by the Trustee or by any Holder shall
be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
delivered in writing or mailed, first-class postage prepaid,
to the Company addressed to it c/o Pathmark Stores, Inc., 301
Blair Road, Woodbridge, New Jersey 07095, Attention:
President, or at any other address furnished in writing to the
Trustee by the Company.
The Company shall provide the Trustee in writing with
the name and address of the agent bank under the Bank Credit
Agreement as of the effective date of this Indenture and shall
promptly provide the Trustee in writing with any change in such
information.
Section 107. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at his address as it appears in the Security Register, not
later that the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In
- 26-
<PAGE>
any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of
such notice with respect to other Holders. Any notice when
mailed to a Holder in the aforesaid manner shall be conclusively
deemed to have been received by such Holder whether or not
actually received by such Holder. Where this Indenture provides
for notice in any manner, such notice may be waived in writing by
the Person entitled to receive such notice, either before or
after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Trustee, but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause, it shall be
impracticable to mail notice of any event as required by any
provision of this Indenture, then any method of giving such
notice as shall be satisfactory to the Trustee shall be deemed to
be a sufficient giving of such notice.
Section 108. Conflict of any Provision of Indenture
with Trust Indenture Act.
If and to the extent that any provision of this
Indenture limits, qualifies or conflicts with the duties imposed
by Sections 310 to 318, inclusive, of the Trust Indenture Act, or
conflicts with any provision (an "incorporated provision")
required by or deemed to be included in this Indenture by
operation of such Trust Indenture Act Sections, such imposed
duties or incorporated provision shall control. If any provision
of this Indenture modifies or excludes any provision of the Trust
Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so
modified or excluded, as the case may be.
Section 109. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of
Contents are for convenience only and shall not affect the
construction hereof.
Section 110. Successors and Assigns.
All covenants and agreements in this Indenture by the
Company shall bind its respective successors and assigns, whether
so expressed or not.
- 27-
<PAGE>
Section 111. Separability Clause.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
Section 112. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express
or implied, shall give to any Person (other than the parties
hereto and their successors hereunder, any Paying Agent, the
Holders and the holders of Senior Indebtedness) any benefit or
any legal or equitable right, remedy or claim under this
Indenture.
Section 113. Governing Law.
This Indenture and the Securities shall be governed by
and construed in accordance with the laws of the State of New
York, without giving effect to the conflicts of laws principles
thereof.
Section 114. Legal Holidays.
In any case where any Interest Payment Date, any date
established for payment of Defaulted Interest pursuant to
Section 307, or any Maturity with respect to any Security shall
not be a Business Day, then (notwithstanding any other provision
of this Indenture or of the Securities) payment of interest or
principal (and premium, if any) need not be made on such date,
but may be made on the next succeeding Business Day with the same
force and effect as if made on the Interest Payment Date, or date
established for payment of Defaulted Interest pursuant to
Section 307, or Maturity, and no interest shall accrue with
respect to such payment for the period from and after such
Interest Payment Date, or date established for payment of
Defaulted Interest pursuant to Section 307, or Maturity, as the
case may be, to the next succeeding Business Day.
Section 115. No Recourse Against Others.
A director, officer, employee or stockholder, as such,
of the Company shall not have any liability for any obligations
of the Company under the Securities or this Indenture or for any
claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting any of the Securities
waives and releases all such liability.
- 28-
<PAGE>
ARTICLE TWO
SECURITY FORMS
Section 201. Forms Generally.
The Securities and the Trustee's certificate of
authentication shall be in substantially the forms set forth in
this Article, with such appropriate insertions, omissions,
substitutions and other variations as are required or permitted
by this Indenture and may have such letters, numbers or other
marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be
determined by the officers executing such Securities, as
evidenced by their execution of the Securities. Any portion of
the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the
Security.
The definitive Securities shall be printed, lithographed
or engraved or produced by any combination of these methods or
may be produced in any other manner permitted by the rules of any
securities exchange on which the Securities may be listed, all as
determined by the officers executing such Securities, as
evidenced by their execution of such Securities.
Section 202. Form of Face of Security.
The form of the face of the Securities shall be
substantially as follows:
PATHMARK STORES, INC.
l2-5/8% Subordinated Debenture
due 2002
No. $
Pathmark Stores, Inc., a Delaware corporation (herein
called the "Company", which term includes any successor entity
under the Indenture hereinafter referred to), for value received,
hereby promises to pay to or registered assigns, the
principal sum of Dollars on June 15, 2002, at the
office or agency of the Company referred to below, and to pay
interest thereon on December 15, 1993 and semiannually thereafter
on June 15 and December 15 in each year and at Stated Maturity,
from June 15, 1993 or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, at the rate
of 12-5/8% per annum, until the principal hereof is paid or duly
provided for.
- 29-
<PAGE>
The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the June 1 or December 1 (whether or not a
Business Day), as the case may be, next preceding such Interest
Payment Date. Any such interest not so punctually paid or duly
provided for, and interest on such defaulted interest at the then
applicable interest rate borne by the Securities, to the extent
lawful, shall forthwith cease to be payable to the Holder on such
Regular Record Date, and may be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities
not less than 10 days prior to such Special Record Date, or may
be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
or at such other office or agency of the Company as may be
maintained for such purpose, in such coin or currency of the
United States of America as at the time of payment is legal
tender for payment of public and private debts; provided,
however, that payment of interest may be made at the option of
the Company by check mailed to the address of the Person entitled
thereto as such address shall appear on the Security Register.
Interest shall be computed on the basis of a 360-day year of
twelve 30-day months.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has been
duly executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture, or be valid or obligatory for any
purpose.
- 30-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed under its corporate seal.
Dated: PATHMARK STORES, INC.
By
Attest:
By
[SEAL]
Authorized Signature
Section 203. Form of Reverse of Security.
The form of the reverse of the Securities shall be
substantially as follows:
This Security is one of a duly authorized issue of
securities of the Company designated as its 12-5/8% Subordinated
Debentures due 2002 (herein called the "Securities"), limited
(except as otherwise provided in the Indenture referred to below)
in aggregate principal amount to $95,750,000, which may be
issued under an indenture (herein called the "Indenture") dated
as of October 26, 1993, between the Company and Wilmington Trust
Company, as trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations
of rights, duties, obligations and immunities thereunder of the
Company, the Trustee and the Holders of the Securities, and of
the terms upon which the Securities are, and are to be,
authenticated and delivered.
The Securities are subject to redemption upon not less
than 21 nor more than 60 days' notice, in amounts of $1,000 or an
integral multiple of $1,000, at any time on or after June 15,
1994 (or, in the circumstances specified in the proviso to this
sentence, at any time before June 15, 1994), as a whole or in
part, at the election of the Company, at a Redemption Price equal
to the percentage of the principal amount set forth below if
redeemed during the 12-month period beginning June 15 of the
years indicated below:
- 31-
<PAGE>
Year Redemption Price
1993 112.625%
1994 112.625%
1995 112.625%
1996 112.625%
1997 103.600%
1998 102.700%
1999 101.800%
2000 100.900%
and thereafter at 100% of the principal amount, in each case
together with accrued interest, if any, to the Redemption Date
(subject to the right of Holders of record on relevant Regular
Record Dates to receive interest due on a Interest Payment Date),
all as provided in this Indenture; provided that the Securities
shall be subject to optional redemption prior to June 15, 1994
only in the event of (i) the occurrence of a Change in Control or
(ii) the Company ceasing to be a Holdings Majority-owned
Subsidiary.
In the event that a Change in Control occurs, each
Holder shall have the right to require that the Company
repurchase such Holder's Securities in whole or in part in
integral multiples of $1,000 at a purchase price in cash in an
amount equal to 101% of the principal amount thereof plus accrued
and unpaid interest, if any, to the date of purchase. Within 30
days following a Change in Control, the Company covenants to
either (i) repay in full all Indebtedness under the Bank Credit
Agreement and permanently reduce the commitments of the lenders
thereunder or offer to repay in full all such Indebtedness and
permanently reduce such commitments and repay the Indebtedness
and permanently reduce the commitments of each lender that
accepted such offer or (ii) obtain the requisite consent under
the Bank Credit Agreement to permit the repurchase of the
Securities.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the
Redemption Date will be payable to the Holders of such
Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on
the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the
Indenture shall cease to bear interest from and after the
Redemption Date.
In the event of redemption of this Security in part
only, a new Security or Securities for the unredeemed portion
hereof shall be issued in the name of the Holder hereof upon the
cancellation hereof.
- 32-
<PAGE>
If an Event of Default shall occur and be continuing,
the principal of all the Securities may be declared due and
payable in the manner and with the effect provided in the
Indenture.
The Indenture contains provisions for defeasance at any
time of (a) the entire indebtedness of the Company on this
Security and (b) certain restrictive covenants and the related
Defaults and Events of Default, upon compliance by the Company
with certain conditions set forth therein, which provisions apply
to this Security.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time
Outstanding. The Indenture also contains provisions permitting
the Holders of specified percentages in aggregate principal
amount of the Securities at the time Outstanding, on behalf of
the Holders of all the Securities, to waive compliance by the
Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such
consent or waiver by or on behalf of the Holder of this Security
shall be conclusive and binding upon such Holder and upon all
future Holders of this Security and of any Security issued upon
the registration of transfer hereof or in exchange herefor or in
lieu hereof whether or not notation of such consent or waiver is
made upon this Security.
The indebtedness evidenced by the Securities is
subordinated in right of payment, in the manner and to the extent
set forth in the Indenture, to the prior payment in full of all
Senior Indebtedness of the Company whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed or
guaranteed. Each Holder by his acceptance hereof agrees to be
bound by such provisions and authorizes and expressly directs the
Trustee, on his behalf, to take such action as may be necessary
or appropriate to effectuate the subordination provided for in
the Indenture and appoints the Trustee his attorney-in-fact for
such purpose; provided that the indebtedness evidenced by this
Security shall cease to be so subordinate and subject in right of
payment upon any defeasance of this Security as provided in the
Indenture.
No reference herein to the Indenture and no provision of
this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of (and premium, if any) and interest on
- 33-
<PAGE>
this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is
registrable on the Security Register of the Company, upon
surrender of this Security for registration of transfer at the
office or agency of the Company maintained for such purpose in
The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon
one or more new Securities, of authorized denominations and for
the same aggregate principal amount, will be issued to the
designated transferee or transferees.
The Securities are issuable only in registered form
without coupons in denominations of $1,000 and any integral
multiple thereof. As provided in the Indenture and subject to
certain limitations therein set forth, the Securities are
exchangeable for a like aggregate principal amount of Securities
of a different authorized denomination, as requested by the
Holder surrendering the same.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all documentary,
stamp or similar issue or transfer taxes or other governmental
charges payable in connection with any registration of transfer
or exchange.
Prior to the time of due presentment of this Security
for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither
the Company, the Trustee nor any agent shall be affected by
notice to the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the
Indenture.
Customary abbreviations may be used in the name of a
Holder or a assignee, such as: TEN COM (=tenants in common), TEN
ENT (=tenants by the entireties), JT TEN (=joint tenants with
right of survivorship and not as tenants in common), CUST
(=Custodian), and U/G/M/A (=Uniform Gifts to Minors Act).
- 34-
<PAGE>
I/We assign and transfer this Security to
Insert assignee's soc. sec. or tax ID no. ........
- --------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint
agent to transfer
this Security on the books of the Company. The agent may
substitute another to act for him.
Dated: Signed:
(Sign exactly as your name appears on the other side of this Security.)
Signature Guaranteed:
(Signature must be guaranteed by a member firm of a principal stock
exchange or a
commercial bank or trust company.)
Section 204. Form of Trustee's Certificate of
Authentication.
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
WILMINGTON TRUST COMPANY
as Trustee
By
Authorized Signatory
- 35-
<PAGE>
ARTICLE THREE
THE SECURITIES
Section 301. Title and Terms.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited to
$95,750,000, except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Section 303, 304, 305, 306, 906,
1012 or 1108.
The Securities shall be known and designated as the
"12-5/8% Subordinated Debentures due 2002" of the Company. Their
Stated Maturity shall be June 15, 2002, and they shall bear
interest at the rate of 12-5/8% per annum from June 15, 1993 or
the most recent Interest Payment Date to which interest has been
paid or duly provided for, as the case may be, payable on
December 15, 1993 and semi-annually thereafter on June 15 and
December 15 in each year and at said Stated Maturity, until the
principal thereof is paid or duly provided for. Subject to
Article Thirteen, interest on any overdue amount of principal,
interest (to the extent lawful) or premium, if any, shall be
payable on demand.
The principal of (and premium, if any) and interest on
the Securities shall be payable at the office or agency of the
Company maintained for such purpose in The City of New York, or
at such other office or agency of the Company as may be
maintained for such purpose; provided, however, that, at the
option of the Company, interest may be paid by check mailed to
addresses of the Persons entitled thereto as such addresses shall
appear on the Security Register.
The Securities shall be redeemable as provided in
Article Eleven.
The Indebtedness evidenced by the Securities shall be
subordinated in right of payment to Senior Indebtedness as
provided in Article Thirteen.
Section 302. Denominations.
The Securities shall be issuable only in registered form
without coupons and only in denominations of $1,000 and any
integral multiple thereof.
- 36-
<PAGE>
Section 303. Execution, Authentication, Delivery and
Dating.
The Securities shall be executed on behalf of the
Company by any two of the following: its Chairman, one of its
Vice Chairmen, its President or one of its Vice Presidents, under
its corporate seal reproduced thereon and attested by its
Secretary or one of its Assistant Secretaries. The signature of
any of these officers on the Securities may be manual or
facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Securities or did not
hold such offices on the date of such Securities.
The Trustee shall (upon Company Order) authenticate and
deliver Securities for original issue in an aggregate principal
amount of up to $95,750,000. At any time and from time to
time after the execution and delivery of this Indenture, the
Company may deliver Securities executed by the Company to the
Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee
in accordance with such Company Order shall authenticate and
deliver such Securities as provided in this Indenture and not
otherwise.
Each Security shall be dated the date of its
authentication.
No Security shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there
appears on such Security a certificate of authentication
substantially in the form provided for herein duly executed by
the Trustee by manual signature of one of its duly authorized
signatories, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder and is
entitled to the benefits of this Indenture.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall
convey, transfer, lease or otherwise dispose of substantially all
of its properties and assets to any Person, and the successor
Person resulting from such consolidation, or surviving such
merger, or into which the Company shall have been merged, or the
successor Person which shall have received a conveyance,
transfer, lease or other disposition as
- 37-
<PAGE>
aforesaid, shall have executed an indenture supplemental hereto
with the Trustee pursuant to Article Eight, any of the Securities
authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time
to time, at the request of the successor Person, be exchanged for
other Securities executed in the name of the successor Person
with such changes in phraseology and form as may be appropriate,
but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and
the Trustee, upon Company Order of the successor Person, shall
authenticate and deliver Securities as specified in such request
for the purpose of such exchange. If Securities shall at any
time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or
substitution for or upon registration of transfer of any
Securities, such successor Person, at the option of any Holder
but without expense to such Holder, shall provide for the
exchange of all Securities at the time Outstanding held by such
Holder for Securities authenticated and delivered in such new
name.
Section 304. Temporary Securities.
Pending the preparation of definitive Securities, the
Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in
any authorized denomination, substantially of the tenor of the
definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other
variations as the officers executing such Securities may
determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable
delay. After the preparation of definitive Securities, the
temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the
office or agency of the Company designated for such purpose
pursuant to Section 1002, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary
Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like principal
amount of definitive Securities of authorized denominations.
Until so exchanged, the temporary Securities shall in all
respects be entitled to the same benefits under this Indenture as
definitive Securities.
- 38-
<PAGE>
Section 305. Registration, Registration of Transfer and
Exchange.
The Company shall cause to be kept at the Corporate
Trust Office of the Trustee a register (the register maintained
in such office and in any other office or agency designated
pursuant to Section 1002 being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for
the registration of Securities and of transfers of Securities.
The Trustee (and any other office or agency so designated) is
hereby initially appointed "Security Registrar" for the purpose
of registering Securities and transfers of Securities as herein
provided.
Upon surrender for registration of transfer of any
Security at the office or agency of the Company designated
pursuant to Section 1002 for such purpose, the Company shall
execute, and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations and of
a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged
for other Securities of any authorized denomination or
denominations of a like aggregate principal amount upon surrender
of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and
deliver, the Securities which the Holder making the exchange is
entitled to receive.
All Securities issued upon any registration of transfer
or exchange of Securities shall be the valid obligations of the
Company, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Securities surrendered upon
such registration of transfer or exchange.
Every Security presented or surrendered for registration
of transfer, or for exchange or redemption, shall (if so required
by the Company or the Security Registrar) be duly endorsed, or be
accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing.
No service charge shall be made for any registration of
transfer or exchange or redemption of Securities, but the Company
may require payment of a sum sufficient to pay all
- 39-
<PAGE>
documentary, stamp or similar issue or transfer taxes or other
governmental charges that may be imposed in connection with any
registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 303, 304, 306, 906, l0l2 or 1108
not involving any transfer.
The Company shall not be required (a) to issue, register
the transfer of or exchange any Security during a period
beginning at the opening of business (i) 15 days before the
mailing of a notice of redemption of the Securities selected for
redemption under Section 1104 and ending at the close of business
on the day of such mailing or (ii) 15 days before an Interest
Payment Date and ending on the close of business on the Interest
Payment Date, or (b) to register the transfer of or exchange any
Security so selected for redemption in whole or in part, except
the unredeemed portion of Securities being redeemed in part.
Section 306. Mutilated, Destroyed, Lost and Stolen
Securities.
If (a) any mutilated Security is surrendered to the
Trustee, or (b) the Company and the Trustee receive evidence to
their satisfaction of the destruction, loss or theft of any
Security, and there is delivered to the Company and the Trustee
such security or indemnity as may be required by them to save
each of them and any agent of them harmless, then, in the absence
of notice to the Company or the Trustee that such Security has
been acquired by a bona fide purchaser, the Company shall execute
and upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a replacement
Security of like tenor and principal amount, and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its discretion may, instead of issuing a replacement
Security, pay such Security.
Upon the issuance of any replacement Securities under
this Section, the Company may require the payment of a sum
sufficient to pay all documentary, stamp or similar issue or
transfer taxes or other governmental charges that may be imposed
in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith.
Every replacement Security issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute a contractual obligation of the Company, whether or
- 40-
<PAGE>
not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of
this Indenture equally and proportionately with any and all other
Securities duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Securities.
Section 307. Payment of Interest; Interest Rights
Preserved.
Interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or
one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest.
Any interest on any Security which is payable, but is
not punctually paid or duly provided for, on any Interest Payment
Date and interest on such defaulted interest at the applicable
interest rate borne by the Securities, to the extent lawful (such
defaulted interest (and such interest thereon) herein
collectively called "Defaulted Interest"), shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date
by virtue of having been such Holder; and such Defaulted Interest
may be paid by the Company, at its election in each case, as
provided in Subsection (a) or (b) below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are
registered at the close of business on a Special Record Date
for the payment of such Defaulted Interest, which shall be
fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest
proposed to be paid on each Security and the date of the
proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to
the Trustee for such deposit prior to the date of the
proposed payment, such money when deposited to be held in
trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Subsection provided. Thereupon
the Trustee shall fix a Special Record Date for the payment
of such Defaulted Interest which shall be not more than 15
days and not less than 10 days prior to the
- 41-
<PAGE>
date of the proposed payment and not less than 10 days after
the receipt by the Trustee of the notice of the proposed
payment. The Trustee shall promptly notify the Company of
such Special Record Date. In the name and at the
expense of the Company, the Trustee shall cause notice of the
proposed payment of such Defaulted Interest and the Special
Record Date therefor to be mailed, first-class postage
prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such
Special Record Date. Notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid
to the Persons in whose names the Securities (or their
respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no
longer be payable pursuant to the following Subsection (b).
(b) The Company may make payment of any Defaulted
Interest in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be
required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to
this Subsection, such payment shall be deemed practicable by
the Trustee.
Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security
shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
Section 308. Persons Deemed Owners.
Prior to the time of due presentment for registration of
transfer, the Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name any Security is
registered as the owner of such Security for the purpose of
receiving payment of principal of (and premium, if any) and
(subject to Section 307) interest on such Security and for all
other purposes whatsoever, whether or not such Security be
overdue, and neither the Company, the Trustee nor any agent of
the Company or the Trustee shall be affected by notice to the
contrary.
Section 309. Cancellation.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee
- 42-
<PAGE>
and shall be promptly cancelled by it. The Company shall deliver
to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Securities so
delivered shall be promptly cancelled by the Trustee. No
Securities shall be authenticated in lieu of or in exchange for
any Securities cancelled as provided in this Section, except as
expressly permitted by this Indenture. All cancelled Securities
held by the Trustee shall be disposed of as directed by a Company
Order.
Section 310. Computation of Interest.
Interest on the Securities shall be computed on the
basis of a year of twelve 30-day months.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 401. Satisfaction and Discharge of Indenture.
This Indenture shall, upon Company Request, cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of Securities herein expressly provided
for) and the Trustee, on demand of and at the expense of the
Company shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(1) all Securities theretofore authenticated and
delivered (other than (i) Securities which have been
destroyed, lost or stolen and which have been replaced
or paid as provided in Section 306 and (ii) Securities
for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from
such trust, as provided in Section 1003) have been
delivered to the Trustee for cancellation; or
(2) all such Securities not theretofore delivered
to the Trustee for cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated
Maturity within one year, or
- 43-
<PAGE>
(iii) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the
Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (2)(i), (ii) or (iii) above,
has irrevocably deposited or caused to be deposited with the
Trustee as trust funds in trust for the purpose an amount in
cash in U.S. Dollars or U.S. Government Obligations
sufficient to pay and discharge the entire indebtedness on
such Securities not theretofore delivered to the Trustee for
cancellation;
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel each stating
that (i) all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture
have been complied with and (ii) such satisfaction and
discharge will not result in a breach or violation of, or
constitute a default under, this Indenture or any other
material agreement or instrument to which the Company is a
party or by which it is bound.
Notwithstanding the satisfaction and discharge of this Indenture,
the obligations of the Company to the Trustee under Section 606
and, if money shall have been deposited with the Trustee pursuant
to subclause (2) of Subsection (a) of this Section, the
obligations of the Trustee under Section 402 and the last
paragraph of Section l003 shall survive.
Section 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section 1003, all money deposited with the Trustee pursuant to
Section 401 shall be held in trust and applied by it, in
accordance with the provisions of the Securities and this
Indenture, to the payment, either directly or through any Paying
Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Persons entitled thereto, of the
principal (and premium, if any) and interest for whose payment
such money has been deposited with the Trustee.
Money so held in trust shall not be subject to the
provisions of Article Thirteen of this Indenture. If the Trustee
or Paying Agent is unable to apply any money or U.S. Government
Obligations in accordance with Section 401 by reason of any
- 44-
<PAGE>
legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations
under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to
Section 401; provided that if the Company has made any payment of
principal of, premium, if any, or interest on any Securities
because of the reinstatement of its obligations, the Company
shall be subrogated to the rights of the Holders of such
Securities to receive such payment from the money or U.S.
Government Obligations held by the Trustee or Paying Agent.
ARTICLE FIVE
REMEDIES
Section 501. Events of Default.
"Event of Default", wherever used herein, means any one
of the following events (whatever the reason for such Event of
Default and whether or not it shall be occasioned or prohibited
by the provisions of Article Thirteen or be voluntary or
involuntary or be effected by the operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administration or governmental body):
(a) default in the payment of interest on any Security
when such interest becomes due and payable and continuance of
such default for a period of 30 days; or
(b) default in the payment of the principal of (or
premium, if any, on) any Security at its Maturity; or
(c) default in the performance, or breach, of any
covenant or agreement of the Company hereunder (other than a
default in the performance, or breach, of a covenant or
agreement that is specifically dealt with elsewhere in this
Section), and continuance of such default or breach for a
period of 60 days after there has been given, by registered
or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in
principal amount of the Outstanding Securities a written
notice specifying such default or breach and stating that
such notice is a "Notice of Default" hereunder; or
(d) (i) an event of default shall have occurred under
any mortgage, bond, indenture, loan agreement or other
document evidencing any issue of Indebtedness of the
- 45-
<PAGE>
Company or any Material Subsidiary for money borrowed, which
issue has an aggregate outstanding principal amount of not
less than $50,000,000, and such default shall result in such
Indebtedness becoming, whether by declaration or otherwise,
due and payable prior to the date on which it would otherwise
become due and payable or (ii) a default in any payment when
due at final maturity of any such Indebtedness; or
(e) final judgments or orders not covered by insurance
or a bond rendered against the Company or any Material
Subsidiary which require the payment in money, either
individually or in an aggregate amount, that is more than
$30,000,000 and such judgment or order shall remain
unsatisfied or unstayed for 60 days; or
(f) the entry of a decree or order by a court having
jurisdiction in the premises (i) for relief in respect of the
Company or any Material Subsidiary in an involuntary case or
proceeding under the Federal Bankruptcy Code or any other
federal or state bankruptcy, insolvency, reorganization or
similar law or (ii) adjudging the Company or any Material
Subsidiary a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment or composition of or
in respect of the Company or any Material Subsidiary under
the Federal Bankruptcy Code or any other applicable federal
or state law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of the Company or any Material Subsidiary or of any
substantial part of any of their properties, or ordering the
winding up or liquidation of any of their affairs, and the
continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(g) the institution by the Company or any Material
Subsidiary of a voluntary case or proceeding under the
Federal Bankruptcy Code or any other applicable federal or
state law or any other case or proceedings to be adjudicated a
bankrupt or insolvent, or the consent by the Company or any
Material Subsidiary to the entry of a decree or order for
relief in respect of the Company or any Material Subsidiary
in any involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state law
or to the institution of bankruptcy or insolvency proceedings
against the Company or any Material Subsidiary, or the filing
by the Company or any Material Subsidiary of a petition or
answer or consent seeking reorganization or relief under the
Federal Bankruptcy Code or any other applicable federal or
state law, or the
- 46-
<PAGE>
consent by it to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator (or other similar
official) of any of the Company or any Material Subsidiary or
of any substantial part of its property, or the making by it
of an assignment for the benefit of creditors, or the
admission by it in writing of its inability to pay its debts
generally as they become due or taking of corporate action by
the Company or any Material Subsidiary in furtherance of any
such action; or
(h) default in the performance or breach of any of the
provisions of Article Eight.
Section 502. Acceleration of Maturity; Rescission.
If an Event of Default (other than an Event of Default
specified in Section 50l(f) or 501(g)) occurs and is continuing,
the Trustee or the Holders of at least 25% of the principal
amount of the Securities then Outstanding may, and the Trustee at
the request of such Holders shall, declare all unpaid principal
of, premium, if any, and accrued interest on all the Securities
to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the Holders); provided
that so long as the Bank Credit Agreement shall be in force and
effect, if any such Event of Default shall have occurred and be
continuing, any such acceleration shall not be effective until
the earlier of (a) five Business Days following a notice of
acceleration given to the Company and the agent bank under the
Bank Credit Agreement and only if upon such fifth Business Day
such Event of Default shall be continuing or (b) the acceleration
of any Indebtedness under the Bank Credit Agreement. If an Event
of Default specified in Section 501(f) or 501(g) occurs and is
continuing, the amounts described above shall ipso facto become
and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Holder.
After a declaration of acceleration, but before a
judgment or decree for payment of the money due has been obtained
by the Trustee, the Holders of at least a majority in aggregate
principal amount of the Securities outstanding, by written notice
to the Company and the Trustee, may annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum
sufficient to pay (i) all sums paid or advanced by the Trustee
under this Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, (ii) all overdue interest on
- 47-
<PAGE>
all Securities, (iii) the principal of and premium, if any, on
any Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities, and (iv) to the extent that payment of
such interest is lawful, interest upon overdue interest at the
rate borne by the Securities; and (b) all Events of Default,
other than the non-payment of principal of the Securities which
have become due solely by the declaration of acceleration, have
been waived as provided in Section 513 or cured. No such
rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of
a declaration of acceleration in respect of the Securities,
because an Event of Default specified in Section 501(d) shall
have occurred and be continuing, such declaration of acceleration
shall be automatically annulled if the Indebtedness that is the
subject of such Event of Default has been discharged or the
holders thereof have rescinded their declaration of acceleration
in respect of such Indebtedness, and, if such Indebtedness is not
Senior Indebtedness, such rescission has been made without any
payment or other transfer or grant, or any promise or other
undertaking to pay or otherwise transfer or grant, any tangible
or intangible property or right to such holders in connection
with such rescission, and written notice of such discharge or
rescission, as the case may be, shall have been given to the
Trustee by the Company and by the holders of such Indebtedness or
a trustee, fiduciary or agent for such holders, within 60 days
after such declaration of acceleration in respect of the
Securities, and (x) no other Event of Default has occurred during
such 60-day period, and (y) no Default arising from such
discharge has occurred during such 60-day period, which, in
either case, has not been cured or waived during such period.
Section 503. Collection of Indebtedness and Suits for
Enforcement by Trustee.
The Company covenants that if
(a) default is made in the payment of any interest on
any Security when such interest becomes due and payable and
such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of
(or premium, if any, on) any Security at the Maturity
thereof,
the Company will, upon demand of the Trustee, pay to it, for the
benefit of the Holders of such Securities, the whole amount
- 48-
<PAGE>
then due and payable on such Securities for principal (and
premium, if any) and interest, with interest upon the overdue
principal (and premium, if any) and, to the extent that payment
of such interest shall be legally enforceable, upon overdue
installments of interest, at the rate borne by the Securities;
and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an
express trust, may institute a judicial proceeding for the
collection of the sums so due and unpaid and may prosecute such
proceeding to judgment or final decree, and may enforce the same
against the Company or any other obligor upon the Securities and
collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any
other obligor upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the
Trustee may in its discretion proceed to protect and enforce its
rights and the rights of the Holders under this Indenture by such
appropriate private or judicial proceedings as the Trustee shall
deem most effectual to protect and enforce such rights.
Section 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company
or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee
(irrespective of whether the principal of the Securities shall
then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made
any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in
such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal (and premium, if any) and interest owing and unpaid
in respect of the Securities and to file such other papers or
documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and
- 49-
<PAGE>
counsel) and of the Holders allowed in such judicial proceeding;
provided that in the event that proof of such
claim and such other papers or documents have not been so
filed by the thirtieth day prior to the final date on which such
claim may be filed, the holders of Specified Senior
Indebtedness or their representatives shall be permitted to
file such proof of claim and other papers and documents for
and on behalf of the Holders of the Securities; and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute
the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay the
Trustee any amount due it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under
Section 606.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Holder any proposal, plan of reorganization,
arrangement, adjustment or composition or other similar
arrangement affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
Section 505. Trustee May Enforce Claims Without
Possession of Securities.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee
without the possession of any of the Securities or the production
thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own
name and as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment
has been recovered.
Section 506. Application of Money Collected.
Subject to Article Thirteen, any money, securities or
other property collected by the Trustee pursuant to this Article
shall be applied in the following order, at the date or
- 50-
<PAGE>
dates fixed by the Trustee and, in case of the distribution of
such money on account of principal (or premium, if any) or
interest, upon presentation of the Securities and the notation
thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 606;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal (and premium, if
any) and interest, in respect of which or for the benefit of
which such money has been collected, ratably, without
preference or priority of any kind, according to the amounts
due and payable on such Securities for principal (and
premium, if any) and interest; and
THIRD: The balance, if any, to the Company.
Section 507. Limitation on Suits.
No Holder of any Securities shall have any right to
institute any proceeding, judicial or otherwise, with respect to
this Indenture or the Securities, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(a) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(b) the Holders of not less than 25% in principal
amount of the Outstanding Securities shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by
the Holders of a majority in principal amount of the
Outstanding Securities;
- 51-
<PAGE>
it being understood and intended that no one or more Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb
or prejudice the rights of any other Holders, or to obtain or to
seek to obtain priority or preference over any other Holders or
to enforce any right under this Indenture except in the manner
provided in this Indenture and for the equal and ratable benefit
of all the Holders.
Section 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is
absolute and unconditional, to receive payment of the principal
of (and premium, if any) and (subject to Section 307) interest on
such Security on the respective due dates expressed in such
Security (or, in the case of redemption, on the Redemption Date)
and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such
Holder.
Section 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture
and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to the Trustee or to
such Holder, then and in every such case the Company, the Trustee
and the Holders shall, subject to any determination in such
proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
Section 510. Rights and Remedies Cumulative.
Except as provided in Section 306, no right or remedy
herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy,
and every right and remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity
or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
- 52-
<PAGE>
Section 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of
any Security to exercise any right or remedy accruing upon any
Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 512. Control by Holders.
The Holders of not less than a majority in principal
amount of the Outstanding Securities shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
or power conferred on the Trustee, provided that
(a) such direction shall not be in conflict with any
rule of law or with this Indenture or expose the Trustee to
personal liability, and
(b) subject to the provisions of Trust Indenture Act
Section 315, the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such
direction.
Section 513. Waiver of Past Defaults.
The Holders of not less than a majority in principal
amount of the Outstanding Securities may on behalf of the Holders
of all the Securities waive any past Default or Event of Default
hereunder and its consequences, except a Default or Event of
Default
(a) in the payment of the principal of (or premium, if
any) or interest on any Security, or
(b) in respect of a covenant or provision hereof which
under Article Nine cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon any such waiver, such Default shall cease to exist,
and any Event of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair
any right consequent thereon.
- 53-
<PAGE>
Section 514. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of
any Security by his acceptance thereof shall be deemed to have
agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture,
or in any suit against the Trustee for any action taken, suffered
or omitted by it as Trustee, the filing by any party litigant in
such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted
by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in principal
amount of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of the payment of the principal
of (or premium, if any) or interest on any Security on or after
the respective Stated Maturities expressed in such Security (or,
in the case of redemption, on or after the Redemption Date).
Section 515. Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay, extension or usury law wherever enacted,
now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company
(to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been
enacted.
Section 516. Unconditional Right of Holders to
Institute Certain Suits.
Notwithstanding any other provision in this Indenture
and any other provision of any Security, the right of any Holder
of any Security to receive payment of the principal of, premium,
if any, and interest on such Security on or after the respective
due dates expressed in such Security, or to institute suit for
the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of
such Holder.
- 54-
<PAGE>
ARTICLE SIX
THE TRUSTEE
Section 601. Notice of Defaults.
Within 60 days after the occurrence of any Default, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, notice of such Default
hereunder known to the Trustee, unless such default shall have
been cured or waived; provided, however, that, except in the case
of a default in the payment of the principal of (or premium, if
any) or interest on any Security, the Trustee shall be protected
in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or
Responsible Officers of the Trustee in good faith determines that
the withholding of such notice is in the interest of the Holders;
and provided further that, in the case of any default or breach
of the character specified in Section 501(d), no such notice to
Holders shall be given until at least 30 days after the
occurrence thereof.
Section 602. Certain Rights of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(i) the Trustee need perform only those duties as
are specifically set forth in this Indenture and no
covenants or obligations shall be implied in this
Indenture that are adverse to the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this
Indenture; provided that the Trustee shall examine the
certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
- 55-
<PAGE>
(c) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(i) this subsection (c) does not limit the effect
of subsection (b) of this Section 602;
(ii) the Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer, unless
it is proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to
Section 512; and
(iv) no provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise
incur any financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights
or powers if it shall have reasonable grounds for believing,
and does believe, that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to this Section 602.
(e) The Trustee may refuse to perform any duty or
exercise any right or power unless it receives indemnity
satisfactory to it against any loss, liability or expense,
including such reasonable advances as may be requested by the
Trustee.
(f) Subject to the foregoing subsections (a) through
(e) of this Section 602:
(i) The Trustee may rely and shall be protected in
acting or in refraining from acting upon any document
believed by it to be genuine and to have been signed or
presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or a
Company Order and any resolution by the board of
directors of the Company may be sufficiently evidenced by
a Board Resolution.
- 56-
<PAGE>
(ii) Before the Trustee acts or refrains from
acting, it may require an Officers' Certificate or an Opinion
of Counsel. The Trustee shall not be liable for
any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of
Counsel. In addition, in determining the Company's
compliance with the financial covenants set forth herein,
the Trustee may rely on the certificate delivered to the
Trustee pursuant to Section 1018(a).
(iii) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(iv) The Trustee shall not be liable for any action
it takes or omits to take in good faith that it believes
to be authorized or within its rights or powers.
(v) The Trustee may consult with counsel,
accountants or other experts and any advice of such
counsel, accountants or other experts shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted to be taken by it
hereunder in good faith and in accordance with such
advice.
Section 603. Not Responsible for Recitals or Issuance
of Securities.
The recitals contained herein and in the Securities,
except the Trustee's certificates of authentication, shall be
taken as the statements of the Company, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this
Indenture or of the Securities. The Trustee shall not be
accountable for the use or application by the Company of
Securities or the proceeds thereof, except that the Trustee
represents that it is duly authorized to execute and deliver this
Indenture, authenticate the Securities and perform its
obligations hereunder and that the statements made by it in a
Statement of Eligibility and Qualification on Form T-l supplied
to the Company are true and accurate, subject to the
qualifications set forth therein.
Section 604. Trustee and Agents May Hold Securities;
Collections; etc.
