<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8 K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): September 14, 1994
Commission File Number 33-22998
RALPHS GROCERY COMPANY
(Exact name of registrant as specified in its charter)
Delaware 31-1241926
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1100 West Artesia Boulevard, Compton, California, 90220
(Address of principal executive offices)
(310) 884-9000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>2
Item 5. Other Events.
On September 14, 1994, Ralphs Supermarkets, Inc., a Delaware corporation
("Ralphs"), Food 4 Less, Inc., a Delaware corporation, Food 4 Less Holdings,
Inc., a California corporation ("F4L Holdings"), Food 4 Less Supermarkets,
Inc., a Delaware corporation ("F4L Supermarkets"), and the stockholders of
Ralphs (the "Selling Stockholders") entered into a definitive Agreement and
Plan of Merger (as the same may be amended from time to time, the "Merger
Agreement") a copy of which is attached hereto as Exhibit 99.1. Ralphs Grocery
Company ("Ralphs Grocery") is a wholly-owned subsidiary of Ralphs. Pursuant to
the terms of the Merger Agreement, which is incorporated herein by reference,
F4L Supermarkets will, subject to certain conditions being satisfied or waived,
be merged with and into Ralphs (the "Merger") and Ralphs will survive the Merger
and become a wholly-owned subsidiary of F4L Holdings. Conditions to the
consummation of the Merger include the receipt of regulatory approvals and other
necessary consents and the completion of financing.
Upon the effectiveness of the Merger, each outstanding share of common stock,
par value $1.00 per share, of Ralphs, will be converted into and become a
right to receive (a) $16.60971 in cash and (b) $3.9083 principal amount of 13%
Senior Subordinated Pay-in-Kind Debentures due 2006 issued by F4L Holdings
(the "Debentures"). This represents an aggregate purchase price of $425 million
in cash and $100 million initial principal amount of Debentures.
The Debentures will be issued pursuant to an Indenture in the form of Exhibit
A to the Merger Agreement to be executed on or about the closing date of the
Merger (the "Closing Date"). Certain covenants of the Indenture will be
finalized, and the trustee under the Indenture will be appointed, on or before
the Closing Date. Pursuant to the terms of a Registration Rights Agreement
(attached as Exhibit G to the Merger Agreement), to be executed on or about
the Closing Date, by and among F4L Supermarkets, F4L Holdings and the holders
of the Debentures, the holders of the Debentures will have certain
registration rights with respect to the Debentures.
In accordance with the Senior Subordinated Pay-in-Kind Debentures Put
Agreement (attached as Exhibit E to the Merger Agreement) to be executed on or
about the Closing Date by and between ("EJDC") and The Yucaipa Companies, a
California general partnership ("Yucaipa"), on the Closing Date Yucaipa may be
required, at EJDC's request, to purchase up to $10,000,000 aggregate principal
amount of Debentures from EJDC at par. In addition, a Consulting Agreement
(attached as Exhibit F to the Merger Agreement) will be entered into by EJDC
and F4L Supermarkets pursuant to which EJDC will act as a consultant to F4L
Supermarkets with respect to certain real estate and general commercial
matters for a period of 5 years from the Closing Date in exchange for the
payment of a consulting fee.
<PAGE>3
The foregoing summary of the terms of the Merger Agreement does not purport to
be complete and is qualified in its entirety by reference to the full text of
the Merger Agreement.
The financing required to complete the Merger will include the issuance of
additional equity by Food 4 Less, Inc. to a group of investors led by Apollo
Advisors, L.P. In addition, Bankers Trust Company has provided its commitment
for bank financing and, together with its affiliates, will also advise F4L
Holdings and F4L Supermarkets in connection with certain other aspects of the
transaction. The remaining funds necessary to complete the transaction are
expected to be raised throught the issuance of new debt securities. In
connection with the receipt of the new financing, F4L Holdings, F4L
Supermarkets and Ralphs Grocery will also be required to complete certain
exchange offers, consent solicitations and/or other transactions with holders
of their currently outstanding debt securities. The information set forth above
shall not be deemed to constitute either an offer to sell, or the solicitation
of an offer to purchase, any security.
Item 7. Financial Statements and Exhibits.
(a) Financial analysis of business acquired: None.
(b) Pro forma financial information: None.
(c) Exhibit:
99.1 Agreement and Plan of Merger dated as of September 14,
1994, by and among Food 4 Less, Inc., Food 4 Less
Holdings, Inc., Food 4 Less Supermarkets, Inc., Ralphs
Supermarkets, Inc. and the Stockholders of Ralphs
Supermarkets, Inc.
<PAGE>4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: September 14, 1994 RALPHS GROCERY COMPANY
By:/s/ Jan Charles Gray
Jan Charles Gray
Senior Vice President,
General Counsel and Secretary
<PAGE>5
EXHIBIT INDEX
Exhibit Page
99 Agreement and Plan of Merger,
dated as of September 14, 1994, by
and among Food 4 Less, Inc., Food
4 Less Holdings, Inc., Food 4 Less
Supermarkets, Inc., Ralphs Supermarkets,
Inc. and the stockholders of Ralphs
Supermarkets, Inc.
<PAGE>1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
FOOD 4 LESS, INC.,
FOOD 4 LESS HOLDINGS, INC.,
FOOD 4 LESS SUPERMARKETS, INC.,
RALPHS SUPERMARKETS, INC.
AND
THE STOCKHOLDERS OF
RALPHS SUPERMARKETS, INC.
SEPTEMBER 14, 1994
<PAGE>2
TABLE OF CONTENTS
Page
ARTICLE I Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Certain Definitions . . . . . . . . . . . . . . . . . . 1
Section 1.2 Additional Defined Terms . . . . . . . . . . . . . . . 4
ARTICLE II The Merger . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.2 Effect of the Merger . . . . . . . . . . . . . . . . . 5
Section 2.3 Consummation of the Merger . . . . . . . . . . . . . . 6
Section 2.4 Restated Certificate of Incorporation; Bylaws;
Directors and Officers . . . . . . . . . . . . . . 6
Section 2.5 Conversion of Securities . . . . . . . . . . . . . . . 6
Section 2.6 Ralphs Supermarkets Stock Options and Related Matters . 7
Section 2.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Exchange of Certificates . . . . . . . . . . . . . . . 8
Section 2.9 Alternative Transaction Structure. . . . . . . . . . . 9
ARTICLE III Representations and Warranties of Selling Stockholders . . 9
Section 3.1 Organization; Authorization; etc . . . . . . . . . . . 9
Section 3.2 Ownership of Shares . . . . . . . . . . . . . . . . . . 9
Section 3.3 Consents and Approvals; No Violations . . . . . . . . . 9
Section 3.4 Acquisition of Debentures for Investment . . . . . . . 10
Section 3.5 Agreements to Sell the Company and Other Matters . . . 10
ARTICLE IV Representations and Warranties of Ralphs Supermarkets . . 10
Section 4.1 Organization . . . . . . . . . . . . . . . . . . . . . 10
Section 4.2 Capitalization; Structure . . . . . . . . . . . . . . 11
Section 4.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 11
Section 4.4 Authority . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.5 Consents and Approvals; No Violation . . . . . . . . . 12
Section 4.6 Financial Statements . . . . . . . . . . . . . . . . . 12
Section 4.7 Absence of Certain Changes or Events . . . . . . . . . 13
Section 4.8 Assets . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.9 Contracts and Commitments . . . . . . . . . . . . . . 15
Section 4.10 Absence of Breaches or Defaults . . . . . . . . . . . 16
Section 4.11 Litigation . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.12 Compliance with Law . . . . . . . . . . . . . . . . . 17
Section 4.13 Labor Matters . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 No Undisclosed Liabilities . . . . . . . . . . . . . . 17
Section 4.15 No Brokers . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.16 No Other Agreements to Sell the Assets or the Company 18
Section 4.17 Proprietary Rights . . . . . . . . . . . . . . . . . . 18
<PAGE>3
Section 4.18 Employee Benefit Plans . . . . . . . . . . . . . . . . 18
Section 4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.20 Affiliate Transactions . . . . . . . . . . . . . . . . 24
Section 4.21 Environmental Matters . . . . . . . . . . . . . . . . 24
Section 4.22 Officers . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.23 Severance Arrangements . . . . . . . . . . . . . . . . 25
Section 4.24 Licensed Departments . . . . . . . . . . . . . . . . . 25
Section 4.25 Bank Accounts . . . . . . . . . . . . . . . . . . . . 25
Section 4.26 Registration Statements . . . . . . . . . . . . . . . 25
Section 4.27 Material Misstatements Or Omissions . . . . . . . . . 25
Section 4.28 Schedules . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE V Representations and Warranties of F4L,
F4L Holdings and F4L Supermarkets . . . . . . . . . . . . . 26
Section 5.1 Organization; Authorization; etc . . . . . . . . . . . 26
Section 5.2 Consents and Approvals; No Violations . . . . . . . . 26
Section 5.3 Acquisition of Shares for Investment . . . . . . . . . 27
Section 5.4 Shelf Registration Statement . . . . . . . . . . . . . 27
Section 5.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.6 Financing Commitments . . . . . . . . . . . . . . . . 27
Section 5.7 Financial Statements . . . . . . . . . . . . . . . . . 28
Section 5.8 Absence of Certain Changes or Events . . . . . . . . . 28
Section 5.9 Absence of Breaches or Defaults . . . . . . . . . . . 28
Section 5.10 Litigation . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.11 Compliance with Law . . . . . . . . . . . . . . . . . 29
Section 5.12 No Undisclosed Liabilities . . . . . . . . . . . . . . 29
Section 5.13 Material Misstatements Or Omissions . . . . . . . . . 29
Section 5.14 No Additional Agreements . . . . . . . . . . . . . . . 29
ARTICLE VI Covenants of F4L, F4L Holdings, F4L Supermarkets,
Ralphs Supermarkets and the Selling Stockholders . . . . . 30
Section 6.1 Investigation of Business; Access to
Properties and Records . . . . . . . . . . . . . . 30
Section 6.2 Reasonable Efforts; Obtaining Consents . . . . . . . . 31
Section 6.3 Antitrust . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.4 Further Assurances . . . . . . . . . . . . . . . . . . 32
Section 6.5 Conduct of Business . . . . . . . . . . . . . . . . . 32
Section 6.6 Public Announcements . . . . . . . . . . . . . . . . . 33
Section 6.7 Notice of Developments . . . . . . . . . . . . . . . . 33
Section 6.8 No Mergers, Consolidations, Sale of Stock, etc . . . . 34
Section 6.9 Delivery of Financial Statements . . . . . . . . . . . 34
Section 6.10 Registration of Debentures. . . . . . . . . . . . . . 34
Section 6.11 Maintenance of Insurance and Indemnification
Provisions . . . . . . . . . . . . . . . . . . . . 34
Section 6.12 Definitive Financing Agreements . . . . . . . . . . . 35
Section 6.13 Continuation of Certain Agreements. . . . . . . . . . 35
<PAGE>4
Section 6.14 Workers' Compensation. . . . . . . . . . . . . . . . . 35
Section 6.15 Purchase of Debentures . . . . . . . . . . . . . . . . 36
ARTICLE VII Certain Tax Matters . . . . . . . . . . . . . . . . . . . 36
Section 7.1 Taxes and Tax . . . . . . . . . . . . . . . . . . . . 36
Section 7.2 Books and Records . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII Conditions to F4L's, F4L Holdings' and
F4L Supermarkets' Obligations to Close . . . . . . . . . 38
Section 8.1 Representations, Warranties and Covenants of Seller . . 38
Section 8.2 Antitrust . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.3 Regulatory Consents, Authorizations, etc . . . . . . . 39
Section 8.4 Injunctions . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.5 Financing . . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.6 Title Policy . . . . . . . . . . . . . . . . . . . . . 39
Section 8.7 Termination of Stockholder Agreements . . . . . . . . . 39
Section 8.8 Material Adverse Change in Company Business
or Facilities . . . . . . . . . . . . . . . . . . 40
Section 8.9 Cancellation of Options . . . . . . . . . . . . . . . . 40
ARTICLE IX Conditions to Ralphs Supermarkets' and the
Selling Stockholders' Obligations to Close . . . . . . . 40
Section 9.1 Representations, Warranties and Covenants
of F4L, F4L Holdings and F4L Supermarkets . . . . 40
Section 9.2 HSR Act . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.3 Regulatory Consents, Authorizations, etc . . . . . . . 41
Section 9.4 Injunctions . . . . . . . . . . . . . . . . . . . . . 41
Section 9.5 Ancillary Agreements . . . . . . . . . . . . . . . . . 41
Section 9.6 Shelf Registration Statement and Indenture . . . . . . 41