The Trustee, any Paying Agent, Security Registrar or any
other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Securities with
- 57-
<PAGE>
the same rights it would have if it were not the Trustee, Paying
Agent, Security Registrar or such other agent and, subject to
Trust Indenture Act Sections 310(b) and 31l, may otherwise deal
with the Company and receive, collect, hold and retain
collections from the Company with the same rights it would have
if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
Section 605. Money Held in Trust.
All moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust hereunder for the
purposes for which they were received and need not be segregated
from other funds except to the extent required by law. The
Trustee shall be under no liability for interest on any money
received by it hereunder except as otherwise agreed with the
Company.
Section 606. Compensation and Reimbursement.
The Company covenants and agrees:
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Trustee and each of its officers,
directors, employees, agents and counsel for, and to hold
them harmless against, any loss, liability or expense
incurred without negligence or bad faith on their part,
arising out of or in connection with the acceptance or
administration of this Indenture or the trusts hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
The obligation of the Company under this Section 606 to
compensate the Trustee and to pay and reimburse the Trustee for
such expenses, disbursements and advances shall constitute
- 58-
<PAGE>
additional Indebtedness hereunder and shall survive the
satisfaction and discharge of this Indenture and shall not be
subject to the provisions of Article Thirteen. If, and to the
extent that, the Trustee, its counsel, and other agents do not
receive compensation for services rendered, reimbursement of
their advances, expenses and disbursements, or indemnity, as
herein provided, as the result of allowances made in any
reorganization, bankruptcy, receivership, liquidation or other
proceeding or by any plan or reorganization or readjustment of
obligations of the Company, the Trustee shall be entitled, in
priority to the Holders of the Securities, to receive any
distributions of any securities, dividends or other disbursements
which would otherwise be made to the Holders of the Securities in
any such proceeding or proceedings and the Trustee is hereby
constituted and appointed, irrevocably, the attorney-in-fact for
the Holders of the Securities and each of them to collect and
receive, in their name, place and stead, such distributions,
dividends or other disbursements, to deduct therefrom the amounts
due to the Trustee, its counsel and other agents on account of
services rendered, advances, expenses, and disbursements made or
incurred, or indemnity, and to pay and distribute the balance,
pro rata, to the Holders of the Securities. The Trustee shall
have a lien upon any securities or other consideration to which
the Holders of the Securities may become entitled pursuant to any
such plan or reorganization or readjustment of obligations, or in
any such proceeding or proceedings; and the court or judge in any
such proceeding or proceedings may determine the terms and
conditions under which any such lien shall exist and be enforced.
As security for the performance of the obligations of
the Company under this Section, the Trustee shall have a claim
prior to the Securities upon all money, securities or other
property held or collected by the Trustee as such, except funds
held in trust for the benefit of Holders of particular
Securities, and the Securities are hereby subordinated to such
claim.
If the Trustee incurs expenses or renders services after
an Event of Default specified in Section 501(g) or 501(h) occurs,
the expenses and the compensation for the services are intended
to constitute expenses of administration under the Federal
Bankruptcy Code and any other applicable federal or state
bankruptcy Law.
Section 607. Conflicting Interests.
The Trustee shall comply with the provisions of
Section 3l0(b) of the Trust Indenture Act.
- 59-
<PAGE>
Section 608. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which
shall be eligible to act as Trustee under Trust Indenture Act
Section 310(a)(1) and which shall have a combined capital and
surplus of at least $100,000,000 and have its Corporate Trust
Office located in The City of New York (or, if its Corporate
Trust Office shall not be located in The City of New York, the
Company shall, pursuant to Section 1002, maintain an office or
agency in The City of New York where the Securities may be
presented or surrendered and notices and demands hereunder may be
made or served) to the extent there is such an institution
eligible and willing to serve. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of
Columbia supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible
in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect hereinafter
specified in this Article.
Section 609. Resignation and Removal; Appointment of
Successor.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee under Section 610, at which time the retiring
Trustee shall be fully discharged from its obligations hereunder.
(b) The Trustee may resign at any time by giving
written notice thereof to the Company. Upon receiving such
notice of resignation, the Company shall promptly appoint a
successor Trustee by written instrument executed by authority of
the Board of Directors of the Company, a copy of which shall be
delivered to the resigning Trustee and a copy to the successor
Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation, the resigning Trustee
may, or any Holder who has been a bona fide Holder of a Security
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper,
appoint a successor Trustee.
- 60-
<PAGE>
(c) The Trustee may be removed at any time by an Act of
the Holders of a majority in principal amount of the Outstanding
Securities, delivered to the Trustee and the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with the
provisions of Trust Indenture Act Section 310(b) after
written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Security for at
least six months, or
(2) the Trustee shall cease to be eligible under
Section 608 and shall fail to resign after written
request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six
months, or
(3) the Trustee shall become incapable of acting
or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be
appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or
liquidation,
then, in any case, (i) the Company by a Board Resolution may
remove the Trustee, or (ii) subject to Section 514, the Holder of
any Security who has been a bona fide Holder of a Security for at
least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause, the Company, by a Board Resolution, shall
promptly appoint a successor Trustee. If, within one year after
such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee shall be appointed by Act of
the Holders of a majority in principal amount of the Outstanding
Securities delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its
acceptance of such appointment in accordance with Section 610,
become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have
been so appointed by the Company or the Holders of the Securities
and so accepted appointment, the Holder of any Security who has
been a bona
- 61-
<PAGE>
fide Holder for at least six months may on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation
and each removal of the Trustee and each appointment of a
successor Trustee by mailing written notice of such event by
first-class mail, postage prepaid, to the Holders of Securities
as their names and addresses appear in the Security Register.
Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office.
Section 610. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall
execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee
shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee;
provided, however, that the retiring Trustee shall continue to be
entitled to the benefit of Section 606(c); but, on request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of its charges, execute and deliver an instrument
transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and money held
by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company shall execute any and all
instruments for more fully and certainly vesting in and
confirming to such successor Trustee all such rights, powers and
trusts.
No successor Trustee shall accept its appointment unless
at the time of such acceptance such successor Trustee shall be
qualified and eligible under this Article.
Upon acceptance of appointment by any successor Trustee
as provided in this Section 610, the Company shall give notice
thereof to the Holders of the Securities, by mailing such notice
to such Holders at their addresses as they shall appear on the
Security Register. If the acceptance of appointment is
substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with
the notice called for by Section 609. If the Company fails to
give such notice within 10 days after acceptance of appointment
by the successor Trustee, the successor Trustee shall cause such
notice to be given at the expense of the Company.
- 62-
<PAGE>
Section 611. Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the
corporate trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation shall be
otherwise qualified and eligible under this Article, without the
execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Securities shall have
been authenticated, but not delivered, by the Trustee then in
office, any successor by merger, conversion or consolidation to
such authenticating Trustee may adopt such authentication and
deliver the Securities so authenticated with the same effect as
if such successor Trustee had itself authenticated such
Securities.
Section 612. Preferential Collection of Claims Against
Company.
If and when the Trustee shall be or become a creditor of
the Company (or any other obligor under the Securities), the
Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of claims against the Company (or
any such other obligor).
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY
TRUSTEE AND COMPANY
Section 701. Disclosure of Names and Addresses of
Holders.
Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that neither the
Company nor the Trustee or any agent of either of them shall be
held accountable by reason of the disclosure of any information
as to the names and addresses of the Holders in accordance with
Trust Indenture Act Section 312, regardless of the source from
which such information was derived, and that the Trustee shall
not be held accountable by reason of mailing any material
pursuant to a request made under Trust Indenture Act Section 312.
- 63-
<PAGE>
Section 702. Reports by Trustee.
Within 60 days after May 15 of each year commencing with
the first May 15 after the first issuance of Securities, the
Trustee shall transmit by mail to all Holders, as their names and
addresses appear in the Security Register, as provided in Trust
Indenture Act Section 313(c), a brief report dated as of such May
l5 if required by Trust Indenture Act Section 313(a).
Section 703. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the
Company is required to file the same with the Commission,
copies of the annual reports and of the information,
documents and other reports (or copies of such portions of
any of the foregoing as the Commission may from time to time
by rules and regulations prescribe) which the Company may be
required to file with the Commission pursuant to Section l3
or Section 15(d) of the Securities Exchange Act of 1934; or,
if the Company is not required to file information, documents
or reports pursuant to either of such Sections, then it shall
file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the
Commission, such of the supplementary and periodic
information, documents and reports which may be required
pursuant to Section 13 of the Securities Exchange Act of 1934
in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in
such rules and regulations;
(b) file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to
time by the Commission, such additional information,
documents and reports with respect to compliance by the
Company with the conditions and covenants of this Indenture
as may be required from time to time by such rules and
regulations; and
(c) transmit by mail to all Holders, as their names and
addresses appear in the Security Register, within 30 days
after the filing thereof with the Trustee, in the manner and
to the extent provided in Trust Indenture Act Section 313(c),
such summaries of any information, documents and reports
required to be filed by the Company pursuant to subsections
(a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
- 64-
<PAGE>
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 801. Company May Consolidate, etc., Only on
Certain Terms.
The Company shall not consolidate or merge with or into
any other Person, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of its properties
and assets (as an entirety or substantially as an entirety in one
transaction or series of related transactions) to any Person or
permit any of its Subsidiaries to enter into any such transaction
or transactions if such transaction or transactions, in the
aggregate, would result in a transfer of all or substantially all
of the assets of the Company and its Subsidiaries on a
consolidated basis to any Person unless, at the time and after
giving effect thereto:
(i) either (a) the Company shall be the continuing
corporation, or (b) the Person (if other than the Company)
formed by such consolidation, or into which the Company is
merged or the Person which acquires by sale, assignment,
transfer, lease, conveyance or disposition the properties and
assets of the Company, substantially as an entirety (the
"Surviving Entity"), shall be a corporation duly organized
and validly existing under the laws of the United States of
America, any state thereof or the District of Columbia and
the Surviving Entity shall, in either case, expressly assume
by supplemental indenture hereto, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this
Indenture and this Indenture shall remain in full force and
effect;
(ii) immediately after giving effect to such transaction
on a pro forma basis, no Default or Event of Default shall
have occurred and be continuing;
(iii) immediately after giving effect to such transaction
on a pro forma basis, the Consolidated Fixed Charge Coverage
Ratio of the Company (or the Surviving Entity if the Company
is not the continuing obligor under this Indenture), for the
Company's four most recently completed full fiscal quarters
is at least 1.75 to 1.0; and
(iv) the Company has delivered or caused to be delivered
to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger,
transfer or lease and such supplemental indenture,
- 65-
<PAGE>
if one is required by this Section 801, comply with this
Section 801 and that all conditions precedent herein provided
for relating to such transaction have been complied with.
Section 802. Successor Substituted.
Upon any consolidation or merger, or any sale,
assignment, transfer, lease or conveyance or other disposition of
all or substantially all of the assets of the Company in
accordance with Section 801, the successor Person formed by such
consolidation or into which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture with the same effect as if such successor Person had
been named as the Company herein. In the event of any
transaction (other than a lease) described in and complying with
the conditions listed in Section 8.01 in which the Company is not
the continuing corporation, the successor Person formed or
remaining shall succeed to, and be substituted for, and may
exercise every right and power, of the Company and the Company
would be discharged from all obligations and covenants under this
Indenture and the Securities.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 901. Supplemental Indentures without Consent of
Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time
and from time to time, may enter into one or more indentures
supplemental hereto in form satisfactory to the Trustee, for any
of the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the
covenants of the Company herein and in the Securities;
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein or in the Securities conferred upon the Company;
(c) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with
any other provision herein, or to make any other provisions
with respect to matters or questions arising
- 66-
<PAGE>
under this Indenture; provided that, in each case, such provisions shall
not adversely affect the interests of the
Holders;
(d) to secure the Securities pursuant to the
requirements of Section 801 or Section 1010 or otherwise;
(e) to provide for the guarantee of payment of the
Securities by any Subsidiary pursuant to the requirements of
Section 1014 or Section 1015;
(f) to comply with the requirements of the Commission
in order to effect or maintain the qualification of this
Indenture under the Trust Indenture Act, as contemplated by
Section 905 or otherwise;
(g) to evidence and provide the acceptance of the
appointment of a successor Trustee hereunder; or
(h) to make any other change that does not adversely
affect the rights of any Holder.
Section 902. Supplemental Indentures with Consent of
Holders.
With the consent of the Holders of not less than a
majority in principal amount of the Outstanding Securities, by
Act of such Holders delivered to the Company and the Trustee,
each when authorized by a Board Resolution, and the Trustee may
enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of waiving
or modifying in any manner the rights of the Holders under this
Indenture; provided, however, that no such supplemental
indenture, amendment or waiver shall, without the consent of the
Holder of each Outstanding Security affected thereby:
(a) change the Stated Maturity of the principal of, or
any installment of interest on, any Security or reduce the
principal amount thereof or the rate of interest thereon or
any premium payable upon the redemption thereof, or change
the coin or currency in which the principal of any Security
or any premium or the interest thereon is payable, or impair
the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or, in the case of
redemption, on or after the Redemption Date) or modify the
obligation of the Company to make and consummate a Change in
Control Offer or modify any of the provisions or definitions
with respect thereto; or
- 67-
<PAGE>
(b) reduce the percentage in principal amount of the
Outstanding Securities, the consent of whose Holders is
required for any such supplemental indenture, or the consent
of whose Holders is required for any waiver (of compliance
with certain provisions of this Indenture or certain defaults
hereunder and their consequences) provided for in this
Indenture; or
(c) modify any of the provisions of this Section or
Section 513 or Section 1019, except to increase any such
percentage or to provide that certain other provisions of
this Indenture cannot be modified or waived without the
consent of the Holder of each Security affected thereby; or
(d) modify any of the provisions of Article Thirteen
hereof in a manner adverse to the Holders of the Securities;
or
(e) except as otherwise permitted under Article Eight,
consent to the assignment or transfer by the Company of any
of its rights and obligations under this Indenture.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such Act
shall approve the substance thereof.
Section 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the
modifications thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and (subject to Trust
Indenture Act Section 315(a) through 315(d) and Section 602
hereof) shall be fully protected in relying upon, an Officers'
Certificate and an Opinion of Counsel stating that the execution
of such supplemental indenture is authorized or permitted by this
Indenture. The Trustee may, but shall not be obligated to, enter
into any such supplemental indenture which affects the Trustee's
own rights, duties or immunities under this Indenture or
otherwise.
Section 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance
therewith, and such supplemental indenture shall form a part of
this Indenture for all purposes; and every Holder of Securities
theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
- 68-
<PAGE>
Section 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture
Act as then in effect.
Section 906. Reference in Securities to Supplemental
Indentures.
Securities authenticated and delivered after the
execution of any supplemental indenture pursuant to this Article
may, and shall if required by the Company, bear a notation in
form approved by the Company as to any matter provided for in
such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the
Company, to any such supplemental indenture may be prepared and
executed by the Company and shall be authenticated and delivered
by the Trustee in exchange for Outstanding Securities.
Section 907. Effect on Senior Indebtedness.
No supplemental indenture shall adversely affect the
rights of any holders of Senior Indebtedness under Article
Thirteen unless the requisite holders of each issue of Senior
Indebtedness affected thereby shall have consented to such
supplemental indenture.
ARTICLE TEN
COVENANTS
Section 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal
of (and premium, if any) and interest on the Securities in
accordance with the terms of the Securities and this Indenture.
Section 1002. Maintenance of Office or Agency.
The Company will maintain, in The City of New York, an
office or agency where Securities may be presented or surrendered
for payment, where Securities may be surrendered for registration
of transfer or exchange and where notices and demands to or upon
the Company in respect of the Securities and this Indenture may
be served. If the Corporate Trust Office is located in New York
City, then it shall be such office or agency of the Company,
unless the Company shall designate and
- 69-
<PAGE>
maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the
Trustee of any change in the location of any such office or
agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust
Office, and the Company hereby appoints the Trustee as its agent
to receive all such presentations, surrenders, notices and
demands.
The Company may from time to time designate one or more
other offices or agencies (in or outside of The City of New York)
where the Securities may be presented or surrendered for any or
all such purposes, and may from time to time rescind such
designation; provided, however, that no such designation or
recission shall in any manner relieve the Company of its
obligation to maintain an office or agency in The City of New
York for such purposes. The Company will give prompt written
notice to the Trustee of any such designation or recission and
any change in the location of any such office or agency.
Section 1003. Money for Security Payments to Be Held in
Trust.
If the Company shall at any time act as its own Paying
Agent, it will, on or before each due date of the principal of
(and premium, if any) or interest on any of the Securities,
segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums
shall be paid to such Persons or otherwise disposed of as herein
provided, and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying
Agents for the Securities, it will, on or before each due date of
the principal of (and premium, if any) or interest on any
Securities, deposit with a Paying Agent a sum in same day funds
(or New York Clearing House funds if such deposit is made prior
to the date on which such deposit is required to be made)
sufficient to pay the principal (and premium, if any) or interest
so becoming due, such sum to be held in trust for the benefit of
the Persons entitled to such principal, premium or interest and
(unless such Paying Agent is the Trustee) the Company will
promptly notify the Trustee of such action or any failure so to
act.
The Company will cause each Paying Agent other than the
Trustee to execute and deliver to the Trustee an instrument
- 70-
<PAGE>
in which such Paying Agent shall agree with the Trustee, subject
to the provisions of this Section, that such Paying Agent will:
(a) hold all sums held by it for the payment of the
principal of (and premium, if any) or interest on Securities
in trust for the benefit of the Persons entitled thereto
until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any default by the
Company (or any other obligor upon the Securities) in the
making of any payment of principal (and premium, if any) or
interest;
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent; and
(d) acknowledge, accept and agree to comply in all
respects with the provisions of this Indenture relating to
the duties, rights and obligations of such Paying Agent.
The Company may at any time, for the purpose of
obtaining the satisfaction and discharge of this Indenture or for
any other purpose, pay, or by Company Order direct any Paying
Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by
the Company or such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Any money deposited with the Trustee or any Paying
Agent, or then held by the Company, in trust for the payment of
the principal of (and premium, if any) or interest on any
Security and remaining unclaimed for two years after such
principal (and premium, if any) or interest has become due and
payable shall be paid to the Company on Company Request or (if
then held by the Company) shall be discharged from such trust;
and the Holder of such Security shall thereafter, as an unsecured
general creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with
respect to such trust money, and all liability of the Company
as trustee thereof, shall thereupon cease; provided, however,
that the Trustee or such Paying Agent, before being required to
make any such repayment, may at the expense of the Company cause
to be published once, in the
- 71-
<PAGE>
New York Times and the Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the
date of such notification or publication, any unclaimed balance
of such money then remaining will be repaid to the Company.
Section 1004. Corporate Existence.
Subject to Article Eight, the Company shall do or cause
to be done all things necessary to preserve and keep in full
force and effect its corporate existence and that of each
Material Subsidiary of the Company and the corporate rights
(charter and statutory), corporate licenses and corporate
franchises of the Company and its Material Subsidiaries, except
where a failure to do so, singly or in the aggregate, is not
likely to have a materially adverse effect upon the business,
assets, financial conditions or results of operations of the
Company and the Material Subsidiaries taken as a whole determined
on a consolidated basis in accordance with generally accepted
accounting principles; provided that the Company shall not be
required to preserve any such existence (except of the Company),
right, licenses or franchise if the Board of Directors of the
Company, or of the Material Subsidiary concerned, shall determine
that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such Material
Subsidiary and that the loss thereof is not disadvantageous in
any material respect to the Holders.
Section 1005. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a) all
material taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or
property of the Company or any of its Subsidiaries and (b) all
material lawful claims for labor, materials and supplies, which,
if unpaid, might by law become a lien upon the property of the
Company or any of its Subsidiaries that could produce a material
adverse effect on the consolidated financial condition of the
Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by
appropriate proceedings and in respect of which appropriate
reserves (in the good faith judgment of management of the
Company) are being maintained in accordance with GAAP.
- 72-
<PAGE>
Section 1006. Maintenance of Properties.
The Company shall cause all material properties owned by
or leased to it or any Material Subsidiary of the Company and
necessary in the conduct of its business or the business of such
Material Subsidiary to be maintained and kept in normal
condition, repair and working order, ordinary wear and tear
excepted; provided that nothing in this Section shall prevent the
Company or any Material Subsidiary of the Company from
discontinuing the use, operation or maintenance of any of such
properties, or disposing of any of them, if such discontinuance
or disposal is, in the judgment of the Board of Directors of the
Company or the Material Subsidiary concerned, or of any officer
(or other agent employed by the Company or any Material
Subsidiary of the Company) of the Company or such Material
Subsidiary having managerial responsibility for any such
property, desirable in the conduct of the business of the Company
or any Material Subsidiary of the Company and if such
discontinuance or disposal is not adverse in any material respect
to the Securityholders.
The Company shall provide or cause to be provided, for
itself and any Material Subsidiaries of the Company, insurance
(including appropriate self-insurance) against loss or damage of
the kinds customarily insured against by corporations similarly
situated and owning like properties in the same general areas in
which the Company or such Material Subsidiaries operate.
Section 1007. Limitation on Indebtedness.
The Company will not, and will not permit any of its
Subsidiaries to, create, incur, assume, or directly or indirectly
guarantee or in any other manner become directly or indirectly
liable for the payment of, any Indebtedness (including any
Acquired Indebtedness, but excluding Permitted Indebtedness)
unless, at the time of such event and after giving effect thereto
on a pro forma basis, the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately
preceding such event, taken as one period and calculated on the
assumption that such Indebtedness had been incurred on the first
day of such four-quarter period and on the assumption that, in
connection with the incurrence of any such Indebtedness, any
related acquisition (whether by means of purchase, merger or
otherwise) and any related repayment of Indebtedness also had
occurred on such date with the appropriate adjustments with
respect to such acquisition and repayment being included in such
pro forma calculation, would have been at least equal to 1.75 to
1.0.
- 73-
<PAGE>
Section 1008. Limitation on Restricted Payments.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend on, or make any
distribution to holders of, any shares of the Company's
Capital Stock (other than dividends or distributions
payable in shares of its Qualified Capital Stock or in
options, warrants or other rights to purchase such
Qualified Capital Stock),
(ii) purchase, redeem or otherwise acquire or retire
for value any Capital Stock of the Company or any
Affiliate thereof (other than Capital Stock of (x) any
Subsidiary held by the Company or any of its
Majority-owned Subsidiaries and (y) any Majority-owned
Subsidiary of the Company) or any options, warrants or
other rights to acquire such Capital Stock,
(iii) make any principal payment on or redeem,
repurchase, defease or otherwise acquire or retire for
value, prior to any scheduled principal payment or
maturity, any Indebtedness of the Company which is pari
passu with or expressly subordinate in right of payment
to the Securities,
(iv) declare or pay any dividend or distribution on
any Capital Stock of any Subsidiary to any Person (other
than the Company or any of its Majority-owned
Subsidiaries) or purchase, redeem or otherwise acquire
or retire for value any Capital Stock of any Subsidiary
held by any Person (other than the Company or any of its
Majority-owned Subsidiaries), or
(v) incur, create or assume any guarantee of
Indebtedness of any Affiliate of the Company (other than
a Majority-owned Subsidiary of the Company) or make any
Investment (other than any Permitted Investment) in any
Person, including any Unrestricted Subsidiary
(such payments or other actions described in the foregoing
clauses (i) through (v), other than any such action that is a
Permitted Payment, are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the
proposed Restricted Payment (the amount of any such Restricted
Payment, if other than cash, as determined by the Board of
Directors of the Company, whose determination shall be conclusive
and evidenced by a Board Resolution), (1) no Default
- 74-
<PAGE>
or Event of Default shall have occurred and be continuing and (2)
the aggregate amount of all Restricted Payments (plus Permitted
Payments set forth in Sections 1008(b)(vi), (xi) and (xii)) declared or
made after the date hereof (including Investments in Unrestricted
Subsidiaries pursuant to the provisions of Section 1017) shall
not exceed the sum of:
(A) 50% of the aggregate cumulative Consolidated
Adjusted Net Income of the Company accrued on a
cumulative basis during the period beginning on
October 31, 1993 and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such
proposed Restricted Payment (or, if such aggregate
cumulative Consolidated Adjusted Net Income shall be a
loss, minus 100% of such loss), plus
(B) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company as capital
contributions to the Company, plus
(C) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received after
the date hereof by the Company from the issuance or
sale (other than to any of its Subsidiaries) of
shares of Qualified Capital Stock of the Company or
warrants, options or rights to purchase shares (other
than issuances permitted by clause (v) of the
definition of Permitted Payments contained in
Section l008(b)) of Qualified Capital Stock of the
Company, plus
(D) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors, whose
determination shall be conclusive), received by the
Company (other than from any of its Subsidiaries)
upon the exercise of options, warrants or rights to
purchase shares of Qualified Capital Stock of the
Company, plus
(E) the aggregate net proceeds, including the
Fair Market Value of property other than cash (as
determined by the Company's Board of Directors,
- 75-
<PAGE>
whose determination shall be conclusive), received
after the date hereof by the Company from the issue
or sale of debt securities that have been converted
into or exchanged for Qualified Capital Stock of the
Company, together with the aggregate cash received by
the Company at the time of such conversion or
exchange.
(b) Section 1008(a) to the contrary notwithstanding,
the Company and its Subsidiaries may take the following actions
(clauses (i) through (xii) being referred to as "Permitted
Payments") so long as, in the case of clauses (vi), (ix), (x) and
(xii), no Default or Event of Default has occurred and is continuing:
(i) the payment of any dividend within 60 days
after the date of declaration thereof, if at such
declaration date such declaration complied with the
provisions of Section 1008(a) (in which event such
dividend shall be deemed to have been paid on such date
of declaration thereof for purposes of Section 1008(a));
(ii) the repurchase, redemption or other
acquisition or retirement of any shares of any class of
Capital Stock of the Company or any Affiliate of the
Company, in exchange for (including any such exchange
pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu
of the issuance of fractional shares or scrip) or out of
the net cash proceeds of a substantially concurrent
issue and sale (other than to a Subsidiary) of shares of
Qualified Capital Stock of the Company;
(iii) payments by the Company to SMG-II pursuant to
the Tax Sharing Agreement;
(iv) dividends or distributions in an aggregate
amount not to exceed the amount of dividends or
distributions paid to the Company or its Subsidiaries by
Unrestricted Subsidiaries since the date of this
Indenture;
(v) the redemption, defeasance, repurchase or
acquisition or retirement for value (each, for purposes
of this clause, a "refinancing") of any Indebtedness of
the Company (other than Redeemable Capital Stock) which
is pari passu with or expressly subordinate in right of
payment to the Securities
- 76-
<PAGE>
through the issuance of (A) new Indebtedness of the
Company or (B) shares of Qualified Capital Stock of the
Company or Newco, provided that, with respect to clause
(A), any such new Indebtedness (1) has a principal
amount that does not exceed the principal amount so
refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of
any premium reasonably determined by the Company as
necessary to accomplish such refinancing, plus the
amount of expenses of the Company incurred in connection
with such refinancing; provided that for purposes of
this clause, the principal amount of any Indebtedness
shall be deemed to mean the principal amount thereof or,
if such Indebtedness provides for an amount less than
the principal amount thereof to be due and payable upon a
declaration of acceleration thereof, such lesser amount
as of the date of determination, (2) has an Average Life
to Stated Maturity that is equal to or greater than the
remaining Average Life to Stated Maturity of the
Securities, (3) has a final Stated Maturity that exceeds
the final Stated Maturity of principal of the
Securities, and (4) is pari passu with or expressly
subordinated in right of payment to the Securities at
least to the same extent as the Indebtedness refinanced;
(vi) dividends, loans or advances by the Company to
Holdings to enable Holdings or Newco to pay cash
dividends on the Holdings Preferred Stock; provided that
on the date of payment of such dividend, the Company,
after giving pro forma effect to such dividend, loan or
advance, would be able to incur $1.00 of additional
Indebtedness under the provisions of Section 1007 (other
than Permitted Indebtedness), assuming a market rate of
interest on such Indebtedness;
(vii) the redemption, repurchase, defeasance or
acquisition or retirement for value of any Pari Passu
Indebtedness; provided that the Company shall redeem,
pursuant to the optional redemption provisions in
Article Eleven and the Securities, the principal amount
of Securities bearing the same proportion to the
aggregate amount of such Pari Passu Indebtedness being
redeemed, repurchased, defeased or acquired or retired
for value that the aggregate outstanding principal
amount of such Securities bears to the aggregate
outstanding principal amount of such Pari Passu
Indebtedness (without giving effect to such redemption,
repurchase, defeasance, acquisition or retirement);
- 77-
<PAGE>
(viii) the declaration or payment of any dividend or
distribution on any Capital Stock of any Subsidiary, or
the purchase, redemption, acquisition or retirement for
value of any Capital Stock of any Subsidiary; provided
that such declaration, payment, purchase, redemption,
acquisition or retirement is made pro rata among all
holders of such Capital Stock of such Subsidiary;
(ix) payments or other actions described in clauses
(i) through (v) of Section 1008(a) that would otherwise
be Restricted Payments in an aggregate amount not to
exceed $35,000,000;
(x) the dividend or distribution of the Capital
Stock of Plainbridge to Newco;
(xi) the repurchase of any Indebtedness of the
Company which is pari passu with or expressly
subordinate in right of payment to the Securities at a
purchase price not greater than 101% of the principal
amount of such Indebtedness in the event of a Change in
Control pursuant to a provision similar to Section 1012;
provided that prior to such repurchase the Company has
made the Change in Control Offer as provided in
Section 1012 and has repurchased all Securities validly
tendered for payment in connection with such Change in
Control Offer; and
(xii) the redemption, repurchase, defeasance or
acquisition or retirement for value of the Holdings
Intercompany Notes remaining outstanding following the
Recapitalization (other than a scheduled principal
payment, scheduled sinking fund payment or at maturity).
Except as provided in this Section 1008(b) and
Section 1008(a)(2), nothing in this Section 1008 limits or
restricts the making of any Permitted Payment and a Permitted
Payment will not be treated as a Restricted Payment.
(c) In computing Consolidated Adjusted Net Income of
the Company under clause (A) of Section 1008(a), (l) the Company
shall use audited financial statements for the portions of the
relevant period for which audited financial statements are
available on the date of determination and unaudited financial
statements and other current financial data based on the books
and records of the Company for the remaining portion of such
period and (2) the Company shall be permitted to rely in good
faith on the financial statements and other financial data
derived from the books and records of the Company that are
available on the date of determination. If the Company makes a
Restricted Payment which, at the time of the making of such
Restricted Payment would in the good faith determination of the
Company be permitted under the applicable provisions of this
Section 1008, such Restricted Payment shall be deemed to have
- 78-
<PAGE>
been made in compliance with such provisions notwithstanding any
subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Adjusted Net Income
of the Company for any period.
Section 1009. Limitation on Transactions with
Affiliates.
(a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, enter into any
transaction or series of related transactions (including, without
limitation, the sale, purchase, exchange or lease of assets,
property or services) with any Affiliate of the Company (other
than a wholly owned Subsidiary thereof) unless (i) such
transaction or series of transactions is or are on terms that are
no less favorable to the Company or such Subsidiary, as the case
may be, than those that could have been obtained at the time of
such transaction or transactions in a comparable transaction in
arm's-length dealings with an unaffiliated third party and (ii)
(A) with respect to any transaction or series of transactions
involving aggregate payments in excess of $1,000,000, but less
than $10,000,000, the Company delivers an Officers' Certificate
to the Trustee certifying that such transaction or transactions
complies with clause (i) above and (B) with respect to a
transaction or series of transactions, involving aggregate
payments equal or greater than $10,000,000, (1) such transaction
or transactions shall have received the approval of a majority of
the disinterested directors of the Board of Directors of the
Company if Plainbridge is a party to such transaction or series
of transactions or (2) if Plainbridge is not a party to such
transaction or series of transactions, such transactions or
series of transactions shall have received either the approval of
a majority of the disinterested directors of the Board of
Directors of the Company or the Company shall deliver to the
Trustee a written opinion of a nationally recognized investment
banking firm stating that such transaction is fair to the Company
from a financial point of view; provided, however, that the
foregoing restriction shall not apply to (1) the payment of fees
to Merrill Lynch Capital Partners, Inc. or Merrill Lynch, Pierce,
Fenner & Smith Incorporated or any of their Affiliates for
consulting, investment banking or financial advisory services
rendered by such Person to the Company or any Subsidiary of the
Company, (2) the payment of reasonable and customary regular fees
to directors of the Company, Newco, SMG-II, Holdings or any of
their respective subsidiaries or parents who are not employees of
any of such Persons, (3) the Logistical Services Agreement and
transactions pursuant thereto and (4) the Spin-Off Agreements and
transactions pursuant thereto. For purposes of this
Section 1009(a), any transaction or series of
- 79-
<PAGE>
related transactions between the Company or any Subsidiary and
any Affiliate of the Company that is approved as being on the
terms required by clause (i) above by a majority of the
disinterested directors of the Board of Directors of the Company
shall be deemed to be on terms as favorable as those that might
be obtained at the time of such transaction or series of
transactions in a comparable transaction in arm's-length dealings
with an unaffiliated third party, and thus shall be permitted
under this Section 1009(a).
(b) The Company will not, and will not permit any of
its Subsidiaries to, amend, modify, or in any way alter the terms
of the Intercompany Agreement, the Logistical Services Agreement
or the Spin-Off Agreements in a manner materially adverse to the
Company, other than (i) by adding new Subsidiaries and (ii) in
the case of the Logistical Services Agreement and the Spin-Off
Agreements, any amendments or modifications that are approved by a
majority of the disinterested directors of the Board of Directors
of the Company.
Section 1010. Limitation on Liens.
The Company will not, and will not permit any Subsidiary
to, create, incur, affirm or suffer to exist any Lien of any kind
securing any Pari Passu Indebtedness or Subordinated Indebtedness
(including any assumption, guarantee or other liability with
respect thereto by any Subsidiary) upon any property or assets
(including any intercompany notes) of the Company or any
Subsidiary owned on the date hereof or acquired after the date
hereof, or any income or profits therefrom, unless the Securities
are directly secured equally and ratably with (or prior to in
the case of Subordinated Indebtedness) the obligation or liability
secured by such Lien, and except for any Lien securing Acquired
Indebtedness created prior to the incurrence of such Indebtedness
by the Company or any Subsidiary, provided that any such Lien only
extends to the assets that were subject to such Lien securing such
Acquired Indebtedness prior to the related acquisition by the Company
or its Subsidiaries.
Section 1011. Limitation on Other Senior Subordinated
Indebtedness.
The Company will not create, incur, assume, guarantee or
in any other manner become liable with respect to any
Indebtedness (other than Permitted Senior Subordinated
Indebtedness) that is subordinate in right of payment to any
Senior Indebtedness unless such Indebtedness is also pari passu
with, or subordinate in right of payment to, the Securities,
- 80-
<PAGE>
pursuant to subordination provisions substantially similar to
those contained in Article Thirteen.
Section l0l2. Purchase of Securities Upon Change in
Control.
(a) If there shall have occurred a Change in Control,
Securities shall be purchased by the Company, at the option of
the Holder thereof, in whole or in part in integral multiples of
$1,000, on a date which shall be a Business Day that is not
earlier than 45 days nor later than 60 days from the date the
Change in Control Notice referred to below is given to Holders or
such later date as may be necessary for the Company to comply
with requirements under the Exchange Act (such date, or such
later date, being the "Change in Control Purchase Date"), at a
purchase price in cash (the "Change in Control Purchase Price")
in an amount equal to 101% of the principal amount of such
Securities, plus accrued and unpaid interest (including any
Defaulted Interest), if any, to the Change in Control Purchase
Date, subject to satisfaction by or on behalf of the Holder of
the requirements set forth in Section 1012(c).
(b) Within 30 days following a Change in Control and
prior to the mailing of the Change in Control Notice to Holders
provided for in paragraph (c) below, the Company covenants to
either (1) repay in full all Indebtedness under the Bank Credit
Agreement and permanently reduce the commitments of the lenders
thereunder or offer to repay in full all such Indebtedness and
permanently reduce such commitments and repay the Indebtedness
and permanently reduce the commitment of each lender who has
accepted such offer or (2) obtain the requisite consent under the
Bank Credit Agreement to permit the repurchase of the Securities
as provided for in this Section 1012. The Company shall first
comply with this subsection (b) before it shall be required to
repurchase the Securities pursuant to this Section 1012, and any
failure to comply with this subsection (b) shall constitute a
default of a covenant for purposes of Section 501(d).
(c) Within 30 days after the occurrence of a Change in
Control, the Company shall give written notice of such Change in
Control (a "Change in Control Notice") and of its offer (the
"Change in Control Offer") to purchase Securities as specified
herein to the Trustee, and to each Holder of the Securities at
his address appearing on the Security Register, by first-class
mail, postage prepaid. The Trustee shall be under no obligation
to ascertain the occurrence of a Change in Control. The Change
in Control Notice shall contain all instructions and materials
necessary to enable such Holders to
- 81-
<PAGE>
tender Securities, shall include a form of Change in Control
Purchase Notice to be completed by the Holder and shall state:
(i) (A) the events causing the Change in Control
and the date such Change in Control is deemed to have
occurred for purposes of this Section 1012, and (B) a
description of any material developments in the
Company's business since the latest annual or quarterly
report filed with the Trustee pursuant to
Section 1018(c) or 1018(d) and, if material, any
appropriate pro forma financial information;
(ii) the date by which a Holder must give a Change
in Control Purchase Notice;
(iii) the Change in Control Purchase Price;
(iv) the Change in Control Purchase Date;
(v) that any Security not purchased will continue
to accrue interest;
(vi) that Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable
at the Change in Control Purchase Price and from and
after such date (unless the Company shall default in the
payment of the Change in Control Purchase Price) such
Securities shall cease to bear interest; and
(vii) the procedures a holder must follow to
exercise rights under this Section 1012 and a brief
description of those rights and the procedures for
withdrawing a Change in Control Purchase Notice.