Section 9.7 Material Adverse Change in F4L, F4L Holdings
or F4L Supermarkets . . . . . . . . . . . . . . . 41
Section 9.8 Solvency Opinion . . . . . . . . . . . . . . . . . . . 41
Section 9.9 Capital Structure . . . . . . . . . . . . . . . . . . 42
Section 9.10 Cancellation of Options. . . . . . . . . . . . . . . . 42
Section 9.11 Reimbursement of Expenses . . . . . . . . . . . . . . 42
Section 9.12 Directors and Officers Liability Insurance . . . . . . 42
ARTICLE X Survival; Indemnification . . . . . . . . . . . . . . . . 42
Section 10.1 Survival of Representations, Etc. . . . . . . . . . . 42
Section 10.2 Indemnification . . . . . . . . . . . . . . . . . . . 42
Section 10.3 Procedures for Indemnification . . . . . . . . . . . . 43
Section 10.4 No Reliance by Selling Stockholders . . . . . . . . . 43
<PAGE>5
ARTICLE XI Termination . . . . . . . . . . . . . . . . . . . . . . . 44
Section 11.1 Termination . . . . . . . . . . . . . . . . . . . . . 44
Section 11.2 Procedure and Effect of Termination . . . . . . . . . 45
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.1 Counterparts . . . . . . . . . . . . . . . . . . . . 45
Section 12.2 Governing Law . . . . . . . . . . . . . . . . . . . . 45
Section 12.3 Entire Agreement . . . . . . . . . . . . . . . . . . 45
Section 12.4 Expenses . . . . . . . . . . . . . . . . . . . . . . 45
Section 12.5 Notices . . . . . . . . . . . . . . . . . . . . . . . 46
Section 12.6 Successors and Assigns . . . . . . . . . . . . . . . 47
Section 12.7 Headings; Definition . . . . . . . . . . . . . . . . 47
Section 12.8 Amendments and Waivers . . . . . . . . . . . . . . . 47
Section 12.9 Severability . . . . . . . . . . . . . . . . . . . . 47
Section 12.10 Confidentiality . . . . . . . . . . . . . . . . . . . 48
Section 12.11 Arbitration . . . . . . . . . . . . . . . . . . . . . 48
Section 12.12 Convenience of Forum; Consent to Jurisdiction . . . . 49
Section 12.13 Termination of Registration Rights and
Corporate Governance Agreement . . . . . . . . . . 49
Section 12.14 Waiver by Selling Stockholders . . . . . . . . . . . 49
<PAGE>6
Table of Schedules
Schedule 2.5(a) Conversion of Securities
Schedule 3.2 Ownership of Shares
Schedule 3.3 Consents and Approvals; No Violations
Schedule 3.5 Agreements to Sell the Company and Other Matters
Schedule 4.1 Organization
Schedule 4.2 Capitalization; Structure
Schedule 4.3 Subsidiaries
Schedule 4.5 Consents and Approvals; No Violation
Schedule 4.6 Financial Statements
Schedule 4.7 Absence of Certain Changes or Events
Schedule 4.8 Assets
Schedule 4.9 Contracts and Commitments
Schedule 4.10 Absence of Breaches or Defaults
Schedule 4.11 Litigation
Schedule 4.12 Compliance with Law
Schedule 4.13 Labor Matters
Schedule 4.15 No Brokers
Schedule 4.17 Proprietary Rights
Schedule 4.18 Employee Plans
Schedule 4.19 Insurance
Schedule 4.20 Affiliate Transactions
Schedule 4.21 Environmental Matters
Schedule 4.22 Officers
Schedule 4.23 Severance Arrangements
Schedule 4.24 Licensed Departments
Schedule 4.25 Bank Accounts
Schedule 5.2 Consents and Approvals; No Violations
Schedule 5.7 Financial Statements
Schedule 5.8 Absence of Certain Changes or Events
Schedule 5.9 Absence of Breaches or Defaults
Schedule 5.10 Litigation
Schedule 5.11 Compliance with Law
Schedule 5.12 No Undisclosed Liabilities
Schedule 6.5 Conduct of Business
Schedule 7.1 Taxes and Tax Returns
Schedule 8.6 Title Policy
Schedule 8.7 Termination of Stockholder Agreements
Schedule 9.9 Capital Structure
<PAGE>7
Table of Exhibits
Exhibit A Form of Indenture
Exhibit B Matters to be Covered in Opinion of Counsel to Ralphs
Supermarkets and EJDC
Exhibit C Matters to be covered in Opinion of Counsel to Selling
Stockholders Other than EJDC
Exhibit D Matters to be Covered in Opinion of Counsel to F4L, F4L
Holdings and F4L Supermarkets
Exhibit E Put Agreement
Exhibit F Consulting Agreement
Exhibit G Registration Rights Agreement
Exhibit H Address for Notices
<PAGE>8
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
September 14, 1994, is by and among Food 4 Less, Inc., a Delaware corporation
("F4L"), Food 4 Less Holdings, Inc., a California corporation ("F4L
Holdings"), Food 4 Less Supermarkets, Inc., a Delaware corporation ("F4L
Supermarkets"), Ralphs Supermarkets, Inc., a Delaware corporation ("Ralphs
Supermarkets"), and The Edward J. DeBartolo Corporation, an Ohio corporation
("EJDC") and the other stockholders of Ralphs Supermarkets (each a "Selling
Stockholder").
WHEREAS, the Selling Stockholders own 100% of the issued and
outstanding shares of capital stock of Ralphs Supermarkets;
WHEREAS, Ralphs Supermarkets owns 100% of the issued and outstanding
shares of capital stock of Ralphs Grocery Company, a Delaware corporation
("Ralphs Grocery," and together with Ralphs Supermarkets and their
subsidiaries, the "Company");
WHEREAS, F4L owns a majority of the issued and outstanding shares of
capital stock of F4L Holdings, which in turn owns 100% of the issued and
outstanding shares of capital stock of F4L Supermarkets;
WHEREAS, F4L, F4L Holdings, F4L Supermarkets, Ralphs Supermarkets
and the Selling Stockholders deem it advisable and for the mutual benefit of
F4L, F4L Holdings, F4L Supermarkets, Ralphs Supermarkets and the Selling
Stockholders, that F4L Supermarkets merge with and into Ralphs Supermarkets
(the "Merger") in accordance with the terms and conditions of this Agreement
and Section 251 of the General Corporation Law of the State of Delaware (the
"GCL");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Certain Definitions
Section 1.1 Certain Definitions. As used in this Agreement the
following terms shall have the following respective meanings:
"Affiliate" shall mean, with respect to any party, any individual,
corporation, partnership or other entity that directly, or through one or more
intermediaries, controls or is controlled by or is under common control with
such party.
"Action" shall mean any action, order, writ, injunction, judgment or
decree outstanding or claim, suit, litigation, proceeding, arbitration or
investigation by or before any court, governmental or other regulatory or
administrative agency or commission or any other person.
"Antitrust Laws" shall mean and include the Sherman Act, as amended,
the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as
amended, and all other federal and state statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
<PAGE>9
"Assets" shall mean all land, buildings, improvements, leasehold
improvements, Fixtures and Equipment and other assets (tangible or intangible)
owned or leased by Ralphs Supermarkets or Ralphs Grocery.
"Closing" shall mean the consummation of the transactions
contemplated by Article II of this Agreement.
"Closing Date" shall mean November 23, 1994 or such other date as
promptly thereafter as of which all of the conditions set forth in Articles
VIII and IX shall have been satisfied or duly waived or, if F4L and Ralphs
Supermarkets shall mutually agree upon a different date, the date upon which
they, with the consent of EJDC, shall have mutually agreed upon in writing.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"Company Business" shall mean the business, Assets, operations and
Facilities of the Company.
"Confidentiality Agreement" shall mean that certain Confidentiality
Agreement dated as of July 1, 1994 among Ralphs Supermarkets, F4L and The
Yucaipa Companies.
"Debentures" shall mean the 13% Senior Subordinated Pay-in-Kind
Debentures due 2006 to be issued by F4L Holdings pursuant to the Indenture.
"Disclosure Schedule" shall mean the schedules called for by the
representations and warranties in this Agreement and attached hereto.
"Encumbrances" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encumbrance or other rights of third parties.
"Environmental Laws" means all federal, state and local laws, rules
and regulations and other requirements which in any way are related to
protection of health, safety, or the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata), including, without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases of
hazardous substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
hazardous substances, including but not limited to the Federal Water Pollution
Control Act (33 U.S.C. Sec. 1251 et seq.), Resource Conservation & Recovery Act
(42 U.S.C. Sec. 6901 et seq.), Safe Drinking Water Act (21 U.S.C. Sec. 349, 42
U.S.C. Sec. 201, 300f), Toxic Substances Control Act (15 U.S.C. Sec. 2601 et
seq.), Clean Air Act (42 U.S.C. Sec. 7401 et seq.), and Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sec. 9601
et seq.).
"Evaluation Material" shall have the meaning ascribed to such
capitalized term in the Confidentiality Agreement.
"Financing" shall mean the debt and equity financing required to
consummate the Merger and the other transactions contemplated by this
Agreement (including the refinancing, as required, of any existing
indebtedness of F4L, Ralphs Supermarkets or their respective subsidiaries) and
any financing necessary to provide working capital for the Surviving
Corporation and its subsidiaries on an ongoing basis. In addition, the
"Financing" shall also refer to the Public Debt Refinancing.
<PAGE>10
"Financing Sources" shall mean the banks, underwriters or other
responsible financial institutions or other responsible persons providing the
Financing as set forth in the Commitment Letters.
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
furnishings, machinery and equipment owned by the Company and located in, at
or upon the Facilities.
"GAAP" shall mean generally accepted accounting principles,
consistently applied.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indenture" shall mean the indenture governing the Debentures to be
entered into by F4L Holdings on the Closing Date, in the form attached hereto
as Exhibit A.
"Material Adverse Effect" shall mean a material adverse effect on
the business, Assets, results of operations or financial condition of the
Company or on the consummation of the transactions contemplated hereby.
"Permitted Encumbrances" shall mean (i) all statutory or other liens
for Taxes or assessments which are not yet due or delinquent or the validity
of which are being contested in good faith by appropriate proceedings; (ii)
all workers' and materialmen's liens, and other similar liens imposed by law,
incurred in the ordinary course of business; (iii) all laws and governmental
rules, regulations, ordinances and restrictions; (iv) all leases, subleases,
licenses, concessions or service contracts to which Ralphs Supermarkets or
Ralphs Grocery is a party; and (v) all other liens, mortgages, covenants,
imperfections in title, charges, easements, restrictions and other
Encumbrances which do not materially detract from or materially interfere with
the value or present use of the asset subject thereto or affected thereby.
"Public Debt Refinancing" shall mean the defeasance, amendment,
repurchase, exchange or other acquisition or retirement by F4L or the
Surviving Corporation of the existing public debt securities of Ralphs
Grocery, F4L Supermarkets and F4L Holdings to the extent that such
transactions are necessary in order to permit the consummation of the Merger
and the other transactions contemplated hereby (including the incurrence of
any additional indebtedness constituting part of the Financing) or as may
otherwise be required by the Financing Sources.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall mean the shares of common stock, par value $1.00 per
share, of Ralphs Supermarkets.
"subsidiary" shall mean, with respect to any person, (i) any
corporation in an unbroken chain of corporations beginning with such person if
each of the corporations other than the last corporation in the unbroken chain
then owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain; (ii) any
partnership in which such person or a subsidiary of such person is a general
partner; or (iii) any partnership, limited liability company or other entity
in which such person possesses a 50% or greater direct or indirect interest in
the total capital or total income of such partnership, limited liability
company or other entity.
<PAGE>11
"Tax" or "Taxes" shall mean all federal, state, local, foreign and
other taxes, levies, imposts, assessments, impositions or other similar
government charges, including, without limitation, income, estimated income,
business, occupation, franchise, real property, payroll, personal property,
sales, transfer, stamp, use, employment, commercial rent or withholding,
occupancy, premium, gross receipts, profits, windfall profits, deemed profits,
license, lease, severance, capital, production, corporation, ad valorem,
excise, duty or other taxes, including interest, penalties and additions (to
the extent applicable) thereto.
"TIA" shall mean the Trust Indenture Act of 1939, as amended.