(d) A Holder may exercise its rights specified in
Section 1012(a) upon (i) delivery to any Paying Agent a written
notice (a "Change in Control Purchase Notice") at any time on or
prior to one Business Day before the Change in Control Purchase
Date, stating (A) the certificate number of the Security that the
Holder will deliver to be purchased and (B) the portion of the
principal amount of the Security that the holder will deliver to
be purchased, which portion must be $1,000 or an integral
multiple thereof and (ii) delivery of such Security to such
Paying Agent at such office prior to, on or after the Change in
Control Purchase Date (together with all necessary endorsements),
such delivery being a condition to receipt by the Holder of the
Change in Control Purchase Price therefor. If a Holder has
elected to deliver to the Company for purchase a portion of a
Security, and if the principal
- 82-
<PAGE>
amount of such portion is $1,000 or an integral multiple of
$1,000, the Company shall purchase such portion from the Holder
thereof pursuant to this Section 1012. Provisions of this
Indenture that apply to the purchase of all of a Security also
apply to the purchase of a portion of such Security. Each Paying
Agent shall promptly notify the Company of the receipt by the
former of any and all Change in Control Purchase Notices and any
and all written notices of withdrawal thereof.
(e) Upon receipt by any Paying Agent of a Change in
Control Purchase Notice, the Holder of the Security in respect of
which such Change in Control Purchase Notice was given shall
(unless such Change in Control Purchase Notice is withdrawn
pursuant to Section 1012(j)) thereafter be entitled to receive
solely the Change in Control Purchase Price with respect to such
Security. Such Change in Control Purchase Price shall be paid to
such Holder promptly following the later of the Business Day
following the Change in Control Purchase Date (provided the
conditions in Section 1012(d) have been satisfied) and the time
of delivery of such Security to the relevant Paying Agent at the
office of such Paying Agent by the Holder thereof in the manner
required by Section 1012(d).
(f) On or prior to the Change in Control Purchase Date,
the Company shall deposit with the Trustee or with a Paying Agent
(or, if the Company is acting as its own Paying Agent, segregate
and hold in trust as provided in Section 1003) an amount of money
in same day funds (or New York Clearing House funds if such
deposit is made prior to the Change in Control Purchase Date)
sufficient to pay the Change in Control Purchase Price of, and
(except if the Change in Control Purchase Date shall be an
Interest Payment Date) accrued interest on, all the Securities or
portions thereof which are to be purchased on that date.
(g) Upon a Change in Control Purchase Notice having
been given as aforesaid, Securities to be purchased shall, on the
Change in Control Purchase Date, become due and payable at the
Change in Control Purchase Price and from and after such date
(unless the Company shall default in the payment of the Change in
Control Purchase Price) such Securities shall cease to bear
interest. Upon surrender of any such Security for purchase in
accordance with the foregoing provisions, such Security shall be
paid by the Company at the Change in Control Purchase Price;
provided, however, that installments of interest whose Stated
Maturity is on or prior to the Change in Control Purchase Date
shall be payable to the Holders of such Securities, or one or
more Predecessor Securities, registered as such on the relevant
Regular Record Dates according to the terms and the provisions of
Section 307. If any Security
- 83-
<PAGE>
tendered for purchase shall not be so paid upon surrender
thereof, the principal thereof (and premium, if any, thereon)
shall, until paid, bear interest from the Change in Control
Purchase Date at the rate borne by such Security.
(h) Any Security that is to be purchased only in part
shall be surrendered to a Paying Agent at the office of such
Paying Agent (with, if the Company or the Trustee so requires,
due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in
writing), and the Company shall execute and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, one or more new Securities of any authorized
denomination as requested by such Holder in an aggregate
principal amount equal to, and in exchange for, the portion of
the principal amount of the Security so surrendered that is not
purchased.
(i) The Company shall comply with the applicable tender
offer rules, including Rule l4e-l under the Exchange Act, in
connection with a Change in Control Offer.
(j) A Change in Control Purchase Notice may be
withdrawn before or after delivery by the Holder to the relevant
Paying Agent at the office of such Paying Agent of the Security
to which such Change in Control Purchase Notice relates, by means
of a written notice of withdrawal (by facsimile transmission or
letter) received by such Paying Agent at such office not later
than one Business Day prior to the Change in Control Purchase
Date, specifying, as applicable:
(i) the certificate number of the Security in
respect of which such notice of withdrawal is being
submitted;
(ii) the principal amount of the Security with
respect to which such notice of withdrawal is being
submitted; and
(iii) the principal amount, if any, of the Security
that remains subject to the original Change in Control
Purchase Notice and that has been or will be delivered
for purchase by the Company.
A written notice of withdrawal may be in the form set
forth in the preceding paragraph. Each Paying Agent will
promptly return to the prospective Holders thereof any Securities
with respect to which a Change in Control Purchase Notice has
been withdrawn in compliance with this Indenture.
- 84-
<PAGE>
Section 1013. Restrictions on Preferred Stock of
Subsidiaries.
The Company will not permit any of its Subsidiaries to
issue any Preferred Stock (other than to the Company or a
Majority-owned Subsidiary of the Company), or permit any Person
(other than the Company or a Majority-owned Subsidiary of the
Company) to own or hold an interest in any Preferred Stock of any
such Subsidiary previously held by the Company or a
Majority-owned Subsidiary of the Company unless such Subsidiary
would be entitled to incur Indebtedness in accordance with the
provisions of Section 1007 in the aggregate principal amount
equal to the aggregate liquidation value of such Preferred Stock
assuming a market rate of interest (as determined by the Company)
for such Preferred Stock as of the date of issuance or transfer.
Section 1014. Limitations on Issuances of Guarantees of
Indebtedness.
The Company will not permit any Subsidiary, directly or
indirectly, to guarantee, assume or in any other manner become
liable with respect to any Pari Passu Indebtedness or
Subordinated Indebtedness, unless such Subsidiary simultaneously
executes and delivers a supplemental indenture hereto providing
for a guarantee of the Securities; provided that, in the case of a
Subsidiary's guarantee, assumption or other liability with
respect to Subordinated Indebtedness, such guarantee, assumption
or other liability shall be subordinated to such Subsidiary's
guarantee of the Securities to the same extent as such
Subordinated Indebtedness is subordinated to the Securities; and
provided further that this Section 1014 shall not be applicable
to any guarantee, assumption or other liability of any Subsidiary
of the Company that (i) existed at the time such Person became a
Subsidiary of the Company and (ii) was not incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary
of the Company. Any such guarantee of the Securities by a
Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon
either (A) the release or discharge of such guarantee of such
Pari Passu Indebtedness or Subordinated Indebtedness, as the case
may be, except a discharge by or as a result of payment under
such guarantee or (B) any sale, exchange or transfer, to any
Person not an Affiliate of the Company, of all the Company's
stock in, or all or substantially all the assets of, such
Subsidiary, which sale, exchange or transfer is made in
compliance with the applicable provisions of this Indenture.
Section 1015. Restriction on Transfer of Assets.
The Company will not sell, convey, transfer or otherwise
dispose of its assets or property to any of its
- 85-
<PAGE>
Subsidiaries, except for (i) sales, conveyances, transfers or
other dispositions of assets or property acquired by the Company
after the date hereof; (ii) sales, conveyances, transfers or
other dispositions of Existing Assets (a) made in the ordinary
course of business; (b) made outside the ordinary course of
business with a net book value that, when aggregated with all
other such transfers by the Company since the date of this
Indenture, less the net book value of Existing Assets transferred
to the Company from its Subsidiaries, would not exceed 10% of the
Consolidated Assets of the Company; or (c) to any Subsidiary if
such Subsidiary simultaneously with such transfer executes and
delivers a supplemental indenture hereto providing for the
guarantee of payment of the Securities by such Subsidiary, which
guarantee shall be subordinated to any guarantee of such
Subsidiary of Senior Indebtedness of the Company and shall be
subordinated to any other Indebtedness of such Subsidiary (which
is not subordinated to any other Indebtedness of such Subsidiary
or which is designated by such Subsidiary as being senior in
right of payment to such guarantee), in each case to the same
extent as the Securities are subordinated to the Senior
Indebtedness of the Company under this Indenture and (iii) sales,
conveyances, transfers or other dispositions of Existing Assets
made pursuant to the Spin-Off. Notwithstanding the foregoing,
any such guarantee of a Subsidiary of the Securities shall
provide by its terms that it shall be automatically and
unconditionally released and discharged (i) on the date that the
net book value of the Existing Assets held by the Company is
greater than 90% of Consolidated Assets or (ii) upon any sale,
exchange or transfer to any Person not an Affiliate of the
Company of all of the Company's stock in, or all or substantially
all the assets of, such Subsidiary, which sale, exchange or
transfer is made in compliance with the terms of this Indenture.
Section 1016. Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.
The Company will not, and will not permit any Subsidiary
to, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind,
on the ability of any Subsidiary to (a) pay dividends or make any
other distribution on its Capital Stock, (b) pay any Indebtedness
owed to the Company or any Subsidiary, (c) make loans or advances
to the Company or any Subsidiary, or (d) transfer any of its
property or assets to the Company or any Subsidiary, except (i)
any encumbrance or restriction pursuant to an agreement in effect
at or entered into on the date hereof; (ii) any encumbrance or
restriction, with respect to a Subsidiary that is not a
Subsidiary of the Company on the date hereof, in existence at the
time such Person becomes a Subsidiary of the Company or created
on the date it becomes a
- 86-
<PAGE>
Subsidiary; (iii) any encumbrance or restriction on the ability
of any Subsidiary whose assets consist substantially only of fee
or leasehold interests in real property and improvements thereon
to transfer any such interests which are acquired after the date
hereof or any unimproved real property acquired on or prior to
the date hereof to the Company or any Subsidiary, which
encumbrance or restriction is required by a lender to, or
purchaser of any indebtedness of, such Subsidiary in connection
with a financing or refinancing permitted hereunder; and (iv) any
encumbrance or restriction pursuant to any agreement that
extends, refinances, renews or replaces any agreement containing
any of the restrictions described in the foregoing clauses
(i)-(iii), provided that the terms and conditions of any such
restrictions are not materially less favorable to the Holders of
the Securities than those under or pursuant to the agreement
extended, refinanced, renewed or replaced.
Section 1017. Limitation on Unrestricted Subsidiaries.
The Company will not make, and will not permit any of
its Subsidiaries to make, any Investments in Unrestricted
Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments
then permitted to be made pursuant to Section 1008. Any
Investments in Unrestricted Subsidiaries permitted to be made
pursuant to this Section 1017 (i) will be treated as the payment
of a Restricted Payment in calculating the amount of Restricted
Payments made by the Company and (ii) may be made in cash or
property.
Section 1018. Statement as to Compliance; Notice of
Default; Provision of Financial Statements.
(a) The Company will deliver to the Trustee, within 120
days after the end of each fiscal year ending after the date
hereof, a brief certificate of its principal executive officer,
principal financial officer or principal accounting officer
stating whether, to such officer's knowledge, the Company is in
compliance with all covenants and conditions to be complied with
by it under this Indenture. For purposes of this Section 1018,
such compliance shall be determined without regard to any period
of grace or requirement of notice under this Indenture.
(b) If a Default has occurred and is continuing, or if
the Trustee, any Holder or the trustee for or the holder of any
other evidence of Indebtedness of the Company (other than
Indebtedness in the aggregate principal amount of less than
$50,000,000) gives any notice or takes any other action with
- 87-
<PAGE>
respect to a claimed Default, the Company shall deliver to the
Trustee an Officers' Certificate specifying such Default, notice
or other action within 5 Business Days of its occurrence.
(c) The Company shall supply without cost to each
Holder of the Securities, and file with the Trustee within l5
days after the Company is required to file the same with the
Commission, copies of the annual reports and quarterly reports
and of the information, documents and other reports which the
Company may be required to file with the Commission pursuant to
Section 13(a), 13(c) or 15(d) of the Exchange Act.
(d) If the Company is not required to file with the
Commission such reports and other information referred to in
Section 1018(c), the Company shall furnish without cost to each
Holder of the Securities and file with the Trustee (i) within 105
days after the end of each fiscal year, annual reports containing
the information required to be contained in Items 1, 2, 3, 5, 6,
7, 8, 9, 10, 11, 12 and 13 of Form 10-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in comparable items of any successor form, (ii)
within 60 days after the end of each of the first three fiscal
quarters of each fiscal year, quarterly reports containing the
information required to be contained in Form 10-Q promulgated
under the Exchange Act, or substantially the same information
required to be contained in any successor form and (iii) promptly
from the time after the occurrence of an event required to be
therein reported, such other reports containing information
required to be contained in Form 8-K promulgated under the
Exchange Act, or substantially the same information required to
be contained in any successor form. The Company shall also make
such reports available to prospective purchasers of the
Securities, securities analysts and broker-dealers upon their
request.
Section 1019. Waiver of Certain Covenants.
The Company may omit in any particular instance to
comply with any covenant or condition set forth in Sections 1007
through 1018 (other than Section 1012) if, before or after the
time for such compliance, the Holders of not less than a majority
in aggregate principal amount of the Securities at the time
Outstanding shall, by Act of such Holders, waive such compliance
in such instance with such covenant or condition, but no such
waiver shall extend to or affect such covenant or condition
except to the extent so expressly waived, and, until such waiver
shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such covenant or
condition shall remain in full force and effect.
- 88-
<PAGE>
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 1101. Right of Redemption.
The Securities may be redeemed, at the election of the
Company, at any time, as a whole or in part subject to the
conditions and at the Redemption Prices specified in the form of
Security, together with accrued interest to the Redemption Date.
Section 1102. Applicability of Article.
Redemption of Securities at the election of the Company
or otherwise, as permitted or required by any provision of this
Indenture, shall be made in accordance with such provision and
this Article.
Section 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities
pursuant to Section 1101 shall be evidenced by a Board
Resolution. In case of any redemption at the election of the
Company, the Company shall, at least 60 days prior to the
Redemption Date fixed by it (unless a shorter notice period shall
be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities to be
redeemed.
Section 1104. Selection by Trustee of Securities to Be
Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities or portions thereof to be redeemed shall be
selected not more than 60 days and not less than 30 days prior to
the Redemption Date by the Trustee, from the Outstanding
Securities not previously called for redemption, either pro rata,
by lot or, by any other method the Trustee shall deem fair and
reasonable, and the amounts to be redeemed may be equal to $1,000
or any integral multiple thereof.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for
redemption and, in the case of any Securities selected for
partial redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of
Securities shall relate, in the case of any Security redeemed
- 89-
<PAGE>
or to be redeemed only in part, to the portion of the principal
amount of such Security which has been or is to be redeemed.
Section 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail,
postage prepaid, mailed not less than 21 nor more than 60 days
prior to the Redemption Date, to each Holder of Securities to be
redeemed, at his address appearing in the Security Register.
All notices of redemption shall state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a Security
to be redeemed in part, the principal amount) of the
particular Securities to be redeemed;
(d) that on the Redemption Date the Redemption Price
will become due and payable upon each such Security or
portion thereof, and that (unless the Company shall default
in payment of the Redemption Price) interest thereon shall
cease to accrue on and after said date;
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price;
(f) that Securities called for redemption must be
surrendered to the Paying Agent to collect the Redemption
Price;
(g) the CUSIP number, if any, relating to such
Securities; and
(h) in the case of a Security to be redeemed in part,
the principal amount of such Security to be redeemed and that
after the Redemption Date upon surrender of such Security,
new Security or Securities in the aggregate principal amount
equal to the unredeemed portion thereof will be issued.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at its
request, by the Trustee in the name and at the expense of the
Company.
- 90-
<PAGE>
Section 1106. Deposit of Redemption Price.
On or prior to any Redemption Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 1003) an amount of money in same day
funds (or New York Clearing House funds if such deposit is made
prior to the applicable Redemption Date) sufficient to pay the
Redemption Price of, and (except if the Redemption Date shall be
an Interest Payment Date) accrued interest on, all the Securities
or portions thereof which are to be redeemed on that date.
Section 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified
and from and after such date (unless the Company shall default in
the payment of the Redemption Price and accrued interest) such
Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such
Security shall be paid by the Company at the Redemption Price
together with accrued interest to the Redemption Date; provided,
however, that installments of interest whose Stated Maturity is
on or prior to the Redemption Date shall be payable to the
Holders of such Securities, or one or more Predecessor
Securities, registered as such on the relevant Regular Record
Dates according to the terms and the provisions of Section 307.
If any Security called for redemption shall not be so
paid upon surrender thereof for redemption, the principal thereof
(and premium, if any, thereon) shall, until paid, bear interest
from the Redemption Date at the rate borne by such Security.
Section 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall
be surrendered at the office or agency of the Company maintained
for such purpose pursuant to Section 1002 (with, if the Company,
the Security Registrar or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company, the Security Registrar or the
Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing), and the Company shall execute, and the
Trustee shall authenticate and deliver to the Holder of such
Security without service charge, a new Security or Securities, of
any authorized denomination as requested by such Holder in
aggregate principal amount equal to and in exchange
- 91-
<PAGE>
for the unredeemed portion of the principal of the Security so
surrendered.
ARTICLE TWELVE
[Intentionally omitted]
ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
Section 1301. Securities Subordinate to Senior
Indebtedness.
The Company covenants and agrees, and each Holder of a
Security, by his acceptance thereof, likewise covenants and
agrees, that, to the extent and in the manner hereinafter set
forth in this Article, the indebtedness represented by the
Securities and the payment of the principal of and premium, if
any, and interest on each and all of the Securities are hereby
expressly made subordinate and subject in right of payment to the
prior payment in full, in cash or cash equivalents, of all Senior
Indebtedness (including any interest accruing after the
occurrence of an Event of Default under Section 501(f) or (g)).
This Article Thirteen shall constitute a continuing
offer to all persons who become holders of, or continue to hold,
Senior Indebtedness, and such provisions are made for the benefit
of the holders of Senior Indebtedness, and such holders are made
obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
Section 1302. Payment Over of Proceeds Upon
Dissolution, etc.
In the event of (a) any insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or
other similar case or proceeding in connection therewith,
relative to the Company or to its creditors, as such, or to its
assets, or (b) any liquidation, dissolution or other winding up
of the Company, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy, or (c) any assignment for
the benefit of creditors or any other marshalling of assets and
liabilities of the Company, then and in any such event:
- 92-
<PAGE>
(1) the holders of all Senior Indebtedness shall be
entitled to receive payment in full, in cash or cash
equivalents, of all amounts due or to become due on or
in respect of all Senior Indebtedness, or provision
shall be made for such payment in cash or cash
equivalents, before the Holders of the Securities are
entitled to receive any payment on account of principal
of (or premium, if any) or interest on the Securities;
and
(2) any payment or distribution of assets of the
Company of any kind or character, whether in cash,
property or securities, by set-off or otherwise, to
which the Holders or the Trustee would be entitled but
for the provisions of this Article Thirteen, including
any such payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of the Securities (except, so long as the effect
of this parenthetical clause is not to cause the
Securities to be treated in any case or proceeding or
similar event described in Subsection (a), (b) or (c) of
this Section 1302 as part of the same class of claims as
the Senior Indebtedness or any class of claims on a
parity with or senior to the Senior Indebtedness, for
any such payment or distribution (x) authorized by an
order or decree giving effect, and stating in such order
or decree that effect is given, to the subordination of
the Securities to the Senior Indebtedness, and made by a
court of competent jurisdiction in a reorganization
proceeding under any applicable bankruptcy law, or (y) of
securities that (A) are unsecured (except to the extent
the Securities are secured), (B) have an Average Life to
Stated Maturity and final maturity which are no shorter than
the Average Life to Stated Maturity of the Securities or
any securities issued to the holders of the Senior
Indebtedness under the Bank Credit Agreement pursuant to
a plan of reorganization or readjustment, (C) are
subordinated, to at least the same extent as the
Securities, to the payment of all Senior Indebtedness
then outstanding and (D) are not guaranteed by any
Subsidiary of the Company (except to the extent the
Securities are so guaranteed)), shall be paid by the
liquidating trustee or agent or other person making
- 93-
<PAGE>
such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior
Indebtedness or their Representative or Representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of the
principal of, and premium, if any, and interest on, and
other amounts due or in connection with, the Senior
Indebtedness held or represented by each, to the extent
necessary to make payment in full, in cash or cash
equivalents, of all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or
distribution to the holders of such Senior Indebtedness;
and
(3) in the event that, notwithstanding the foregoing
provisions of this Section, the Trustee or the Holder of
any Security shall have received any such payment or
distribution of assets of the Company of any kind or
character, whether in cash, property or securities,
including any such payment or distribution which may be
payable or deliverable by reason of the payment of any
other indebtedness of the Company being subordinated to
the payment of the Securities, before all Senior
Indebtedness is paid in full, in cash or cash
equivalents, then and in such event such payment or
distribution shall be paid over or delivered forthwith
to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person
making payment or distribution of assets of the Company
for application to the payment of all Senior
Indebtedness remaining unpaid, to the extent necessary
to pay all Senior Indebtedness in full, in cash or cash
equivalents, after giving effect to any concurrent payment
or distribution to or for the holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance, transfer or
lease of its properties and assets substantially as an entirety
to another corporation upon the terms and conditions set forth in
Article Eight shall not be deemed a dissolution, winding up,
liquidation, reorganization, assignment for the benefit of
creditors or marshalling of assets and liabilities of the Company
for the purposes of this Section if the corporation formed by
such consolidation or into which the Company is merged or the
corporation which acquires by
- 94-
<PAGE>
conveyance, transfer or lease such properties and assets
substantially as an entirety, as the case may be, shall, as a
part of such consolidation, merger, conveyance, transfer or
lease, comply with the conditions set forth in Article Eight.
Section 1303. No Payment When Specified Senior
Indebtedness in Default.
(a) (i) In the event of and during the continuation of
any default in the payment of principal of (or premium, if any)
or interest on any Specified Senior Indebtedness beyond any
applicable grace period with respect thereto, or (ii) in the
event that any other event of default with respect to any
Specified Senior Indebtedness shall have occurred and be
continuing and shall have resulted in such Specified Senior
Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise have become due and payable,
or (b) in the event that any event of default (other than a
default described in clause (a)) with respect to any Specified
Senior Indebtedness shall have occurred and be continuing
permitting the holders of such Specified Senior Indebtedness (or a
trustee on behalf of such holders) to declare such Specified
Senior Indebtedness due and payable prior to the date on which it
would otherwise have become due and payable, then no payment
shall be made by the Company on account of the principal of (or
premium, if any) or interest on the Securities or on account of
the purchase or redemption or other acquisition of Securities
(x) in case of any event of default described in subclause (i) of
clause (a), or an event of default described in subclause (ii) of
clause (a) resulting in an acceleration as specified in clause
(a), unless and until such payment event of default shall have
been cured or waived or shall have ceased to exist or such
acceleration shall have been rescinded or annulled or the holders
of such Specified Senior Indebtedness or their agents have waived
the benefits of this Section, or (y) in case of any event of
default specified in clause (b), from the earlier of the date the
Company or the Trustee receives written notice of such event of
default (which notice requests that no such payment be made) from
the agent with respect to any such event of default under the
Bank Credit Agreement or any other Representative of a holder of
Specified Senior Indebtedness with respect to any such event of
default under such Specified Senior Indebtedness until the
earlier of (1) 179 days after such date and (2) the date, if any,
on which the Specified Senior Indebtedness to which such event of
default relates is discharged or such event of default is waived
by the holders of such Specified Senior Indebtedness (including,
if any Indebtedness under the Bank Credit Agreement is
outstanding, lenders under the Bank Credit Agreement) or
otherwise cured (provided that further written notice relating
- 95-
<PAGE>
to the same or any other event of default specified in clause (b)
above with respect to any Specified Senior Indebtedness received
by the Company or the Trustee within 12 months after such receipt
shall not be effective for purposes of this clause (y)).
In the event that, notwithstanding the foregoing, the
Company shall make any payment to the Trustee or the Holder of
any Security prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over
and delivered forthwith to the Company.
The provisions of this Section shall not apply to any
payment with respect to which Section 1302 would be applicable.
Section 1304. Payment Permitted if No Default.
Nothing contained in this Article or elsewhere in this
Indenture or in any of the Securities shall prevent the Company,
at any time except during the pendency of any case, proceeding,
dissolution, liquidation or other winding up, assignment for the
benefit of creditors or other marshalling of assets and
liabilities of the Company referred to in Section 1302 or under
the conditions described in Section 1303, from making payments at
any time of principal of (and premium, if any) or interest on the
Securities.
Section 1305. Subrogation to Rights of Holders of
Senior Indebtedness.
Subject to the payment in full, in cash or cash
equivalents, of all Senior Indebtedness, the Holders of the
Securities shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express
terms is subordinated to Senior Indebtedness of the Company to
the same extent as the Securities are subordinated and which is
entitled to like rights of subrogation) to the rights of the
holders of such Senior Indebtedness to receive payments and
distributions of cash, property and securities applicable to the
Senior Indebtedness until the principal of (and premium, if any)
and interest on the Securities shall be paid in full. For
purposes of such subrogation, no payments or distributions to the
holders of Senior Indebtedness of any cash, property or
securities to which the Holders of the Securities or the Trustee
would be entitled except for the provisions of this Article, and
no payments over pursuant to the provisions of this Article to
the holders of Senior Indebtedness by Holders of the Securities
or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment or
- 96-
<PAGE>
distribution by the Company to or on account of the Senior
Indebtedness.
Section 1306. Provisions Solely to Define Relative
Rights.
The provisions of this Article are and are intended
solely for the purpose of defining the relative rights of the
Holders of the Securities on the one hand and the holders of
Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this Indenture or in the Securities is
intended to or shall (a) impair, as among the Company, its
creditors other than holders of Senior Indebtedness and the
Holders of the Securities, the obligation of the Company, which
is absolute and unconditional, to pay to the Holders of the
Securities the principal of (and premium, if any) and interest on
the Securities as and when the same shall become due and payable
in accordance with their terms; or (b) affect the relative rights
against the Company of the Holders of the Securities and
creditors of the Company other than the holders of Senior
Indebtedness; or (c) prevent the Trustee or the Holder of any
Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
express limitations set forth in Article Five and to the rights,
if any, under this Article of the holders of Senior Indebtedness
(1) in any case, proceeding, dissolution, liquidation or other
winding up, assignment for the benefit of creditors or other
marshalling of assets and liabilities of the Company referred to
in Section 1302, to receive, pursuant to and in accordance with
such Section, cash, property and securities otherwise payable or
deliverable to the Trustee or such Holder, or (2) under the
conditions specified in Section 1303, to prevent any payment
prohibited by such Section.
Section 1307. Trustee to Effectuate Subordination.
Each Holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate the
subordination provided in this Article and appoints the Trustee
his attorney-in-fact for any and all such purposes.
Section 1308. No Waiver of Subordination Provisions.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or
failure to act, in good faith, by any such holder, or by any
- 97-
<PAGE>
non-compliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof
any such holder may have or be otherwise charged with.
Without in any way limiting the generality of the
foregoing paragraph, the holders of Senior Indebtedness may, at
any time and from time to time, without the consent of or notice
to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and
without impairing or releasing the subordination provided in this
Article or the obligations hereunder of the Holders of the
Securities to the holders of Senior Indebtedness, do any one or
more of the following: (a) change the manner, place or terms of
payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding;
(b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(c) release any Person liable in any manner for the collection of
Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against the Company and any other Person.
Section 1309. Notice to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to the Company which would prohibit the
making of any payment to or by the Trustee in respect of the
Securities. Notwithstanding the provisions of this Article or
any other provision of this Indenture, the Trustee shall not be
charged with knowledge of the existence of any facts which would
prohibit the making of any payment to or by the Trustee in
respect of the Securities, unless and until the Trustee shall
have received written notice thereof from the Company or a holder
of Senior Indebtedness or from any trustee, fiduciary or agent
therefor; and, prior to the receipt of any such written notice,
the Trustee shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall
not have received the notice provided for in this Section at
least three Business Days prior to the date upon which by the
terms hereof any money may become payable for any purpose
(including, without limitation, the payment of the principal of
(and premium, if any) or interest on any Security), then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to
such date.
- 98-
<PAGE>
Subject to the provisions of Section 601, the Trustee
shall be entitled to rely on the delivery to it of a written
notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior
Indebtedness (or a trustee, fiduciary or agent therefor). In the
event that the Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or
distribution pursuant to this Article, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to
participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article, and if
such evidence is not furnished, the Trustee may defer any payment
to such Person pending judicial determination as to the right of
such Person to receive such payment.
Section 1310. Reliance on Judicial Order or Certificate
of Liquidating Agent.
Upon any payment or distribution of assets of the
Company referred to in this Article, the Trustee, subject to the
provisions of Section 602, and the Holders of the Securities
shall be entitled to rely upon any order or decree entered by any
court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization,
dissolution, winding up or similar case or proceeding is pending,
or a certificate of the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of
Securities, for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article.
Section 1311. Rights of Trustee as a Holder of Senior
Indebtedness; Preservation of Trustee's Rights.
The Trustee in its individual capacity shall be entitled
to all the rights set forth in this Article with respect to any
Senior Indebtedness which may at any time be held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in this Indenture shall deprive the Trustee of any of its
rights as such holder.
- 99-
<PAGE>
Nothing in this Article shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 606.
Section 1312. Article Applicable to Paying Agents.
In case at any time a Paying Agent other than the Trustee
shall have been appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article shall in
such case (unless the context otherwise requires) be construed as
extending to and including such Paying Agent within its meaning
as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the
Trustee; provided, however, that Section 1311 shall not apply to
the Company or any Affiliate of the Company if it or such
Affiliate acts as Paying Agent.
Section 1313. Rescission.
The provisions of this Article Thirteen shall continue
to be effective or be reinstated, as the case may be, if at any
time any payment in respect of any Senior Indebtedness is
rescinded or must otherwise be returned by the holder thereof
upon the insolvency, bankruptcy or reorganization of the Company
or otherwise, all as though such payment had not been made.
Section 1314. Application by Trustee of Assets
Deposited With It.
Any cash or U.S. Government Obligations deposited in
trust with the Trustee pursuant to and in accordance with
Section 1401 shall be for the sole benefit of the Holders and
shall not be subject to the subordination provisions of this
Article Thirteen.
ARTICLE FOURTEEN
DEFEASANCE AND COVENANT DEFEASANCE
Section 1401. Option to Effect Defeasance or Covenant
Defeasance.
The Company may, at its option by Board Resolution, at
any time, with respect to the Securities, elect to have either
Section 1402 or Section 1403 be applied to all Outstanding
Securities upon compliance with the conditions set forth below in
this Article Fourteen.
- 100-
<PAGE>
Section 1402. Defeasance and Discharge.
Upon the Company's exercise under Section l401 of the
option applicable to this Section 1402, the Company shall be
deemed to have been discharged from its obligations with respect
to all Outstanding Securities on the date the conditions set
forth below are satisfied (hereinafter, "defeasance"). For this
purpose, such defeasance means that the Company shall be deemed
to have paid and discharged the entire indebtedness represented
by the Outstanding Securities, which shall thereafter be deemed
to be "Outstanding" only for the purposes of Section 1405 and the
other Sections of this Indenture referred to in (A) and (B)
below, and to have satisfied all its other obligations under such
Securities and this Indenture, including its obligations under
the covenants contained in Article Thirteen (and the Trustee, on
demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following
which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of Outstanding Securities
to receive solely from the trust fund described in Section 1404
and as more fully set forth in such Section, payments in respect
of the principal of (and premium, if any) and interest on such
Securities when such payments are due, (B) the Company's
obligations with respect to such Securities under Sections 304,
305, 306, 1002 and 1003, (C) the rights, powers, trusts, duties
and immunities of the Trustee hereunder and the Company's
obligations in connection therewith and (D) this Article
Fourteen. Subject to compliance with this Article Fourteen, the
Company may exercise its option under this Section 1402
notwithstanding the prior exercise of its option under Section
1403 with respect to the Securities.
Section 1403. Covenant Defeasance.
Upon the Company's exercise under Section 1401 of the
option applicable to this Section 1403, the Company shall be
released from its obligations under the covenants contained in
Articles Eight and Thirteen and in Sections 1007 through 1018
with respect to the Outstanding Securities on and after the date
the conditions set forth below are satisfied (hereinafter,
"covenant defeasance"), and the Securities shall thereafter be
deemed to be not "Outstanding" for the purposes of any direction,
waiver, consent or declaration or Act of Holders (and the
consequences of any thereof) in connection with such covenants,
but shall continue to be deemed "Outstanding" for all other
purposes hereunder (it being understood that such Securities
shall not be deemed Outstanding for financial accounting
purposes). For this purpose, such covenant defeasance means
that, with respect to the Outstanding
- 101-
<PAGE>
Securities, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or
by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to
comply shall not constitute a default or an Event of Default
under Section 501(c) or Section 501(h), but, except as specified
above, the remainder of this Indenture and such Securities shall
be unaffected thereby. In addition, upon the Company's exercise
under Section 1401 of the option applicable to Section 1403,
Sections 501(c) through 501(h) (other than Sections 501(f) and
(g)) shall not constitute Events of Default.
Section 1404. Conditions to Defeasance or Covenant
Defeasance.
The following shall be the conditions to application of
either Section 1402 or Section 1403 to the Outstanding
Securities:
(1) The Company shall irrevocably have deposited
or caused to be deposited with the Trustee (or another
trustee satisfying the requirements of Section 608 who
shall agree to comply with the provisions of this
Article Fourteen applicable to it) as trust funds in
trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of such
Securities, (A) cash in U.S. Dollars in an amount, or
(B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect
thereof in accordance with their terms will provide, not
later than one day before the due date of any payment,
cash in U.S. Dollars in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants
expressed in a written certification thereof delivered
to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to
pay and discharge, (i) the principal of (and premium,
if any) and interest on the Outstanding Securities on
the Stated Maturity of such principal or installment
of principal (and premium, if any) or interest and (ii)
any mandatory sinking fund payments or analogous payments
applicable to the Outstanding Securities on the day on
which such payments are due and payable in accordance with
the terms of this Indenture and of such Securities; provided
that the Trustee shall have
- 102-
<PAGE>
been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to said
payments with respect to the Securities. For this
purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of
America for the timely payment of which its full faith
and credit is pledged or (y) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as
a full faith and credit obligation by the United States
of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank
(as defined in Section 3(a)(2) of the Securities Act of
1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government
Obligation held by such custodian for the account of the
holder of such depository receipt; provided that (except
as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder
of such depository receipt from any amount received by
the custodian in respect of the U.S. Government
Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by
such depository receipt;
(2) In the case of an election under Section 1402,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States stating that
(x) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(y) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to
the effect that, and based thereon such opinion shall
confirm that, the Holders of the Outstanding Securities
will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and
will be subject to federal income tax on the same amounts,
in the same manner and at the same times as would have
been the case if such defeasance had not occurred;
(3) In the case of an election under Section 1403,
the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States to the effect
that the Holders of the Outstanding Securities
- 103-
<PAGE>
will not recognize income, gain or loss for federal
income tax purposes as a result of such covenant
defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same
times as would have been the case if such covenant
defeasance had not occurred;
(4) No Default or Event of Default with respect to
the Securities shall have occurred and be continuing on
the date of such deposit or, insofar as Subsection
501(f) or 501(g) is concerned, at any time during the
period ending on the 91st day after the date of such
deposit (it being understood that this condition shall
not be deemed satisfied until the expiration of such
period);
(5) Such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a
default under, this Indenture or any other material
agreement or instrument to which the Company is a party
or by which it is bound;
(6) In the case of an election under either
Section 1402 or 1403, the Company shall have delivered
to the Trustee an Officers' Certificate stating that the
deposit made by the Company pursuant to its election
under Section 1402 or 1403 was not made by the Company
with the intent of preferring the Holders over other
creditors of the Company or with the intent of
defeating, hindering, delaying or defrauding creditors
of the Company or others; and
(7) The Company shall have delivered to the
Trustee an Officers' Certificate and an Opinion of
Counsel in the United States, each stating that all
conditions precedent provided for relating to either the
defeasance under Section 1402 or the covenant defeasance
under Section 1403 (as the case may be) have been
complied with as contemplated by this Section 1404.
On and after the date the conditions set forth above are
satisfied, the United States dollars or U.S. Government
Obligations so deposited shall not be subject to the rights of
the holders of Senior Indebtedness pursuant to the provisions of
Article Thirteen.