In addition to the foregoing, the phrases "to Ralphs Supermarkets'
knowledge" or "to the Company's knowledge," or like phrase, shall mean the
actual knowledge of any director or executive officer of Ralphs Supermarkets
or Ralphs Grocery, and the phrase "to F4L's knowledge," or like phrase, shall
mean the actual knowledge of any director or executive officer of F4L or any
subsidiary of F4L.
Section 1.2 Additional Defined Terms. The following terms are
defined in the Sections set forth opposite such term:
Term Section
AAA 12.11
Affiliated Group 7.1(a)
Agreement Preamble
Ancillary Agreements 9.5
Audited Financial Statements 4.6
Benefit Arrangement 4.18(a)(i)
Constituent Corporations 2.2
Commitment Letters 5.6
Consulting Agreement 9.5
Contracts 4.9
Crawford 4.3
Definitive Financing Agreements 6.12
Delivering Party 7.2
DIR 6.14
EAR 2.6
Effective Date 2.3
EJDC Preamble
EJDC Guarantee 6.14
EJDC Guaranteed Claims 6.14
Employee Plans 4.18(a)(ii)
ERISA 4.18(a)(iii)
ERISA Affiliate 4.18(a)(iv)
F4L Preamble
F4L Audited Financial Statements 5.6
F4L Entity 12.11
F4L Financial Statements 5.6
F4L Holdings Preamble
F4L Supermarkets Preamble
F4L Unaudited Financial Statements 5.6
<PAGE>12
Facility 4.8
Financial Statements 4.6
Fractional Amounts 2.5(b)
GCL Preamble
Hazardous Materials 4.21
Indemnified Party 10.4
Indemnifying Party 10.4
Leases 4.8
Merger Preamble
Merger Consideration 2.5(a)
Multiemployer Plan 4.18(a)(v)
Option 2.6
PBGC 4.18(a)(vi)
Pension Plan 4.18(a)(vii)
Private Financing 6.10
Projected Losses 6.14
Property 4.8
Proprietary Rights 4.17
Put Agreement 9.5
Ralphs Registration Rights Agreement 12.13
Ralphs Supermarkets Preamble
Ralphs Grocery Preamble
Registration Rights Agreement 9.5
Registration Statements 4.26
Requesting Party 7.2
Shelf Registration Statement 6.10
Specified Properties 4.21
Subject Companies 10.4
Surviving Corporation 2.1
Taxpayers 7.1(a)
Tax Returns 7.1(a)
Transferee 12.6
Unaudited Financial Statements 4.6
United States real property holding corporation 7.1(i)
Welfare Plan 4.18(a)(viii)
ARTICLE II
The Merger
Section 2.1 The Merger. At the Effective Date, in accordance with
this Agreement and the GCL, F4L Supermarkets shall be merged with and into
Ralphs Supermarkets, the separate existence of F4L Supermarkets (except as may
be continued by operation of law) shall cease, and Ralphs Supermarkets shall
continue as the surviving corporation. As constituted from and after the
Effective Date, Ralphs Supermarkets hereinafter sometimes is referred to as
the "Surviving Corporation."
Section 2.2 Effect of the Merger. When the Merger has been
effected, the Surviving Corporation shall thereupon and thereafter possess all
the rights, privileges, immunities and franchises, of a public as well as of a
private nature, of F4L Supermarkets and Ralphs Supermarkets (the "Constituent
Corporations"); all property, real, personal and mixed, and all debts due on
whatever account and all choses in action, and all and every other interest,
or belonging to or due
<PAGE>13
each of the Constituent Corporations shall be vested in the Surviving
Corporation without further act or deed; and the title to any real estate, or
any interest therein, vested in F4L Supermarkets, Ralphs Supermarkets or the
Surviving Corporation shall not revert or be in any way impaired by reason of
the Merger. The Surviving Corporation shall thenceforth be responsible and
liable for all the liabilities and obligations of each of the Constituent
Corporations so merged; any claim existing or action or proceeding pending by
or against any of the Constituent Corporations may be prosecuted as if the
Merger had not taken place, or the Surviving Corporation may be substituted in
its place. The Surviving Corporation shall have all the rights, privileges,
immunities and powers and shall be subject to all the duties and liabilities
of a corporation organized under the GCL, and neither the rights of creditors
nor any liens upon the respective properties of the Constituent Corporations
and the Surviving Corporation shall be impaired by the Merger; all with the
effect set forth in the GCL.
Section 2.3 Consummation of the Merger. As soon as is practicable
after the satisfaction or waiver of the conditions hereinafter set forth, the
parties hereto will cause the Merger to be consummated by filing with the
Secretary of State of Delaware a certificate of merger in such form as
required by, and executed in accordance with, the relevant provisions of the
GCL (the time of such filing being the "Effective Date").
Section 2.4 Restated Certificate of Incorporation; Bylaws;
Directors and Officers. The Restated Certificate of Incorporation and Bylaws
of the Surviving Corporation shall be the Certificate of Incorporation and
Bylaws of Ralphs Supermarkets, as in effect immediately prior to the Effective
Date, until thereafter amended as provided therein and under the GCL, except
that the Restated Certificate of Incorporation of the Surviving Corporation
shall provide for the authorized capitalization and for the number of
directors set forth in the certificate of merger filed with the Delaware
Secretary of State.
Section 2.5 Conversion of Securities. At the Effective Date, by
virtue of the Merger and without any action on the part of F4L Supermarkets,
Ralphs Supermarkets, the Surviving Corporation or the holder of any of the
following securities:
(a) Each Share (or fractional Share) issued and outstanding
immediately prior to the Effective Date shall be cancelled and extinguished
and be converted into and become a right to receive $16.60971 in cash and
$3.9083 principal amount of the Debentures (or the pro rata portion of such
cash and Debentures, in the case of fractional Shares) (collectively, and
together with the cash amounts referred to in Section 2.5(b) below, the
"Merger Consideration"). Each Selling Stockholder hereby waives all
dissenters', appraisal and other rights arising under Section 262 of the GCL
(or comparable provisions of any applicable laws of other jurisdictions) with
respect to its Shares in the Merger. The Merger Consideration payable to each
Selling Stockholder is set forth in Schedule 2.5(a).
(b) Debentures will be issued only in denominations of $1000 and
integral multiples of $1000. A Selling Stockholder will not be entitled to
receive Debentures in principal amounts less than $1000, or in principal
amounts in excess of $1000 (or an integral multiple thereof) but less than the
next highest integral multiple ("Fractional Amounts"), but instead will be
entitled to receive cash in lieu of any such Fractional Amount.
(c) Each share of Common Stock, par value $0.01 per share, of F4L
Supermarkets issued and outstanding immediately prior to the Effective Date
shall be converted into and become one validly issued, fully paid and
nonassessable share of Common Stock of the Surviving Corporation. Each share
of Preferred Stock, par value $0.01 per share, of F4L Supermarkets issued and
outstanding immediately prior to the Effective Date shall be converted into
and become one validly issued, fully paid and nonassessable share of preferred
stock of the Surviving Corporation,
<PAGE>14
having the same rights, preferences, privileges and restrictions as that share
of Preferred Stock of F4L Supermarkets so converted.
(d) All notes and other debt instruments of the Constituent
Corporations which are outstanding at the Effective Date shall continue to be
outstanding subsequent to the Effective Date as debt instruments of the
Surviving Corporation, if permitted by their respective terms and provisions.
(e) There shall be withheld from the cash consideration set forth
in Section 2.5(a) any amounts lawfully required to be withheld and paid over
to any taxing authority with respect to any Selling Stockholder (whether by
reason of receipt of the Merger Consideration or any other consideration
received in, or in connection with, the transactions contemplated by this
Agreement); it being agreed, however, that except as otherwise required as a
result of a change after the date hereof in law (including court decisions),
regulations or administrative interpretation thereof: (i) if the Company
provides a FIRPTA certificate as set forth in Section 7.1(h) hereof (and F4L
has no reason to believe that such certificate is not true and complete), no
portion of the cash consideration shall be withheld pursuant to sections 897
and 1445 of the Code, and (ii) if such Selling Stockholder provides an opinion
of counsel in form and substance reasonably satisfactory to F4L and to F4L's
counsel to the effect that no portion of the Merger Consideration to be
received by such Selling Stockholder is subject to withholding under sections
1441 or 1442 of the Code, no amount of the cash consideration shall be
withheld pursuant to sections 1441 or 1442 of the Code.
Section 2.6 Ralphs Supermarkets Stock Options and Related Matters.
At or immediately prior to the Effective Date, each then outstanding stock
option (an "Option") to purchase Shares, heretofore granted under the Ralphs
Holding Company Nonqualified Stock Option Plan dated February 3, 1992 (whether
or not such Option is then exercisable) shall be cancelled, exercised or
surrendered by the holder thereof, without payment of consideration for such
cancellation or surrender (or payment of Merger Consideration with respect to
any Shares acquired upon exercise thereof) in excess of $880,000 (including
the principal amount of any Debentures issued as Merger Consideration with
respect to Shares acquired upon exercise thereof). At or immediately prior to
the Effective Date, each then outstanding equity appreciation right (an "EAR")
heretofore granted pursuant to the Company's Equity Appreciation Plan, as
amended through the date hereof (the "EAR Plan"), will be paid in accordance
with its terms. In the event that F4L and the holders of such options or EARs
enter into any agreement to modify or cancel a portion of the options or EARs
held by such person in connection with the consummation of the Merger, the
Company will execute such documentation as may be reasonably requested by F4L
to reflect such modification or cancellation.
Section 2.7 Closing. The Closing shall take place on the Closing
Date at 10:00 A.M., Los Angeles time, at the offices of Latham & Watkins, 633
West Fifth Street, Los Angeles, California 90071, or at such other time and
place as shall be agreed upon by the parties. At the Closing (a) the Selling
Stockholders and Ralphs Supermarkets, as applicable, will deliver to F4L (i)
certificates representing 100% of the issued and outstanding Shares, in
accordance with the provisions of Section 2.8, (ii) corporate minute books,
stock transfer books and Bylaws of Ralphs Supermarkets, (iii) certificates of
each Selling Stockholder and of Ralphs Supermarkets (signed on behalf of such
Selling Stockholder or Ralphs Supermarkets, as applicable, by the Chairman,
the President or a Vice President of each of them) to the effect that the
conditions set forth in Article VIII hereof (but only insofar as such
conditions relate to such Selling Stockholder or Ralphs Supermarkets, as
applicable) have been satisfied (except as waived by F4L), (iv) an opinion of
Willkie Farr & Gallagher, counsel to Ralphs and EJDC, an opinion of a firm of
California counsel to Ralphs and EJDC reasonably acceptable to F4L, and an
opinion of Milbank, Tweed, Hadley & McCloy, special tax counsel to Ralphs,
relating to the matters set forth in Exhibit B, and opinions of counsel to
each Selling Stockholder other than EJDC, relating to the matters set forth in
Exhibit C, (v) the certificate of
<PAGE>15
incorporation of Ralphs Supermarkets certified by the Secretary of State of
Delaware and certificates of good standing of Ralphs Supermarkets in Delaware
and California, (vi) incumbency certificates with respect to the officers of
Ralphs Supermarkets and of each Selling Stockholder, (vii) the resignation of
such members of the Board of Directors of Ralphs Supermarkets and Ralphs
Grocery as shall be specified by F4L in writing at least ten days prior to the
Closing Date and (viii) such other certificates, instruments or other
documents as F4L may reasonably request, in each case in form and substance
reasonably satisfactory to F4L; and (b) F4L, F4L Holdings and F4L
Supermarkets, as applicable, will cause to be delivered to each Selling
Stockholder (i) the cash portion of the Merger Consideration due to it by wire
transfer in immediately available funds to an account specified by such
Selling Stockholder, (ii) the Debenture portion of the Merger Consideration
due to it by delivery of one or more Debentures in appropriate principal
amount, (iii) certificates of F4L, F4L Holdings and F4L Supermarkets (signed
on behalf of each of them by the President or a Vice President of each of
them) to the effect that the conditions set forth in Article IX hereof have
been satisfied (except as waived by Ralphs Supermarkets and the Selling
Stockholders), (iv) an opinion of Latham & Watkins, counsel to F4L, F4L
Holdings and F4L Supermarkets relating to the matters set forth in Exhibit D,
(v) the certificates of incorporation of F4L, F4L Holdings and F4L
Supermarkets certified by the Secretary of State of Delaware and certificates
of good standing of F4L and F4L Holdings in Delaware and F4L Supermarkets in
Delaware and California, (vi) incumbency certificates with respect to the
officers of F4L, F4L Holdings and F4L Supermarkets, (vii) the solvency opinion
referred to in Section 9.8, and (viii) such other certificates, instruments or
other documents as Ralphs Supermarkets or any Selling Stockholder may
reasonably request, in each case in form and substance reasonably satisfactory
to Ralphs Supermarkets or such Selling Stockholder.
Section 2.8 Exchange of Certificates.
(a) From and after the Effective Date, each holder of a certificate
or certificates representing Shares shall surrender such certificate or
certificates to the Surviving Corporation, duly endorsed without recourse
except as provided herein, as the Surviving Corporation may require, and shall
receive in exchange therefor the Merger Consideration. At the Effective Date,
the holder of a certificate or certificates representing Shares shall have no
rights with respect to such Shares other than to surrender such certificate or
certificates pursuant to this Section 2.8. No interest shall accrue on the
Merger Consideration. If the Merger Consideration (or any portion thereof) is
to be delivered to any person other than the person in whose name the
certificate or certificates representing Shares surrendered in exchange
therefor is registered, it shall be a condition to such exchange that the
person requesting such exchange shall pay to the Surviving Corporation any
transfer or other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the certificate
or certificates so surrendered, or shall establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Surviving Corporation nor any other
party hereto shall be liable to a holder of Shares for any Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat and similar laws.
(b) After the Effective Date, there shall be no transfers of any
Shares on the stock transfer books of the Surviving Corporation. If, after
the Effective Date, certificates formerly representing Shares are presented to
the Surviving Corporation, they shall be cancelled and exchanged for the
Merger Consideration in accordance with this Section 2.8.
Section 2.9 Alternative Transaction Structure. At the election of
F4L, the transactions contemplated by this Agreement may be restructured in
the form of a purchase by F4L or a subsidiary of F4L of all of the outstanding
capital stock of Ralphs Supermarkets, or a merger of a subsidiary of F4L with
and into Ralphs Supermarkets, or such other form as F4L may determine to be
appropriate, provided that such stock purchase or other form does not result
in any consequences
<PAGE>16
to any Selling Stockholder which are less favorable to such Selling
Stockholder than the consequences which would have resulted from the Merger,
and appropriate conforming changes to this Agreement satisfactory to the
Selling Stockholders are made.
ARTICLE III
Representations and Warranties of Selling Stockholders
Each Selling Stockholder hereby represents and warrants, severally
and not jointly, to F4L, F4L Holdings and F4L Supermarkets as follows (in each
case only as to such Selling Stockholder and not as to any other Selling
Stockholder):
Section 3.1 Organization; Authorization; etc. Such Selling
Stockholder is duly incorporated, validly existing and in good standing under
the laws of its jurisdiction of incorporation. Except as set forth in
Schedule 3.3, the execution and delivery of this Agreement and the
Registration Rights Agreement and the consummation of the Merger and the other
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of such Selling Stockholder. Except as
set forth in Schedule 3.3, this Agreement has been duly executed and delivered
by such Selling Stockholder, and, assuming the due execution hereof by each
other party hereto, this Agreement constitutes the legal, valid and binding
obligation of such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms, subject in each case to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and to general equitable principles (regardless of whether enforcement is
sought in equity or at law).
Section 3.2 Ownership of Shares. At the time of Closing, such
Selling Stockholder will own, beneficially and of record, all of the Shares
issued in its name and set forth opposite its name on Schedule 3.2, free of
any Encumbrance (including any Encumbrance arising as a result of the consum-
mation of the Merger or the other transactions contemplated hereby) and
subject to no restriction with respect to the voting or transfer thereof,
other than restrictions generally applicable under federal or state securities
laws.
Section 3.3 Consents and Approvals; No Violations. Except for the
filing with the Delaware Secretary of State of the certificate of merger set
forth in Section 2.3, and the matters set forth in Schedule 3.3, and assuming
compliance with any applicable Antitrust Laws, there is no requirement
applicable to such Selling Stockholder to make any filing or registration
with, or to obtain any permit, authorization, consent or approval of, any
government or regulatory authority or any non-governmental person or entity in
connection with the execution and delivery by such Selling Stockholder of this
Agreement, the consummation of the Merger, and the performance of the other
transactions contemplated hereby, except where the failure to make such
filings or registrations or to obtain such permits, authorizations, consents
or approvals would not, individually or in the aggregate, have a material
adverse effect on the consummation of the Merger or the other transactions
contemplated by this Agreement. Except as set forth in Schedule 3.3, neither
the execution or delivery of this Agreement by such Selling Stockholder nor
the consummation by such Selling Stockholder of the transactions contemplated
by this Agreement will (i) violate any provision of the certificate of
incorporation or By-laws of such Selling Stockholder, (ii) violate any
provision of, or constitute (with or without notice, the passage of time or
both) a default under, or result in the acceleration of or entitle any party
to accelerate (whether after the giving of notice or lapse of time or both) or
terminate any obligation under, any mortgage, lien, lease, agreement or other
instrument or obligation to which such Selling Stockholder is a party or by
which it or the Shares owned by it are bound, except where such event would
not, individually or in the aggregate, have a material adverse effect on the
consummation of the Merger or the other transactions contemplated hereby, or
<PAGE>17
(iii) assuming compliance with any applicable Antitrust Laws, violate any
order, writ, injunction, decree, statute, rule or regulation to which such
Selling Stockholder is subject.
Section 3.4 Acquisition of Debentures for Investment. Such Selling
Stockholder has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its
acquisition of the Debentures. Such Selling Stockholder confirms that F4L and
Ralphs Supermarkets have made available to it the opportunity to ask questions
of the officers and management employees of F4L and Ralphs Supermarkets and to
acquire additional information about the business, assets and financial
condition of F4L and Ralphs Supermarkets. Such Selling Stockholder confirms
that it is not acquiring the Debentures with a view toward any distribution
thereof or with any present intention of selling any Debentures in either case
in a transaction that would violate the Securities Act or the securities laws
of any state or other applicable jurisdiction. Subject to the provisions of
Section 6.10 hereof, such Selling Stockholder acknowledges and agrees that the
Debentures may not be sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the
Securities Act except pursuant to an exemption from such registration
available under the Securities Act.
Section 3.5 Agreements to Sell the Company and Other Matters.
Except as set forth in Schedule 3.5 or the Ralphs Registration Rights
Agreement, no Selling Stockholder has any legal obligation, absolute or
contingent, to any other person or firm to sell or dispose of its interest in
the capital stock of Ralphs Supermarkets, by way of a sale of capital stock,
merger, consolidation or other reorganization, or otherwise, or to enter into
any agreement with respect thereto. Except as set forth in Schedule 3.5, EJDC
has not directly or through any Affiliate or agent created, or caused to be
created, (i) any legal obligation, absolute or contingent, to any other person
or firm to sell any material portion of the Assets of the Company, to sell the
capital stock of Ralphs Supermarkets or Ralphs Grocery, to effect any merger,
consolidation or other reorganization of Ralphs Supermarkets or Ralphs
Grocery, or to enter into any agreement with respect thereto, or (ii) any
liability (contingent or otherwise) for payment of a brokerage, finder's,
investment banking or other fee or commission in connection with any sale or
restructuring of the Company, or (iii) any obligation with respect to the
issuance or sale of capital stock by Ralphs Supermarkets or any subsidiary.
ARTICLE IV
Representations and Warranties of Ralphs Supermarkets
Ralphs Supermarkets hereby represents and warrants to F4L, F4L
Holdings and F4L Supermarkets as follows:
Section 4.1 Organization. Each of Ralphs Supermarkets and its
subsidiaries is duly incorporated, validly existing and in good standing under
the laws of the state of its incorporation and each has all requisite
corporate power and authority to own its properties and assets and to carry on
its business as it is now being conducted. Each of Ralphs Supermarkets and
its subsidiaries is in good standing and is duly qualified to transact
business in California and in each other jurisdiction in which the nature of
the property owned or leased by it or the conduct of its business requires it
to be so qualified, except where the failure to be in good standing or duly
qualified to transact business would not have a Material Adverse Effect. The
jurisdictions in which Ralphs Supermarkets and its subsidiaries are qualified
to do business are set forth in Schedule 4.1. Ralphs Supermarkets has
delivered or made available to F4L correct and complete copies of its and its
subsidiaries' certificates of incorporation and by-laws, as amended to the
date of this Agreement. Ralphs Supermarkets has also delivered or made
available to F4L true copies of the minute books of Ralphs Supermarkets and
its subsidiaries in the form in which they are maintained by Ralphs
Supermarkets and such subsidiaries.
<PAGE>18
Section 4.2 Capitalization; Structure. The authorized capital
stock of Ralphs Supermarkets consists of 50,000,000 shares of Common Stock,
$1.00 par value per share, and 5,000,000 shares of Preferred Stock, $.01 par
value per share, of which, as of the date hereof: (i) 25,587,279.88971 shares
of Common Stock are issued and outstanding, (ii) no shares of Preferred Stock
are issued and outstanding and (iii) no shares of Common Stock or Preferred
Stock are held in Ralphs Supermarkets' treasury. All of the issued and
outstanding Shares are duly authorized, validly issued, fully paid and
nonassessable and owned of record by the Selling Stockholders. Except as set
forth in Schedule 4.2, there are no outstanding options, warrants, calls,
subscriptions, convertible securities or other securities, or any other rights
of any kind to acquire, or obligations to issue, shares of capital stock of
any class of, or other equity interests in, Ralphs Supermarkets or any
subsidiary of Ralphs Supermarkets. Neither Ralphs Supermarkets nor any
subsidiary of Ralphs Supermarkets has any commitments or obligations to
purchase or redeem any shares of capital stock of any class of, or other
equity interests in, Ralphs Supermarkets or any subsidiary of Ralphs
Supermarkets.
Section 4.3 Subsidiaries. The only subsidiaries of Ralphs
Supermarkets are Ralphs Grocery and Crawford Stores, Inc. ("Crawford"). All
of the outstanding shares of capital stock of Ralphs Grocery and Crawford are
validly issued, fully paid, non-assessable and free of preemptive rights or
rights of first refusal. Except as set forth in Schedule 4.3, Ralphs
Supermarkets owns all of the issued and outstanding capital stock of Ralphs
Grocery, and Ralphs Grocery owns all of the issued and outstanding capital
stock of Crawford, in each case free and clear of all Encumbrances and there
are no existing options, warrants, calls, subscriptions, convertible
securities or other securities, agreements, commitments or obligations of any
character relating to the outstanding capital stock or other securities of
Ralphs Grocery or Crawford or which would require Ralphs Grocery or Crawford
to issue or sell any shares of its capital stock or securities convertible
into or exchangeable for shares of its capital stock. Neither Ralphs
Supermarkets nor its subsidiaries owns any voting securities or other capital
stock of any corporation (other than the stock of Ralphs Grocery held by
Ralphs Supermarkets or the stock of Crawford held by Ralphs Grocery) or other
entity (other than investments in marketable securities).
Section 4.4 Authority. The execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated hereby have been duly authorized by the Board of Directors and
stockholders of Ralphs Supermarkets and no other corporate proceedings on the
part of Ralphs Supermarkets or its stockholders are necessary therefor. This
Agreement has been duly executed and delivered by Ralphs Supermarkets and,
assuming the due execution hereof by the other parties hereto, constitutes the
legal, valid and binding obligation of Ralphs Supermarkets, enforceable
against Ralphs Supermarkets in accordance with its terms, subject in each case
to applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and to general equitable principles (regardless of whether
such enforceability is sought in equity or at law).
Section 4.5 Consents and Approvals; No Violation. Except for
liquor licensing laws, the filing with the Delaware Secretary of State of the
certificate of merger referred to in Section 2.3, and the matters set forth in
Schedule 4.5, and assuming compliance with any applicable Antitrust Laws,
there is no requirement applicable to Ralphs Supermarkets to make any filing
or registration with, or to obtain any permit, authorization, consent or
approval of, any government or regulatory authority or any non-governmental
person or entity in connection with the execution and delivery by Ralphs
Supermarkets of this Agreement, the consummation of the Merger and the
performance of the other transactions contemplated hereby, except where the
failure to make such filings or registrations or to obtain such permits,
authorizations, consents and approvals would not, individually or in the
aggregate impair the continued operation by the Company of any store,
warehouse or distribution facility, or otherwise have a Material Adverse
Effect. Except as set forth in Schedule 4.5, neither the execution and
delivery of this Agreement by Ralphs Supermarkets nor the consummation by
Ralphs
<PAGE>19
Supermarkets of the Merger or the other transactions contemplated by this
Agreement will (i) violate any provision of Ralphs Supermarkets' certificate
of incorporation or by-laws, (ii) violate any provision of, or constitute
(with or without notice, the passage of time or both) a default under, or
result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) or terminate any
obligation under, or result in the imposition of any lien upon or the creation
of a security interest in any assets of the Company pursuant to, any mortgage,
lien, lease, agreement or other instrument or obligation to which the Company
is a party or by which its properties are bound, except where such event would
not, individually or in the aggregate, impair the continued operation by the
Company of any store, warehouse or distribution facility, or otherwise have a
Material Adverse Effect, or (iii) assuming compliance with any applicable
Antitrust Laws, violate any order, writ, injunction, decree, law, statute,
rule or regulation to which the Company is subject.