- 104-
<PAGE>
Section 1405. Deposited Money and U.S. Government
Obligations to Be Held in Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section 1003, all money and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this
Section 1405, the "Trustee") pursuant to Section 1404 in respect
of the Outstanding Securities shall be held in trust and applied
by the Trustee, in accordance with the provisions of such
Securities and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as its own
Paying Agent) as the Trustee may determine, to the Holders of
such Securities of all sums due and to become due thereon in
respect of principal (and premium, if any) and interest, but such
money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to Article Thirteen.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against the
cash or U.S. Government Obligations deposited pursuant to Section
1404 or the principal and interest received in respect thereof
other than any such tax, fee or other charge which by law is for
the account of the Holders of the Outstanding Securities.
Anything in this Article Fourteen to the contrary
notwithstanding, the Trustee shall deliver or pay to the Company
from time to time upon Company Request any money or U.S.
Government Obligations held by it as provided in Section 1404
which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 1404(l)), are in excess of the
amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
Section 1406. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
United States dollars or U.S. Government Obligations in
accordance with Section 1402 or 1403, as the case may be, by
reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture
and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 1402 or 1403, as the
case may be, until such time as the Trustee or
- 105-
<PAGE>
Paying Agent is permitted to apply all such money in accordance
with Section 1402 or 1403, as the case may be; provided, however,
that, if the Company makes any payment of principal of (or
premium, if any) or interest on any Security following the
reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the money held by the Trustee or Paying Agent.
* * * * *
This Indenture may be signed in any number of
counterparts with the same effect as if the signatures to each
counterpart were upon a single instrument, and all such
counterparts together shall be deemed an original of this
Indenture.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, all as of the day and
year first above written.
PATHMARK STORES, INC.
By: /s/ Anthony Cuti
Title:
Attest: Marc Strassler
Title:
WILMINGTON TRUST COMPANY
By: /s/ Donald G. MacKelean
Title:
Attest:
Title:
- 106-
<PAGE>
STATE OF New York )
) ss.:
COUNTY OF New York )
On the 26th day of October, 1993, before me
personally came Anthony Cuti, to me known, who, being by me
duly sworn, did depose and say that s/he resides at Saddle River,
New Jersey; that s/he is President of PATHMARK STORES, INC.,
one of the corporations described in and which executed the
above instrument; that s/he knows the corporate seal of
such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that s/he
signed her/his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
---------------
Notary Public
- 107-
<PAGE>
STATE OF New York )
) ss.:
COUNTY OF New York )
On the 26th day of October 26, 1993, before me
personally came Donald Mackelean, to me known, who, being duly
sworn, did depose and say that s/he resides at Wilmington
Delaware; that s/he is Financial Services Officer of WILMINGTON
TRUST COMPANY, one of the corporations described in and which
executed the above instrument; that s/he knows the corporate seal
of such corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed pursuant to authority
of the Board of Directors of such corporation; and that s/he
signed her/his name thereto pursuant to like authority.
(NOTARIAL SEAL)
/s/ Linda Corrigan
---------------
Notary Public
- 108-
<PAGE>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<TABLE>
<S> <C>
(000's OMITTED)
INDUSTRIAL REVENUE BONDS
(See details on page 2) $ 6,375
OTHER DEBT (PRIMARILY MORTGAGES)
(See details on page 2) 41,804
-------
$48,179
=======
Holdings Intercompany Note related to the Holdings Subordinated Notes in an aggregate principal amount
equal to or less than $3,361,000.
Holdings Intercompany Note related to the 13-1/8 Junior Subordinated Discount Debentures due 2003 of
Holdings in an aggregate principal amount equal to or less than $1,800,000.
</TABLE>
S-I-1
<PAGE>
<TABLE><CAPTION>
Schedule I (cont'd)
PATHMARK STORES, INC.
CERTAIN EXISTING INDEBTEDNESS
-----------------------------
<S> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS RATE DATE (IN THOUSANDS)
------------------------ -------- -------- --------------
Massachusetts Mutual Life 9.0% 1999 $ 243
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life 7.0 1994 1,207
Insurnace Company
200 Berkley Street
Boston, MA 02117
Re: Bridge Stuart Properties
Massachusetts Mutual Life 7.0-9.0 1993-99 480
Insurance Company
1295 State Street
Springfield, MA 01101
Re: Pennsylvania Stuart Properties
Connecticut General Life 10.2-10.4 1997-99 855
Insurance Company
Hartford, CT 06115
Re: Jersey Stuart Properties
Prudential Insurance Company 10.5 1998 37,278
of America
10 Rockefeller Center, 15th Fl.
New York, NY
Re: SGC Mortgaged Properties
Delaware Economic Development 10.875 2003 3,000
Authority
c/o Philadelphia National Bank
P.O. Box 7010
Philadelphia, PA
Re: Lancaster Pike IRB
Industrial Revenue Bonds 10.6 2003 3,375
c/o Philadelphia National Bank
P.O. Box 7918
Philadelphia, PA
Re: Schillington IRB
Jacqueline Nallitt 11.0 1999 276
1688 Victory Blvd.
Staten Island, NY
Re: Forrest Ave. Mall Store
Mt. Vernon Urban Renewal Agency 8.0 1995 670
9 South First Ave., 9th Fl.
Mt. Vernon, NY 10550
Re: Mt. Vernon Development
AFCO 5.5 1994 795
900 Lanidex Plaza
Parsippany, NJ 07054
Re: Insurance Policy Premium ______
LONG TERM DEBT $48,179
=======
</TABLE>
S-I-2
<PAGE>
<TABLE><CAPTION>
Schedule I
PATHMARK STORES, INC.
CERTAIN EXISTING LIENS
----------------------
The Indebtedness listed hereon is secured only by mortgages on the properties listed opposite such
Indebtedness.
<S> <C> <C> <C> <C>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
Massachusetts Mutual Life Pathmark of Hamilton 9.0% 1999 $ 243
Insurance Company 2735 S. Broad Street
1295 State Street Hamilton Township, NJ 08610
Springfield, MA 01101
Re: Madison Stuart Properties
John Hancock Mutual Life Pathmark of Inwood 7.0% 1994 362
Insurance Company 410 W. 207th Street
200 Berkley Street New York, NY 10034
Boston, MA 02117
Re: Bridge Stuart Properties Pathmark & Rickel of 511
Edgewater Park
2110 Rt. 130 & Wood Lane Rd.
Beverly, NJ 08010
Pathmark of Ivy Hill .344
1331 Ivy Hill Road
Springfield Township
Philadelphia, PA 19150
Massachusetts Mutual Life Former Pathmark of Whitaker 7.0-9.0 1993-99 394
Insurance Company 5520 Whitaker Avenue
1295 State Street Philadelphia, PA 19124
Springfield, MA 01101
Re: Pennsylvania Stuart Franklin Township Gas
Properties 673 Somerset Street
Somerset, NJ 08873
Paramus Gas 34
639 Route 17 South
Paramus, NJ 07652
Fairless Hills Gas 28
Route 1 and Atlantic Ave.
Fairless Hills, PA 19030
Connecticut General Life Pathmark of Belmont 10.2-10.4 1997-99 855
Insurance Company 115 Belmont Avenue
Hartford, CT 06115 Belleville, NJ 07109
Re: Jersey Stuart
Properties
Prudential Insurance Company Pathmark of Upper Darby 10.5 1998 1,710
of America 421 S. 69th Street
10 Rockefeller Center, Upper Darby, PA 19082
15th Fl.
New York, NY
Re: SGC Mortgaged Properties Pathmark & Rickel of 4,355
Glenolden
140 N. McDade Blvd.
Glenolden, PA 19036
Pathmark & Rickel of 3,078
Shillington
243A W. Lancaster Avenue
Shillington, PA 19607
</TABLE>
S-I-3
<PAGE>
<TABLE><CAPTION>
INTEREST MATURITY BALANCE
INDEBTEDNESS PROPERTY RATE DATE (IN THOUSANDS)
-------------------------- ------------------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Prudential Insurance Company Pathmark of Willow Grove 4,450
of America (continued) 2545 Moreland Road
Willow Grove, PA 19090
Pathmark of Lancaster Pike 2,018
3901 Lancaster Pike
Wilmington, DE 19805
Pathmark & Rickel of East 9,633
Brunswick
50 Race Track Road
East Brunswick, NJ 08615
Rickel of Forrest Avenue 3,135
1520 Forrest Avenue
Staten Island, NY 10302
Rickel of Johnson City 2,337
540 Harry L. Drive
Johnson City, NY 13790
Pathmark Drug of Danbury 10.5 1996 2,200
100 Danbury - Newtown Road
Danbury, CT 06810
Purity Supreme Store 3,762
3375 Berlin Turnpike
Newington, CT 06111
Jacqueline Nallitt Pathmark of Forrest 11.0 1999 276
1688 Victory Blvd. Avenue
Staten Island, NY 1351 Forrest Avenue
Re: Forrest Ave. Mall Store Staten Island, NY 10302
Mt. Vernon Urban Renewal Agency Pathmark Development 8.0 1995 670
9 South First Ave., 9th Fl. One Pathmark Plaza
Mt. Vernon, NY 10550 Mt. Vernon, NY 10550
Re: Mt. Vernon Development
_______
$41,009
=======
</TABLE>
S-I-4
<PAGE>
APPENDIX A
[Form of Intercompany Agreement]
[Indebtedness of the Company or any Majority-owned
Subsidiary to any one or the other of them will qualify
as Permitted Indebtedness if, and only if, such
Indebtedness is made pursuant to and is evidenced
by an agreement in the form of a promissory
note in substantially the form as follows:]
$ , 19
Evidences of all loans or advances ("Loans") hereunder
shall be reflected on the grid attached hereto. FOR VALUE
RECEIVED, , a corporation (the
"Maker"), HEREBY PROMISES TO PAY ON DEMAND to the order of
(the "Holder") the principal sum of the aggregate
unpaid principal amount of all Loans (plus accrued interest
thereon) at any time and from time to time made hereunder.
All capitalized terms used herein that are defined in,
or by reference in, the Indenture between Pathmark Stores, Inc.
and Wilmington Trust Company, trustee, dated as of , 1993
with respect to the 12 5/8% Subordinated Debentures due 2002 (the
"Indenture"), have the meanings assigned to such terms therein,
or by reference therein, unless otherwise defined.
ARTICLE I
TERMS OF INTERCOMPANY NOTE
Section 1.01. Not Forgivable. Unless the Maker of the
Loan hereunder is the Company, the Holder may not forgive any
amounts owing under this Intercompany Note.
A-1
<PAGE>
Section 1.02. Interest; Prepayment. (a) The interest
rate ("Interest Rate") on any Loan shall be a rate per annum
reflected on the grid attached hereto.
(b) The interest, if any, payable on each of the Loans
shall accrue from the date such Loan is made and shall be payable
upon demand of the Holder.
(c) If the principal or accrued interest, if any, on
the Loans is not paid on the date demand is made, interest on the
unpaid principal and interest will accrue at a rate equal to the
Interest Rate, if any, plus 1% per annum from maturity until the
principal and interest on such Loans are fully paid.
(d) Any amounts owed hereunder may be prepaid at any
time by the Maker.
Section 1.03. Subordination. All Loans made to the
Company shall be subordinated in right of payment to the payment
and performance of the obligations of the Company and any
Subsidiary under the Indenture, the Securities, and any other
Indebtedness ranking senior to or pari passu with the Securities,
including, without limitation, any Senior Indebtedness; provided
that, with respect to a Subsidiary in any specific instance, such
Subsidiary is also an obligor under the Indenture, the Securities
or such other senior or pari passu Indebtedness, as the case may
be, whether as a borrower, guarantor or pledgor of collateral.
ARTICLE II
EVENTS OF DEFAULT
Section 2.01. Events of Default. If, after the date of
issuance of this Loan an Event of Default has occurred under the
Indenture, then (x) in the event the Maker is not the Company and
not a Subsidiary that is also an obligor under the Indenture or
the Securities (in the case where the Holder is not the Company),
all amounts owing under the Loans hereunder shall be immediately
due and payable (whether or not demand has been made) to the
Holder, (y) in the event the Maker is the Company, the amounts
owing under the Loans hereunder shall not be payable and (z) in
the event the Maker is a Subsidiary that is also an obligor under
the Indenture or the Securities and the Holder is not the Company
or another Subsidiary that is also an obligor under the Indenture
or the Securities, the amounts owing under the Loans hereunder
shall not be due and payable; provided, however, that, if such
Event of Default or acceleration has been waived, cured or
rescinded, such amounts shall no longer be due and payable in
the case of clause (x), and such amounts may be paid in the
case of clauses (y) and (z). If the Holder is a Subsidiary,
then the Holder hereby agrees that if it receives any payments
or distributions on any Loan from the Company, or from a
Subsidiary that is also an obligor under the Indenture or the
Securities, which payments or distributions, pursuant to clause
(y) or (z) of the prior sentence, are not payable after any
Event of Default has occurred, is continuing and has not been
waived, cured or rescinded, such Holder will pay over and
deliver forthwith to the Company or such Subsidiary, as, the case
may be, all such payments and distributions.
A-2
<PAGE>
ARTICLE III
MISCELLANEOUS
Section 3.01. Amendments, Etc. No amendment or waiver
of any provision of this Agreement, or consent to depart
therefrom is permitted at any time for any reason, except with
the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities.
Section 3.02. Assignment. No party to this Agreement
may assign, in whole or in part, any of its rights and
obligations under this Agreement, except to its legal
successor-in-interest.
Section 3.03. Third Party Beneficiaries. The Holders
of the Securities or any other Indebtedness ranking pari passu
with, or senior to, the Securities including, without limitation,
any Senior Indebtedness, shall be third party beneficiaries to
this Agreement and shall have the right to enforce this Agreement
against the Company and the Subsidiaries.
Section 3.04. Headings. Article and Section headings
in this Agreement are included for convenience of reference only
and shall not constitute a part of this Agreement for any other
purpose.
Section 3.05. Entire Agreement. This Agreement sets
forth the entire agreement of the parties with respect to its
subject matter and supersedes all previous understandings,
written or oral, in respect thereof.
Section 3.06. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
A-3
<PAGE>
Section 3.07. Waivers. The Maker hereby waives
presentment, demand for payment, notice of protest and all other
demands and notices in connection with the delivery, acceptance,
performance or enforcement hereof.
By:
A-4
<PAGE>
GRID
Amount Interest Rate
Date of of on the Notation
Advance Advance Advance Made By
<PAGE>
Appendix B-1
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 1, 1992 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as supplemented by the First Supplemental Indenture
dated as of October 5, 1993 between the Lender and the
Trustee and the 11-5/8% Subordinated Notes due 2002 issued
thereunder (such Indenture and Notes, as supplemented, amended,
modified or waived from time to time in accordance with the terms
thereof being the "Lender Indenture" and "Lender Subordinated
Notes", respectively), together with interest on such principal
sum from the date hereof at the times and in the amounts provided
in the Lender Indenture and the Lender Subordinated Notes for the
payment of interest thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of October 26,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 11-5/8% Subordinated Notes due 2002
(the "Borrower Indenture"), (ii) the Borrower's 11-5/8%
Subordinated Notes due 2002 (the "Borrower Subordinated Notes")),
(iii) the Subordinated Debentures and the Deferred Coupon Notes
(as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
PATHMARK STORES, INC.
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-1-2
<PAGE>
Appendix B-2
[Form of Holdings Intercompany Note]
PROMISSORY NOTE
U.S. $ Dated as of: , 1993
FOR VALUE RECEIVED, the undersigned, Supermarkets
General Corporation (the "Borrower"), HEREBY PROMISES TO PAY to
the order of Supermarkets General Holdings Corporation (the
"Lender") the principal sum of United States
Dollars (U.S. $ ) at the times and in the amounts
provided for the payment of principal thereof or thereunder (and
any premiums) in the Indenture dated as of May 25, 1987 by and
between the Lender and Wilmington Trust Company, Trustee (the
"Trustee"), as amended and restated as of May 15, 1992 and as
supplemented as of June 15, 1992 and the 12-5/8% Subordinated
Debentures due 2002 issued thereunder (such Indenture and Notes,
as supplemented, amended, modified or waived from time to time in
accordance with the terms thereof being the "Lender Indenture"
and "Lender Subordinated Debentures", respectively), together
with interest on such principal sum from the date hereof at the
times and in the amounts provided in the Lender Indenture and the
Lender Subordinated Debentures for the payment of interest
thereunder.
Indebtedness evidenced by this Note is subordinated in
right of payment to the prior payment in full of (i) all Senior
Indebtedness (as defined in the Indenture dated as of October 5,
1993 by and between the Borrower and Wilmington Trust Company,
Trustee with respect to the 12-5/8% Subordinated Debentures due
2002 (the "Borrower Indenture"), (ii) the Borrower's 12-5/8%
Subordinated Debentures due 2002 (the "Borrower Subordinated
Notes")), (iii) the Subordinated Notes and the Deferred Coupon
Notes (as defined in the Borrower Indenture) and (iv) all other
Indebtedness (as defined in the Borrower Indenture) of the
Borrower, whether outstanding on the date of the Borrower
Indenture or thereafter created, incurred, assumed or guaranteed
to the same extent as the Borrower Subordinated Notes are
subordinated to Senior Indebtedness (as defined in the Borrower
Indenture) of the Borrower under the Borrower Indenture. For
purposes of this provision, Article Thirteen and other relevant
provisions of the Borrower Indenture are hereby incorporated by
reference in this Note with appropriate modifications to the
extent required by the terms hereof to effectuate such
subordination.
<PAGE>
The Borrower shall make each payment under this Note not
later than 12:00 noon (Eastern Standard time) on the day when due
in lawful money of the United States of America (in freely
transferable United States dollars) to the Lender at its address
c/o Merrill Lynch Capital Partners, Inc., 767 Fifth Avenue, 48th
Floor, New York, New York 10153, Attention: Stephen M. McLean, or
at such other address of which the Lender may give the Borrower
written notice from time to time, in same day funds.
Computations of interest shall be made by the Lender in
accordance with the terms and conditions contained in the Lender
Indenture and the Lender Subordinated Notes.
This Note shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Borrower has caused this Note to
be executed by its duly authorized representative as of the day
and year first above written.
PATHMARK STORES, INC.
By
Name:
Title:
Address: 301 Blair Road
Woodbridge, NJ 07095
8283e B-2-2
LOGISTICAL SERVICES AGREEMENT
BETWEEN
PATHMARK STORES, INC.
AND
PLAINBRIDGE, INC.
DATED AS OF OCTOBER 26, 1993
<PAGE>
LOGISTICAL SERVICES AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01 Certain Defined Terms ............... 2
ARTICLE II
PURCHASE OBLIGATIONS AND
ACQUISITION OF MERCHANDISE
Section 2.01 Agreement to Purchase ............... 8
Section 2.02 Directed Purchases from Vendors ..... 8
Section 2.03 Warranty and Passing of Title ....... 9
Section 2.04 Merchandise Pricing and Payment ..... 9
Section 2.05 Service Level Requirement ........... 11
Section 2.06 Plainbridge Sales to Third Parties .. 11
ARTICLE III
WAREHOUSING
Section 3.01 Warehousing ......................... 12
Section 3.02 Permits; Compliance ................. 12
Section 3.03 Storage and Handling Capacity ....... 13
ARTICLE IV
INVENTORY
Section 4.01 Inventory ........................... 14
Section 4.02 Excess Inventory .................... 14
Section 4.03 Quality Control ..................... 14
ARTICLE V
DELIVERY
Section 5.01 Delivery ............................ 18
Section 5.02 Vendor Direct-to-Store
Deliveries ........................ 19
i
<PAGE>
Page
ARTICLE VI
UPCHARGES
Section 6.01 Upcharges ........................... 20
Section 6.02 Minimum Annual Upcharge Payment ..... 20
ARTICLE VII
SHORTAGES AND VENDOR RETURNS
Section 7.01 Shortages ........................... 22
Section 7.02 Reclamation ......................... 23
ARTICLE VIII
FORCE MAJEURE; PLAINBRIDGE INSURANCE
Section 8.01 Occurrence of Event of Force
Majeure ........................... 23
Section 8.02 Plainbridge Insurance ............... 24
ARTICLE IX
BUSINESS CONTEXT OF THE AGREEMENT
Section 9.01 Agreement Based on
Past Practices .................... 24
Section 9.02 Commitment to Efficient
Operations ........................ 25
ARTICLE X
TERM AND TERMINATION
Section 10.01 Term ................................ 25
Section 10.02 Optional Termination by Pathmark .... 25
Section 10.03 Termination for Breach .............. 26
Section 10.04 Offer to Purchase Assets upon
Termination by Pathmark ........... 26
Section 10.05 Plainbridge Put upon Termination
by Plainbridge .................... 27
Section 10.06 Waiver .............................. 27
ii
<PAGE>
Page
ARTICLE XI
PURCHASE OPTIONS
Section 11.01 Sale of Pathmark
Distribution Assets ............... 28
Section 11.02 Change of Control ................... 28
ARTICLE XII
DISPUTE RESOLUTION
Section 12.01 Grievances and Disputed
Amounts ........................... 28
Section 12.02 Interparty Dispute Resolution ....... 29
Section 12.03 Arbitration ......................... 29
Section 12.04 Selection of Arbitrator ............. 29
Section 12.05 Cost of Arbitration ................. 29
ARTICLE XIII
GENERAL PROVISIONS
Section 13.01 Books and Records ................... 30
Section 13.02 Entire Agreement .................... 30
Section 13.03 Expenses ............................ 30
Section 13.04 Amendments .......................... 30
Section 13.05 Notices ............................. 30
Section 13.06 Binding Effect; Assignment .......... 31
Section 13.07 Counterparts ........................ 31
Section 13.08 Confidentiality ..................... 31
Section 13.09 Relationship of Parties ............. 32
Section 13.10 No Third-Party Beneficiaries ........ 32
Section 13.11 Severability ........................ 33
Section 13.12 Headings ............................ 33
Section 13.13 Governing Law ....................... 33
iii
<PAGE>
LOGISTICAL SERVICES AGREEMENT, dated as of October
26, 1993 (this "Agreement"), between PATHMARK STORES, INC., a
Delaware corporation ("Pathmark"), and PLAINBRIDGE, INC., a
Delaware corporation ("Plainbridge").
W I T N E S S E T H :
WHEREAS, Pathmark, Plainbridge and Supermarkets
General Holdings Corporation, a Delaware corporation, have
entered into a Distribution and Transfer Agreement, dated as of
October 26, 1993 (the "Distribution and Transfer
Agreement"), pursuant to which Pathmark will, among other
things, contribute its warehouse and distribution operations
(the "Blair Businesses") to the capital of Plainbridge in
exchange for the assumption by Plainbridge of substantially all
the liabilities (other than liabilities relating to transferred
inventory) and obligations relating to the Blair Businesses
(the "Plainbridge Asset and Liability Transfer");
WHEREAS, pursuant to the Distribution and Transfer
Agreement, Pathmark will distribute to its sole stockholder all
the outstanding shares of the common stock, par value $.01 per
share, of Plainbridge;
WHEREAS, certain warehousing, distribution and
logistical services have heretofore been supplied to Pathmark
by the Blair Businesses;
WHEREAS, it is a condition to the Plainbridge Asset
and Liability Transfer that Pathmark and Plainbridge enter into
this Agreement, pursuant to which Plainbridge will continue to
supply the aforementioned services to Pathmark in substantially
the same manner as prior to the Reorganization; and
WHEREAS, Pathmark and Plainbridge intend that the
services provided to Pathmark during fiscal year 1992 (the
"Past Practices") will provide a baseline against which the
performance of this Agreement may be compared, and, further,
Pathmark and Plainbridge have jointly prepared a manual (the
"Pathmark/Blair Logistics Manual") in which certain Past
Practices are documented, and which is referred to from time to
time in this Agreement.
NOW, THEREFORE, in consideration of the premises and
the mutual agreements and covenants hereinafter set forth,
Pathmark and Plainbridge hereby agree as follows:
<PAGE>
2
ARTICLE I
CERTAIN DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following
meanings:
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or
is under common control with such Person; provided,
however, that Pathmark and its Subsidiaries, on the one
hand, and Plainbridge and its Subsidiaries, on the other
hand, shall not be deemed to be Affiliates of each other
for purposes of this Agreement.
"Agreement" has the meaning specified in the preamble
to this Agreement.
"Applicable Share Value" as a given date means (i) the
Fair Market Share Value, if the Public Share Value is not
the Applicable Share Value pursuant to clause (ii) below,
and (ii) the Public Share Value if, in the aggregate, 20%
or more of the outstanding Common Stock has been sold to the
public by the holders of the Common Stock or the Common Stock
Company pursuant to one or more registered offerings
under the Securities Act of 1933, as amended, or pursuant to Rule
144 thereunder, and the Common Stock is listed on a national
securities exchange or is trading on the NASDAQ/National Market
System or is trading on a market in the Common Stock made by a
professional marketmaker.
"Billback" means a charge to a Vendor by a purchaser
of Merchandise, whether or not contracted for and
irrespective of the type of purchasing, advertising, or
other performance criteria required to generate such a
charge, which reflects a deduction to be made from a
previous payment or payments to such Vendor based on any
type of Discount or Allowance.
"Blair Businesses" has the meaning specified in the
recitals to this Agreement.
"Business Day" means any day other than Saturday,
Sunday or a legal holiday in the State of New Jersey
"Change of Control" means any change in the ultimate
beneficial ownership of the Voting Stock of Plainbridge
such that a Person, other than Merrill Lynch & Co., Inc., a
Delaware corporation, or an Affiliate of Merrill Lynch &
Co., Inc., is the ultimate beneficial owner of a majority
of such Voting Stock.
"Common Stock" has the meaning specified in Section
10.04(a).
"Common Stock Company" has the meaning specified in
Section 10.04(a).
"Competing Retailers" means supermarkets, drug stores,
and other retail stores stocking merchandise carried by
Pathmark in Pathmark's current markets in New Jersey,
Delaware, Eastern and Central Pennsylvania, Metropolitan
New York, and Connecticut; provided that retail stores that
do not in the ordinary course of business engage to a
significant degree in the sale of food or pharmacy-related
products shall not be deemed to be Competing Retailers.
<PAGE>
3
"Damaged or Dated Merchandise" means the
Pathmark/Blair Merchandise described in the Pathmark/Blair
Logistics Manual that, at some time subsequent to its
receipt by Pathmark, no longer complies with Pathmark's
standards and specifications as set forth in the
Pathmark/Blair Logistics Manual or remains unsold by
Pathmark subsequent to the date of expiration listed on the
packaging of such Pathmark/Blair Merchandise.
"Discounts and Allowances" or "Discounts or
Allowances" means all merchandising credits, advertising
allowances, trade allowances, rebates, discounts (cash or
otherwise), slotting allowances, broker accruals, volume
incentive allowances, other deferred accruals and all other
funds made available by Vendors to a purchaser of
Merchandise.
"Distribution and Transfer Agreement" has the meaning
specified in the recitals to this Agreement.
"Event of Force Majeure" means, for any Person, any
event, circumstance or condition that is beyond the control
of such Person and that prevents such Person from
performing, in whole or in part, its obligations under this
Agreement. Without limiting the generality of the
foregoing, the following occurrences shall be deemed to be
Events of Force Majeure: (a) Acts of God, fire, explosion,
accident, flood, storm or other natural phenomenon; (b) war
(whether declared or undeclared), riot, blockade, sabotage
or acts of public enemies; (c) national defense
requirements; (d) compliance with any law, rule, regulation
or Governmental Order that (x) becomes effective after the
date hereof and (y) is binding on the Person seeking to
rely on such law, rule, regulation or Governmental Order to
excuse performance, and such Person's compliance therewith
is not voluntary or optional; (e) strikes, lockouts or
injunctions (it being understood that nothing herein shall
require a Person to settle such or any other kind of labor
dispute except on such terms as shall be satisfactory to
such Person); (f) unavailability (for reasons other than
the cost thereof) of adequate fuel, power, raw materials,
labor, containers or transportation facilities; and (g)
breakage or failure of machinery or equipment. Without
limiting the generality of the foregoing, compliance with
any Law or Governmental Order shall not be considered an
Event of Force Majeure unless such Law or Governmental
Order is binding on the Person seeking to rely on
compliance with such Law or Governmental Order to excuse
performance of its obligations under this Agreement and
<PAGE>
4
such Person's compliance therewith is not voluntary or
optional.
"Event of Insolvency" means that, with respect to any
Person or any of its Subsidiaries, such Person or any of
its Subsidiaries shall generally not pay its debts as such
debts become due, or shall admit in writing its inability
to pay its debts generally, or shall make a general
assignment for the benefit of creditors; or any proceeding
shall be instituted by or against such Person or any of its
Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee, custodian
or other similar official for it or for any substantial
part of its property and, in the case of any such
proceeding instituted against it (but not instituted by
it), either such proceeding shall remain undismissed or
unstayed for a period or 30 days, or any of the actions
sought in such proceeding (including, without limitation,
the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other
similar official for, it or for any substantial part of its
property) shall occur; or such Person or any of its
Subsidiaries shall take any corporate action to authorize
any of the actions set forth above in this definition.
"Fair Market Value" means fair market value as
Pathmark and Plainbridge together, in good faith, may
reasonably determine; provided that if Pathmark and
Plainbridge are unable to make such a determination, such
determination shall be made by an independent appraiser
mutually acceptable to Pathmark and Plainbridge, and the
determination by such independent appraiser shall be
conclusive.
"Fair Market Share Value" means the value of a share
of Common Stock as of the date of payment for the Pathmark
Distribution Assets as a result of a Pathmark Forced Termination
as determined in a good faith in a written report to Plainbridge
by an independent investment banking firm of national reputation,
selected by Plainbridge. For the purpose of the definition of
Fair Market Value, the value to be determined shall be the price
per share at which the Common Stock delivered (assuming that there
is only one class of common stock, each share possessing equal
voting rights) would trade on a national securities exchange,
NASDAQ or a similar market, assuming full liquidity and the
absence of any significant concentration of ownership of such
Common Stock in any holder or group of holders. In reaching
such determination, such independent investment banking firm
shall compare the Common Stock Company with whatever companies
it deems relevant. Among the factors that shall be considered
as relevant in its determination shall be market share and the
specialized nature of products, price to earnings ratio, the
market value to book value ratio and the market value to operating
cash flow ratio of the common stock of such companies.
"Governmental Authority" means any U.S. federal, state
or local government, governmental authority, regulatory or
administrative agency, governmental commission, board,
bureau, court or tribunal or any other similar arbitral
body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award
entered by or with any Governmental Authority.
<PAGE>
5
"Law" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, order,
requirement or rule of common law.
"Liabilities, Actions and Damages" means any and all
claims, damages, losses, liabilities and expenses of any
kind or nature whatsoever including, without limitation,
any incidental or consequential damages.
"Merchandise" means food, groceries, general
merchandise, pharmacy-related products and other
merchandise sold currently and in the future in Pathmark
supermarkets and drug stores.
"Past Practices" has the meaning specified in the
recitals to this Agreement.
"Pathmark" has the meaning specified in the preamble
to this Agreement.
"Pathmark/Blair Merchandise" means all Merchandise
ordered from a Vendor by Pathmark on behalf of Plainbridge,
intended to be ultimately sold and delivered by Plainbridge
to Pathmark.
"Pathmark/Blair Logistics Manual" has the meaning
specified in the recitals to this Agreement.
"Pathmark Distribution Assets" has the meaning specified
in Section 10.04(a).
"Pathmark Forced Termination" has the meaning specified in
Section 10.04(a).
"Person" means any individual, partnership, firm,
corporation, association, trust, unincorporated
organization or other entity, as well as any syndicate or
group that would be deemed to be a person under Section
13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"Piggyback Order" means a purchase order by
Plainbridge for Merchandise from Vendors in contemplation
of resale to third parties, which orders are placed with
Vendors at the same time and as part of the same order as a
purchase order for Pathmark/Blair Merchandise.
"Plainbridge" has the meaning specified in the
preamble to this Agreement.
"Plainbridge Asset and Liability Transfer" has the
meaning specified in the recitals to this Agreement.
"Plainbridge Credit Agreement" means the bank credit
agreement, dated as of October 26, 1993, among Plainbridge,
the lenders listed on the signature pages thereof and Bankers
Trust Company, as Agent, as amended, modified, or supplemented
from time to time.
"Plainbridge Security Agreement" means the security agreement,
dated as of October 26, 1993, between Plainbridge and Bankers
Trust Company, as agent for the lenders party to the Bank Credit
Agreement, as amended, modified, or supplemented from time to time.
"Plainbridge Disbursement Account" means the account
established in the name of Plainbridge at a bank or similar
financial institution and from which Plainbridge shall make
payment to Vendors.
<PAGE>
6
"Plainbridge Permit" means any franchise, grant,
authorization, license, permit, easement, variance,
exemption, consent, certificate, approval, or other order
necessary for Plainbridge to own, lease, and operate its
properties or to carry on the Blair Businesses in the
manner contemplated by this Agreement.
"Plainbridge Subsidiary" means a Subsidiary of
Plainbridge.
"Public Share Value" of a share of Common Stock as of
the date of payment for the Pathmark Distribution Assets
shall be the average closing price of a share of Common Stock
on such national securities exchange as may be designated
by the Common Stock Company, in the event that the Common
Stock is not listed for trading on a national securites
exchange but is quoted on an automated quotation system,
the average closing bid price per share of Common Stock on
such automated quotation system or, in the event that the
Common Stock is not quoted on any such system, the average
of the closing bid prices per share of Common Stock as
furnished by a professional marketmaker making a market in
the Common Stock designated by the Common Stock Company
(the "Average Closing Price"), for the 30-day period ending
on such date. The Average Closing Price of a share of
Common Stock shall be determined by dividing (i) the
sum of the closing prices for the Common Stock on each
day that the Common Stock was traded and a closing price
was reported on such national securities exchange or such
automated quotation system or by such marketmaker, as the
case may be, during the 30-day period, by (ii) the number
of days on which the Common Stock was traded and a closing
price was reported on such national securities exchange or
such automated quotation system or by such marketmaker, as
the case may be, during the 30-day period.
"Subsidiary" of a Person means any corporation,
partnership, joint venture, association or other entity
controlled by such Person directly or indirectly through
one or more intermediaries.
"Top-Up Merchandise" has the meaning specified in
Section 4.01(a).
"Upcharge" has the meaning specified in Section
6.01(a).
"Vendor" means a vendor from whom Pathmark proposes to
purchase or purchases Merchandise or whom it invites to bid
to act as a supplier of Merchandise.
"Voting Stock" means capital stock issued by a
corporation, or the equivalent interests in any other
Person, the holders of which are ordinarily, in the absence
of contingencies, entitled to vote for the election of
directors (or persons performing similar functions) of such
Person, even though the right to vote may have been
suspended by the happening of such a contingency.
ARTICLE II
PURCHASE OBLIGATIONS AND ACQUISITION OF MERCHANDISE
SECTION 2.01. Agreement to Purchase. (a) Subject to
the provisions of this Agreement, Pathmark shall purchase from
Plainbridge, and Plainbridge shall sell to Pathmark, on the
terms and conditions set forth in this Agreement, such of
Pathmark's Merchandise requirements as Pathmark may request;
provided, however, that Plainbridge shall not be required to
supply Merchandise that is sold to Pathmark solely on a Vendor
direct-to-store delivery basis.
(b) Pathmark shall at all times be permitted to
solicit bids from, and to purchase its Merchandise
<PAGE>
7
requirements and obtain warehousing and distribution services
from, third-party suppliers of warehousing and distribution
services; provided, however, that irrespective of whether
Pathmark has so utilized such third parties, Pathmark shall
remain obligated to pay to Plainbridge the Minimum Annual
Upcharge Payment pursuant to Section 6.02.
SECTION 2.02. Directed Purchases from Vendors. (a)
Following the date hereof, and thereafter from time to time,
Pathmark shall, on or about the time of its placement of a
purchase order with a Vendor for Pathmark/Blair Merchandise,
deliver to Plainbridge a copy of such purchase order. All
Pathmark/Blair Merchandise shall be ordered by Pathmark on
behalf, and for the account, of Plainbridge. Plainbridge shall
purchase, receive from, and pay the Vendor for, in accordance
with the terms and conditions of such purchase orders, and
store and, at Pathmark's direction and subject to Section 2.04,
sell and deliver to Pathmark, all such Pathmark/Blair
Merchandise.
(b) With respect to all Merchandise shipped from
Vendors directly to Pathmark, Pathmark shall purchase such
Merchandise on its own behalf and for its own account;
provided, however, that Pathmark may still designate
Plainbridge or a Plainbridge Subsidiary to act as Pathmark's
carrier for the transportation of such Merchandise from the
Vendor to Pathmark. Any and all fees that Plainbridge or a
Plainbridge Subsidiary, as the case may be, may charge Pathmark
for such transportation services not relating to Pathmark/Blair
Merchandise are not contemplated by and do not come within the
scope of this Agreement.
(c) Pathmark shall be responsible for negotiating all
relevant terms and conditions of purchase for Pathmark/Blair
Merchandise purchased from Vendors, including, without
limitation, the types of merchandise desired, the quantities
required, approximate delivery schedules, pricing, and terms
and conditions of payment.
SECTION 2.03. Warranty and Passing of Title.
(a) Plainbridge warrants to Pathmark that, upon delivery to
Pathmark, Pathmark shall have good and marketable title to the
Pathmark/Blair Merchandise delivered to Pathmark pursuant to
this Agreement. Plainbridge shall indemnify and hold harmless
Pathmark and its officers, directors, employees, agents, and
advisors from and against any and all Liabilities, Actions and
Damages (including, without limitation, reasonable fees and
expenses of counsel) arising out of, in connection with, or by
reason of any breach of the warranty in this Section 2.03(a).