Section 4.6 Financial Statements. The unaudited consolidated
balance sheet of Ralphs Grocery as of July 17, 1994 and the related unaudited
consolidated statement of operations for the twelve weeks then ended and
unaudited consolidated statement of cash flows for the twenty-four weeks then
ended, with the notes thereto, contained in the Quarterly Report on Form 10-Q
for such period filed with the SEC by Ralphs Grocery (collectively, the
"Unaudited Financial Statements"), and the audited consolidated balance sheets
of Ralphs Grocery as of January 30, 1994 and January 31, 1993 and the related
audited consolidated statements of operations, cash flows and stockholder's
equity for the fiscal years then ended, with the notes thereto, contained in
the Annual Reports on Form 10-K for such periods filed with the SEC by Ralphs
Grocery (collectively, the "Audited Financial Statements" and, together with
the Unaudited Financial Statements, the "Financial Statements"), present
fairly the consolidated financial position and results of operations of Ralphs
Grocery for the periods or as of the dates set forth therein, in each case in
accordance with GAAP (except as otherwise indicated therein or in Schedule 4.6
and except that the Unaudited Financial Statements do not include all of the
notes required by GAAP). Except as otherwise set forth therein or in Schedule
4.6, the Financial Statements are complete in all material respects, are in
accordance with the books and records of Ralphs Grocery, fairly present the
financial condition and results of operations indicated thereby in accordance
with GAAP consistently applied, and contain and reflect all necessary
adjustments (under GAAP consistently applied) for a fair representation of the
Financial Statements as of the dates and for the periods covered thereby.
Except as set forth in Schedule 4.6, and except for its ownership of the
capital stock of Ralphs Grocery, Ralphs Supermarkets (a) did not as of the
respective dates of the Unaudited Financial Statements and the Audited
Financial Statements, (b) does not as of the date hereof, and (c) will not as
of the Closing Date, own any assets, whether tangible or intangible, have any
liabilities, whether known or unknown, fixed or contingent, or have any
operations.
Section 4.7 Absence of Certain Changes or Events. Except as set
forth in Schedule 4.7, since July 17, 1994 the Company has conducted its
business only in the ordinary and usual course and there has not been any:
(a) change in the Company's condition (financial or otherwise),
results of operations, assets, liabilities, working capital or reserves,
except for changes contemplated hereby or changes which have not, individually
or in the aggregate, had a Material Adverse Effect;
(b) (i) except for normal periodic increases or grants in the
ordinary course of business consistent with past practice, (A) increase in the
compensation payable or to become payable by the Company to any of its
employees whose base compensation for services rendered to the Company is
currently at an annual rate of more than $150,000, or (B) bonus, incentive
compensation, service award or other like benefit granted, made or accrued,
contingently or otherwise, for or to the credit of any employees, (ii)
employee welfare, pension, retirement, profit-sharing or similar payment
<PAGE>20
or arrangement made or agreed to by the Company for any employees except
pursuant to the existing plans and arrangements described in Schedule 4.18,
(iii) new employment or consulting agreement involving annual payments in
excess of $75,000 to which the Company is a party, or (iv) grant of additional
EARs or any similar rights;
(c) addition to or modification of the employee benefit plans,
arrangements or practices described in Schedule 4.18 affecting employees other
than (i) contributions made in 1994 for the 1993 plan year in accordance with
the normal practices of the Company or (ii) the extension of coverage to other
employees who became eligible after July 17, 1994;
(d) sale, assignment or transfer of any of the Assets of the
Company, other than in the ordinary course of business;
(e) cancellation of any indebtedness owed to the Company in an
aggregate amount greater than $50,000, or waiver of any rights of similar
value to the Company relating to any of its business activities or properties,
whether or not in the ordinary course of business;
(f) amendment, cancellation or termination of any Contract required
to be listed in Schedule 4.9, license or other instrument material to the Com-
pany;
(g) capital expenditure or the execution of any lease or any
incurring of liability therefor by the Company involving payments in excess of
$500,000 in the aggregate;
(h) failure to repay any material obligation of the Company;
(i) change in accounting methods, principles or practices by the
Company materially affecting any of its assets, liabilities, results of
operations or business;
(j) material revaluation by the Company of any of its Assets,
including without limitation, writing up of the value of inventory, property,
plant, equipment or any other Asset;
(k) material damage, destruction or loss (whether or not covered by
insurance) affecting any Facilities or any other material Assets of the
Company and resulting in a loss in excess of $500,000;
(l) mortgage, pledge or other encumbrance of any Assets of the
Company, material singly or in the aggregate, except purchase money mortgages,
equipment leases or other Encumbrances arising in the ordinary course of
business;
(m) declaration, setting aside or payment of any dividend or other
distribution or payment (whether in cash, stock or property) with respect to
the capital stock of Ralphs Supermarkets or Ralphs Grocery, or any redemption,
purchase or other acquisition of any of the securities of Ralphs Supermarkets
or Ralphs Grocery, or any other payment to any stockholder of Ralphs
Supermarkets in its capacity as a stockholder;
(n) issuance by Ralphs Supermarkets or any of its subsidiaries of,
or commitment by any of them to issue, any capital stock or other equity
securities or obligations or any securities convertible into or exchangeable
or exercisable for capital stock or other equity securities;
(o) indebtedness for borrowed money incurred by the Company or any
commitment to incur indebtedness for borrowed money entered into by the
Company, or any loans made or agreed to be made by the Company;
<PAGE>21
(p) incurrence of other liabilities involving $100,000 or more
except in the ordinary course of business and consistent with past practice,
or any increase or change in any assumptions underlying, or methods of
calculating, any bad debt, contingency or other reserves;
(q) payment, discharge or satisfaction of any liabilities other
than the payment, discharge or satisfaction (i) in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the Unaudited Financial Statements as of July 17, 1994, or
incurred in the ordinary course of business and consistent with past practice
since July 17, 1994 and (ii) of other liabilities involving $250,000 or less
individually and $1,000,000 or less in the aggregate;
(r) adoption of a plan of liquidation or resolutions providing for
the liquidation, dissolution, merger, consolidation or other reorganization of
Ralphs Supermarkets or Ralphs Grocery (except for transactions contemplated
hereby);
(s) agreement by the Company to do any of the foregoing;
(t) other event or condition of any character which in any one case
or in the aggregate has had a Material Adverse Effect, or any event or
condition (other than matters of general public knowledge relating to general
economic conditions or the Company's industry as a whole) which it is
reasonable to expect will, individually or in the aggregate, have a Material
Adverse Effect on the Company; or
(u) other event or condition of any character which, if occurring
after the date hereof, would constitute a breach of Section 6.5.
Section 4.8 Assets. Except as set forth in Schedule 4.8, the
Company has good and marketable fee simple title to or a valid leasehold
interest in all material Assets reflected in the Unaudited Financial
Statements as of July 17, 1994, and in all material Assets acquired by the
Company since that date, less any Assets sold or transferred by the Company
since that date (provided that such sale or transfer was permitted under the
terms of this Agreement), in each case free and clear of all Encumbrances
(other than any Permitted Encumbrances). Schedule 4.8 contains a complete and
accurate list of (i) each store, office, plant or warehouse maintained by the
Company (each of the foregoing, a "Facility") showing the location and use
thereof and whether the Facility is leased or owned, (ii) all other material
improved or unimproved real property owned or leased by the Company (each of
the foregoing, a "Property") showing the location and use thereof and whether
the Property is leased or owned and (iii) each other Facility (other than
stores) owned or operated by the Company or any predecessor since January 1,
1985. There are no pending or, to the best of the Company's knowledge,
threatened condemnation proceedings relating to any of the Properties or
Facilities. The Company has provided to F4L accurate written disclosure of
its current capital expense budget, with respect to its Facilities and planned
Facilities, as used for internal Company planning purposes. The Company has
all permits necessary to own or operate its fee-owned Properties, and no such
permits will be required, as a result of the Merger or the other transactions
contemplated hereby, to be issued after the Closing to permit the Surviving
Corporation to continue to own or operate such Properties, other than any such
Permits which are ministerial in nature or the absence of which would not have
a Material Adverse Effect. The Company has valid leasehold interests in all
of the Assets that are leased by it, which leasehold interests are free and
clear of all Encumbrances, except as set forth in Schedule 4.8 and for
Permitted Encumbrances and except for Encumbrances that would not,
individually or in the aggregate, have a Material Adverse Effect. Schedule
4.8 sets forth a list of all leases (including subleases) of personal property
involving any annual expense in excess of $50,000 and not cancelable (without
liability) within 30 days and all leases (including subleases) of real
property, in each case to which the Company or any of its subsidiaries is a
party, whether as lessor, lessee, guarantor or otherwise, or by which any of
them or their respective
<PAGE>22
properties or assets are bound, or which otherwise relate to the operation of
their respective business (the "Leases"). The Company has in all material
respects performed all the obligations required to be performed by it with
respect to (y) all Assets leased by it (whether as lessor or lessee) except
where the failure to perform would not, individually or in the aggregate, have
a Material Adverse Effect, and (z) all Leases of the Facilities, and there
exists no default or event which, with the giving of notice or lapse of time
or both, would become a default on the part of the Company under any Lease,
which defaults, individually or in the aggregate, would have a Material
Adverse Effect. The Leases are valid, binding and enforceable in accordance
with their respective terms and are in full force and effect, and assuming all
consents required by the terms thereof or applicable law have been obtained,
the Leases will continue to be valid, binding and enforceable in accordance
with their respective terms and in full force and effect immediately following
the consummation of the transactions expressly contemplated hereby (excluding
any modification to the transaction structure pursuant to Section 2.9), except
where the failure of such Leases to be or continue in effect will not have a
Material Adverse Effect. Ralphs Supermarkets has delivered to F4L, or
otherwise made available, originals or true copies of all the Leases as
amended, and made available for review all related files.
Section 4.9 Contracts and Commitments. Schedule 4.9 contains a
complete and accurate list of all written and oral contracts, plans,
undertakings and other commitments or agreements ("Contracts") of the
following categories to which the Company is a party or by which it is bound
as of the date of this Agreement:
(i) Contracts not made in the ordinary course of business
involving expenditures or liabilities in excess of $500,000 in the
aggregate;
(ii) employment contracts, including without limitation,
contracts to employ executive officers and other contracts with officers,
directors or stockholders of Ralphs Supermarkets or Ralphs Grocery;
(iii) any other Contracts with or for the benefit of the
stockholders of Ralphs Supermarkets or their Affiliates (other than the
Company);
(iv) labor contracts not on terms generally applicable to
Southern California supermarket chains;
(v) advertising contracts which are not cancelable (without
penalty, cost or other liability) within 90 days;
(vi) Contracts for the purchase of inventory connected with
merchandise allowances which are not cancelable (without penalty, cost or
other liability) within 90 days (other than Contracts for the purchase of
holiday goods in accordance with customary industry practices);
(vii) Contracts relating to commission arrangements with
others involving liabilities in excess of $50,000;
(viii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments relating to the lending of
money, whether as borrower, lender or guarantor, in excess of $100,000;
(ix) Contracts, other than leases and other operating
agreements with respect to Facilities, containing covenants limiting the
freedom of the Company to engage in any line of business or compete with
any person or operate at any location; and
<PAGE>23
(x) joint venture or partnership agreements.
True copies of the written Contracts identified in Schedule 4.9 have been
delivered to F4L or will be so delivered promptly on request.
Section 4.10 Absence of Breaches or Defaults. The Company is not
in default under, or in breach or violation of, any Contract except where such
event would not, individually or in the aggregate, have a Material Adverse
Effect. No event has occurred which either entitles, or would, on notice or
lapse of time or both, entitle the holder of any indebtedness affecting the
Company to accelerate, or which does accelerate, the maturity of any
indebtedness affecting the Company, except as set forth in Schedule 4.10. To
the best of the Company's knowledge, the Company has not committed any act,
and there has been no omission which will result in a default by it under, or
the breach by it of, any Contract, and there has been no occurrence which will
give rise to product liability or breach of warranty (whether covered by
insurance or not) on the part of the Company, except for such liability or
breach which would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 4.11 Litigation. Except as set forth in Schedule 4.11,
there are no Actions instituted, pending or, to the best knowledge of the
Company, threatened, which are reasonably likely, individually or in the
aggregate, directly or indirectly to have a Material Adverse Effect, or, if
adversely decided, would prevent or delay the Merger or otherwise prevent
Ralphs Supermarkets from performing its obligations under this Agreement, nor
is there any outstanding judgment, decree, or injunction or any statute, rule
or order of any domestic or foreign court, governmental department,
commission, agency or arbitrator which has or will have, individually or in
the aggregate, any such Material Adverse Effect.
Section 4.12 Compliance with Law. The Company is in compliance
with all foreign, federal, state and local laws and regulations applicable to
its operations or with respect to which compliance is a condition of engaging
in the business thereof (including, without limitation, all Environmental
Laws), except to the extent that failure to comply would not have a Material
Adverse Effect. Except as set forth in Schedule 4.12, to the best knowledge
of the Company, the Company has not received any notice asserting a failure,
or possible failure, to comply with any such law, regulation or requirement
the subject of which notice has not been resolved as required thereby or
otherwise to the satisfaction of the party sending the notice, except to the
extent that failure to comply would not have a Material Adverse Effect. The
Company has all material permits, licenses and franchises from governmental
agencies required to conduct its business as now being conducted and none of
such permits, licenses and franchises will be terminated as a result of the
Merger or the other transactions contemplated by this Agreement.
Section 4.13 Labor Matters.
(a) Except as set forth in Schedule 4.13(a), no employees of the
Company are represented by any labor organization, and, as of the date hereof,
no labor organization or group of employees of the Company has made a demand
for recognition, has filed a petition seeking a representation proceeding or
given the Company notice of any intention to hold an election of a collective
bargaining representative. There is no strike, work stoppage or labor
disturbance pending or, to the best knowledge of the Company, threatened,
which involves any employees of the Company.
(b) Except as set forth in Schedule 4.13(b) there are presently
pending or, to the best knowledge of the Company, threatened, against the
Company no material claims by any governmental authority, labor organization,
or employee alleging that the Company has violated any
<PAGE>24
applicable laws, rules or regulations respecting employment practices. The
Company is in compliance in all material respects with its obligations under
all statutes, executive orders and other governmental regulations or judicial
decrees governing its employment practices, including without limitation,
provisions relating to wages, hours, equal opportunity and payment of social
security and other taxes.
Section 4.14 No Undisclosed Liabilities. The Company has no
liabilities or obligations (absolute, accrued, contingent or otherwise) except
(i) liabilities which are reflected and reserved against in the Unaudited
Financial Statements as of July 17, 1994, (ii) liabilities incurred in the
ordinary course of business and consistent with past practice since July 17,
1994, (iii) liabilities arising under Contracts, letters of credit, purchase
orders, licenses, permits, purchase agreements and other agreements, business
arrangements and commitments described in Schedule 4.9 or which are of the
type described in Schedule 4.9 but which did not meet the dollar threshold or
other qualifications which would have required them to be listed in Schedule
4.9, and (iv) other liabilities or obligations which would not have a Material
Adverse Effect.
Section 4.15 No Brokers. Except as set forth in Schedule 4.15, no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission payable by Ralphs Supermarkets or Ralphs Grocery in
connection with the Merger or in connection with any proposed sale of the
Company or any of its assets, or a restructuring of or merger or similar
transaction involving the Company.
Section 4.16 No Other Agreements to Sell the Assets or the Company.
The Company has no legal obligation, absolute or contingent, to any other
person or firm to sell any material portion of the Assets of the Company, to
sell the capital stock of Ralphs Supermarkets or Ralphs Grocery, to effect any
merger, consolidation or other reorganization of Ralphs Supermarkets or Ralphs
Grocery, or to enter into any agreement with respect thereto.
Section 4.17 Proprietary Rights. Schedule 4.17 contains a list of
all of the patents, trademarks, trade names, service marks and copyrights, and
applications therefor (collectively, the "Proprietary Rights"), which are
owned by the Company, or in which the Company has any interest, or which, to
the Company's knowledge, have been used in connection with, or which relate to
the Company's business (whether or not presently used in connection
therewith). Except as set forth in Schedule 4.17, the Company owns and has
the sole and exclusive right to use all of the Proprietary Rights and such
items are not subject to any licenses, liens, mortgages, pledges,
encumbrances, claims, restrictions, or charges of any kind. The Company has
not been charged, and to the Company's knowledge is not threatened to be
charged, with infringement of, nor to the Company's knowledge has it
infringed, any unexpired patent, trademark, trademark registration, trade
name, service mark, copyright, copyright registration or other proprietary
right of any party. The Company owns, or is licensed or otherwise has the
right to use, all patents, trademarks, trade names, service marks, copyrights,
technology, know-how, processes, methods and designs used in or necessary for
the conduct of its business as presently being conducted. The consummation of
the Merger and the other transactions contemplated hereby will not alter or
impair any of such rights.
Section 4.18 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this Section
4.18, shall have the following meanings. Any of these terms may, unless the
context otherwise requires, be used in the singular or the plural depending on
the reference.
(i) Benefit Arrangement. "Benefit Arrangement" shall mean any
employment, consulting, severance or other similar contract, arrangement or
policy and each plan, arrangement (written or oral), program, agreement or
commitment providing for insurance coverage
<PAGE>25
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, life, health, disability or accident benefits (including, without
limitation, any "voluntary employees' beneficiary association" as defined in
Section 501(c)(9) of the Code providing for the same or other benefits) or for
deferred compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive compensation
or post-retirement insurance, compensation or benefits which (A) is not a
Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may
be, by the Company or a Current ERISA Affiliate or under which the Company or
any Current ERISA Affiliate may incur any liability, and (C) covers any
employee or former employee of the Company or any Current ERISA Affiliate
(with respect to their relationship with such entities).
(ii) Current ERISA Affiliate. "Current ERISA Affiliate" shall
mean any entity which as of either the date hereof or the Closing Date is a
member of a "controlled group of corporations" with, under "common control"
with, or a member of an "affiliated service group" with, the Company as
defined in Section 414(b), (c), (m) or (o) of the Code.
(iii) Employee Plans. "Employee Plans" shall mean all Benefit
Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
(iv) ERISA. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
(v) ERISA Affiliate. "ERISA Affiliate" shall mean any entity
which is (or at any relevant time was) a member of a "controlled group of
corporations" with or under "common control" with the Company as defined in
Section 414(b), (c), (m) or (o) of the Code.
(vi) Multiemployer Plan. "Multiemployer Plan" shall mean any
"multiemployer plan," as defined in Section 4001(a)(3) of ERISA, (A) which the
Company or any Current ERISA Affiliate maintains, administers, contributes to
or is required to contribute to, or, after September 25, 1980, maintained,
administered, contributed to or was required to contribute to, or under which
the Company or any Current ERISA Affiliate may incur any liability and
(B) which covers any employee or former employee of the Company or any Current
ERISA Affiliate (with respect to their relationship with such entities).
(vii) Other Multiemployer Plan. "Other Multiemployer Plan"
shall mean any "multiemployer plan," as defined in Section 4001(a)(3) of
ERISA, (A) which any ERISA Affiliate which is not a Current ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
after September 25, 1980, maintained, administered, contributed to or was
required to contribute to, or under which any ERISA Affiliate which is not a
Current ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of any ERISA Affiliate which is not a Current
ERISA Affiliate (with respect to their relationship with such entities).
(viii) PBGC. "PBGC" shall mean the Pension Benefit Guaranty
Corporation.
(ix) Pension Plan. "Pension Plan" shall mean any "employee
pension benefit plan" as defined in Section 3(2) of ERISA (other than a
Multiemployer Plan) (A) which the Company or any Current ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or,
within the five years prior to the Closing Date, maintained, administered,
contributed to or was required to contribute to, or under which the Company or
any Current ERISA
<PAGE>26
Affiliate may incur any liability and (B) which covers any employee or former
employee of the Company or any Current ERISA Affiliate (with respect to their
relationship with such entities).
(x) Other Pension Plan. "Other Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2) of ERISA (other
than a Multiemployer Plan) (A) which any ERISA Affiliate which is not a
Current ERISA Affiliate maintains, administers, contributes to or is required
to contribute to, or, within the five years prior to the Closing Date,
maintained, administered, contributed to or was required to contribute to, or
under which any ERISA Affiliate which is not a Current ERISA Affiliate may
incur any liability and (B) which covers any employee or former employee of
any ERISA Affiliate which is not a Current ERISA Affiliate (with respect to
their relationship with such entities).
(xi) Welfare Plan. "Welfare Plan" shall mean any "employee
welfare benefit plan" as defined in Section 3(1) of ERISA, (A) which the
Company or any Current ERISA Affiliate on either the date hereof or the
Closing Date maintains, administers, contributes to or is required to
contribute to, or under which the Company or any Current ERISA Affiliate may
incur any liability and (B) which covers any employee or former employee of
the Company or any Current ERISA Affiliate (with respect to their relationship
with such entities).
(b) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Schedule 4.18 contains a complete list of Employee Plans which
cover or have covered employees of the Company or a Current ERISA Affiliate.
True and complete copies of each of the following documents have been
delivered by the Company to F4L: (i) all plan documents and summary plan
descriptions with respect to each Employee Plan (other than any Multiemployer
Plan), including all amendments thereto (the Company will make available to
F4L all written interpretations thereof and written descriptions thereof which
have been distributed to the Company's employees generally during the last
five years) and all annuity contracts or other funding instruments relating to
any Employee Plan (other than any Multiemployer Plan); (ii) a complete
description of any such Benefit Arrangement which is not in writing; (iii) the
most recent determination letter issued by the Internal Revenue Service with
respect to each Pension Plan and each Welfare Plan which covers or has covered
employees of the Company or a Current ERISA Affiliate; (iv) for the three most
recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Pension Plan and each Welfare Plan which
covers or has covered employees of the Company or a Current ERISA Affiliate;
(v) all actuarial reports prepared for the last three plan years for each
Pension Plan which covers or has covered employees of the Company or a Current
ERISA Affiliate; (vi) a description of complete age, salary, service and
related data as of the last day of the last plan year for employees and, to
the extent available, former employees of the Company and each Current ERISA
Affiliate; (vii) a description setting forth the amount of any liability of
the Company as of the Closing Date or the date hereof, as applicable, for
payments more than thirty days past due with respect to each Welfare Plan; and
(viii) all summary plan descriptions and all general interpretations or
descriptions of Multiemployer Plans generally distributed to employees of the
Company or any Current ERISA Affiliate within the past five years.
(c) Representations. Except as set forth in Schedule 4.18, Ralphs
Supermarkets represents as follows:
(i) Pension Plans
(A) The funding method used in connection with each
Pension Plan which is subject to the minimum funding requirements of
ERISA and the actuarial assumptions used in connection with funding each
such plan are reasonable. During the last five years, the fair market
value of the assets in the Ralphs Grocery Company Retirement
<PAGE>27
Plan have exceeded the Plan's accumulated benefit obligations under FAS 87.
No "accumulated funding deficiency" (for which an excise tax is due or
would be due in the absence of a waiver) as defined in Section 412 of the
Code or as defined in Section 302(a)(2) of ERISA, whichever may apply, has
been incurred with respect to any Pension Plan with respect to any plan
year, whether or not waived. Neither the Company nor any Current ERISA
Affiliate has failed to pay when due any "required installment," within
the meaning of Section 412(m) of the Code and Section 302(e) of ERISA,
whichever may apply, with respect to any Pension Plan. Neither the Company
nor any Current ERISA Affiliate is subject to any lien imposed under
Section 412(n) of the Code or Section 302(f) of ERISA, whichever may
apply, with respect to any Pension Plan. Neither the Company nor any
Current ERISA Affiliate has failed to make full payment when due of all
amounts which under the provisions of any Pension Plan or the Code
of ERISA are required to be made as contributions to such Pension Plan.
(B) Neither the Company nor any Current ERISA Affiliate
is required to provide security to a Pension Plan under Section
401(a)(29) of the Code.