<PAGE>
8
(b) Title to and risk of loss with respect to, and
responsibility for, all Pathmark/Blair Merchandise delivered to
Pathmark pursuant to this Agreement shall pass from Plainbridge
to Pathmark at the point of its delivery to the applicable
Pathmark store location. Prior to such time, Plainbridge shall
have title to and risk of loss with respect to, and
responsibility for, all Pathmark/Blair Merchandise received by
it from Vendors.
SECTION 2.04. Merchandise Pricing and Payment.
(a) The delivery of Pathmark/Blair Merchandise by Plainbridge
to Pathmark shall create a payable on the part of Pathmark to
Plainbridge for an amount equal, subject to the provisions of
this Section 2.04, to the amount indicated on the purchase
order submitted by Pathmark to the Vendor for such
Pathmark/Blair Merchandise, as such amount may subsequently be
adjusted by mutual agreement between Pathmark and such Vendor,
and, if not included in such purchase order, any and all
contracted freight costs relating to the transportation of such
Pathmark/Blair Merchandise from the Vendor to Plainbridge (the
"Base Price"). Payables incurred hereunder shall be paid by
Pathmark to Plainbridge as set forth in Section 2.04(b) and
(f).
(b) Plainbridge shall offer to Pathmark terms and
conditions of payment for all Pathmark/Blair Merchandise
equivalent to the terms and conditions of payment for such
Pathmark/Blair Merchandise offered by the Vendor to
Plainbridge. Pathmark agrees to pay to Plainbridge an amount
sufficient to enable Plainbridge to pay the Vendors' amounts
owing under any purchase order for Pathmark/Blair Merchandise
at the time that the Vendor requires payment from Plainbridge
in respect thereto. The aggregate of such payments shall be
applied against the aggregate payables incurred under
Section 2.04(a).
(c) If requested by a Vendor, Pathmark may, in its
sole discretion, guarantee any payment obligations of
Plainbridge to such Vendor which relate to Pathmark/Blair
Merchandise. Plainbridge shall not sell any such
Pathmark/Blair Merchandise to third parties without the prior
written consent of Pathmark.
(d) All Discounts and Allowances made available by
Vendors to Plainbridge in respect of Pathmark/Blair Merchandise
shall reduce the Upcharge owed by Pathmark to Plainbridge in
respect of such Pathmark/Blair Merchandise; provided, however,
that no such reduction shall occur if such Discounts and
Allowances have been or will be paid directly to Pathmark; and
provided further that if such Discounts and
<PAGE>
9
Allowances are already accounted for in the Vendor's invoice to
Plainbridge in respect of such Pathmark/Blair Merchandise, then
such Discounts and Allowances shall reduce the Base Price, and
not the Upcharge, of such Pathmark/Blair Merchandise. Pathmark
shall be responsible for notifying Plainbridge of the
availability of such Discounts and Allowances, and Plainbridge
shall assist Pathmark in its efforts to secure such Discounts
and Allowances. There shall be no reduction in the applicable
Upcharge or Base Price, as the case may be, for any Discounts
or Allowances made available by Vendors to Plainbridge solely
as a result of actions taken or not taken by Plainbridge. Any
and all Discounts or Allowances lost by, or interest charged by
Vendors to, Plainbridge as a result of late payment by Pathmark
to Plainbridge for Pathmark/Blair Merchandise shall be promptly
paid by Pathmark to Plainbridge upon the incurrence of any such
lost Discounts or Allowances or Vendor interest. Any and all
charges over and above the Base Price from a Vendor to
Plainbridge as a result of actions taken or not taken solely by
Plainbridge shall not increase the Upcharge payable by Pathmark
to Plainbridge.
(e) All Billbacks related to Pathmark/Blair
Merchandise shall be for the account of Pathmark, unless the
availability of such Billbacks is solely the result of actions
taken or not taken solely by Plainbridge, in which case they
shall be for the account of Plainbridge. Pathmark shall be
responsible for tracking and collecting Billbacks that are for
its account; provided, however, that Plainbridge shall promptly
remit to Pathmark all Billbacks received by Plainbridge which
are for the account of Pathmark.
(f) Pathmark's payment obligations to Plainbridge
under this Section 2.04 shall be discharged by the delivery by
Pathmark of immediately available funds in the required amounts
to the Plainbridge Disbursement Account. Such payments shall
be made at or before the time that payment is due from
Plainbridge to the Vendor of the Pathmark/Blair Merchandise to
which such payments relate.
SECTION 2.05. Service Level Requirement. Subject to
the availability of Pathmark/Blair Merchandise at Plainbridge
facilities, Plainbridge shall deliver Pathmark/Blair
Merchandise to Pathmark at a 98% or better Service Level, as
determined and defined in the Pathmark/Blair Logistics Manual.
If a failure by Plainbridge to meet such Service Level results
in a material adverse economic effect on Pathmark, Plainbridge
shall promptly pay to Pathmark that amount of money determined
to have been lost by Pathmark as a result of such failure.
<PAGE>
10
SECTION 2.06. Plainbridge Sales to Third Parties.
(a) Plainbridge may purchase and sell Merchandise for its own
account to third parties; provided, however, that subject to
the third sentence of this subsection 2.06(a), Plainbridge
may not sell to Competing Retailers without Pathmark's prior
written consent, which consent shall not be unreasonably
withheld. Upon the occurrence of a default by Plainbridge
under the Plainbridge Bank Credit Agreement and the exercise
by the lenders thereunder of their rights in respect of the
Merchandise pursuant to the terms of the Plainbridge Security
Agreement, Pathmark shall have the right to purchase, and, if
such right to purchase is exercised, Plainbridge shall sell to
Pathmark, for cash, within 30 days of written notice to Pathmark
that such lenders intend to exercise such rights, all or a
portion all Merchandise (including Pathmark/Blair Merchandise)
purchased by Plainbridge and warehoused as stored by
Plainbridge at the time of such default (i) with respect to
Plainbridge/Blair Merchandise, on the terms and conditions
contemplated by this Agreement and (ii) with respect to
Merchandise purchased by Plainbridge for its own account, on
terms and conditions customary in the industry at such time;
provided that all payments will be made directly to the Agent
under the Plainbridge Bank Credit Agreement. It is understood
that, in the event or to the extent that Pathmark does not
exercise such right, the restriction on sales to third parties
contained in the first sentence of Subsection 2.06(a) or in
the second sentence of Subsection 2.04(c) would not restrict
the rights of Plainbridge's lenders under the Plainbridge
Security Agreement.
(b) Plainbridge shall be permitted to make Piggyback
Orders; provided, however, that such Piggyback Orders may not
interfere with the delivery schedules, quantity requirements or
any other needs of Pathmark in connection with the
Pathmark/Blair Merchandise underlying such Piggyback Orders.
All Discounts and Allowances included in a Vendor's invoice
shall be credited to the account of Plainbridge to the extent
that they relate to the Piggyback Order. Discounts and
Allowances not included in the Vendor's invoice to Plainbridge
but paid separately by the Vendor, by the granting of credits
to Plainbridge or otherwise, shall be for the account of
Pathmark. Pathmark may, in its sole discretion, grant
additional cost allowances relating to such Piggyback Orders to
Plainbridge to aid in the development of the Piggyback Order
business of Plainbridge.
ARTICLE III
WAREHOUSING
SECTION 3.01. Warehousing. Plainbridge shall be
responsible for the warehousing and storage of all
Pathmark/Blair Merchandise. Plainbridge shall determine the
facilities at which Pathmark/Blair Merchandise shall be
warehoused and stored; provided that the Upcharges applicable
to a particular merchandise line shall not be increased due to
the storage of such merchandise in warehouse locations not in
accordance with Past Practices, as specified in the
Pathmark/Blair Logistics Manual, without Pathmark's prior
written consent.
SECTION 3.02. Permits; Compliance. If Plainbridge is
unable to obtain or maintain any franchises, grants,
authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, or other orders
necessary for it to own, lease, and operate its properties or
to carry on the Blair Businesses in the manner in which this
Agreement contemplates (the "Blair Permits"), Pathmark may use a
third party to supply the services contemplated in this
Agreement to be provided by Plainbridge to the extent
Plainbridge is unable to do so ("Blair Permit
<PAGE>
11
Noncompliance"); provided that Pathmark shall use reasonable
efforts to engage a third party which can supply such services
to Pathmark at the lowest practicable cost. If Pathmark
engages a third party to supply any such services because of
Blair Permit Noncompliance, the Minimum Annual Upcharge Payment
(as defined in Section 6.02) shall be reduced, during the
period of Blair Permit Noncompliance, by the sum of (i) the
aggregate of the Upcharges that would have been applicable, if
Pathmark had purchased such Merchandise through Plainbridge, on
that quantity and type of Merchandise purchased by Pathmark
through such third-party supplier and (ii) the excess, if any,
of Pathmark's cost of purchasing such Merchandise from such
third-party supplier over the sum of (A) the Base Price and (B)
the Upcharge that would have been applicable to such
Merchandise if Pathmark had purchased such Merchandise through
Plainbridge. If Plainbridge subsequently obtains or returns to
effectiveness the applicable Blair Permits, the Minimum Annual
Upcharge Payment shall (i) for the period in which there
existed Blair Permit Noncompliance, be reduced in accordance
with the immediately preceding sentence, and (ii) upon the
return to effectiveness of the Blair Permits, be further
reduced by the sum of (A) the aggregate of the Upcharges that
would have been applicable, if Pathmark had purchased such
Merchandise through Plainbridge, on that quantity and type of
Merchandise purchased by Pathmark through a third-party
supplier with whom Pathmark shall, because of the Blair Permit
Noncompliance, have entered into any contract or arrangement to
provide the services contemplated in this Agreement to be
provided by Plainbridge and which contract or arrangement
cannot be immediately discontinued by Pathmark and is
continuing, and (B) the difference, if any, between Pathmark's
cost of purchasing such Merchandise from such third-party
supplier and the sum of (1) the Base Price and (2) the Upcharge
that would have been applicable to such Merchandise if Pathmark
had purchased such Merchandise through Plainbridge.
SECTION 3.03. Storage and Handling Capacity.
(a) Plainbridge shall make available storage and handling
capacity sufficient to accommodate Pathmark/Blair Merchandise,
in accordance with Past Practices. In addition, Plainbridge
shall provide storage and handling capacity sufficient to
accommodate increases in the volume (measured by total case
shipments) of Pathmark/Blair Merchandise of up to five percent
per year, subject to the provisions of Sections 6.02(d) and
(e). If Plainbridge fails to meet such annual capacity growth
requirement, Plainbridge shall promptly pay to Pathmark the
cost incurred by Pathmark to
<PAGE>
12
obtain such additional capacity through alternate suppliers,
less the aggregate upcharges that would have been payable
pursuant to this Agreement in respect of all Pathmark/Blair
Merchandise handled by such alternate suppliers through such
additional capacity.
(b) Pathmark shall promptly, as they are incurred,
reimburse Plainbridge for all reasonable incremental
out-of-pocket costs (but not capital costs) incurred by
Plainbridge for the storage and handling of Pathmark/Blair
Merchandise that is in excess of the capacity Plainbridge is
required to provide pursuant to Section 3.03(a); provided such
out-of-pocket costs do not exceed the costs of storage and
handling at independent warehouses operating in the same
geographic regions as the Blair Businesses.
ARTICLE IV
INVENTORY
SECTION 4.01. Inventory. (a) Plainbridge shall at
all times maintain, for the exclusive use of Pathmark, an
inventory of Pathmark/Blair Merchandise with a book value of at
least $130 million. To the extent that the inventory of
Pathmark/Blair Merchandise shall fall below such level,
Plainbridge shall promptly notify Pathmark of the amount of the
deficiency and shall purchase sufficient Merchandise ("Top-Up
Merchandise") to maintain such level; provided that Pathmark
shall have ordered such Merchandise from Vendors. Pathmark
shall be liable for the Upcharge on, and the Base Price of,
Top-Up Merchandise only upon the delivery to Pathmark of such
Top-Up Merchandise from Plainbridge.
(b) The purchase by Pathmark of Merchandise from
other third-party suppliers in accordance with Section 2.01(b)
shall not relieve Plainbridge of its obligations to comply with
the provisions of Section 4.01(a).
(c) Plainbridge shall keep separate books of account
and records, in accordance with United States generally
accepted accounting principles, with respect to (i)
Pathmark/Blair Merchandise and (ii) other Merchandise purchased
by Plainbridge for resale to third parties.
SECTION 4.02. Excess Inventory. (a) Pathmark may
designate any Pathmark/Blair Merchandise as "excess inventory".
Plainbridge may, upon obtaining Pathmark's prior written
consent, sell such excess inventory to third parties
<PAGE>
13
at prices to be determined by Pathmark. Pathmark shall
reimburse Plainbridge promptly for all losses realized on the
disposition of such excess inventory.
(b) At Pathmark's sole discretion, Plainbridge may
repurchase excess inventory of Pathmark/Blair Merchandise that
is located at Pathmark stores from Pathmark at a price equal to
the cost of such Pathmark/Blair Merchandise to Pathmark (it
being understood that such cost includes the Upcharge charged
to Pathmark by Plainbridge when such Pathmark/Blair Merchandise
was delivered to Pathmark). Written consent, which consent
shall not be unreasonably withheld, shall be required from
Pathmark for sales by Plainbridge of such excess inventory to
Competing Retailers.
SECTION 4.03. Quality Control. (a) All
Pathmark/Blair Merchandise purchased by Pathmark pursuant to
this Agreement shall comply with, and be shipped and stored in
accordance with, the standards and specifications (including,
without limitation, temperature controls, sanitation standards,
date code reviews and packaging inspections) set forth in the
Pathmark/Blair Logistics Manual and with all such other
reasonable and practicable standards and specifications,
expressed in comparable detail, of a nature similar to and
requiring tolerances no more onerous to Plainbridge than those
currently contained in the Pathmark/Blair Logistics Manual, as
may be furnished to Plainbridge in writing from time to time by
Pathmark (the "Standards and Specifications").
(b) Pathmark shall not be obligated to purchase any
Pathmark/Blair Merchandise that does not meet Pathmark's
quality standards indicated on the applicable purchase order or
which shall have been previously communicated to the Vendor and
Plainbridge and negotiated with and accepted by the Vendor;
provided, however, that Pathmark may not impose on Plainbridge
any standards that are more stringent than those accepted by
the Vendor. Plainbridge shall be responsible for ensuring that
any Pathmark/Blair Merchandise determined to be inferior to the
quality standards established by Pathmark is rejected or
returned to Vendors and not accepted for shipment to Pathmark
stores; provided, however, that the requirement that
Plainbridge maintain product quality standards shall not be
construed as requiring Plainbridge to perform detailed
inspections of all Pathmark/Blair Merchandise for compliance
with the Standards and Specifications; and provided further
that Plainbridge shall not be responsible for inspecting any
Pathmark/Blair Merchandise already inspected by Pathmark.
Plainbridge shall also be responsible for ensuring that
Pathmark/Blair
<PAGE>
14
Merchandise receiving, selection, and delivery functions are
handled in such a manner that Pathmark product dating code
standards, as set forth in the Pathmark/Blair Logistics Manual,
are met.
(c) Notwithstanding Plainbridge's responsibility for
quality control, Pathmark may from time to time place its
representatives at Plainbridge's facilities to ensure that the
Pathmark/Blair Merchandise being accepted meets the standards
established pursuant to Sections 4.03(a) and (b). Plainbridge
shall permit Pathmark's duly authorized representatives (the
"Inspectors") to inspect the facilities of Plainbridge
maintained or used in the storage and handling of
Pathmark/Blair Merchandise (the "Facilities") at any reasonable
time in order to verify that the Facilities and the
Pathmark/Blair Merchandise comply with the Standards and
Specifications and shall provide workspace sufficient to
accommodate the reasonable requirements of such Inspectors;
provided that such Inspectors shall conduct themselves in such a
way as not to unduly interfere with Plainbridge's business
operations. Subject to the foregoing, Plainbridge shall:
(i) permit the Inspectors to have full access to all
employees and agents of Plainbridge involved in the
storage, handling and distribution of Pathmark/Blair
Merchandise and otherwise in the performance of
Plainbridge's obligations under this Agreement, and use
ordinary diligence to ensure the cooperation of such
employees and agents, as may be reasonably necessary for
carrying out the duties set forth in this Section 4.03(d);
provided that Pathmark shall not solicit or endeavor to
entice away any employee of Plainbridge, or otherwise
interfere with the lawful business between Plainbridge and
any employee thereof;
(ii) permit the Inspectors to examine all phases of
the storage and handling of Pathmark/Blair Merchandise and,
solely at Plainbridge's expense, to sample, in reasonable
quantities, all such Pathmark/Blair Merchandise at any
reasonable time in order to verify that such procedures
comply with Pathmark's Standards and Specifications;
provided that such inspection does not interfere with the
ordinary business operations of Plainbridge; and
(iii) permit the Inspectors access to all areas of the
Facilities, including, without limitation, all receiving
areas, storage areas and facilities, and all
<PAGE>
15
equipment, relating to the handling, rotation or
transportation of Pathmark/Blair Merchandise, and to
perform inspections or other tests to the extent reasonably
necessary in order to verify that such facilities and
equipment perform in a manner that complies with Pathmark's
Standards and Specifications.
(d) Plainbridge further acknowledges that,
notwithstanding any rights of Pathmark provided for under
Section 4.03(c), Pathmark expressly reserves the right to
enforce any and all provisions of this Section 4.03 at all
times, without regard to any previous failure to exercise any
such rights.
(e) Plainbridge hereby guarantees to Pathmark that
any and all Pathmark/Blair Merchandise delivered by Plainbridge
to Pathmark or any Affiliate of Pathmark shall, as of the date
of such delivery and insofar as applicable, (i) be Merchandise
that may be introduced into interstate commerce pursuant to the
Federal Food, Drug and Cosmetic Act, 21 U.S.C. Secs. 301 et seq.,
(ii) conform to all applicable consumer product safety Laws,
standards, rules and regulations promulgated under the Federal
Consumer Product Safety Act, 15 U.S.C. Secs. 2051 et seq., and
shall not be a banned hazardous product thereunder, (iii)
conform to all applicable consumer product safety Laws,
standards, rules and regulations promulgated under the Federal
Hazardous Substances Act, 15 U.S.C. Secs. 1261 et seq., and shall
not be a banned hazardous substance thereunder, and (iv) have
been inspected by the United States Department of Agriculture
and be Merchandise that may be introduced into interstate
commerce pursuant to, and shall not be adulterated or
misbranded as determined under, the Federal Meat Inspection
Act, 21 U.S.C. Secs. 601 et seq. Plainbridge further guarantees
that any such Pathmark/Blair Merchandise shall comply with all
other federal Laws, rules and regulations of all political
subdivisions of the United Sates of America and with the Laws,
rules and regulations of the respective states and their
respective political subdivisions, whether now or hereinafter
enacted. Plainbridge agrees that if any Pathmark/Blair
Merchandise is found to violate any of the above indicated
Laws, standards, rules or regulations, or is otherwise rendered
unmarketable by any Governmental Authorities administering such
Laws, standards, rules and regulations, Plainbridge shall
accept return of the Pathmark/Blair Merchandise, if such
Pathmark/Blair Merchandise shall not have been seized or
condemned by any such Governmental Authority, and shall refund
to Pathmark the cost thereof as billed to Pathmark together
with any
<PAGE>
16
reasonable and necessary transportation charges incurred in
said return. If any such Pathmark/Blair Merchandise shall have
been seized by a Governmental Authority, Plainbridge shall
refund to Pathmark the cost thereof as billed to Pathmark but
will be entitled to defend, in Plainbridge's own name and at
its own expense, any such seizure, and to obtain possession of
such Pathmark/Blair Merchandise in the event that Plainbridge
is successful in such defense.
ARTICLE V
DELIVERY
SECTION 5.01. Delivery. (a) Plainbridge or a
Plainbridge Subsidiary shall deliver Pathmark/Blair Merchandise
to Pathmark stores in a timely manner as specified in the
Pathmark/Blair Logistics Manual, using its best efforts to meet
Pathmark's reasonable delivery schedules by, among other
things, appropriately scheduling deliveries from Vendors to
Plainbridge's storage facilities, insofar as it has discretion
within the delivery schedule indicated by Pathmark to the
Vendor. Pathmark shall direct Plainbridge or a Plainbridge
Subsidiary, as the case may be, as to what Pathmark/Blair
Merchandise shall be delivered to which Pathmark stores.
Plainbridge or a Plainbridge Subsidiary shall ensure that
Pathmark/Blair Merchandise received is available for shipment
within the periods designated in the Pathmark/Blair Logistics
Manual. Neither Plainbridge nor a Plainbridge Subsidiary may,
without Pathmark's prior written consent, change the method or
pattern of delivery in a manner that, in the sole determination
of Pathmark, adversely impacts Pathmark's operations. Pathmark
shall notify Plainbridge or a Plainbridge Subsidiary, as the
case may be, of (i) any restrictions imposed by local
ordinances, not existing on the date of this Agreement, on the
delivery of Merchandise to existing stores and (ii) any
restrictions imposed by local ordinances on the delivery of
Merchandise to new stores.
(b) Subject to Section 3.03, Plainbridge or a
Plainbridge Subsidiary, as the case may be, shall increase the
number of deliveries of Pathmark/Blair Merchandise to Pathmark
stores and the number of trailers available for such deliveries
commensurate with any increase by Pathmark in the number of its
stores and at the rate per new store specified in the
Pathmark/Blair Logistics Manual.
<PAGE>
17
(c) Pathmark shall be responsible for the unloading
of Pathmark/Blair Merchandise at each store and shall provide
approximately that number of man-hours of labor per load as is
specified in the Pathmark/Blair Logistics Manual for such task.
Plainbridge or Plainbridge Subsidiary drivers shall assist in
the unloading of Pathmark/Blair Merchandise delivered to
stores.
(d) Plainbridge or a Plainbridge Subsidiary, as the
case may be, shall retrieve all trailers delivered to Pathmark
stores within the periods specified in the Pathmark/Blair
Logistics Manual.
(e) Pathmark shall pay the detention fee specified in
the Pathmark/Blair Logistics Manual for any delay incurred by
Plainbridge or a Plainbridge Subsidiary as a result of a
trailer being retained by Pathmark in excess of the standard
delivery periods specified in the Pathmark/Blair Logistics
Manual.
(f) Pathmark shall pay a storage fee to Plainbridge
or a Plainbridge Subsidiary, as the case may be, in connection
with any trailers used by Pathmark other than for the delivery
of Pathmark/Blair Merchandise to and from Pathmark stores.
Such storage fee shall not exceed the cost of a third-party
rental of equivalent equipment plus the related out-of-pocket
costs incurred by Plainbridge or such Plainbridge Subsidiary.
Such storage costs shall not be applicable to trailers used by
Pathmark for temporary storage purposes, where such trailers
are available from among the fleet of trailers normally
allocated by Plainbridge for Pathmark/Blair Merchandise, as
specified in the Pathmark/Blair Logistics Manual.
(g) Pallets normally maintained in the Facilities
shall be considered the property of Plainbridge. Pathmark
shall not be responsible for any losses of such pallets due to
breakage or normal shrinkage during the ordinary course of
Plainbridge's distribution and transportation operations,
except that Pathmark shall be responsible for duly documented
material losses of such assets that occur at Pathmark stores.
SECTION 5.02. Vendor Direct-to-Store Deliveries.
Pathmark shall determine whether any Merchandise is to be
delivered by a Vendor directly to Pathmark stores
("Direct-to-Store Deliveries"). Pathmark shall in good faith
attempt to designate Plainbridge or a Plainbridge Subsidiary as
the carrier for Direct-to-Store Deliveries; provided that
Plainbridge's or a Plainbridge Subsidiary's charges for such
delivery are no greater than the lesser of (i) the applicable
Vendor's prepaid freight charge and (ii) the fee that would
<PAGE>
18
be charged for such delivery by third party carriers. Pathmark
shall not be liable for additional freight charges that may be
incurred by Plainbridge or such Plainbridge Subsidiary in
connection with such Direct-to-Store Deliveries that are over
and above the agreed-upon payment from Pathmark to Plainbridge
or such Plainbridge Subsidiary. Any Vendor freight allowances,
which shall be for the account of Plainbridge, shall reduce the
freight fee charged to Pathmark by Plainbridge or such
Plainbridge Subsidiary, as the case may be.
ARTICLE VI
UPCHARGES
SECTION 6.01. Upcharges. (a) Upon the delivery of
Pathmark/Blair Merchandise to Pathmark by Plainbridge, Pathmark
shall pay Plainbridge a fee (an "Upcharge") in the amounts
specified in the Pathmark/Blair Logistics Manual. It is
expressly understood that Upcharges shall vary depending on the
type of Pathmark/Blair Merchandise and its value.
(b) Annual cost benefits derived from increases in
the volume of Pathmark/Blair Merchandise, as applied to the
applicable fiscal year's average cost per case, and increases
in the volume of Plainbridge's sales to third parties over the
volumes and values specified in the Pathmark/Blair Logistics
Manual shall be shared between Plainbridge and Pathmark. Such
benefits shall be calculated for each fiscal year period by
subtracting the Plainbridge variable Upcharge (as specified in
the Pathmark/Blair Logistics Manual) from the actual Upcharge
relating to the type and value of such Pathmark/Blair
Merchandise and third party sales. The result shall be divided
equally between Pathmark and Plainbridge.
(c) Consistent with Past Practices, Plainbridge shall
provide an allowance to Pathmark on all Pathmark/Blair
Merchandise equal to 1% of the Base Price (before deduction of
cash discounts). Such allowance shall be charged to the
various distribution facilities on a weekly basis in accordance
with the formula contained in the Pathmark/Blair Logistics
Manual, and shall be deducted from the weekly installment of
the Minimum Annual Upcharge Payment described in Section 6.02.
In the event that variations in the amount of Pathmark/Blair
Merchandise ordered by Pathmark are so great as to materially
adversely affect Plainbridge's ability to pay its weekly
expenses, Plainbridge shall provide the
<PAGE>
19
allowance to Pathmark on a bi-weekly basis for as long as such
ability shall be so affected.
SECTION 6.02. Minimum Annual Upcharge Payment.
(a) Pathmark shall be obligated to pay Plainbridge a minimum
annual fee (the "Minimum Annual Upcharge Payment") of
$134,879,000, the Upcharge fee that would result if 95% of the
actual volume level for 1992 was achieved; provided that the
Minimum Annual Upcharge Payment shall be reduced by the
allowance described in Section 6.01(c). The Minimum Annual
Upcharge Payment shall be increased, but not decreased, by an
amount equal to the annual rate of inflation, as calculated
using the consolidated internal inflation factors that are used
by Pathmark for its computations of inventory valuations based
on the "Last In, First Out" methodology in accordance with
United States Generally Accepted Accounting Principles.
(b) The Minimum Annual Upcharge Payment shall be
payable in equal weekly installments on the last Business Day
of each week. The amount of such weekly installments shall be
calculated by dividing (x) the Minimum Annual Upcharge Payment,
as it may be increased pursuant to Section 6.02(a), by (y) 52
or 53, as the case may be, depending on the number of weeks in
the applicable fiscal year of Pathmark; provided, however, that
the installments payable on the last Business Day of the first
week of each fiscal month shall be adjusted by (i) the
aggregate fiscal year-to-date Upcharges, based upon the actual
Upcharges, actually paid or payable by Pathmark to Plainbridge
for fiscal year-to-date purchases, and (ii) the sum of the
aggregate fiscal year-to-date Upcharges actually paid by
Pathmark to Plainbridge for fiscal year-to-date purchases,
including installments on the Minimum Annual Upcharge Payment
and any adjustments thereto. If the amount calculated pursuant
to subclause (i) above exceeds the amount calculated pursuant
to subclause (ii) above, such excess shall be added to the
first weekly installment payable from Pathmark to Plainbridge
subsequent to the monthly calculation. If the amount
calculated pursuant to subclause (i) above is less than the
amount calculated pursuant to subclause (ii) above, such
shortfall shall be deducted from the first weekly installment
payable from Pathmark to Plainbridge subsequent to such monthly
calculation; provided, however, that no such deduction may be
taken if it would reduce the aggregate fiscal year-to-date
Upcharge payments to an amount less than the pro rata fiscal
year-to-date Minimum Annual Upcharge Payment as calculated
based on a 52-week or 53-week year, as applicable.
<PAGE>
20
(c) As promptly as practicable after the end of each
fiscal year, Pathmark and Plainbridge shall calculate (i) the
aggregate Upcharges payable to Plainbridge by Pathmark during
such fiscal year (the "Actual Upcharge") and (ii) the aggregate
Minimum Annual Upcharge Payment installments and monthly
adjustments actually paid to Plainbridge by Pathmark during
such fiscal year (the "Paid Upcharge"). Promptly upon the
completion of such calculations: (i) Pathmark shall pay to
Plainbridge the amount, if positive, equal to (x) the Actual
Upcharge less (y) the Paid Upcharge; and (ii) Plainbridge shall
pay to Pathmark the amount, if positive, equal to (x) the Paid
Upcharge less (y) the Actual Upcharge; provided, however, that
such amount shall not be paid if such payment would reduce the
Minimum Annual Upcharge Payment, as it may be increased
pursuant to Section 6.02(a).
(d) In the event that during the term of this
Agreement Pathmark disposes of any of its stores, which stores
are not replaced with substitute stores, such that (i) the
total number of Pathmark supermarket stores is less than 146 or
(ii) the total number of Pathmark drugstores is less than 33,
the Minimum Annual Upcharge Payment shall thenceforth be
reduced by the product of (x) the Minimum Annual Upcharge
Payment and (y) a fraction the numerator of which shall be the
aggregate Upcharges paid by Pathmark in respect of
Pathmark/Blair Merchandise purchased for such stores during the
preceding fiscal year and the denominator of which shall be the
aggregate Upcharges paid by Pathmark during the preceding
fiscal year. In addition, upon the occurrence of such an
event, Pathmark and Plainbridge hereby agree to negotiate in
good faith to determine whether such reduced level in the
number of stores will continue to exist for the then
foreseeable future and, if so, to renegotiate in good faith an
appropriate reduction in the capacity growth requirement of
Section 3.03(a).
(e) In the event that Pathmark experiences a
reduction in its volume requirements (other than a volume
reduction due to store dispositions) such that the volume of
purchased Pathmark/Blair Merchandise in any one fiscal year is
less than 90% of the actual volume level for 1992, the parties
agree to renegotiate in good faith (i) a reduction in the
Minimum Annual Upcharge Payment to the extent that Plainbridge
is able to realize reductions in its fixed or variable
operating costs as a result of such decreased volume and (ii) a
reduction in the capacity growth requirement of Section 3.03(a)
in the event that Pathmark and Plainbridge agree, negotiating
in good faith, that Pathmark will continue
<PAGE>
21
to experience such reduced volume level for the then
foreseeable future.
ARTICLE VII
SHORTAGES AND VENDOR RETURNS
SECTION 7.01. Shortages. (a) Plainbridge shall
grant Pathmark a general, fixed credit for shortages, damages,
and misselects that reduce assumed full pallet quantities
billed to Pathmark. This credit shall be equal to a percentage
of the billed cost of the Pathmark/Blair Merchandise, as
specified in the Pathmark/Blair Logistics Manual. Shortages or
overages (greater than full pallet shipments) that are actually
discovered shall be reported and investigated as specified in
the Pathmark/Blair Logistics Manual.
(b) Plainbridge shall conduct annual physical
inventories at each of its warehouses, the results of which
shall be compared with Plainbridge's book inventory records to
determine losses or overages. Any shrink losses so determined
shall be for the account of Plainbridge. If any such physical
inventory discloses overages, such overages shall be offset
against any previous shrink losses occurring in the same fiscal
year to determine if there is a net overage. Pathmark shall be
credited for any such net overage to reflect undelivered
Pathmark/Blair Merchandise that had been assumed delivered to
Pathmark.
SECTION 7.02. Reclamation. (a) Pathmark shall
return all Damaged or Dated Merchandise to Plainbridge, which
shall then dispose of all such Damaged or Dated Merchandise.
Plainbridge shall determine the manner in which Damaged or
Dated Merchandise is to be disposed of; provided that any such
disposition not consistent with the policies established in the
Pathmark/Blair Logistics Manual must be approved by Pathmark.
Plainbridge shall pursue the most cost effective means of
processing Damaged or Dated Merchandise. Plainbridge shall be
prohibited from selling Damaged or Dated Merchandise, without
the prior written consent of Pathmark, to any third party that
is in the business of reselling, or that could reasonably be
expected to resell, such Damaged or Dated Merchandise to
Competing Retailers.
(b) Pathmark shall receive a credit from Plainbridge
offsetting the base price and Upcharges previously paid for
Damaged or Dated Merchandise, equal to the lesser of (i)
<PAGE>
22
Pathmark's cost of such Damaged or Dated Merchandise, (ii) any
credit relating to such Damaged or Dated Merchandise that
Plainbridge receives from the applicable Vendor, which credit
Plainbridge shall use all reasonable efforts to obtain, and
(iii) the net proceeds to Plainbridge of any sale of such
Damaged or Dated Merchandise to third parties.
ARTICLE VIII
FORCE MAJEURE; PLAINBRIDGE INSURANCE
SECTION 8.01. Occurrence of Event of Force Majeure.
(a) If, as a result of the occurrence of an Event of Force
Majeure, either party is unable to perform its obligations
under this Agreement, in whole or in part, subject to Section
8.01(b) below, such obligations shall be temporarily suspended
to the extent, but only to the extent, that they cannot be
performed as a result of such Event of Force Majeure; provided
that such suspension shall be in effect only for the period
during which such Event of Force Majeure shall be continuing;
and provided further that the party shall diligently attempt to
remove the cause of its inability to fully perform such
obligations and shall keep the other party advised on a regular
basis of its progress in removing the cause of its inability to
fully perform such obligations. If an Event of Force Majeure
prevents Plainbridge from performing some or all of its
obligations under this Agreement, the Minimum Annual Upcharge
Payment shall be reduced proportionately to the extent that
Plainbridge is so prevented from performing such obligations.
(b) Notwithstanding any other provision of this
Agreement, if during the term of this Agreement, as a result of
the occurrence and continuance of an Event of Force Majeure,
Plainbridge shall be unable to supply Pathmark/Blair
Merchandise to Pathmark in the quantities required pursuant to
this Agreement for a period exceeding 180 consecutive days,
Pathmark shall have the right to terminate this Agreement.
Section 8.02. Plainbridge Insurance. All material
properties and risks of Plainbridge and any and all Plainbridge
Subsidiaries shall at all times be covered by valid and
currently effective insurance policies or binders of insurance
or programs of self-insurance in such types and amounts as are
consistent with customary practices and standards of companies
engaged in businesses and operations similar to those of
Plainbridge and the Plainbridge Subsidiaries.
<PAGE>
23
ARTICLE IX
BUSINESS CONTEXT OF THE AGREEMENT
SECTION 9.01. Agreement Based on Past Practices. In
the event that future developments in the warehouse and
distribution business cause significant alterations in the way
that shipping configurations, Merchandise mix, and other basic
aspects of such business are conducted, and such alterations
would work to the material detriment of either party, the
parties agree to negotiate changes to this Agreement in good
faith to provide Plainbridge with profit opportunities and
Pathmark with cost levels substantially similar to those
intended on the date of this Agreement.
SECTION 9.02. Commitment to Efficient Operations.
The parties hereby agree to cooperate to reduce costs and
improve service levels. Among other things, Pathmark shall
communicate, as and when it deems appropriate, to Plainbridge
its projected sales figures based on its annual, quarterly and
weekly budget projections. If either party undertakes other
measures designed to achieve such efficiency goals, and those
measures inadvertently and disproportionately penalize the
other party, the parties shall negotiate in good faith to
appropriately allocate the costs of such measures based on the
benefits expected to be realized by each party.
ARTICLE X
TERM AND TERMINATION
SECTION 10.01. Term. This Agreement shall become
effective as of the date hereof and shall remain in effect for a
period of ten years or until such time as it shall have been
terminated in the manner provided in Section 10.02 or 10.03.
If this Agreement is not so terminated prior to the end of such
ten-year period, Pathmark shall, for a period of five years,
each year have an option to renew this Agreement for an
additional year. Pathmark may exercise such option by
delivering written notice of its election to exercise such
option to Plainbridge at least 90 days before the otherwise
scheduled expiration of the term of this Agreement.
SECTION 10.02. Optional Termination by Pathmark.
Pathmark may terminate this Agreement upon not less than six
months' written notice to Plainbridge (a "Notice of
Termination"), at any time on or after the fourth anniversary
of the date of this Agreement. This Agreement shall
<PAGE>
24
terminate on the later of (i) six months following the date of a
Notice of Termination or (ii) the date specified in the Notice
of Termination. During the period following delivery of a
Notice of Termination and prior to the termination of this
Agreement, each party shall perform its obligations under this
Agreement in substantially the same manner as they were
performed prior to the date of delivery of such Notice of
Termination, with no disruption to Pathmark's supply of
Pathmark/Blair Merchandise; provided, however, that the parties
shall negotiate in good faith to agree to a "winding-up"
schedule for such period.