(C) Each Pension Plan intended to be qualified and each
related trust agreement, annuity contract or other funding instrument of
any such plan is qualified and tax-exempt under the provisions of Code
Sections 401(a) (or 403(a), as appropriate) and 501(a) and has been so
qualified during the period from its adoption to date.
(D) To the knowledge of Ralphs Supermarkets, each Pension
Plan, each related trust agreement, annuity contract or other funding
instrument presently complies and has been maintained in substantial com-
pliance with its terms and, both as to form and in operation, with the
requirements prescribed by any and all statutes, orders, rules and
regulations which are applicable to such plans, including but not limited
to ERISA and the Code.
(E) The Company has paid all premiums (and interest
charges and penalties for late payment, if applicable) due the PBGC with
respect to each Pension Plan for each plan year thereof for which such
premiums are required. Neither the Company nor any Current ERISA
Affiliate has engaged in, or is a successor or parent corporation to an
entity that has engaged in, a transaction described in Section 4069 of
ERISA. There has been no "reportable event" (as defined in Section
4043(b) of ERISA and the PBGC regulations under such Section) with
respect to any Pension Plan. No filing has been made by the Company or
any Current ERISA Affiliate with the PBGC, and no proceeding has been
commenced by the PBGC, to terminate any Pension Plan. No condition
exists and no event has occurred that could constitute grounds for the
termination of any Pension Plan by the PBGC. Neither the Company nor any
Current ERISA Affiliate has, at any time, (I) ceased operations at a
facility so as to become subject to the provisions of Section 4068(e) of
ERISA, (II) withdrawn as a substantial employer so as to become subject
to the provisions of Section 4063 of ERISA or (III) ceased making
contributions on or before the Closing Date to any Pension Plan subject
to Section 4064(a) of ERISA to which the Company or any Current ERISA
Affiliate made contributions during the five years prior to the Closing
Date.
(F) No Other Pension Plan has been terminated in a manner
which would subject the Company or any of its Current ERISA Affiliates to
any liability.
<PAGE>28
(ii) Multiemployer Plans
(A) Neither the Company nor any Current ERISA Affiliate
has, at any time, withdrawn from a Multiemployer Plan in a "complete
withdrawal" or a "partial withdrawal" as defined in Sections 4203 and
4205 of ERISA, respectively, so as to result in a liability, contingent
or otherwise (including, but not limited to, the obligations pursuant to
an agreement entered into in accordance with Section 4204 of ERISA), of
the Company or any Current ERISA Affiliate.
(B) All contributions required to be made by the Company
or any Current ERISA Affiliate to each Multiemployer Plan have been made
when due.
(C) Except as set forth in Schedule 4.18(c)(ii)(C), if,
as of the Closing Date, the Company (and all Current ERISA Affiliates)
were to withdraw from all Multiemployer Plans to which it (or any of
them) has contributed or been obligated to contribute, it (and they)
would incur no liabilities to such plans under Title IV of ERISA.
(D) To the best of the Company's knowledge, with respect
to each Multiemployer Plan: (I) no such Multiemployer Plan has been
terminated or has been in reorganization under ERISA so as to result,
directly or indirectly, in any liability, contingent or otherwise, of the
Company or any Current ERISA Affiliate under Title IV of ERISA; (II) no
proceeding has been initiated by any person (including the PBGC) to
terminate any Multiemployer Plan; (III) the Company and the Current ERISA
Affiliates have no reason to believe that any Multiemployer Plan will be
terminated or will be reorganized under ERISA; and (IV) the Company and
the Current ERISA Affiliates do not expect to withdraw from any
Multiemployer Plan.
(E) There was no withdrawal liability incurred with
respect to an Other Multiemployer Plan which has not been paid in full
and which would subject the Company or any Current ERISA Affiliate to any
liability.
(iii) Welfare Plans
(A) To the knowledge of Ralphs Supermarkets, each Welfare
Plan has been maintained in substantial compliance with its terms and,
both as to form and operation, with the requirements prescribed by any
and all statutes, orders, rules and regulations which are applicable to
such Welfare Plan, including but not limited to ERISA and the Code.
(B) Except as set forth in Schedule 4.18(c)(iii)(B), none
of the Company, any Current ERISA Affiliate or any Welfare Plan has any
present or future obligation to make any payment to or with respect to
any present or former employee of the Company or any Current ERISA
Affiliate pursuant to any retiree medical benefit plan, or other retiree
Welfare Plan, and no condition exists which would prevent the Company
from amending or terminating any such benefit plan or Welfare Plan.
(C) Each Welfare Plan which is a "group health plan," as
defined in Section 607(1) of ERISA, has been operated in substantial
compliance with provisions of Part 6 of Title I of ERISA and Sections
162(k) and 4980B of the Code at all times.
(D) Neither the Company nor any Current ERISA Affiliate
has incurred any liability resulting from any cessation of contributions,
cessation of obligation to
<PAGE>29
make contributions or other form of withdrawal from such Welfare Plan, with
respect to any Welfare Plan that is a "multiemployer plan", as defined in
Section 3(37) of ERISA, under the terms of such Welfare Plan, any
collective bargaining agreement or otherwise.
(E) Except as set forth in Schedule 4.18(c)(iii)(E), if,
as of the Closing Date, the Company (and all Current ERISA Affiliates)
were to have a cessation of contributions, cessation of obligations to
make contribution or other form of withdrawal from all Welfare Plans that
are "multiemployer plans," as defined in Section 3(37) of ERISA, it (and
they) would incur no withdrawal liabilities under any such Welfare Plans.
(iv) Benefit Arrangements. To the knowledge of Ralphs
Supermarkets, each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to such Benefit
Arrangement, including but not limited to the Code.
(v) At-Will Employment. Except as set forth on the Disclosure
Schedule, and except as provided by law, the employment of all persons
presently employed or retained by the Company is terminable at will.
(vi) Unrelated Business Taxable Income. No Employee Plan (or
trust or other funding vehicle pursuant thereto) has incurred any tax under
Code Section 511 or expects to incur any such tax in the current year.
(vii) Deductibility of Payments. There is no contract,
agreement, plan or arrangement covering any employee or former employee of the
Company or an ERISA Affiliate that, individually or collectively, provides for
the payment by the Company of any material amount that is not deductible under
Section 162(a)(1) or 404 of the Code.
(viii) Fiduciary Duties and Prohibited Transactions. To the
knowledge of Ralphs Supermarkets, neither the Company nor any plan fiduciary
of any Welfare Plan or Pension Plan has engaged in any transaction in
violation of Sections 404 or 406 of ERISA or any "prohibited transaction," as
defined in Section 4975(c)(1) of the Code, for which no exemption exists under
Section 408 of ERISA or Section 4975(c)(2) or (d) of the Code.
(ix) Validity and Enforceability. Each Welfare Plan, Pension
Plan, related trust agreement, annuity contract or other funding instrument
and Benefit Arrangement is legally valid and binding and in full force and
effect.
(x) Litigation. Except as set forth in Schedule 4.18(c)(x),
none of the Company, any Current ERISA Affiliate nor any Employee Plan is a
party to any litigation relating to or seeking benefits under any Employee
Plan.
(xi) No Amendments. Except as set forth in Schedule 4.18,
neither the Company nor any Current ERISA Affiliate has any announced plan or
legally binding commitment to create any additional Employee Plans or to amend
or modify any existing Employee Plan.
(xii) No Other Material Liability. To the knowledge of Ralphs
Supermarkets, no event has occurred in connection with which the Company or
any Current ERISA Affiliate or any Employee Plan, directly or indirectly,
could be subject to any material liability (i) under any statute, regulation
or governmental order relating to any Employee Plans or (ii) pursuant to any
obligation of the Company or any Current ERISA Affiliate to indemnify any
person against liability incurred under, any such statute, regulation or order
as they relate to the Employee Plans.
<PAGE>30
(xiii) Unpaid Contributions. Neither the Company nor any
Current ERISA Affiliate has any liability for unpaid contributions under
Section 515 of ERISA with respect to any Pension Plan, Multiemployer Plan or
Welfare Plan.
(xiv) Insurance Contracts. Except as set forth in Schedule
4.18(c)(xiv), neither the Company nor any Employee Plan (other than a
Multiemployer Plan) holds as an asset of any Employee Plan any interest in any
annuity contract, guaranteed investment contract or any other investment or
insurance contract issues by an insurance company that is the subject of
bankruptcy, conservatorship or rehabilitation proceedings.
(xv) Equity Appreciation Rights. Schedule 4.18 sets forth a
list of all holders of currently outstanding EARs or other rights which are
based upon or derive their value from the value of the Shares, the number of
EARs or other rights held by such holders, the currently accrued value
thereof, and all prior payments made by the Company in satisfaction of
previously granted EARs or such other rights.
(xvi) No Acceleration or Creation of Rights. Except as set
forth in Schedule 4.18(c)(xvi), neither the execution and delivery of this
Agreement by Ralphs Supermarkets nor the consummation of the transactions
contemplated hereby will result in the acceleration or creation of any rights
of any person to benefits under any Employee Plan.
Section 4.19 Insurance. Schedule 4.19 contains a materially
complete and accurate list of all policies or binders of fire, liability,
property, title, workers' compensation, business interruption, errors or
omissions and other forms of insurance (showing as to each policy or binder
the carrier, policy number, coverage limits, including without limitation,
retentions and deductibles, expiration dates, annual premiums and a general
description of the type of coverage provided) maintained by the Company on its
business, property or employees within the last five years. To the Company's
knowledge, all of such policies are sufficient for compliance with all
requirements of law and of all contracts to which the Company is a party,
except where the failure so to comply would not have a Material Adverse
Effect. To the best of the Company's knowledge, the Company has not failed to
give any notice or to present any claim under any such policy or binder in a
due and timely fashion, except where any such failure to give any notice or to
present any claim would not have a Material Adverse Effect. There are no
outstanding unpaid claims under any such policies or binders for which
adequate reserves have not been established. Such policies and binders
provide sufficient coverage (in light of prevailing commercial practices with
respect to similarly situated properties) for the risks insured against, are
in full force and effect on the date hereof and shall be kept in full force
and effect by the Company through the Effective Date. True copies of the
documents described will be delivered to F4L on request.
Section 4.20 Affiliate Transactions. Except as set forth in
Schedule 4.20, since January 30, 1994, there have been no transactions between
or involving Ralphs Supermarkets or Ralphs Grocery and any present or former
director, officer, stockholder or Affiliate thereof, excluding transactions
consisting of payment of customary and reasonable directors' fees and expenses
to directors and payment of reasonable direct and indirect compensation to the
employees of the Company in the ordinary course of business.
Section 4.21 Environmental Matters. Except as set forth in
Schedule 4.21, all real property heretofore or currently owned or leased by
the Company or any of its subsidiaries and each store, office, plant or
warehouse heretofore or currently maintained by the Company or any of its
subsidiaries (the "Specified Properties") has been maintained in compliance
with all Environmental Laws, except where the failure to so comply would not
have a Material Adverse Effect. Except as set forth in Schedule 4.21, no
conditions exist with respect to the soil, surface waters, groundwaters,
<PAGE>31
land, stream sediments, surface or subsurface strata, ambient air, and any
environmental medium on or off the Specified Properties, which could result in
any damage, claim, or liability to or against the Company by any third party
(including without limitation, any government entity), including, without
limitation, any condition resulting from the operation of the Company's
business and/or operator in the vicinity of any of the Specified Properties
and/or any activity or operation formerly conducted by any person or entity on
the Specified Properties. With the exception of retail consumer products sold
in the ordinary course and consumer and industrial products used by the
Company in the ordinary course, the Company and any other person or entity for
whose conduct the Company is or may be held responsible, has not generated,
manufactured, refined, transported, treated, stored, handled, disposed,
transferred, produced, or processed any pollutant, hydrocarbon, or petroleum
substances or petroleum products, including, without limitation, existing and
future asbestos, polychlorinated biphenyls, radioactive or flammable
materials, or any other hazardous or toxic waste, substance or material, as
those terms may be defined in any and all Environmental Laws (collectively,
"Hazardous Materials"). Except as set forth in Schedule 4.21, (i) there are
no existing notices of violation, administrative actions, or lawsuits against
the Company arising under Environmental Laws or relating to the use, handling,
storage, treatment, recycling, generation, or release of Hazardous Materials
by the Company at any of the Specified Properties, nor has the Company
received any notification of any allegation of any responsibility for any
disposal, release, or threatened release at any location of any Hazardous
Materials; (ii) there have been no spills or releases of Hazardous Materials
at any of the Specified Properties in excess of quantities reportable under
Environmental Laws; and (iii) there are no consent decrees, consent orders,
judgments, judicial or administrative orders, or liens by any governmental
authority relating to any Environmental Law which regulate, obligate, or bind
the Company.