SECTION 10.03. Termination for Breach. This
Agreement may be terminated upon not less than six months'
written notice, at the option of:
(a) Pathmark, (i) if Plainbridge fails to perform in
any material way any of its material obligations under this
Agreement and if such failure shall remain unremedied for
sixty (60) days after written notice thereof shall have
been given by Pathmark to Plainbridge, or (ii) upon the
occurrence of an Event of Insolvency with respect to
Plainbridge.
(b) Plainbridge, (i) if Pathmark fails to perform in
any material way any of its material obligations under this
Agreement and if such failure shall remain unremedied for
sixty (60) days after written notice thereof shall have been
given by Plainbridge to Pathmark, or (ii) upon the occurrence
of an Event of Insolvency with respect to Pathmark.
SECTION 10.04. Offer to Purchase Assets upon
Termination by Pathmark. (a) In the event that Pathmark
terminates this Agreement pursuant to Section 10.03(a) (a
"Pathmark Forced Termination"), Pathmark shall have the right
to purchase, and, if such right to purchase is exercised,
Plainbridge shall sell to Pathmark, for cash, within 30 days of
the effectiveness of such termination, the portion of the
assets of Plainbridge that is essential to the support of the
obligations of Plainbridge to Pathmark under this Agreement
(the "Pathmark Distribution Assets") at a price equal to the
lower of their (i) net book value and (ii) Fair Market Value,
payable, at Pathmark's option (except with respect to
Merchandise, which shall be sold only for cash), in (i) cash
or (ii) shares of common stock ("Common Stock") of Pathmark
or an Affiliate of Pathmark (as applicable, the "Common Stock
Company") registered under the Securities Act of 1933, as
amended, having an aggregate Applicable Share Value equal to
such net book value or Fair Market Value, as the case may be.
(b) In the event that Pathmark elects to purchase the
Pathmark Distribution Assets upon the occurrence of a Pathmark
Forced Termination, Pathmark shall deliver to Plainbridge a
notice to such effect signed by the Chief Executive Officer of
Pathmark within 90 days of the date of
<PAGE>
25
the applicable notice of termination, and Pathmark shall be
obligated to purchase from Plainbridge, and Plainbridge shall
sell within 30 days of the effectiveness of such Pathmark
Forced Termination, the Pathmark Distribution Assets at a price
equal to the lower of their (i) net book value and (ii) Fair
Market Value.
(c) In the event that Pathmark terminates this
Agreement pursuant to Section 10.02 (a "Pathmark Optional
Termination"), it shall offer to purchase, for cash, within 30
days of the effectiveness of such termination, and, if
Plainbridge accepts such offer, purchase, the Pathmark
Distribution Assets at their Fair Market Value.
(d) In the event that Plainbridge elects to sell the
Pathmark Distribution Assets to Pathmark upon the occurrence of
a Pathmark Optional Termination, Plainbridge shall deliver to
Pathmark a notice to such effect signed by the Chief Executive
Officer of Plainbridge and delivered to Pathmark within 90 days
of the date of the applicable notice of termination, and
Pathmark shall purchase from Plainbridge within 30 days of the
effectiveness of such Pathmark Optional Termination the
Pathmark Distribution Assets at their Fair Market Value.
SECTION 10.05. Plainbridge Put upon Termination by
Plainbridge. (a) In the event that Plainbridge terminates
this Agreement pursuant to Section 10.03(b) (a "Plainbridge
Termination"), Plainbridge shall have the right to sell, and,
in the event that such right is exercised, Pathmark shall
purchase, for cash, within 30 days of the effectiveness of such
termination, the Pathmark Distribution Assets at their Fair
Market Value.
(b) In the event that Plainbridge elects to sell the
Pathmark Distribution Assets upon the occurrence of a
Plainbridge Termination, Plainbridge shall deliver a notice to
such effect signed by the Chief Executive Officer of
Plainbridge to Pathmark within 90 days of the date of the
applicable notice of termination, and Plainbridge shall sell to
Pathmark within 30 days of the effectiveness of such
Plainbridge Termination the Pathmark Distribution Assets at
their Fair Market Value.
SECTION 10.06. Waiver. Either party to this
Agreement may (a) extend the time for the performance of any of
the obligations or other acts of the other party or (b) waive
compliance with any of the agreements or conditions of the
other party contained herein. Any such extension or
<PAGE>
26
waiver shall be valid only if set forth in an instrument in
writing signed by the party to be bound thereby. Any waiver of
any term or condition shall not be construed as a waiver of any
subsequent breach or a subsequent waiver of the same term or
condition, or a waiver of any other term or condition, of this
Agreement. The failure of any party to assert any of its
rights hereunder shall not constitute a waiver of any of such
rights.
ARTICLE XI
PURCHASE OPTIONS
SECTION 11.01. Sale of Pathmark Distribution Assets.
Other than in the ordinary course of business, Plainbridge
shall not sell any of the Pathmark Distribution Assets without
Pathmark's prior written consent.
SECTION 11.02. Change of Control. (a) In the event
of a Change of Control, Pathmark shall have the right to
purchase any or all of the Pathmark Distribution Assets at
their Fair Market Value.
(b) In the event of a Change of Control, Plainbridge
shall deliver a notice (a "Change of Control Notice") signed by
an officer of Plainbridge to Pathmark stating the occurrence of
a Change of Control within fifteen Business Days of the
occurrence of such Change of Control. For a period of two
years following delivery of a Change of Control Notice (the
"Change of Control Option Period"), Pathmark shall have the
irrevocable and exclusive option to purchase any or all of the
Pathmark Distribution Assets at their Fair Market Value. If
Pathmark elects to purchase the Pathmark Distribution Assets,
it shall give written notice (a "Pathmark Election Notice") of
such election to Plainbridge prior to the expiration of the
Change of Control Option Period.
(c) In the event that Pathmark elects to purchase the
Pathmark Distribution Assets upon the occurrence of a Change of
Control, Plainbridge shall be obligated to sell to Pathmark,
and Pathmark shall purchase within 30 days of the date of the
applicable Pathmark Election Notice, the Pathmark Distribution
Assets at their Fair Market Value.
<PAGE>
27
ARTICLE XII
DISPUTE RESOLUTION
SECTION 12.01. Grievances and Disputed Amounts. If
Pathmark disputes any portion of an invoice from Plainbridge,
it shall pay the undisputed amount by the payment due date.
Either party shall give notice to the other party of any
invoice adjustment it believes should be made, and the parties
shall attempt to reach agreement on such adjustment within
seven days.
SECTION 12.02. Interparty Dispute Resolution.
Disputes between the two parties arising under this Agreement
and not settled pursuant to Section 12.01 or otherwise shall be
submitted to an arbitration panel made up of representatives
from both parties (the "Dispute Panel"). The President of
Pathmark shall act as chairman of the Dispute Panel, and each
party shall appoint two other members to the Dispute Panel,
with each member of the Dispute Panel having one vote. The
decision of the Dispute Panel shall be binding on both parties;
provided that the Boards of Directors of each party shall have
approved the decision. In the event that a decision of the
Dispute Panel shall not be approved by each Board of Directors,
the dispute shall be submitted to independent arbitration
pursuant to Sections 12.03, 12.04 and 12.05.
SECTION 12.03. Arbitration. In the event that the
parties are not successful in resolving the dispute pursuant to
Section 12.02, the parties agree to submit the matter to
binding arbitration in accordance with the Center for Public
Resources Rules for Non-Administered Arbitration of Business
Disputes or the procedure of another mutually agreed-upon
organization, as modified herein, by a sole arbitrator, in New
York, New York, selected in accordance with the provisions of
Section 12.04. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. Secs. 1-16, and judgment upon the
award rendered by the arbitrator may be entered by any court
having jurisdiction thereof.
SECTION 12.04. Selection of Arbitrator. Upon a
failure of the parties to resolve a dispute pursuant to Section
12.02, the parties shall have 10 days to agree upon a mutually
acceptable neutral person not affiliated with either of the
parties to act as arbitrator. If no arbitrator has been
selected within such time, the parties agree jointly to request
the Center for Public Resources or another mutually
<PAGE>
28
agreed-upon organization to supply within 10 days a list of
potential arbitrators with qualifications as specified by the
parties in the joint request. Within five days of receipt of
the list, the parties shall independently rank the proposed
candidates, shall simultaneously exchange rankings, and shall
select as the arbitrator the individual receiving the highest
combined ranking who is available to serve.
SECTION 12.05. Cost of Arbitration. The costs of
arbitration shall be apportioned between Pathmark and
Plainbridge as determined by the arbitrator in such manner as
the arbitrator deems reasonable taking into account the
circumstances of the case, the conduct of the parties during
the proceeding, and the result of the arbitration.
ARTICLE XIII
GENERAL PROVISIONS
SECTION 13.01. Books and Records. Upon prior written
notice, each party shall have access to the books and records
of the other party as they pertain to such party's obligations
or its ability to perform its obligations under this Agreement.
SECTION 13.02. Entire Agreement. This Agreement
constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
SECTION 13.03. Expenses. Except as otherwise
specified in this Agreement, all costs and expenses, including,
without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with
this Agreement and the transactions contemplated hereby prior
to the date of the Plainbridge Asset and Liability Transfer
shall be paid by Pathmark to the extent that appropriate
documentation concerning such costs and expenses shall be
provided to Pathmark.
SECTION 13.04. Amendments. (a) This Agreement may
not be amended or modified except (i) by an instrument in
writing signed by, or on behalf of, each of Pathmark and
Plainbridge or (ii) by a waiver in accordance with Section
10.06.
<PAGE>
29
(b) The Pathmark/Blair Logistics Manual may not be
amended or modified except by an instrument in writing signed
by, or on behalf of, each of Pathmark and Plainbridge.
SECTION 13.05. Notices. All notices, requests,
claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by
courier service, by cable, by telecopy, by telegram, by telex
or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section
13.05):
(a) If to Pathmark:
PATHMARK STORES, INC.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-0915
Telecopier: (908) 499-3460
Attention: Chief Executive Officer
With a copy to: Corporate Secretary
(b) If to Plainbridge:
PLAINBRIDGE, INC.
P.O. Box 5021
Woodbridge, New Jersey 07095
Telecopier: (908) 499-3100
Attention: President
With a copy to: Corporate Secretary
SECTION 13.06. Binding Effect; Assignment. This
Agreement shall be binding upon and inure to the benefit of
Pathmark and Plainbridge and their respective successors and
assigns; provided that (i) Plainbridge shall not have the right
to assign or subcontract its rights and obligations hereunder
or any interest herein without the prior written consent of
Pathmark and (ii) Pathmark may assign its rights and
obligations hereunder without Plainbridge's consent only so
long as (A) (1) Pathmark shall assign all such rights and
obligations and (2) the assignment is to a person who is
acquiring all or substantially all of Pathmark's assets or (B)
Pathmark shall guarantee all of the assigned obligations.
Notwithstanding the foregoing, Plainbridge may assign (without
Pathmark's prior written consent) any of its rights, but not
its obligations, hereunder to any Person providing financing to
Plainbridge.
<PAGE>
30
SECTION 13.07. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 13.08. Confidentiality. Each of Pathmark and
any of its Subsidiaries, on the one hand, and Plainbridge and
the Plainbridge Subsidiaries, on the other hand, agree to and
will cause their respective authorized agents, representatives,
Affiliates, employees, officers, directors, accountants,
counsel and other designated representatives (collectively,
"Representatives") to: (i) treat and hold as confidential (and
not disclose or provide access to any Person to) all records,
books, contracts, instruments, computer data and other data and
information (collectively, "Information") concerning the other
in its possession or furnished by the other or the other's
Representatives pursuant to this Agreement, (ii) in the event
that either party or its Representatives become legally
compelled to disclose any such Information, provide the other
party with prompt written notice of such requirement so that
such other party may seek a protective order or other remedy or
waive compliance with this Section 13.08 and (iii) in the event
that such protective order or other remedy is not obtained, or
the other party waives compliance with this Section 13.08,
furnish only that portion of such Information which is legally
required to be provided and exercise its best efforts to obtain
assurances that confidential treatment will be accorded such
Information; provided, however, that this sentence shall not
apply to any Information that, at the time of disclosure, is
available publicly and was not disclosed in breach of this
Agreement by such party or its Representatives; and provided
further, however, that Plainbridge agrees that Pathmark is the
owner of all Information relating to Pathmark's purchasing
practices and that Pathmark may in its sole discretion sell
such purchasing-related Information to third parties. Each
party agrees and acknowledges that remedies at Law for any
breach of its obligations under this Section 13.08 are
inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and
specific performance, in the event of any such breach, without
the necessity of demonstrating the inadequacy of monetary
damages.
SECTION 13.09. Relationship of Parties. In all
matters relating to this Agreement, both parties shall be
acting solely as independent contractors and shall be solely
<PAGE>
31
responsible for the acts of their employees, officers,
directors and agents. Employees, agents or contractors of one
party shall not be considered employees, agents or contractors
of the other party.
SECTION 13.10. No Third-Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon
any other Person, including, without limitation, any union or
any employee or former employee of Pathmark or Plainbridge or
any Subsidiary of Pathmark or Plainbridge Subsidiary, any legal
or equitable right, benefit or remedy of any nature whatsoever,
including, without limitation, any rights of employment for any
specified period, under or by reason of this Agreement.
SECTION 13.11 Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any Law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated
to the greatest extent possible.
SECTION 13.12. Headings. The descriptive headings
contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 13.13. Governing Law. This Agreement shall
be governed by, and construed in accordance with, the laws of
the State of New Jersey, without regard to the principles of
conflicts of laws thereof.
<PAGE>
32
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first written above.
PATHMARK STORES, INC.
By /s/ John Henry
Name: John Henry
Title: Vice President
PLAINBRIDGE, INC.
By /s/ Marc S. Strassler
Name: Marc A. Strassler
Title: Vice President
RICKEL SERVICES AGREEMENT
SERVICES AGREEMENT, dated as of October 26, 1993
(this "Agreement"), between PATHMARK STORES, INC., a Delaware
corporation ("Pathmark"), and PLAINBRIDGE, INC., a Delaware
corporation ("Plainbridge").
W I T N E S S E T H:
WHEREAS, Pathmark, Plainbridge and PTK Holdings, Inc.,
a Delaware corporation, have entered into a Distribution and
Transfer Agreement, dated as of October 26, 1993, pursuant to
which Pathmark will, among other things, contribute certain
assets and properties related to its Rickel operations (the
"Rickel Businesses") to the capital of Plainbridge and
Plainbridge will assume substantially all the liabilities and
obligations relating to the Rickel Businesses (the "Asset and
Liability Transfer");
WHEREAS, Pathmark and its employees have heretofore
provided certain administrative services to the Rickel
Businesses and, in order for Plainbridge to operate the Rickel
Businesses, Plainbridge will require that Pathmark continue to
provide such services to Plainbridge on the terms and
conditions set forth herein;
WHEREAS, it is a condition to the Asset and Liability
Transfer that Pathmark and Plainbridge enter into this
Agreement;
NOW, THEREFORE, in consideration of the premises and
and the mutual agreements and covenants hereinafter set forth,
Pathmark and Plainbridge hereby agree as follows:
ARTICLE I
CERTAIN DEFINED TERMS
Section 1.01 Certain Defined Terms. As used in this
Agreement, the following terms shall have the following
meanings:
<PAGE>
2
"Action" means any claim, action, suit, arbitration,
inquiry, proceeding or investigation by or before any
Governmental Authority.
"Asset and Liability Transfer" has the meaning
specified in the recitals to this Agreement.
"Event of Force Majeure" means, for any Person, any
event, circumstance or condition that is beyond the control of
such Person and that prevents such Person from performing, in
whole or in part, its obligations under this Agreement.
Without limiting the generality of the foregoing, the following
occurrences shall be deemed to be Events of Force Majeure: (a)
Acts of God, fire, explosion, accident, flood, storm or other
natural phenomenon; (b) war (whether declared or undeclared),
riot, blockade, sabotage or acts of public enemies;
(c) national defense requirements; (d) compliance with any law,
rule, regulation or Governmental Order that (x) becomes
effective after the date hereof and (y) is binding on the
Person seeking to rely on such law, rule, regulation or
Governmental Order to excuse performance, and such Person's
compliance therewith is not voluntary or optional; (e) strikes,
lockouts or injunctions (it being understood that nothing
herein shall require a Person to settle such or any other kind
of labor dispute except on such terms as shall be satisfactory
to such Person); (f) unavailability (for reasons other than the
cost thereof) of adequate fuel, power, raw materials, labor,
containers or transportation facilities; and (g) breakage or
failure of machinery or equipment. Without limiting the
generality of the foregoing, compliance with any law,
regulation or Governmental Order shall not be considered an
Event of Force Majeure unless such law, regulation or
Governmental Order is binding on the Person seeking to rely on
compliance with such law, regulation or Governmental Order to
excuse performance of its obligations under this Agreement and
such Person's compliance therewith is not voluntary or
optional.
"Event of Insolvency" means that, with respect to any
Person or any of its Subsidiaries, such Person or any of its
Subsidiaries shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by
or against such Person or any of its Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or
relief of
<PAGE>
3
debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property
and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period or 30 days, or any of the
actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the
appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property)
shall occur; or such Person or any of its Subsidiaries shall
take any corporate action to authorize any of the actions set
forth above in this definition.
"Governmental Authority" means any U.S. federal, state
or local government, governmental authority, regulatory or
administrative agency, governmental commission, board, bureau,
court or tribunal or any other similar arbitral body.
"Governmental Order" means any order, writ, judgment,
injunction, decree, stipulation, determination or award entered
by or with any Governmental Authority.
"Liabilities" means any and all debts, liabilities,
and obligations, whether accrued or fixed, absolute or
contingent, matured or unmatured, or determined or
undeterminable, including, without limitation, those arising
under any law (including, without limitation, any environmental
law), Action, or Governmental Order and those arising under any
contract, agreement, arrangement, commitment, or undertaking.
"Losses" means any and all losses, Liabilities,
claims, damages, payments, costs and expenses, absolute or
contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, including, without
limitation, the costs and expenses of any and all Actions,
threatened Actions, demands, assessments, judgments,
settlements and compromises relating thereto and attorneys'
fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any such Actions
or threatened Actions.
"Pathmark Subsidiary" means any Subsidiary of Pathmark
other than Plainbridge or any Plainbridge Subsidiary.
"Person" means any individual, partnership, firm,
corporation, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be
deemed to be a person under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
<PAGE>
4
"Plainbridge Subsidiary" means any entity that is
currently a subsidiary of Plainbridge and any other Subsidiary
of Plainbridge which hereafter may be organized or acquired.
"Rickel Businesses" has the meaning specified in the
recitals to this Agreement.
"Rickel Service Manual" means the Rickel service
manual prepared by Pathmark and delivered to Plainbridge on the
date of this Agreement.
"Services" means the administrative services to be
purchased from Pathmark by Plainbridge pursuant to this
Agreement and described in the Rickel Service Manual.
"Subsidiary" of a Person means any corporation,
partnership, joint venture, association and other entity
controlled by such Person directly or indirectly through one or
more intermediaries.
ARTICLE II
SERVICES
SECTION 2.01. Provision of Services by Pathmark.
(a) Pathmark shall provide, or cause to be provided, to
Plainbridge and each Plainbridge Subsidiary such Services as
may be required by Plainbridge or such Plainbridge Subsidiary,
as the case may be; such Services to be performed in a manner
substantially consistent with the manner (i) in which the
Services were provided by Pathmark to the Rickel Businesses
prior to the Asset and Liability Transfer and (ii) in which
Pathmark shall perform such Services for its own benefit.
Pathmark shall be an independent contractor and, except as
authorized by Plainbridge, shall have no authority to bind
Plainbridge or any Plainbridge Subsidiary in any manner
whatsoever. Plainbridge agrees to provide, or cause to be
provided, to Pathmark and its employees such authority as may
be required for Pathmark to effectively and efficiently perform
the Services for Plainbridge and any Plainbridge Subsidiary.
All communications with third parties by Pathmark on behalf of
Plainbridge or any Plainbridge Subsidiary shall be in the name
of Plainbridge or such Plainbridge Subsidiary.
(b) Plainbridge shall be responsible for the
completeness and accuracy of all information furnished to
<PAGE>
5
Pathmark by Plainbridge in connection with Pathmark's
performance of the Services. Plainbridge shall provide all
information, data and documentation in the same format as was
used by the Rickel Businesses prior to the Asset and Liability
Transfer, except as reasonably agreed to by Pathmark.
SECTION 2.02. Third Party Provision of Services. In
the event that Pathmark has contracted with a third party to
provide any of the Services, it shall use commercially
reasonable efforts to cause such third party to provide such
Services to Plainbridge at a performance and quality level
substantially similar to the level of service provided to the
Rickel Businesses prior to the Asset and Liability Transfer,
and Plainbridge shall continue to pay Pathmark directly for the
Services in accordance with Article III. Pathmark shall
discuss with Plainbridge as soon as practicable any problems or
difficulties relating to such third parties, and will give
Plainbridge at least 30 days' notice in the event such a
problem or difficulty threatens to affect the Services in a
manner materially adverse to Plainbridge.
ARTICLE III
SERVICE FEE
SECTION 3.01. Service Fee. As payment for such
Services as may be provided pursuant to Article II, Plainbridge
agrees, subject to Section 3.02, to pay Pathmark a single fee
(the "Service Fee") representing the aggregate cost to Pathmark
of providing such Services calculated in accordance with the
methods documented in the Rickel Service Manual. Pathmark
shall deliver to Plainbridge an invoice as promptly as
practicable after the end of each month for the Service Fee for
such month. Plainbridge shall pay to Pathmark the Service Fee
specified in such invoice within seven days of its receipt.
SECTION 3.02. Service Fee Adjustments. (a) Pathmark
agrees to make a good faith effort to provide the Services in a
cost efficient manner.
(b) Service Fee reductions shall be made
(retroactively as necessary) to reflect the cost reductions
applicable to the period for which a Service Fee is to be or
was paid. Any Service Fee reduction applicable to a period for
which the Service Fee has already been paid shall be
<PAGE>
6
applied to offset future Service Fee payments or shall be
promptly paid by Pathmark to Plainbridge if no further Service
Fee payments equal to or in excess of such amount can
reasonably be expected to become due and payable.
ARTICLE IV
PROPRIETARY INFORMATION
SECTION 4.01. Confidential Information. Each party
agrees to, and will cause its agents, representatives,
Affiliates, employees, officers, directors, accountants,
counsel and other designated representatives (collectively,
"Representatives") to: (i) treat and hold as confidential all,
and not disclose or provide access to any Person to any, books,
records, contracts, instruments, computer data and other data
and information (collectively, "Information") concerning the
other in its possession or furnished by the other or the
other's Representatives pursuant to this Agreement (it being
understood that, with respect to Plainbridge, such Information
is limited to that which concerns the Rickel Businesses), (ii)
in the event that either party or its representatives become
legally compelled to disclose any such Information, provide the
other party with prompt written notice of such requirement so
that such other party may seek a protective order or other
remedy or waive compliance with this Section 4.01 and (iii) in
the event that such protective order or other remedy is not
obtained, or the other party waives compliance with this
Section 4.01, furnish only that portion of such Information
that is legally required to be provided and exercise its best
efforts to obtain assurances that confidential treatment will
be accorded such Information; provided, however, that this
sentence shall not apply to any Information that, at the time
of disclosure, is available publicly and was not disclosed in
breach of this Agreement by such party or its representatives.
Each party agrees and acknowledges that remedies at law for any
breach of its obligations under this Section 4.01 are
inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and
specific performance, in the event of any such breach, without
the necessity of demonstrating the inadequacy of monetary
damages.
SECTION 4.02. Delivery of Data. Pathmark and
Plainbridge agree that Plainbridge is the owner of all
historical records and data processing files in Pathmark's
possession relating exclusively to the Rickel Businesses (the
"Records"). Plainbridge shall have the right, at any time
<PAGE>
7
and from time to time during normal business hours, to copy and
retain all Records and make extracts of information relating to
Plainbridge from Pathmark's data processing records. Upon the
termination of this Agreement, Pathmark shall transfer all
Records to Plainbridge. Pathmark shall not destroy any Records
without having given 30 days' prior written notice to
Plainbridge. Pathmark shall inform any third party service
providers that the Records are the property of Plainbridge and
require such providers to keep the Records confidential and to
transfer all Records to Plainbridge upon termination of this
Agreement.
ARTICLE V
TERM AND TERMINATION
SECTION 5.01. Term. This Agreement shall have a term
of five years. Thereafter, subject to the agreement of
Pathmark, Plainbridge shall each year have an option to renew
for an additional year. Plainbridge may exercise such option
by delivering written notice of its election to exercise such
option to Pathmark at least 120 days before the otherwise
scheduled expiration of the term of this Agreement, and this
Agreement shall be renewed for an additional year unless
Pathmark shall have objected to such renewal in a notice
delivered to Plainbridge at least 90 days before the otherwise
scheduled expiration of the term of this Agreement.
SECTION 5.02. Termination. This Agreement may be
terminated by either Plainbridge or Pathmark (i) if the other
party hereto fails to perform in any material way any of its
material obligations under this Agreement and if such failure
shall remain unremedied for 60 days after written notice
thereof shall have been given to such other party, or (ii) upon
the occurrence of an Event of Insolvency with respect to the
other party.
SECTION 5.03. Transitional Assistance. Upon the
termination of this Agreement, Pathmark shall aid Plainbridge
in the resulting transition by providing Services, at a fee to
be mutually agreed upon, negotiating in good faith at that
time, to Plainbridge, until such time as Plainbridge shall have
had a reasonable opportunity to make alternative arrangements.
SECTION 5.04. Payment Obligations. Notwithstanding
any provisions herein to the contrary, all payment obligations
arising hereunder prior to the termination of this Agreement
shall survive such termination until all such obligations shall
have been paid.
<PAGE>
8
ARTICLE VI
FORCE MAJEURE
SECTION 6.01. Event of Force Majeure. If, as a
result of the occurrence of an Event of Force Majeure, either
party is unable to perform its obligations hereunder, such
obligations shall be temporarily suspended; provided that such
suspension shall be in effect only for the period during which
such Event of Force Majeure shall be continuing and provided
further that such party shall diligently attempt to remove the
cause of its inability to fully perform such obligations and
shall keep the other party advised on a regular basis of its
progress in removing the cause of its inability to fully
perform such obligations. If and to the extent that such
causes reduce or restrict the ability of Pathmark to provide
Services hereunder, Pathmark shall provide the Services to
Plainbridge on a proportional or restricted basis comparable to
its own operations, and the charges shall be adjusted
equitably, by mutual agreement, to reflect any interruption or
reduction in service. In addition, Pathmark shall consult with
Plainbridge in connection with Plainbridge's efforts to arrange
the provision of Services by a third party and otherwise
attempt to assist Plainbridge in its efforts to minimize or
reduce the effect on its operations of Pathmark's inability to
provide the Services in the quantities or at the levels desired
by Plainbridge; provided, however, that nothing herein shall
require Pathmark to assume obligations in addition to those
otherwise set forth in this Agreement or to incur costs in
addition to those otherwise contemplated by this Agreement.
ARTICLE VII
LIMITATION ON LIABILITY
SECTION 7.01. Limitation on Pathmark's Liability.
Plainbridge acknowledges that Pathmark is not in the business
of providing the Services and that the Services are being
provided pursuant to this Agreement solely as an accommodation
to Plainbridge in connection with the Asset and Liability
Transfer. Plainbridge's sole and exclusive remedy and
Pathmark's sole and exclusive liability for any failure by
Pathmark to provide, and for any Losses of Plainbridge
attributable to the provision of, the Services in the manner
specified in Section 2.01 shall be reperformance of such
<PAGE>
9
services. Pathmark makes no warranty regarding the Services
and disclaims all warranties with respect to the Services.
ARTICLE VIII
DISPUTE RESOLUTION
SECTION 8.01. Grievances and Disputed Amounts. If
Plainbridge disputes any portion of any invoice for the Service
Fee from Pathmark, it shall pay the undisputed amount by the
date specified in Section 3.01. Each party shall give notice
to the other party of any invoice adjustment it believes should
be made, and the parties shall attempt to reach agreement on
such adjustment within seven days of such notice.
SECTION 8.02. Interparty Dispute Resolution.
Disputes between the two parties arising under this Agreement
and not settled pursuant to Section 8.01 or otherwise shall be
submitted to an arbitration panel made up of representatives
from both parties (the "Dispute Panel"). The President of
Pathmark shall act as chairman of the Dispute Panel, and each
party shall appoint two other members to the Dispute Panel,
with each member of the Dispute Panel having one vote. The
decision of the Dispute Panel shall be binding on both parties;
provided that the Boards of Directors of each party shall have
approved the decision. In the event that a decision of the
Dispute Panel shall not be approved by each Board of Directors,
the dispute shall be submitted to independent arbitration
pursuant to Sections 8.03, 8.04 and 8.05.
SECTION 8.03. Arbitration. In the event that the
parties are not successful in resolving the dispute pursuant to
Section 8.02, the parties agree to submit the matter to binding
arbitration in accordance with the Center for Public Resources
Rules for Non-Administered Arbitration of Business Disputes or
the procedure of another mutually agreed-upon organization, as
modified herein, by a sole arbitrator, in New York, New York,
selected in accordance with the provisions of Section 8.04.
The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. Secs. 1-16, and judgment upon the award
rendered by the arbitrator may be entered by any court having
jurisdiction thereof.
SECTION 8.04. Selection of Arbitrator. Upon a
failure of the parties to resolve a dispute pursuant to Section
8.02, the parties shall have 10 days to agree upon a mutually
acceptable neutral person not affiliated with either of the
parties to act as arbitrator. If no arbitrator has
<PAGE>
10
been selected within such time, the parties agree jointly to
request the Center for Public Resources or another mutually
agreed-upon organization to supply within 10 days a list of
potential arbitrators with qualifications as specified by the
parties in the joint request. Within five days of receipt of
the list, the parties shall independently rank the proposed
candidates, shall simultaneously exchange rankings, and shall
select as the arbitrator the individual receiving the highest
combined ranking who is available to serve.
SECTION 8.05. Cost of Arbitration. The costs of
arbitration shall be apportioned between Pathmark and
Plainbridge as determined by the arbitrator in such manner as
the arbitrator deems reasonable taking into account the
circumstances of the case, the conduct of the parties during
the proceeding, and the result of the arbitration.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Books and Records. Upon prior written
notice, each party shall have access to the books and records
of the other party as they pertain to such party's obligations
or its ability to perform its obligations under this Agreement.
SECTION 9.02. Entire Agreement. This Agreement
constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior agreements
and undertakings, both written and oral, between the parties
hereto with respect to the subject matter hereof.
SECTION 9.03. Expenses. Except as otherwise
specified in this Agreement, all costs and expenses, including,
without limitation, fees and disbursements of counsel, incurred
in connection with this Agreement and the transactions
contemplated hereby prior to the date of the Asset and
Liability Transfer shall be paid by Pathmark to the extent that
appropriate documentation concerning such costs and expenses
shall be provided to Pathmark.
SECTION 9.04. Amendments. (a) This Agreement may
not be amended or modified except (i) by an instrument in
writing signed by, or on behalf of, each of Pathmark and
Plainbridge or (ii) by a waiver set forth in an instrument in
writing signed by the party to be bound thereby.
<PAGE>
11
(b) The Rickel Service Manual may not be amended or
modified except by an instrument in writing signed by, or on
behalf of, each of Pathmark and Plainbridge.
SECTION 9.05. Notices. All notices, requests,
claims, demands and other communications hereunder shall be in
writing and shall be given or made (and shall be deemed to have
been duly given or made upon receipt) by delivery in person, by
courier service, by cable, by telecopy, by telegram, by telex
or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section
9.05):
(a) If to Pathmark:
Pathmark Stores, Inc.
301 Blair Road
P.O. Box 5301
Woodbridge, New Jersey 07095-0915
Telecopier: (908) 499-3100/3460
Attention: Chief Executive Officer
With a copy to: Corporate Secretary
(b) If to Plainbridge:
Plainbridge, Inc.
P.O. Box 5021
Woodbridge, New Jersey 07095-
Telecopier:
Attention: President
With a copy to: Corporate Secretary
SECTION 9.06. Binding Effect; Assignment. This
Agreement shall be binding upon and inure to the benefit of
Pathmark and Plainbridge and their respective successors and
assigns; provided that Plainbridge may not assign its rights
and obligations hereunder or any interest herein without the
prior written consent of Pathmark. Notwithstanding the
foregoing, Plainbridge may assign (without Pathmark's prior
written consent) any of its rights, but not its obligations,
hereunder to any Person providing financing to Plainbridge.
SECTION 9.07. Counterparts. This Agreement may be
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
<PAGE>
12
SECTION 9.08. Relationship of Parties. In all
matters relating to this Agreement, both parties shall be
acting solely as independent contractors and shall be solely
responsible for the acts of their employees, officers,
directors and agents. Employees, agents or contractors of one
party shall not be considered employees, agents or contractors
of the other party. Neither party shall have the right, power
or authority under this Agreement to create any obligation,
express or implied, on behalf of the other party.
SECTION 9.09. No Third-Party Beneficiaries. This
Agreement shall be binding upon and inure solely to the benefit
of the parties hereto and their permitted assigns and nothing
herein, express or implied, is intended to or shall confer upon
any other Person any legal or equitable right, benefit or
remedy of any nature whatsoever.
SECTION 9.10. Severability. If any term or other
provision of this Agreement is invalid, illegal or incapable of
being enforced by any law or public policy, all other terms and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions
contemplated hereby are consummated as originally contemplated
to the greatest extent possible.
SECTION 9.11. Headings. The descriptive headings
contained in this Agreement are for convenience of reference
only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.12. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the laws of
<PAGE>
13
the State of New Jersey, without regard to the principles of
conflicts of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized as of the date first above written.
PATHMARK STORES, INC.
By
Name: John Henry
Title: Vice President
PLAINBRIDGE, INC.
By
Name: Marc Strassler
Title: Vice President
EXHIBIT 10.6
TAX SHARING AGREEMENT
---------------------
AMENDED AND RESTATED TAX SHARING AGREEMENT
("Agreement") dated as of December 3, 1993, by and between
SMG-II HOLDINGS CORPORATION, a Delaware corporation
("Holdings") and PATHMARK STORES, INC., a Delaware corporation
("Subsidiary").
PREAMBLE
Holdings and Subsidiary have determined to amend
certain provisions of the Tax Sharing Agreement dated as of
October 26, 1993 between them, and have further determined to
restate such Agreement to reflect such amendments.
Subsidiary is a member of a consolidated group,
within the meaning of Section 1.1502-1(h) of the Treasury
Regulations, of which Holdings is a common parent corporation
("Holdings Group") and Holdings will include Subsidiary in
filing a consolidated United States Federal income tax return
for the group which includes itself and Subsidiary (a
"Consolidated Return").
IN CONSIDERATION of the mutual agreements and
understandings set forth herein, Holdings and Subsidiary
hereby agree as follows:
SECTION 1. Hypothetical Subsidiary Tax Liability.
-------------------------------------
For each taxable period in which Subsidiary is included in a
Consolidated Return (whether or not other corporations are
included in the affiliated group filing such Consolidated
Return), Subsidiary shall cause to be prepared hypothetical
estimated and final Federal income tax returns ("Subsidiary
Group Returns") showing the estimated and final Federal income
tax liability that Subsidiary would have been obligated to pay
had it not joined in the Consolidated Return (the "Subsidiary
Group Tax Liability"). The Subsidiary Group Tax Liability
shall be computed as follows:
(i) Subsidiary shall be considered to have the
same taxable year as Holdings (except for short taxable
years, if any, when Subsidiary enters or leaves the
affiliated group).
(ii) Such computation shall be made as though
Subsidiary had filed a consolidated Federal income tax
return for the hypothetical group consisting of itself
and its subsidiaries ("Subsidiary Group").
(iii) Such computation shall be made solely by
reference to items of income, gain, deduction, loss and
credit in the current and prior taxable years of the
Subsidiary Group, notwithstanding that any such item may
require a different treatment or limitation on the
Consolidated Return.
(iv) Items of income, gain, loss or deduction
arising from a transaction described in Section 1.1552-
1(a)(2)(ii) of the Treasury Regulations shall be taken
into account by the Subsidiary Group in the same manner
and in the same taxable years as such items are actually
taken into account on the Consolidated Return.
(v) Carryovers and carrybacks of losses, credits
or similar items shall be computed using any of such
items that would be available if (but subject to the same
limitations that would exist if) the Subsidiary Group had
filed a consolidated Federal income tax return for each
year since the organization of Subsidiary notwithstanding
<PAGE>
that there is no actual carryover or carryback or there
is a larger or smaller carryover or carryback as a result
of filing a Consolidated Return.
(vi) The treatment of any item affecting the
computation of the Subsidiary Group Tax Liability shall
be (i) in accordance with Federal income tax law, (ii)
subject to (i), consistent with the treatment, if any, of
such item in Subsidiary's similar calculations for any
prior tax period unless the inconsistency is one that
would not require Internal Revenue Service ("IRS")
approval or unless Holdings has obtained such approval,
and (iii) subject to (i), such as to minimize the actual
and estimated Subsidiary Group Tax Liability and the
amount of taxes payable by Subsidiary hereunder.
Subsidiary shall have the right to make any and all
elections permitted by law with respect to the treatment
of items of income, deduction or credit for it and its
subsidiaries.
SECTION 2. Payments.
--------
(a) If the Subsidiary Group Tax Liability (whether
estimated or final) shown on the Subsidiary Group Return for
any taxable period is positive, Subsidiary shall pay such
amount to Holdings not later than the time or times such
amount (or any portion thereof) would be due from Subsidiary
to the IRS if the Subsidiary Group filed a separate
consolidated return.
(b) If the Subsidiary Group Return shows
entitlement to a refund, including any refund attributable to
a carryback or carryforward, then Holdings shall pay to
Subsidiary the amount of such refund (including interest)
within 10 days of receiving the Subsidiary Group Return.
SECTION 3. Returns; Indemnity. For each taxable
------------------
period for which a Consolidated Return (estimated or final)
which includes the Subsidiary is filed, Holdings will cause
such Return to be prepared and filed and shall pay all amounts
shown to be due thereon to the IRS. Holdings shall hold the
Subsidiary Group harmless from any actual estimated or final
Federal income tax liability (including penalties and
interest) of the Holdings Group or any members thereof. The
Subsidiary Group shall not be entitled to any refund or other
adjustment received by the Holdings Group from the IRS but
only to the payments provided herein.
SECTION 4. Calculations. All determinations
------------
required by this Agreement, including the calculation of the
Subsidiary Group Tax Liability, shall be jointly performed by
the person or persons designated by Holdings and Subsidiary.
Except as provided in Section 6 hereof, the determinations
made as described in this Section 4 shall be deemed to be
conclusive for purposes of this Agreement.
SECTION 5. States, etc. Subsidiary agrees to join
-----------
with Holdings in any consolidated or combined state or local
income or franchise tax return ("Combined Return") for any
taxable year for which Holdings files a Combined Return that
may include Subsidiary. If the liability for any state or
local income or franchise taxes of Subsidiary and Holdings is
determined on a consolidated or combined basis, this Agreement
shall be applied, mutatis mutandis, to all matters relating to
------- ---------
such taxes.
SECTION 6. Audits. If any Federal income tax
------
return filed with the IRS covering or including the Subsidiary
Group is audited, the determinations required by this
Agreement shall be computed on the basis of the
"determination" (within the meaning of Section 1313(a) of the
Internal Revenue Code of 1986, as amended) of such audit and
<PAGE>
adjusting payments with interest at the rates that would have
been payable to or by the IRS shall be paid within 30 days
following such "determination".
SECTION 7. Cooperation. Holdings and Subsidiary
-----------
will cooperate, consult and furnish each other with
information concerning matters covered by this Agreement,
including tax returns, claims for refund, tax audits, and
other filings and proceedings related to a taxable year in
which Subsidiary is or was included in a Consolidated Return.
If for any taxable year the Subsidiary Group is not included
in a Consolidated Return, Holdings and Subsidiary will
cooperate, consult and furnish each other with information
required accurately to prepare any Federal income tax return
for any taxable year of either Holdings or the Subsidiary
Group in which the tax liability of either (or of the
affiliated group of which either is a member) may be affected
by the income, deductions or other tax attributes of the
other.
SECTION 8. Effective Date. This Agreement is
--------------
effected with respect to taxable periods ending after October
26, 1993. Notwithstanding the above sentence, Section 6 and 7
of this Agreement will apply to any "determination" occurring
after October 26, 1993.
SECTION 9. Miscellaneous.
-------------
(a) This Agreement may only be terminated or
amended by written agreement of the parties.
(b) This Agreement shall be governed by the laws of
the State of New York.
(c) This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their
respective successors and assigns. In the event Holdings
ceases to be the common parent corporation of the affiliated
group that includes Holdings, the new common parent
corporation, if any, shall be considered a successor of
Holdings.
(d) For purposes of this Agreement, "tax" shall
include interest, penalties and additions to tax associated
therewith, and "Holdings" shall include any affiliates of
Holdings with which it may file from time to time a
consolidated, combined or similar return.
The parties hereto have executed this Agreement as
of the date first above written.
SMG-II HOLDINGS CORPORATION
By Joseph Adelhardt
-----------------------------
Name:
Title:
PATHMARK STORES, INC.
By Joseph Adelhardt
-----------------------------
Name:
Title:
EXHIBIT 10.7
TAX INDEMNITY AGREEMENT
-----------------------
AMENDED AND RESTATED TAX INDEMNITY AGREEMENT
("Agreement") dated as of December 3, 1993, by and between
PATHMARK STORES, INC., a Delaware corporation ("Pathmark") and
PLAINBRIDGE, INC. a Delaware corporation ("Plainbridge").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Pathmark and Plainbridge have determined to
amend certain provisions of the Tax Indemnity Agreement dated
as of October 26, 1993 between them, and have further
determined to restate such Agreement to reflect such
amendments;
WHEREAS, Pathmark and Plainbridge have entered into
a Distribution and Transfer Agreement, dated as of October 26,
1993 pursuant to which Pathmark on October 26, 1993
distributed to its sole shareholder all the outstanding shares
of the common stock, par value $.01 per share, of Plainbridge,
(the "Distribution");
WHEREAS, it is intended that, for federal income tax
purposes, the Distribution shall qualify as a tax-free
distribution under provisions of Section 355 of the United
States Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, SMG-II HOLDINGS CORPORATION, a Delaware
Corporation, is the common parent of a consolidated group (the
"SMG-II Group"), within the meaning of Section 1.1502-1(h) of
the United States Treasury Regulations, which includes
Pathmark and Plainbridge; and
WHEREAS, Pathmark and Plainbridge have determined
that it is appropriate and desirable to set forth their
agreement with respect to certain liabilities that may be
asserted in respect of the tax consequences of the
Distribution;
NOW, THEREFORE, in consideration of the premises and
the mutual agreements and covenants hereinafter set forth
Pathmark and Plainbridge hereby agree as follows:
SECTION 1. Indemnified Taxes. Plainbridge shall
-----------------
indemnify Pathmark and all other members of the SMG-II Group
and hold them harmless against any income or franchise taxes
resulting from the Distribution, including, without
limitation, any taxes imposed pursuant to or as a result of
Section 311 of the Code.
SECTION 2. Miscellaneous.
-------------
(a) This Agreement may only be terminated or
amended by written agreement of the parties.
(b) This Agreement shall be governed by the laws of
New York.
(c) For purposes of this Agreement, "tax" shall
include interest, penalties and additions to tax associated
therewith.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
PATHMARK STORES, INC.
By Joseph Adelhardt
--------------------------
Name:
Title:
PLAINBRIDGE, INC.
By Joseph Adelhardt
--------------------------
Name:
Title:
EXHIBIT 10.18
EMPLOYMENT AGREEMENT
AGREEMENT, dated as of August 1, 1993 (the "Effective
Date"), among Supermarkets General Corporation, a Delaware
corporation (the "Company"), Supermarkets General Holdings
Corporation, a Delaware corporation and parent corporation to
the Company ("Holdings"), and SMG-II Holdings Corporation, a
Delaware corporation and parent corporation to Holdings ("SMG-
II"), and Jack Futterman ("Executive").
W I T N E S S E T H:
WHEREAS, The Company, Holdings, SMG-II (collectively, the
"Companies") and Executive are parties to an Employment
Agreement, dated as of January 1, 1990, as amended as of
February 4, 1991 and as of February 28, 1992 (the "Prior
Agreement"), pursuant to which Executive is employed by the
Company as Chairman of the Board of Directors, President and
Chief Executive Officer, and serves in the same capacity for
Holdings and SMG-II.
WHEREAS, effective as of the Effective Date, Executive
has relinquished the position of President of the Companies;
and
WHEREAS, the parties now desire to enter into a new
employment agreement reflecting the terms and conditions of
Executive's current positions with the Companies and certain
other agreements and understandings between the parties, and
the parties further intend that such new agreement shall
supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and
the mutual covenants herein contained, the parties hereto
agree as follows:
1. Employment and Duties.
---------------------
(a) General. The Company hereby employs Executive
-------
and Executive agrees, upon the terms and conditions herein set
forth, to service as Chairman of the Board of Directors and
Chief Executive Officer of the Company. Holdings hereby
retains Executive as Chairman of the Board of Directors and
Chief Executive Officer of Holdings, and SMG-II hereby retains
Executive as Chairman of the Board of Directors and Chief
Executive Officer of SMG-II. In such capacities, Executive
shall report directly to the Board of Directors of the Company
(the "Board"), to the Board of Directors of Holdings (the
"Holdings Board"), and to the Board of Directors of SMG-II
(the "SMG-II Board"), and shall perform such duties in respect
of such positions as may be delineated in the By-Laws of the
Company, Holdings or SMG-II, as the case may be, and such
other duties, commensurate with Executive's title and
positions of Chairman and Chief Executive Officer of the
Company, Holdings and SMG-II, as may be assigned to Executive
from time to time by the Board, the Holdings Board or the SMG-
II Board. If elected or appointed, Executive shall also serve
as a director or officer of any of the Company's subsidiaries
or affiliated companies without further compensation.
(b) Full-Time Service. Throughout the Period (as
-----------------
defined in paragraph 2 below), Executive shall, except as may
from time to time be otherwise agreed in writing by the
Company, and unless prevented by ill health, devote his full-
time working hours to his duties hereunder, shall in all
respects conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board, the
Holdings Board and the SMG-II Board, and shall use his best
efforts to promote and serve the interests of the Companies.
<PAGE>
(c) No Other Employment. Throughout the Period,
-------------------
Executive shall not, directly or indirectly, render services
to any other person or organization for which he receives
compensation without the consent of the Board, the Holdings
Board or the SMG-II Board, or otherwise engage in activities
which would interfere significantly with his faithful
performance of his duties hereunder. Executive may perform
inconsequential services without specific compensation
therefor in connection with the management of personal
investments, provided that such activity does not contravene
the provisions of subparagraph 1(b) hereof or paragraph 5
hereof.
2. Term of Employment. The Company shall retain
------------------
Executive and Executive shall serve in the employ of the
Company for an initial period of three (3) years, commencing
on the Effective Date and extending through and including July
31, 1996 (the "Initial Period"); provided, however, that
-------- -------
commencing on the second anniversary of the effective Date and
each successive anniversary thereafter, the term of employment
hereunder shall be automatically extended for one additional
year, unless at least thirty (30) days prior to such
anniversary, the Company has delivered to Executive, or
Executive has delivered to the Company, written notice of its
or his desire, as the case may be, not to extend the term of
employment (the Initial Period, including the extensions
thereof, if any, is herein referred to as the "Period");
provided, further, that the period shall terminate when
-------- -------
Executive's employment hereunder terminates.
3. Compensation and Other Benefits. Subject to the
-------------------------------
provisions of this Agreement, the Company shall pay and
provide the following compensation and other benefits to
Executive during the Period as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to
-----------
Executive an annual base salary (the "Base Salary") at the
rate of $475,000 per annum, payable in accordance with the
Company's then current payroll practices. The Base Salary
shall be reviewed annually and may be increased in the
discretion of the Board or Holdings Board. The Company shall
be entitled to deduct or withhold all taxes and charges which
the Company may be required to deduct or withhold therefrom.
(b) Bonus. For each fiscal year in the Period (or
-----
fraction thereof), Executive shall be eligible to receive a
bonus, ranging in each year from 0 to a maximum rate of 75% of
annual Base Salary, in accordance with the terms of the
Executive Incentive Plan of the Company which shall be no less
favorable in the aggregate to Executive than the terms of such
plan in effect for Executive on the Effective Date.
(c) Employment Benefit Plans. At all times during
------------------------
the Period, Executive shall be provided the opportunity to
participate in pension and welfare plans, programs and
arrangements (the "Plans") that are generally made available
to executives of the Company, or as may be deemed appropriate
by the Compensation Committee of the Board or, if there is no
Compensation Committee of the Board, the Compensation
Committee of the Holdings' Board.
(d) Support Services. At all times during the
----------------
Period, the Company shall provide Executive with office space
and support services, including secretarial services,
equivalent to those afforded to Executive immediately prior to
the Effective Date.
(e) Relocation. The Company shall not, without
----------
Executive's consent, relocate Executive's principal place of
business to a location beyond 20 miles from the location of
<PAGE>
Executives's principal place of business immediately prior to
the Effective Date.
(f) Travel. The Company shall not, without
------
Executive's consent, require Executive to travel on the
Company's business to an extent materially inconsistent with
the Company's business travel requirements as applied to
Executive immediately prior to the Executive Date.
4. Termination of Employment.
-------------------------
(a) Termination for Cause; Resignation Without Good
-----------------------------------------------
Reason. (i) If, prior to the expiration of the Period,
------
Executive's employment is terminated by the Company for Cause,
as defined in subparagraph 4(a)(ii), or if Executive resigns
from his employment hereunder without Good Reason, as defined
in subparagraph 4(b)(iv), Executive shall not be eligible to
receive Base Salary under subparagraph 3(a) or to participate
in any Plans under subparagraph 3(c) with respect to future
periods after the date of such termination or resignation,
except for the right to receive benefits which have become
vested under any Plan in accordance with the terms of such
Plan. In addition, Executive shall not be eligible to receive
any bonus described in subparagraph 3(b) for the Company's
fiscal year during which the date of termination or
resignation occurs and any later years.
(ii) Termination for "Cause" shall mean termination
of Executive's employment with the Company by the Board of
Directors of the Company because of (A) the commission by
Executive of an act of fraud or embezzlement against the
Company or any of its subsidiaries, or (B) a felony conviction
of such Executive.
(iii) The date of termination of employment by the
Company under this paragraph 4(a) shall be the date specified
in a written notice of termination (which date shall be no
earlier than the date of furnishing such notice), or if no
such date is specified therein, the date of receipt by
Executive of such written notice of termination. The date of
resignation under this paragraph 4(a) shall be two weeks after
receipt by the Company of written notice of resignation, or if
no such notice is provided, the day Executive ceases to
perform his duties hereunder.
(b) Termination Without Cause; Resignation for Good
-----------------------------------------------
Reason. (i) Subject to the provisions of subparagraph
------
4(b)(iii) and subparagraph 4(b)(vii), if, prior to the
expiration of the Period, Executive's employment is terminated
by the Company without Cause, or if Executive resigns from his
employment for Good Reason, Executives hall be entitled to
receive as severance benefits (the "Severance Benefits") the
following: (A) his Base Salary at the annual rate then in
effect immediately prior to such termination or resignation
for the remainder of the Period or two years, whichever is
longer, commencing on the day following the date of such
termination or resignation (the "Severance Period"); (B) the
portion of the bonus or bonuses attributable to the financial
targets set forth for the Company under the EIP that Executive
would have earned had his employment continued for the
Severance Period, determined in accordance with the Company's
Executive Incentive Plan and based on the same percentage of
base compensation used to calculate bonuses for Executive at
the time of such termination or resignation and subject to the
Company reaching such applicable financial targets set under
the EIP or any other bonus plans; provided, however, that if
-------- -------
any bonus period commences during the Severance Period and
concludes after the expiration thereof, the amount of the
bonus, if any, for such bonus period shall be prorated to take
into account the portion of such bonus period coinciding with
the Severance Period; and (C) continued coverage for the
Severance Period under the Company's health and insurance
<PAGE>
plans applicable to Executive immediately prior to such
termination or resignation or, if any such plan does not
permit continued coverage of Executive, the Company shall
arrange to provide a benefit substantially similar to and no
less favorable than the benefits he was entitled to under such
plan; and provided further that, if such termination without
-------- -------
cause or resignation for Good Reason occurs on or after a
Change in Control (as hereinafter defined), then (D) Severance
Period shall mean the three-year period commencing on the day
following the date of such termination or resignation; and (E)
the amount of Executive's Base Salary, for purposes of
determining Executive's Severance Benefits, shall be deemed to
be the greater of (X) his Base Salary at the annual rate in
effect immediately prior to such termination or resignation,
and (Y) $500,000. In addition, in the event Executive is
terminated without Cause or resigns for Good Reason, the
following shall apply: (1) Executive shall receive, as of the
date of such termination or resignation, full credit for the
Initial Period (to the extend not otherwise credited) for
purposes of "Vesting Service" under the Supplemental
retirement Agreement, dated March 9, 1987, between the Company
and Executive (the "Retirement Agreement"); and (2) to the
extent applicable, the Severance Period and the amounts paid
to Executive in respect thereof (calculated solely for this
purpose without reduction for compensation received from a
subsequent employer) shall be considered in calculating
Executive's "final average compensation" for purposes of
Executive's benefits under the Retirement Agreement or any
other nonqualified retirement arrangement applicable to
Executive. Severance Benefits shall be reduced by any
compensation or benefits which Executive is entitled to
receive in connection with any employment of Executive by
another employer during the Severance Period. Executive shall
provide the Company with any evidence of amounts received in
connection with other employment which the Company shall
reasonably request.
(ii) In the event of a termination or resignation
described in this paragraph 4(b), Executive shall receive
title, free and clear of all encumbrances, to the Company
provided automobile then provided to Executive for his use and
the Company will reimburse Executive for secretarial and
office expenses, not in excess of $30,000.00, incurred by
Executive during the first year following such termination or
resignation.
(iii) If, following such termination or resignation
of employment, Executive breaches the provisions of paragraph
5 hereof, Executive shall not be eligible, as of the date of
such breach, for the payment of Severance Benefits, and all
obligations and agreements of the Company to pay Severance
Benefits shall thereupon cease; provided, however, that this
-------- -------
paragraph 4(b)(iii) shall not in any way impair Executive's
rights to extended medical coverage, at his expense, under
Section 4980B(f) of the Internal Revenue Code of 1986, as
amended, and the applicable final proposed and temporary rules
and regulations thereunder (the "Code").
(iv) The date of termination of employment by the
Company under this paragraph 4(b) shall be the date specified
in a written notice of termination to Executive (which date
shall be no earlier than the date of furnishing such notice)
or, if no such date is specified therein, the date on which
such notice is given to Executive. The date of resignation
under this paragraph 4(b) shall be two weeks after receipt by
the Company of the written notice of resignation.
(v) Resignation for "Good Reason" shall mean
Executive's voluntary termination of employment with the
Company because of (A) a reduction, without Executive's
written consent, in Executive's current base or aggregate
compensation, unless such reduction is generally applicable to
<PAGE>
all executives of the Company, (B) a reduction, without
Executive's consent, in Executive's then current
responsibilities as set forth in paragraph 1(a) hereof, or (C)
such other events of hardship as the Board or Holdings' Board
may determine on a case-by-case basis.
(vi) Severance Benefits representing Base Salary
continuation shall be paid in accordance with the Company's
then current payroll practice commencing on the next payroll
date following the date of the termination of Executive's
employment under subparagraph 4(b), in an amount equal to the
amount paid to Executive by the Company for the payroll period
immediately prior to such termination or resignation.
Severance Benefits representing bonus payments shall be paid
annually in accordance with the Company's then current
practice for paying bonuses commencing within two months after
the Company's fiscal year end.
(vii) In the event that the Severance Benefits would
not be deductible in whole or in part in the calculation of
Federal income tax owned by the Company or any of its
affiliates, or any other person or entity making such payment
or providing such benefit by reason of Section 280G of the
Code, the Severance Benefits shall be reduced until no portion
of the Severance Benefits is not deductible by reason of
Section 280G of the Code.
(viii) For purposes of this paragraph 4(b), "Change
------
in Control" shall mean (A) the acquisition by a Third Party
----------
(as hereinafter defined) of beneficial ownership of more than
30% of the issued and outstanding voting common stock of SMG-
II, Holdings, PTK Holdings, Inc., a wholly-owned subsidiary of
Holdings ("PTK"), or the Company, or (B) the acquisition of
all or substantially all of the assets of the Company by a
Third Party; provided, however, that no Change in Control
-------- -------
shall be deemed to occur as long as (i) Merrill Lynch & Co.,
Inc. and its affiliates (the "Merrill Stockholders"), (ii) the
--------------------
management employees of the Company, or (iii) the Merrill
Stockholders, in combination with the management employees of
the Company, beneficially own, directly or indirectly, more
than 50% of the voting common stock of the Company. For
purposes of this paragraph 4(b)(viii), "Third Party" shall
mean any person other than the Company, Holding, SMG-II, PIK,
each of the Merrill Stockholders, or the Equitable Life
Assurance Society of the United States and its affiliates.
For purposes of this paragraph 4(b)(viii), "person" and
------
"beneficial ownership" shall have the meanings assigned to
---------- ---------
such terms under Section 13(d) of the Securities Exchange Act
of 1934, as amended, and "affiliate" of any first person shall
---------
mean a second person that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is
under common control with, such first person.
(c) Death. If Executive dies prior to the
-----
expiration of the Period, his Base Salary and bonus
(determined as the bonus he would have earned had his
employment continued until the end of the applicable bonus
period during which his death occurred) will be prorated
through his day of death and paid to his beneficiary or
estate.
(d) Disability. If Executive becomes Permanently
----------
Disabled, as defined below in this subparagraph, prior to the
expiration of the Period, the Company shall be entitled to
terminate his employment and Executive shall be entitled to
receive disability benefits in accordance with the disability
policy maintained by the Company as of the date of such
disability. If Executive's employment is terminated by reason
of Executive becoming Permanently Disabled, the provisions of
clause (1) of Section 4(b)(i) above shall apply to the
calculation of Executive's benefits under the Retirement
Agreement. For the purposes of this subparagraph, Executive
shall be deemed "Permanently Disabled" when, and only when, he
suffers a physical or mental disability or infirmity that
prevents the normal performance of duties lasting for a
continuous period of six months or more.
<PAGE>
5. Secrecy and Noncompetition.
--------------------------
(a) No Competing Employment. For so long as
-----------------------
Executive is receiving, or is entitled to receive, any
payments under or pursuant to this Agreement (such period
being referred to hereinafter as the "Restricted Period"),
Executive shall not, unless he receives after the Effective
Date the prior written consent of the Company, directly or
indirectly, whether as owner, consultant, employee, partner,
venturer, agent, through stock ownership, investment of
capital, lending of money or property, rendering of services,
or otherwise (except ownership of less than 5% of the number
of shares outstanding of any securities which are publicly
traded), compete with the retail supermarket business or any
other business contributing at least 15% of the consolidated
revenues of the Company at the time of the termination of
Executive's employment hereunder (such businesses are
hereinafter referred to as the "Business"), or assist, become
interested in or be connected with any corporation, firm,
partnership, joint venture, sole proprietorship or other
entity which so competes with the Business, except for the
aforementioned 5% ownership of publicly traded securities.
The restrictions imposed by this subparagraph shall not apply
to any geographic area in which the Company is not engaged in
the Business at the time of termination.
(b) No Interference. During the Restricted Period,
---------------
Executive shall not, whether for his own account or for the
account of any other individual, partnership, firm,
corporation or any other business organization or entity
(other than the Company), intentionally solicit, endeavor to
entice away from the Company, or any affiliate, or otherwise
interfere with the relationship of the Company, or any
affiliate, with any person who is employed with the Company,
or any affiliate (including, but not limited to, any
independent sales representatives or organizations), or any
person or entity who is, or was within the then most recent
12-month period, a customer or client (other than an
individual retail consumer) of the Company, or any affiliate.
(c) Secrecy. Executive recognizes that the
-------
services to be performed by him hereunder are special, unique
and extraordinary in that, by reason of his employment
hereunder and his past employment with the Company, he may
acquire or has acquired confidential information and trade
secrets concerning the operations of the Company, or its
affiliates, the use or disclosure of which could cause the
Company substantial loss and damages which could not be
readily calculated, and for which no remedy at law would be
adequate. Accordingly, Executive covenants and agrees with
the Company that he will not at any time, except in
performance of Executive's obligations to the Company
hereunder, or with the prior written consent of the Company
Board or Holdings' Board, directly or indirectly, disclose any
secret or confidential information that he may learn or has
learned by reason of his association with the Company, or any
predecessors to its business, or use any such information to
the detriment of the Company, Holdings, or any of their
affiliates. The term "confidential information" includes,
without limitation, information not previously disclosed to
the public or to the trade by the Company's management with
respect to the Company's, Holdings', or any of their
respective subsidiaries' or affiliates', business plans,
prospects and opportunities, the identity of clients,
suppliers or customers, information regarding operational
strengths and weaknesses, trade secrets, know-how and other
intellectual property, systems, procedures, manuals,
confidential reports, product price lists, marketing plans of
strategies, and financial information. Executive understands
and agrees that the rights and obligations set forth in this
subparagraph 5(c) are perpetual and, in any case, shall extend
<PAGE>
beyond the Restricted Period and Executive's employment
hereunder.
(d) Exclusive Property. Executive confirms that
------------------
all confidential information is and shall remain the exclusive
property of the Company. All business records, papers and
documents kept or made by Executive relating to the business
of the Company shall be and remain the property of the
Company. Upon the termination of his employment with the
Company, or upon the request of the Company at any time,
Executive shall promptly deliver to the Company, and shall
not, without the consent of the Company (which consent shall
not be unreasonably withheld), retain copies of, any written
materials not previously made available to the public, records
and documents made by Executive or coming into his possession
concerning the business or affairs of the Company. Executive
may retain records relating exclusively to the terms and
conditions of his employment relationship with the Company.
Executive understands and agrees that the rights and
obligations set forth in this subparagraph 5(d) are perpetual
and, in any case, shall extend beyond the Restricted Period
and Executive's employment hereunder.
(e) Stock Ownership. Other than as provided in
---------------
subparagraph 1(c) or 5(a) hereof, nothing in this Agreement
shall prohibit Executive from acquiring or holding any issue
of stock or securities of any company or other business
entity, provided that Executive does not participate in the
operations of any such company, and provided further that,
with respect to any class of voting securities listed on a
national securities exchange or quoted on the automated
quotation system of the National Association of Securities
Dealers, Inc., Executive and members of his immediate family
do not own at any time during the Restricted Period more than
5% of the issued and outstanding shares of such class of
securities.
(f) Injunctive Relief. Without intending to limit
-----------------
the remedies available to the Company, Executive acknowledges
that a breach of any of the covenants contained in this
paragraph 5 may result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited
by this paragraph 5, or such other relief as may be required
to specifically enforce any of the covenants in this paragraph
5.
6. Certain Equity Arrangements.
---------------------------
Amendment of Employee Stock Options. SMG-II, as
-----------------------------------
successor to Holdings in respect of all options outstanding
under the SMG-II Management Investors 1987 Stock Option Plan
(as successor to the Holdings Management Investors 1987 Stock
Option Plan) (the "Option Plan"), and Executive have
previously agreed to amend the Incentive Stock Option
Agreements, dated December 22, 1987 and March 21, 1990,
between Holdings and Executive, and the Nonqualified Stock
Option Agreements, dated December 22, 1987 and March 21, 1990,
between Holdings and Executive, and hereby agree to amend, and
without further action of the parties hereby amend, the
Incentive Stock Option Agreement and Nonqualified Stock Option
Agreement, each dated March 26, 1992, between SMG-II and the
Executive (collectively, the "Option Agreements"), to provide
that, if Executive's employment is terminated by the Company
without Cause, or if Executive resigns for Good Reason prior
to the expiration of the Period, the options to purchase up to
a maximum of 13,000 shares of Class A Common Stock of SMG-II
evidence by such Option Agreements shall be exercisable until
<PAGE>
the Expiration Date (as defined in Section 2 of such Option
Agreements).
7. Arbitration. Any controversy or claim arising out
-----------
of or relating to this Agreement, including, but not limited
to, any claim relating to the validity, interpretation,
enforceability or breach of this Agreement, or any claim or
controversy arising out of the employment relationship or the
commencement or termination of that relationship, including,
but limited to, any claim for breach of covenant, breach of
any implied covenant, wrongful termination, constructive
discharge or intentional infliction of emotional distress,
which is not settled by agreement between the parties, shall
be settled by arbitration in New York, New York, before a
panel of three arbitrators, one to be selected by the
Companies, one by Executive and the other by the two persons
so selected, all in accordance with the rules of the American
Arbitration Association then in effect; provided, however,
-------- -------
that the Companies shall nevertheless be entitled to seek
relief under paragraph 5 above in accordance with paragraph
5(f) thereof. In consideration of the parties' agreement to
submit to arbitration disputes with regard to this Agreement
and with regard to any alleged tort, contract or other claim
arising out of the employment relationship, and in
consideration of the anticipated expedition and minimization
of expense of this arbitration remedy, each party agrees that
the arbitration provisions of this Agreement shall provide it
with the exclusive remedy, except as provided in the preceding
sentence, and each party expressly waives any right it may
have to seek redress in any other forum except as provided
herein. The parties further agree that the arbitrators acting
hereunder shall be empowered to assess no remedy other than
payment of compensatory damages or an order (including
temporary, preliminary or permanent injunctive relief)
enforcing the provisions of paragraph 5 above. The expenses
of the arbitration proceeding plus the reasonable attorneys
fees incurred by Executive in connection therewith shall be
paid by the Company. Any decision or order of the majority of
arbitrators shall be binding upon the parties hereto and
judgment thereon may be entered in the Supreme Court of the
State of New York or any other court having jurisdiction.
8. Nonassignability; Binding Agreement. Neither this
-----------------------------------
Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by Executive
without the Company's prior written consent, provided,
--------
however, that nothing in this paragraph shall preclude
-------
Executive from designating any of his beneficiaries to receive
any benefits payable hereunder upon his death, or the
executors, administrators, or other legal representatives from
assigning any rights hereunder to the person or persons
entitled thereto.
This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or assigns
of the Companies and Executive's heirs and the personal
representatives of Executive's estate.
9. Severability. If the final determination of a court
------------
of competent jurisdiction declares, after the expiration of
the time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid
or unenforceable term or provision shall be deemed replaced by
a term or provision that is valid and enforceable and that
comes closest to expressing the intention of the invalid or
unenforceable term or provision.
10. Amendment; Waiver. This Agreement may not be
------------------
modified, amended or waived in any manner, except by an
instrument in writing signed by all parties hereto. The waiver
<PAGE>
by any party of compliance with any provision of this
Agreement by any other party shall not operate or be construed
as a waiver of any other provision of this Agreement, or of
any subsequent breach by such party of a provision of this
Agreement.
11. Governing Law. All matters effecting this
-------------
Agreement, including the validity thereof, are to be governed
by, interpreted and construed in accordance with the laws of
the State of New York.
12. Notices. Any notice hereunder by any party to any
-------
other shall be given in writing by personal delivery or
certified mail, return receipt requested. If addressed to
Executive, the notice shall be delivered or mailed to
Executive at the address last known to the Company, or if
addressed to any of the Companies, the notice shall be
delivered or mailed to the Company at its executive offices,
to the attention of the Board. A notice shall be deemed
given, if by personal delivery, on the date of such delivery
or, if by certified mail, on the date shown on the applicable
return receipt.
13. Supersedes Previous Agreements. This Agreement
------------------------------
supersedes all prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the
subject matter hereof (including the Prior Agreement), all
such other negotiations, commitments, agreements and writings
will have no further force or effect, and the parties to any
such other negotiations, commitment, agreement or writing will
have no further rights or obligations thereunder; provided,
--------
however, that, except as expressly provided herein, this
-------
Agreement shall not supersede the Retirement Agreement, the
Management Investors Exchange Agreement dated as of February
4, 1991 among SMG-II, Holdings and the Executive, or the
Option Agreements.
14. Counterparts. This Agreement may be executed by any
------------
of the parties hereto in counterpart, each of which shall be
deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
15. Headings. The headings of paragraphs herein are
--------
included solely for convenience of reference and shall not
control the meaning or interpretation of any of the provisions
of this Agreement.
16. Tax Withholding. The Company shall be entitled to
---------------
deduct or withhold from any payment made hereunder all
Federal, state and local taxes which the Company is required
by law to deduct or withhold therefrom.
IN WITNESS WHEREOF, each of the Companies have caused the
Agreement to be signed by its officer pursuant to the
authority of its Board of Directors, and Executive has
executed this Agreement as of the day and year first written
above.
SUPERMARKETS GENERAL CORPORATION
By: Anthony Cuti
--------------------------------
Title:
Jack Futterman
--------------------------------
Title:
SUPERMARKETS GENERAL HOLDINGS
CORPORATION
By: Anthony Cuti
-------------------------------
Title:
SMG-II HOLDINGS CORPORATION
By: Anthony Cuti
-------------------------------
Title:
EXHIBIT 10.19
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1993 (the
"Effective Date"), between Supermarkets General Corporation, a
Delaware corporation (the "Company"), and Anthony Cuti
("Executive"), and joined in by SMG-II Holdings Corporation, a
Delaware corporation, and parent corporation to the Company
("SMG-II").
W I T N E S S E T H
-------------------
WHEREAS, the Company and Executive are paries to an
Employment Agreement, dated as of July 26, 1990 (the "Prior
Agreement"); and
WHEREAS, subsequent to the execution of the Prior
Agreement, Executive has assumed the position of President the
Company, Supermarkets General Holdings Corporation
("Holdings") and SMG-II; and
WHEREAS, the parties now desire to enter into a new
employment agreement reflecting the terms and conditions of
Executive's current positions with the Company and certain
other agreements and understandings between the parties, and
the parties further intend that such new agreement shall
supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
1. Employment and Duties.
---------------------
(a) General. The Company hereby employs Executive
-------
and Executive agrees upon the terms and conditions herein set
forth to serve as President of the Company and, in such
capacity,shall perform such duties as may be delineated in the
by-laws of the Company, and such other duties, commensurate
with Executive's title and position of President, as may be
assigned to Executive from time to time by the Chairman and
Chief Executive Officer of the Company, or by the Board of
Directors of the Company or the Board of Directors of
Supermarkets General Holdings Corporation ("Holdings"), parent
corporation of the Company, or such officer of the Company or
Holdings as may be designated by the Board of Directors of the
Company or Holdings. If elected or appointed, Executive shall
also serve as a director or officer of any of the Company's
subsidiaries or affiliated companies and, if elected, will
serve as an officer or a member of the Board of Directors or
committees of the Board of Directors of the Company Holdings
or SMG-II, without further compensation.
(b) Full-Time Service. Throughout the Period (as
-----------------
defined in paragraph 2 below), Executive shall, except as may
from time to time be otherwise agreed to in writing by the
Company and unless prevented by ill health, devote his full-
time working hours to his duties hereunder, in all respects
conform to and comply with the lawful and reasonable
directions and instructions given to him by the Board of
Directors of the Company, and Holdings, shall use his best
efforts to promote and serve the interests of the Company.
(c) No Other Employment. Throughout the Period,
-------------------
Executive shall not, directly or indirectly, render services
to any other person or organization for which he receives
compensation without the consent of the Board of Directors of
Holdings or the Company, or otherwise engage in activities
which would interfere significantly with his faithful
<PAGE>
performance of his duties hereunder. Executive may perform
inconsequential services without specific compensation
therefor in connection with the management of personal
investments, provided that such activity does not contravene
the provisions of subparagraph 1(b) hereof or paragraph 5
hereof.
2. Term of Employment. The Company shall retain
------------------
Executive and Executive shall serve in the employ of the
Company for an initial period of three years commencing on the
Effective Date and extending through and including July 31,
1996 (the "Initial Period"); provided, however, that
-------- -------
commencing on the second anniversary of the Effective Date and
each successive anniversary thereafter the term of employment
hereunder shall be automatically extended for one additional
year, unless at least 30 days prior to such anniversary the
Company has delivered to Executive, or Executive has delivered
to the Company, written notice of its or his desire, as the
case may be, not to extend the term of employment (the Initial
Period, including the extensions thereof, if any, is herein
referred to as the "Period"; provided, further, that the
-------- -------
period shall terminate when Executive's employment hereunder
terminates).
3. Compensation and other Benefits. Subject to the
-------------------------------
provisions of this Agreement, the Company shall pay and
provide the following compensation and other benefits to
Executive during the Period as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to
-----------
Executive an annual base salary (the "Base Salary) at the rate
of $300,000 per annum, payable in accordance with the
Company's then current payroll practice. The Base Salary
shall be reviewed annually and may be increased in the
discretion of the Board of Directors of Holdings or the
Company. The Company shall be entitled to deduct or withhold
all taxes and charges which the Company may be required to
deduct or withhold therefrom.
(b) Bonus. Commencing on the Effective Date, for
-----
each fiscal year in the period (or fraction thereof),
Executive shall be eligible to receive a bonus, ranging in
each year from 0 to a maximum rate of 75% of annual Base
Salary, in accordance with the terms of the Executive
Incentive Plan ("EIP") of the Company as in effect for Company
Executives.
(c) Employee Benefit Plans. At all times during
----------------------
the Period, Executive shall be provided the opportunity to
participate in pension and welfare plans, programs and
arrangements (the "Plans") that are generally made available
to executives of the Company, or as may be deemed appropriate
by the Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee"), or if there shall be
no Compensation Committee, then the Compensation Committee of
the Board of Directors of Holdings.
(d) Certain Equity Considerations. SMG-II
-----------------------------
agrees that for a period of one year from the Effective Date,
Executive may purchase 250 shares of SMG-II's Class A Common
Stock ("Stock") at a purchase price of $100 per share in cash,
subject to a private placement.
(e) Support Service. At all times during the
---------------
Period, the Company shall provide Executive with office space
and support services, including secretarial services,
equivalent to those afforded to Executive immediately prior to
the Executive Date.
(f) Relocation. The Company shall not, without
----------
Executive's consent, relocate Executive's principal place of
<PAGE>
business to a location beyond 20 miles from the location of
Executive's principal place of business as of the Effective
Date.
(g) Travel. The Company shall not, without
------
Executive's consent, require Executive to travel on the
Company's business to an extent materially inconsistent with
the Company's normal business travel requirements.
4. Termination of Employment.
-------------------------
(a) Termination for Cause (i) If, prior to the
---------------------
expiration of the Period, Executive's employment is terminated
by the Company for Cause, as defined in subparagraph 4(a)(ii),
or if Executive resigns from his employment without Good
Reason, as defined in subparagraph 4(b)(iv), Executive shall
not be eligible to receive Base Salary under subparagraph 3(a)
or to participate in any Plans under subparagraph 3(c) with
respect to future periods after the date of such termination
or resignation except for the right to receive benefits which
have become vested under any Plan in accordance with the term
of such Plan. In addition, Executive shall not be eligible to
receive any bonus described in subparagraph 3(b) or
subparagraph 3(h) for the Company's fiscal year during which
the date of termination or resignation occurs and any later
years.
(ii) Termination for "Cause" shall mean
termination of Executive's employment with the Company by the
Board of Directors of the Company because of (A) the
commission by Executive of an act of fraud or embezzlement
against the Company or any of its subsidiaries; or (B) a
conviction of such Executive of a crime.
(iii) The date of termination of employment
by the Company under this paragraph 4(a) shall be the date
specified in a written notice of termination (which date shall
be no earlier than the date of furnishing such notice), or if
no such date is specified therein, the date of receipt by
Executive of such written notice of termination. The date of
resignation under this written notice of resignation, or if no
such notice is provided, the date the Executive ceases to
perform his duties hereunder.
(b) Termination Without Cause; Resignation for Good
-----------------------------------------------
Reason (i) Subject to the provisions of subparagraph
------
4(b)(ii) and subparagraph 4(b)(vi), if, prior to expiration of
the Period, Executive's employment is terminated by the
Company without Cause or if Executive resigns from his
employment with the Company for Good Reason, Executive shall
be entitled to receive, as "Severance Benefits" the following:
(A) his Base Salary at the annual rate then in effect
immediately prior to such termination or resignation for the
remainder of the Period or two years, whichever is longer,
commencing on the day following the date of such termination
or resignation (the "Severance Period"); (B) the portion of
the bonus or bonuses attributable to the financial targets set
for the Company under the EIP that Executive would have earned
had his employment with the Company continued for the
Severance Period, determined in accordance with the EIP and
based on the same percentage of base compensation used to
calculate bonuses for Executive at the time of such
termination or resignation and subject to the Company reaching
such applicable financial targets set under the EIP or any
other bonus plans in the applicable fiscal years, provided,
--------
however, that if any bonus period commences during the
-------
Severance Period and concludes after the expiration thereof,
the amount of the bonus, if any, for such bonus period shall
be prorated to take into account the portion of such bonus
period coinciding with he Severance Period; and (C) continued
coverage for the Severance Period under the Company health and
insurance plans applicable to Executive immediately prior to
<PAGE>
such termination or resignation, or, if any such plan does not
permit continued coverage of Executive, the Company shall
arrange to provide a benefit substantially similar to and no
less favorable than the benefits he was entitled to under the
plan. reduced by any compensation or benefits which Executive
is entitled to receive in connection with any employment of
the Executive by another employer during the time that
Severence Benefits are payable to Executive pursuant to this
paragraph 4(b). Executive shall provide the Company with any
evidence of amounts received in connection with other
employment which the Company shall reasonably request.
(ii) If, following a termination of employment,
Executive breaches the provisions of paragraph 5 hereof,
Executive shall not be eligible, as of the date of such
breach, for the payment Severance Benefits and all obligations
and agreements of the Company to pay Severance Benefits shall
thereupon cease.
(iii) The date of termination of employment
by the Company under this paragraph 4(b) shall be the date
specified in a written notice of termination to Executive
(which date shall be no earlier than the date of furnishing
such notice) or, if no such date is specified therein, the
date on which such notice is given to Executive. The date of
resignation under this paragraph 4(b) shall be two weeks after
receipt by the Company of the written notice of resignation.
(iv) Resignation for "Good Reason" shall mean
the Executive's voluntary termination of employment with the
Company because of (A) a reduction, without Executive's
written consent, in Executive's then current base or aggregate
compensation, unless such reduction is generally applicable to
all executives of the Company, (B) a reduction, without the
Executive's consent, in Executive's then current
responsibilities, (C) receipt of notice by Executive pursuant
to paragraph (2) hereof of the Company's desire not to extend
hardship as the Boards of Directors of Holdings and the
Company may determine on a case-by-case basis.
(v) Severance Benefits representing Base
Salary continuation shall be paid in connection with the
Company's then current payroll practice commencing on the next
payroll date following the date of the termination of
Executive's employment under subparagraph 4(b), in a gross
amount equal to the amount paid to Executive by the Company
for the payroll period immediately prior to such termination
or resignation. Severance Benefits representing bonus
payments shall be paid annually in accordance with the
Company's then current practice for paying bonuses commencing
within three months after the Company's fiscal year end.
(vi) In the event that the Severance Benefits
would not be deductible in whole or in part in the calculation
of Federal income tax owed by The Company or any of its
affiliates or any other person or entity making such payment
or providing such benefit by reason of Section 280G of the
Internal Revenue Code of 1986 (the "Code"), the Severance
Benefits shall be reduced until no portion of the Severance
Benefits is not deductible by reason of Section 280G of the
Code.
(c) Death. If Executive dies prior to the
-----
expiration of the Period, his Base Salary and bonus
(determined as the bonus he would have earned had his
employment continued until the end of the applicable bonus
period during which his death occurred) will be prorated
through his day of death and paid to his beneficiary or
estate.
(d) Disability. If Executive becomes Permanently
----------
Disabled, as defined below in this subparagraph, prior to the
<PAGE>
expiration of the Period, the Company shall be entitled to
terminate his employment and Executive shall be entitled to
receive disability benefits in accordance with the disability
policy maintained by the Company as of the date of such
disability. For the purposes of this subparagraph, Executive
shall be deemed "Permanently Disabled" when, and only when, he
suffers a physical or mental disability or infirmity that
prevents the normal performance of duties lasting for a
continuous period of six months or more.
5. Secrecy and Noncompetition.
--------------------------
(a) No Competing Employment. For so long as
-----------------------
Executive is receiving, or is entitled to receive, any
payments under or pursuant to this Agreement (such period
being referred to hereinafter as the "Restricted Period"),
Executive shall not, unless he receives the prior written
consent of the Company, directly or indirectly, whether as
owner, consultant, employee, partner, venturer, agent, through
stock ownership, investment of capital, lending of money or
property, rendering of services, or otherwise (except
ownership of less than 5% of the number of shares outstanding
of any securities which are publicly traded), compete with the
retail supermarket business of the Company or any other
business contributing at least 15% of the consolidated
revenues of the Company at the time of termination of
Executive's employment hereunder (such business are
hereinafter referred to as the "Business"), or assist, become
interested in or be connected with any corporation, firm,
partnership, joint venture, sole partnership or other entity
which so competes with the Business, except for the
aforementioned 5% ownership of publicly trade securities. The
restrictions imposed by this subparagraph shall not apply to
any geographic area in which the Company is not engaged in the
business at the time of termination.
(b) No Interference. During the Restricted
---------------
Period, Executive shall not, whether for his own account or
for the account of any other individual, partnership, firm,
corporation or other business organization or entity (other
than the Company), intentionally solicit, endeavor to entice
away from the Company or any Affiliate or otherwise interfere
with the relationship of the Company or any Affiliate with,
any person who is employed by or associated with the Company
or any affiliate (including, but not limited to, any
independent sales representatives or organizations) or any
person or entity who is, or was within the then most recent 12
month period, a customer or client of the Company or any
Affiliate.
(c) Secrecy. Executive recognizes that the
-------
services to be performed by him hereunder are special, unique
and extraordinary in that, by reason of his employment
hereunder with the Company, he may acquire confidential
information and trade secrets concerning the operations of the
Company or its Affiliates, the use or disclosure of which
could cause the Company substantial loss and damages which
could not be readily calculated and for which no remedy at law
would be adequate. Accordingly, Executive covenants and
agrees with the Company that he will not at any time, except
in performance of Executive's obligations to the Company
hereunder or with the prior written consent of the Board of
Directors of Holdings, directly or indirectly, disclose any
secret or confidential information that he may learn by reason
of his association with the Company or use any such
information to the detriment of the Company, Holdings or any
of their affiliates. The term "confidential information"
includes, without limitation, information not previously
disclosed to the public or to the trade by the Company's
management with respect to the Company's, Holdings' or any of
their respective subsidiaries' or affiliates' business plans,
prospects and opportunities, the identity of clients,
<PAGE>
suppliers or customers, information regarding operational
strengths and weaknesses, trade secrets, know-how and other
intellectual property, systems, procedures, manuals,
confidential reports, product price lists, marketing plans or
strategies, and financial information. Executive understands
and agrees that the rights and obligations set forth in this
subparagraph 5(c) are perpetual and, in any case, shall extend
beyond the Restricted Period and Executive's employment
hereunder.
(d) Exclusive Property. Executive confirms that all
------------------
confidential information is and shall remain the exclusive
property of the Company. All business records, papers and
documents kept or made by Executive relating to the business
of the Company shall be and remain the property of the
Company. Upon the termination of his employment with the
Company or upon the request of the Company at any time,
Executive shall promptly deliver to the Company, and shall
not, without the consent of the Company (which consent shall
not be unreasonably withheld), retain copies of any written
materials not previously made available to the public, records
and documents made by Executive or coming into his possession
concerning the business or affairs of the Company. Executive
may retain records relating exclusively to the terms and
condition of employment relationship with the Company.
Executive understands and agrees that the rights and
obligations set forth in this subparagraph 5(d) are perpetual
and, in any case, shall extend beyond the Restricted Period
and Executive's employment hereunder.
(e) Stock Ownership. Other than as provided in
---------------
subparagraph 1(c) or 5(a) hereof, nothing in this Agreement
shall prohibit Executive from acquiring or holding any issue
of stock or securities of any company or other business
entity, provided that Executive does not participate in the
operations of any such company and provided further that, with
respect to any class of voting securities listed on a national
securities exchange or quoted on the automated quotations
system of the National Association of Securities Dealers,
Inc., Executive and members of his immediate family do not own
at any time during the Restricted Period more than 5% of the
issued and outstanding shares of such class of securities.
(f) Injunctive Relief. Without intending to
-----------------
limited the remedies available to the Company, Executive
acknowledges that a breach of any of the covenants contained
in this paragraph result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited
by this paragraph 5 or such other relief as may be required to
specifically enforce any of the covenants in this paragraph 5.
6. Nonassignability, Binding Agreement. Neither this
-----------------------------------
Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by Executive
without the Company's prior written consent provided, however,
-------- -------
that nothing in this paragraph shall preclude Executive from
designating any of his beneficiaries to receive any benefits
payable hereunder upon his death, or the executors,
administrators, or other legal representatives from assigning
any rights hereunder to the person or persons entitled
thereto.
This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or assigns
of the Company and Executive's heirs and the personal
representatives of Executive's estate.
<PAGE>
7. Severability. If the final determination of a court
------------
of competent jurisdiction declares, after the expiration of
the time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid
or unenforceable term or provision shall be deemed replaced by
a term or provision that is valid and enforceable and that
becomes closest to expressing the intention of the invalid or
unenforceable term or provision.
8. Amendment; Waiver. This Agreement may not be
-----------------
modified, amended or waived in any manner except by an
instrument in writing signed by both parties hereto. The
waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a
provision of this Agreement.
9. Governing Law. All matters affecting this Agreement,
-------------
including the validity thereof, are to be governed by,
interpreted and construed in accordance with the laws of the
State of New Jersey.
10. Notices. Any notice hereunder by either party to
-------
the other shall be given in writing by personal delivery or
certified mail, return receipt requested. If addressed to
Executive, the notice shall be delivered or mailed to
Executive at the address last know to the Company, of if
addressed to the Company, the notice shall be delivered or
mailed to the Company at its executive offices, to the
attention of the Chairman of the Board, with a copy to the
Secretary of the Company, at 301 Blair Road, Woodbridge, NJ
07095. A notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
11. Supersedes Previous Agreements. This Agreement
------------------------------
supersedes all prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the
subject matter hereof, all such other negotiations,
commitments, agreements and writings will have no further
force or effect, and the parties to any such other
negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder. Notwithstanding the
foregoing, the parties acknowledge that the terms hereof shall
have no effect on Executive's Supplemental Retirement
Agreement date March 12, 1993.
12. Counterparts. This Agreement may be executed by
------------
either of the parties hereto in counterpart, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
13. Headings. The headings of paragraphs herein are
--------
included solely for convenience of reference and shall not
control the meaning or interpretation of any of such
provisions of this Agreement.
14. Tax Withholding. The Company shall be entitled to
---------------
deduct or withhold from any payment made hereunder all
Federal, state and local taxes which the Company is requires
by law to deduct ow withhold therefrom.
15. Definition of Affiliate. As used in this Agreement,
-----------------------
the term "Affiliate" shall mean a person, corporation or other
entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the Company or Holdings.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement
to be signed pursuant to the authority of its Board of
Directors, and Executive has executed this Agreement as of the
day and year first written above.
SUPERMARKETS GENERAL CORPORATION
By Jack Futterman
------------------------------
Jack Futterman
Chairman and
Chief Executive Officer
Anthony Cuti
-----------------------------
Consented to:
SUPERMARKETS GENERAL HOLDINGS CORPORATION
By Jack Futterman
----------------------------------------
Jack Futterman
Chairman and Chief Executive Officer
The undersigned joins in this Agreement solely for purposes of
its obligations under subparagraph (d) of paragraph 3 above.
SMG-II HOLDINGS CORPORATION
By Jack Futterman
----------------------------------------
Jack Futterman
Chairman and Chief Executive Officer
EXHIBIT 10.20
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of August 1, 1993 (the
"Effective Date"), between Supermarkets General Corporation, a
Delaware corporation (the "Company"), and Jules Borshadel
("Executive").
W I T N E S S E T H
-------------------
WHEREAS, the Company and Executive are paries to an
Employment Agreement, dated as of July 16, 1990 (the "Prior
Agreement"); and
WHEREAS, subsequent to the execution of the Prior
Agreement, Executive has assumed the positions of President
and Chief Executive Officer of the Rickel Home Center division
of the Company ("Rickel"); and
WHEREAS, the parties now desire to enter into a new
employment agreement reflecting the terms and conditions of
Executive's current positions with the Company and certain
other agreements and understandings between the parties, and
the parties further intend that such new agreement shall
supersede the Prior Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as
follows:
1. Employment and Duties.
---------------------
(a) General. The Company hereby employs Executive
-------
and Executive agrees upon the terms and conditions herein set
forth to serve as President and Chief Executive Officer of
Rickel and, in by-laws of the Company, and such other duties,
commensurate with Executive's title and position of President
and Chief Executive Officer of Rickel, as may be assigned to
Executive from time to time by the Chairman and Chief
Executive Officer of the Company, or by the Board of Directors
of the Company or Supermarkets General Holdings Corporation
("Holdings"), parent corporation of the Company, or such other
officer of the Company or Holdings as may be designated by the
Board of Directors of the Company or the Board of Directors of
Holdings. If elected or appointed, Executive shall also serve
as a director or officer of any of the Company's subsidiaries
or affiliated companies and, if elected, will serve as a
member of the Board of Directors or committees of the Board of
Directors of the Company and/or Holdings, without further
compensation.
(b) Full-Time Service. Throughout the Period (as
-----------------
defined in paragraph 2 below), Executive shall, except as may
from time to time be otherwise agreed to in writing by the
Company and unless prevented by ill health, devote his full-
time working hours to his duties hereunder, in all respects
conform to and comply with the lawful and reasonable
directions and instructions given to him by the Chairman and
CEO of the Company, or the Boards of Directors of the Company
and Holdings, and shall use his best efforts to promote and
serve the interests of the Company.
(c) No Other Employment. Through the Period,
-------------------
Executive shall not, directly or indirectly, render services
to any other person or organization for which he receives
compensation without the consent of the Board of Directors of
Holdings or the Company, or otherwise engage in activities
which would interfere significantly with his faithful
performance of his duties hereunder. Executive may perform
inconsequential services without specific compensation
<PAGE>
therefor in connection with the management of personal
investments, provided that such activity does not contravene
the provisions of subparagraph 1(b) hereof or paragraph 5
hereof.
2. Term of Employment. The Company shall retain
------------------
Executive and Executive shall serve in the employ of the
Company for an initial period of three years commencing on the
Effective Date and extending through and including July 31,
1996 (the "Initial Period"); provided, however, that
-------- -------
commencing on the second anniversary of the Effective Date and
each successive anniversary thereafter the term of employment
hereunder shall be automatically extended for one additional
year, unless at least 30 days prior to such anniversary the
Company has delivered to Executive, or Executive has delivered
to the Company, written notice of its or his desire, as the
case may be, not to extend the term of employment (the Initial
Period, including the extensions thereof, if any, is herein
referred to as the "Period"; provided, further, that the
-------- -------
period shall terminate when Executive's employment hereunder
terminates).
3. Compensation and other Benefits. Subject to the
-------------------------------
provisions of this Agreement, the Company shall pay and
provide the following compensation and other benefits to
Executive during the Period as compensation for services
rendered hereunder:
(a) Base Salary. The Company shall pay to
-----------
Executive an annual base salary (the "Base Salary) at the rate
of $300,000 per annum, payable in accordance with the
Company's then current payroll practice. The Base Salary
shall be reviewed annually and may be increased in the
discretion of the Board of Directors of Holdings or the
Company. The Company shall be entitled to deduct or withhold
all taxes and charges which the Company may be required to
deduct or withhold therefrom.
(b) Bonus. Commencing on the Effective Date, for
-----
each fiscal year in the period (or fraction thereof),
Executive shall be eligible to receive a bonus, ranging in
each year from 0 to a maximum rate of 75% of annual Base
Salary, in accordance with the terms of the Executive
Incentive ("EIP") of the Company as in effect for Rickel.
(c) Employee Benefit Plans. At all times during
----------------------
the Period, Executive shall be provided the opportunity to
participate in pension and welfare plans, programs and
arrangement (the "Plans") that are generally made available to
executives of Rickel, or as may be deemed appropriate by the
Compensation Committee of the Board of Directors of the
Company (the "Compensation Committee"), or if there shall be
no Compensation Committee, then the Compensation Committee of
the Board of Directors of Holdings.
(d) Support Service. At all times during the
---------------
Period, the Company shall provide Executive with office space
and support services, including secretarial services,
equivalent to those afforded to Executive immediately prior to
the Executive Date.
(e) Relocation. The Company shall not, without
----------
Executive's consent, relocate Executive's principal place of
business to a location beyond 20 miles from the location of
Executive's principal place of business as of the Effective
Date.
(f) Travel. The Company shall not, without
------
Executive's consent, require Executive to travel on the
Company's business to an extent materially inconsistent with
the Company's business travel requirements as applied to
Executive immediately prior to the Effective Date.
<PAGE>
(g) Special Sale Bonus. In the event the Company
------------------
decides to sell Rickel, Executive shall, in such manner as the
Company may reasonably request, use his best efforts to assist
the Company in effecting a sale and in obtaining the highest
practicable sale price for Rickel. In consideration of the
agreements of Executive contained in this Agreement and his
continued employment hereunder, in the event that a sale of
Rickel to a Third Party (as hereinafter defined) is
consummated during the Period, the Company shall pay to
Executive a bonus of $300,000, payable on the closing of said
sale. For purposes of this paragraph 3(g), "Third Party"
shall mean any person other than the Company, Plainbridge,
Inc., PTK Holdings, Inc., Holdings, SMG-II Holdings
Corporation ("SMG-II"), or any of their respective
subsidiaries, any stockholder of SMG-II on the date hereof who
is an affiliate as of the date hereof of Merrill Lynch & Co.,
Inc. or with The Equitable Life Assurance Society of the
United States or any of their respective affiliates. For
purposes of this paragraph 3(g), "person" shall have the
meaning assigned to such term under Section 13(d) of the
Securities Exchange Act of 1934, as amended, and "affiliate"
of any first person shall mean a second person that directly,
or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such first
person.
4. Termination of Employment.
-------------------------
(a) Termination for Cause (i) If, prior to the
---------------------
expiration of the Period, Executive's employment is terminated
by the Company for Cause, as defined in subparagraph 4(a)(ii),
or if Executive resigns from his employment without Good
Reason, as defined in subparagraph 4(b)(iv), Executive shall
not be eligible to receive Base Salary under subparagraph 3(a)
or to participate in any Plans under subparagraph 3(c) with
respect to future periods after the date of such termination
or resignation except for the right to receive benefits which
have become vested under any Plan in accordance with the term
of such Plan. In addition, Executive shall not be eligible to
receive any bonus described in subparagraph 3(b) for the
Company's fiscal year during which the date of termination or
resignation occurs and any later years.
(ii) Termination for "Cause" shall mean
termination of Executive's employment with the Company by the
Board of Directors of the Company because of (A) the
commission by Executive of an act of fraud or embezzlement
against the Company or any of its subsidiaries; or (B) a
conviction of such Executive of a crime.
(iii) The date of termination of employment
by the Company under this paragraph 4(a) shall be the date
specified in a written notice of termination (which date shall
be no earlier than the date of furnishing such notice), or if
no such date is specified therein, the date of receipt by
Executive of such written notice of termination. The date of
resignation under this written notice of resignation, or if no
such notice is provided, the date the Executive ceases to
perform his duties hereunder.
(b) Termination Without Cause; Resignation for Good
-----------------------------------------------
Reason (i) Subject to the provisions of subparagraph
------
4(b)(ii) and subparagraph 4(b)(vi), if, prior to expiration of
the Period, Executive's employment is terminated by the
Company without Cause or if Executive resigns from his
employment with the Company for Good Reason, Executive shall
be entitled to receive, as "Severance Benefits" the following:
(A) his Base Salary at the annual rate then in effect
immediately prior to such termination or resignation for the
two year period commencing on the day following the date of
such termination or resignation (the "Severance Period"); (B)
the portion of the bonus or bonuses attributable to the
<PAGE>
financial targets set for Rickel under the EIP which Executive
would have earned had his employment with the Company
continued for the Severance Period, determined in accordance
with the EIP and based on the same percentage of base
compensation used to calculate bonuses for Executive at the
time of such termination or resignation and subject to Rickel
reaching such applicable financial targets set under the EIP
or any other bonus plans in the applicable fiscal year,
provided, however, that if any bonus period commences during
-------- -------
the Severance Period and concludes after the expiration
thereof, the amount of the bonus, if any, for such bonus
period shall be prorated to take into account the portion of
such bonus period coinciding with he Severance Period; and (C)
continued coverage for the Severance Period under Rickel
health and insurance plans applicable to Executive immediately
prior to such termination or resignation, or, if any such plan
does not permit continued coverage of Executive, the Company
shall arrange to provide a benefit substantially similar to
and no less favorable than the benefits he was entitles to
under the plan. Severance Benefits shall be reduced by an
compensation or benefits which Executive receive o is entitled
to receive in connection with any employment of the Executive
are payable to Executive pursuant to this paragraph 4(b).
Executive shall provide the Company with any evidence of
amounts received in connection with other employment which the
Company shall reasonably request.
(ii) If, following a termination of employment,
Executive breaches the provisions of paragraph 5 hereof,
Executive shall not be eligible, as of the date of such
breach, for the payment Severance Benefits and all obligations
and agreements of the Company to pay Severance Benefits shall
thereupon cease.
(iii) The date of termination of employment
by the Company under this paragraph 4(b) shall be the date
specified in a written notice of termination to Executive
(which date shall be no earlier than the date of furnishing
such notice) or, if no such date is specified therein, the
date on which such notice is given to Executive. The date of
resignation under this paragraph 4(b) shall be two weeks after
receipt by the Company of the written notice of resignation.
(iv) Resignation for "Good Reason" shall mean
the Executive's voluntary termination of employment with the
Company because of (A) a reduction, without Executive's
written consent, in Executive's then current base or aggregate
compensation, unless such reduction is generally applicable to
all executives of the Company, (B) a reduction, without the
Executive's consent, in Executive's then current
responsibilities, (C) receipt of notice by Executive pursuant
to paragraph (2) hereof of the Company's desire of hardship as
the Boards of Directors of Holdings and the Company may
determine on a case-ny-case basis.
(v) Severance Benefits representing Base
Salary continuation shall be paid in connection with the
Company's then current payroll practice commencing on the next
payroll date following the date of the termination of
Executive's employment under subparagraph 4(b), in a gross
amount equal to the amount paid to Executive by the Company
for the payroll period immediately prior to such termination
or resignation. Severance Benefits representing bonus
payments shall be paid annually in accordance with the
Company's then current practice for paying bonuses commencing
within three months after the Company's fiscal year end.
(vi) In the event that the Severance Benefits
would not be deductible in whole or in part in the calculation
of Federal income tax owed by The Company or any of its
affiliates or any other person or entity making such payment
or providing such benefit by reason of Section 280G of the
<PAGE>
Internal Revenue Code of 1986 (the "Code"), the Severance
Benefits shall be reduced until no portion of the Severance
Benefits is not deductible by reason of Section 280G of the
Code.
(c) Death. If Executive dies prior to the
-----
expiration of the Period, his Base Salary and bonus
(determined as the bonus he would have earned had his
employment continued until the end of the applicable bonus
period during which his death occurred) will be prorated
through his day of death and paid to his beneficiary or
estate.
(d) Disability. If Executive becomes Permanently
----------
Disabled, as defined below in this subparagraph, prior to the
expiration of the Period, the Company shall be entitled to
terminate his employment and Executive shall be entitled to
receive disability benefits in accordance with the disability
policy maintained by the Company as of the date of such
disability. For the purposes of this subparagraph, Executive
shall be deemed "Permanently Disabled" when, and only when, he
suffers a physical or mental disability or infirmity that
prevents the normal performance of duties lasting for a
continuous period of six months or more.
5. Secrecy and Noncompetition.
--------------------------
(a) No Competing Employment. For so long as
-----------------------
Executive is receiving, or is entitled to receive, any
payments under or pursuant to this Agreement or the Phantom
Plan (such period being referred to hereinafter as the
"Restricted Period"), Executive shall not, unless he receives
the prior written consent of the Company, directly or
indirectly, whether as owner, consultant, employee, partner,
venturer, agent, through stock ownership, investment of
capital, lending of money or property, rendering of services,
or otherwise (except ownership of any securities which are
publicly traded), compete with the retail supermarket business
of the Company or any other business contributing at least 15%
of the consolidated revenues of the Company at the time of
termination of Executive's employment hereunder (such business
are hereinafter referred to as the "Business"), or assist,
become interested in or be connected with any corporation,
firm, partnership, joint venture, sole partnership or other
entity which so competes with the Business, except for the
aforementioned 5% ownership of publicly trade securities. The
restrictions imposed by this subparagraph shall not apply to
any geographic area in which the Company is not engaged in the
business at the time of termination.
(b) No Interference. During the Restricted
---------------
Period, Executive shall not, whether for his own account or
for the account of any other individual, partnership, firm,
corporation or other business organization or entity (other
than the Company), intentionally solicit, endeavor to entice
away from the Company or any Affiliate or otherwise interfere
with the relationship of the Company or any Affiliate with,
any person who is employed by or associated with the Company
or any affiliate (including, but not limited to, any
independent sales representatives or organizations) or any
person or entity who is, or was within the then most recent 12
month period, a customer or client of the Company or any
Affiliate.
(c) Secrecy. Executive recognizes that the
-------
services to be performed by him hereunder are special, unique
and extraordinary in that, by reason of his employment
hereunder and his past employment with the Company, he may
acquire or has acquired confidential information and trade
secrets concerning the operations of the Company or its
Affiliates, the use or disclosure of which could cause the
Company substantial loss and damages which could not be
<PAGE>
readily calculated and for which no remedy at law would be
adequate. Accordingly, Executive covenants and agrees with
the Company that he will not at any time, except in
performance of Executive's obligations to the Company
hereunder or with the prior written consent of the Board of
Directors of Holdings, directly or indirectly, disclose any
secret or confidential information that he may learn by reason
of his association with the company or any predecessors to its
business, or use any such information to the detriment of the
Company, Holdings or any of their affiliates. The term
"confidential information" includes, without limitation,
information not previously disclosed to the public or to the
trade by the Company's management with respect to the
Company's, Holdings' or any of their respective subsidiaries'
or affiliates' business plans, prospects and opportunities,
the identity of clients, suppliers or customers, information
regarding operational strengths and weaknesses, trade secrets,
know-how and other intellectual property, systems, procedures,
manuals, confidential reports, product price lists, marketing
plans or strategies, and financial information. Executive
understands and agrees that the perpetual and, in any case,
shall extend beyond the Restricted Period and Executive's
employment hereunder.
(d) Exclusive Property. Executive confirms that all
------------------
confidential information is and shall remain the exclusive
property of the Company. All business records, papers and
documents kept or made by Executive relating to the business
of the Company shall be and remain the property of the
Company. Upon the termination of his employment with the
Company or upon the request of the Company at any time,
Executive shall promptly deliver to the Company, and shall
not, without the consent of the Company (which consent shall
not be unreasonably withheld), retain copies of any written
materials not previously made available to the public, records
and documents made by Executive or coming into his possession
concerning the business or affairs of the Company. Executive
understands and agrees that the rights and obligations set
forth in this subparagraph 5(d) are perpetual and, in any
case, shall extend beyond the Restricted Period and
Executive's employment hereunder.
(e) Stock Ownership. Other than as provided in
---------------
subparagraph 1(c) or 5(a) hereof, nothing in this Agreement
shall prohibit Executive from acquiring or holding any issue
of stock or securities of any company or other business
entity, provided that Executive does not participate in the
operations of any such company and provided further that, with
respect to any class of voting securities listed on a national
securities exchange or quoted on the automated quotations
system of the National Association of Securities Dealers,
Inc., Executive and members of his immediate family do not own
at any time during the Restricted Period more than 5% of the
issued and outstanding shares of such class of securities.
(f) Injunctive Relief. Without intending to
-----------------
limited the remedies available to the Company, Executive
acknowledges that a breach of any of the covenants contained
in this paragraph result in material irreparable injury to the
Company for which there is no adequate remedy at law, that it
will not be possible to measure damages for such injuries
precisely and that, in the event of such a breach or threat
thereof, the Company shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction
restraining Executive from engaging in activities prohibited
by this paragraph 5 or such other relief as may be required to
specifically enforce any of the covenants in this paragraph 5.
6. Nonassignability, Binding Agreement. Neither this
-----------------------------------
Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by Executive
without the Company's prior written consent provided, however,
-------- -------
<PAGE>
that nothing in this paragraph shall preclude Executive from
designating any of his beneficiaries to receive any benefits
payable hereunder upon his death, or the executors,
administrators, or other legal representatives from assigning
any rights hereunder to the person or persons entitled
thereto.
This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto, any successors to or assignees
of the Company and Executive's heirs and the personal
representatives of Executive's estate.
7. Severability. If the final determination of a court
------------
of competent jurisdiction declares, after the expiration of
the time within which judicial review (if permitted) of such
determination may be perfected, that any term or provision
hereof is invalid or unenforceable, (a) the remaining terms
and provisions hereof shall be unimpaired, and (b) the invalid
or unenforceable term or provision shall be deemed replaced by
a term or provision that is valid and enforceable and that
becomes closest to expressing the intention of the invalid or
unenforceable term or provision.
8. Amendment; Waiver. This Agreement may not be
-----------------
modified, amended or waived in any manner except by an
instrument in writing signed by both parties hereto. The
waiver by either party of compliance with any provision of
this Agreement by the other party shall not operate or be
construed as a waiver of any other provision of this
Agreement, or of any subsequent breach by such party of a
provision of this Agreement.
9. Governing Law. All matters affecting this Agreement,
-------------
including the validity thereof, are to be governed by,
interpreted and construed in accordance with the laws of the
State of New Jersey.
10. Notices. Any notice hereunder by either party to
-------
the other shall be given in writing by personal delivery or
certified mail, return receipt requested. If addressed to
Executive, the notice shall be delivered or mailed to
Executive at the address last know to the Company, of if
addressed to the Company, the notice shall be delivered or
mailed to the Company at its executive offices, to the
attention of the Chairman of the Board, with a copy to the
Secretary of the Company, at 301 Blair Road, Woodbridge, NJ
07095. A notice shall be deemed given, if by personal
delivery, on the date of such delivery or, if by certified
mail, on the date shown on the applicable return receipt.
11. Supersedes Previous Agreements. This Agreement
------------------------------
supersedes all prior or contemporaneous negotiations,
commitments, agreements and writings with respect to the
subject matter hereof, all such other negotiations,
commitments, agreements and writings will have no further
force or effect, and the parties to any such other
negotiation, commitment or writing will have no further rights
or obligations thereunder.
12. Counterparts. This Agreement may be executed by
------------
either of the parties hereto in counterpart, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
13. Headings. The headings of paragraphs herein are
--------
included solely for convenience of reference and shall not
control the meaning or interpretation of any of such
provisions of this Agreement.
14. Tax Withholding. The Company shall be entitled to
---------------
deduct or withhold from any payment made hereunder all
<PAGE>
Federal, state and local taxes which the Company is requires
by law to deduct ow withhold therefrom.
15. Definition of Affiliate. As used in this Agreement,
-----------------------
the term "Affiliate" shall mean a person, corporation or other
entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under
common control with, the Company or Holdings.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be signed pursuant to the authority of its Board of
Directors, and Executive has executed this Agreement as of the
day and year first written above.
SUPERMARKETS GENERAL CORPORATION
By Jack Futterman
------------------------------
Jack Futterman
Chairman and
Chief Executive Officer
Jules Borshadel
------------------------------
Consented to:
SUPERMARKETS GENERAL HOLDINGS CORPORATION
By Jack Futterman
----------------------------------------
Jack Futterman
Chairman and Chief Executive Officer
SMG-II HOLDINGS CORPORATION
By Jack Futterman
----------------------------------------
Jack Futterman
Chairman and Chief Executive Officer
Exhibit 22
List of Subsidiaries
Name State of
---- --------
Incorporation
-------------
Pathmark Stores, Inc. Delaware
PTK Holdings, Inc. Delaware
Bridge Stuart, Inc. New York
Pennsylvania Stuart, Inc. Pennsylvania
Jersey Stuart, Inc. New Jersey
Bucks Stuart, Inc. Pennsylvania
Madison Stuart Corporation New Jersey
Brick Stuart, Inc. New Jersey
Trauts-South Plainfield, Inc. New Jersey
AAL Realty Corp. New York
Pauls Trucking Corp. New York
GAW Properties Corp. New Jersey
Eatontown Stuart, Corp. New Jersey
Plainbridge, Inc. Delaware
Chefmark, Inc. Delaware
Exhibit 23
[DELOITTE & TOUCHE LETTERHEAD]
April 28, 1994
Supermarkets General Holdings Corporation
Woodbridge, New Jersey
We have audited the consolidated financial statements of Supermarkets
General Holdings Corporation as of January 29, 1994 and January 30, 1993,
and for each of the three years in the period ended January 29, 1994
included in your Annual Report on Form 10-K to the Securities and Exchange
Commission and have issued our report thereon dated April 28, 1994.
Note 5 to such consolidated financial statements contains a description
of your adoption during the year ended January 29, 1994 of a change in
the method utilized to calculate LIFO inventories relating to your
indirect wholly owned subsidiary, Pathmark Stores, Inc. Previously,
you utilized a retail approach to determine current cost and a general
warehouse purchase index to measure inflation in the cost of your store
merchandise inventories. As indicated in Note 5, your change arose from
the development and utilization in fiscal 1993 of internal cost indices
based on the specific identification of merchandise in your stores to
measure inflation in such prices, thereby eliminating the averaging and
estimation inherent in the retail and general warehouse purchase index
methods. This change was made to more accurately measure the impact
of inflation in the cost of merchandise in your stores. In our judgment,
such change is to an alternative accounting principle that is preferable
under the circumstances.
Yours truly,
Deloitte & Touche
Exhibit 24
SUPERMARKETS GENERAL HOLDINGS CORPORATION
Power of Attorney
-----------------
The undersigned, a director of Supermarkets General
Holdings Corporation (the "Company"), a Delaware corporation,
which intends to file with the United States Securities and
Exchange Commission, under the provisions of the Securities
Exchange Act of 1934 (the "'34 Act"), as amended, each year an
annual report on Form 10-K, or such other form appropriate for
the purpose, pursuant to Section 13 or 15(d) of the '34 Act,
together with possible amendments thereto, constitutes and
appoints JOSEPH ADELHART and MARC A. STRASSLER, and each of
them, severally, as true and lawful attorney or attorneys,
with full power of substitution and resubsitution, for him and
in his name, place and stead, to sign in any and all
capacities and file or cause to be filed said Annual Report on
Form 10-K, and any and all amendments thereto, and all
instruments necessary or incidental in connection therewith,
and hereby grants to the said attorneys, and each of them,
severally, full power and authority to do and perform in the
name and on behalf of the undersigned, and in any and all
capacities, any and all acts and things whatsoever necessary
or appropriate to be done in the premises, as fully and to all
intents and purposes as the undersigned might or could do in
person, hereby ratifying and confirming the acts of said
attorneys and each of them.
IN WITNESS WHEREOF, the undersigned has hereunto set her
hand and seal this 21st day of April, 1994.
Susan C. Penny
---------------------------
Susan C. Penny