Section 4.22 Officers. Schedule 4.22 contains a list of all
officers and other employees and consultants under contract to the Company and
all officers and other employees and consultants of the Company whose current
base annual compensation is at the rate of $150,000 or more, together in each
case with the current job title or relationship to the Company and the
aggregate remuneration rate for each such person.
Section 4.23 Severance Arrangements. Except as set forth in
Schedule 4.23, the Company has not entered into any severance or similar
arrangement in respect of any present or former employee, consultant or agent
that will result in any obligation (absolute or contingent) of the Company to
make any payment to any present or former employee, consultant or agent
following termination of employment, consultancy or agency.
Section 4.24 Licensed Departments. Except as set forth in Schedule
4.24, there are no departments in any of the Facilities which are operated by
third parties under lease, sublease, license or other arrangement entitling
any third party to be present on or use the premises of any of the Facilities.
Section 4.25 Bank Accounts. Schedule 4.25 contains a true and
complete listing of all bank accounts or other depositary accounts maintained
by the Company and the authorized signatories thereto.
Section 4.26 Registration Statements. None of the information
supplied in writing by the Company or any of its auditors, attorneys,
financial advisors, other consultants or advisors specifically for use in the
Shelf Registration Statement or any other registration statement under the
Securities Act filed with the SEC by F4L, F4L Holdings or F4L Supermarkets and
relating to any securities to be issued as part of the Financing or the Public
Debt Refinancing (together with the Shelf Registration Statement, the
"Registration Statements"), at (i) the time the Registration Statements become
effective, (ii) the time the indentures related thereto are qualified under
the TIA, and (iii) the
<PAGE>32
Effective Date, will contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
Section 4.27 Material Misstatements Or Omissions. No repre-
sentations or warranties by Ralphs Supermarkets in this Agreement, nor any
exhibit, statement, certificate or schedule furnished to F4L or its agents or
Affiliates pursuant hereto, or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a
material fact, or omits or will omit to state any material fact necessary to
make the statements or facts contained therein not misleading. There is no
fact known to the Company which is not disclosed in this Agreement or the
Disclosure Schedule and which is reasonably likely to have a Material Adverse
Effect.
Section 4.28 Schedules. Disclosure of any fact or item in any
Schedule hereto referenced by a particular paragraph or section in this
Agreement shall, should the existence of the fact or item or its contents be
relevant to any other paragraph or section, be deemed to be disclosed with
respect to that other paragraph or section whether or not an explicit
cross-reference appears.
ARTICLE V
Representations and Warranties of F4L, F4L Holdings and F4L Supermarkets
Each of F4L, F4L Holdings and F4L Supermarkets hereby represents and
warrants to Ralphs Supermarkets and the Selling Stockholders as follows:
Section 5.1 Organization; Authorization; etc. Each of F4L, F4L
Holdings and F4L Supermarkets is duly incorporated, validly existing and in
good standing under the laws of the state of its incorporation. The execution
and delivery of this Agreement, the Ancillary Agreements and the Indenture,
the consummation of the Merger, the issuance of the Debentures and the other
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors of each of F4L, F4L Holdings and F4L Supermarkets, as
applicable, and no other corporate proceedings on the part of any of them are
necessary therefor. This Agreement has been duly executed and delivered by
each of F4L, F4L Holdings and F4L Supermarkets, and, assuming the due
execution hereof by the other parties hereto, this Agreement constitutes the
legal, valid and binding obligation of each of F4L, F4L Holdings and F4L
Supermarkets, enforceable against each of them in accordance with its terms,
subject in each case to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in equity or at law). On or
prior to the Closing Date, the Indenture and the Debentures will have been
duly executed and delivered by F4L Holdings, and assuming the due execution
hereof by the trustee thereunder, the Indenture and the Debentures will
constitute the legal, valid and binding obligation of F4L Holdings,
enforceable against F4L Holdings in accordance with their respective terms,
subject in each case to applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in equity or at law). Without
limitation of the foregoing, the Debentures will not, at the time of their
issuance, violate any applicable usury laws of the State of California.
Section 5.2 Consents and Approvals; No Violations. Except for
liquor licensing and pharmacy laws, the filing with the Delaware Secretary of
State of the certificate of merger referred to in Section 2.3, and the matters
set forth in Schedule 5.2, and assuming compliance with applicable Antitrust
Laws, there is no requirement applicable to F4L, F4L Holdings or F4L
Supermarkets to make any filing or registration with, or to obtain any permit,
authorization, consent or approval of, any government or regulatory authority
or any non-governmental person or entity in connection with the execution and
delivery by F4L, F4L Holdings and F4L Supermarkets of this Agreement, the
<PAGE>33
consummation of the Merger and the performance of the other transactions
contemplated hereby, except where the failure to make such filings or
registrations or to obtain such permits, authorizations, consents or approvals
would not, individually or in the aggregate, have a material adverse effect on
the consummation of the Merger or the other transactions contemplated by this
Agreement. Except as set forth in Schedule 5.2, neither the execution or
delivery of this Agreement by F4L, F4L Holdings or F4L Supermarkets nor the
consummation by any of them of the Merger or the other transactions
contemplated by this Agreement will (i) violate any provision of the
certificate of incorporation or By-laws of any of them, (ii) violate any
provision of, or constitute (with or without notice, the passage of time or
both) a default under, or result in the acceleration of or entitle any party
to accelerate (whether after the giving of notice or lapse of time or both) or
terminate any obligation under, any mortgage, lien, lease, agreement or other
instrument or obligation to which F4L, F4L Holdings or F4L Supermarkets is a
party or by which any of them is bound, except where such event would not,
individually or in the aggregate, have a material adverse effect on the
business, assets, results of operations or financial condition of the
Surviving Corporation, or (iii) assuming compliance with any applicable
Antitrust Laws, violate any order, writ, injunction, decree, statute, rule or
regulation to which any of them is subject.
Section 5.3 Acquisition of Shares for Investment. F4L has such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits and risks of its acquisition of shares of the
Surviving Corporation in the Merger. F4L confirms that Ralphs Supermarkets
has made available to F4L the opportunity to ask questions of the officers and
management employees of the Company and to acquire additional information
about the business, assets and financial condition of the Company. F4L
confirms that it is not acquiring shares of the Surviving Corporation with a
view toward any distribution thereof or with any present intention of selling
any shares in a transaction that would violate the Securities Act or the
securities laws of any state or other applicable jurisdiction. F4L
acknowledges and agrees that such shares may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of without registration
under the Securities Act except pursuant to an exemption from such
registration available under the Securities Act.
Section 5.4 Shelf Registration Statement. None of the information
contained in the Shelf Registration Statement, at (i) the time the Shelf
Registration Statement becomes effective, and (ii) the Effective Date, will
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. Notwithstanding the foregoing, F4L and its subsidiaries make
no representations or warranties with respect to any information that has been
supplied by the Company or its auditors, attorneys, financial advisors, other
consultants or advisors specifically for use in any of the foregoing
documents. The Shelf Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated thereunder.
Section 5.5 No Brokers. Neither F4L nor any subsidiary or
Affiliate of F4L has created any liability or obligation on the part of any
Selling Stockholder to pay any brokerage, finder's or other fee or commission
in connection with the Merger or the other transactions contemplated hereby.
Section 5.6 Financing Commitments. F4L has delivered to Ralphs
Supermarkets and EJDC copies of fully-executed letters from the Financing
Sources setting forth the commitments of such Financing Sources to provide
(or, in the case of public debt securities comprising part of the Financing,
stating that such Financing Sources are "highly confident" of their ability to
provide) the amounts and types of Financing upon the terms therein
contemplated (collectively, and together with any modifications or
replacements thereof approved by EJDC, the "Commitment Letters"). The
Financing contemplated by the Commitment Letters, together with the existing
debt securities of F4L,
<PAGE>34
Ralphs Supermarkets, or their respective subsidiaries, as amended or as
exchanged for newly-issued debt securities of F4L or its subsidiaries pursuant
to the Public Debt Refinancing, provide for all of the Financing needed by F4L
and its subsidiaries to consummate the transactions contemplated hereby and to
fund the anticipated working capital requirements of the Surviving Corporation
after the Closing. As of the date hereof, F4L knows of no reason that the
conditions set forth in the Commitment Letters will not be satisfied.
Section 5.7 Financial Statements. The unaudited consolidated
balance sheets of F4L Holdings and F4L Supermarkets as of April 2, 1994 and
the related unaudited consolidated statements of operations and cash flows for
the twelve weeks then ended, with the notes thereto, contained in the
Quarterly Reports on Form 10-Q for such period filed with the SEC by F4L
Holdings and F4L Supermarkets, respectively (collectively, the "F4L Unaudited
Financial Statements"), and the audited consolidated balance sheets of F4L
Holdings and F4L Supermarkets as of June 26, 1993 and June 27, 1992 and the
related audited consolidated statements of operations, cash flows and
stockholder's equity for the fiscal years then ended, with the notes thereto,
contained in the Annual Reports on Form 10-K for such periods filed with the
SEC by F4L Holdings and F4L Supermarkets, respectively (collectively, the "F4L
Audited Financial Statements" and, together with the F4L Unaudited Financial
Statements, the "F4L Financial Statements"), present fairly the consolidated
financial position and results of operations of F4L Holdings and F4L
Supermarkets, respectively, for the periods or as of the dates set forth
therein, in each case in accordance with GAAP (except as otherwise indicated
therein or in Schedule 5.7 and except that the F4L Unaudited Financial
Statements do not include all of the notes required by GAAP). Except as
otherwise set forth therein, the F4L Financial Statements are complete in all
material respects, are in accordance with the books and records of F4L
Holdings and F4L Supermarkets, respectively, fairly present the financial
condition and results of operations indicated thereby in accordance with GAAP
consistently applied, and contain and reflect all necessary adjustments (under
GAAP consistently applied) for a fair representation of the F4L Financial
Statements as of the dates and for the periods covered thereby.
Section 5.8 Absence of Certain Changes or Events. Except as set
forth in Schedule 5.8, since April 2, 1994, F4L Holdings and its subsidiaries
have conducted its business only in the ordinary and usual course and there
has not been any change in F4L Holdings' condition (financial or otherwise),
results of operations, assets, liabilities, working capital or reserves,
except for changes contemplated hereby or changes which would not,
individually or in the aggregate, have a material adverse effect on the
Surviving Corporation, or other event or condition of any character which in
any one case or in the aggregate would not have a material adverse effect on
the business, assets, results of operations or financial condition of the
Surviving Corporation, or any event or condition (other than matters of
general public knowledge relating to general economic conditions or F4L's
industry as a whole) which it is reasonable to expect will, individually or in
the aggregate, have a material adverse effect on the business, assets, results
of operations or financial condition of the Surviving Corporation.
Section 5.9 Absence of Breaches or Defaults. None of F4L Holdings
or any subsidiary is in default under, or in breach or violation of, any
Contract except where such event would not, individually or in the aggregate,
have a material adverse effect on the business, assets, results of operations
or financial condition of the Surviving Corporation. No event has occurred
which either entitles, or would, on notice or lapse of time or both, entitle
the holder of any material indebtedness of F4L Holdings or any subsidiary to
accelerate, or which does accelerate, the maturity of any material
indebtedness of F4L Holdings or any subsidiary, except as set forth in
Schedule 5.9. To F4L's knowledge, neither F4L Holdings nor any subsidiary has
committed any act, and there has been no omission which will result in a
default by it under, or the breach by it of, any Contract, and there has been
no occurrence which will give rise to product liability or breach of warranty
(whether covered by insurance or not) on the part of F4L Holdings or any
subsidiary.
<PAGE>35
Section 5.10 Litigation. Except as set forth in Schedule 5.10,
there are no Actions instituted, pending or, to the knowledge of F4L,
threatened, which are reasonably likely, individually or in the aggregate,
directly or indirectly to have a material adverse effect on the business,
assets, results of operations or financial condition of the Surviving
Corporation, or, if adversely decided, would prevent or delay the Merger or
otherwise prevent F4L, F4L Holdings, or F4L Supermarkets from performing their
respective obligations under this Agreement, the Ancillary Agreements or the
Debentures, nor is there any outstanding judgment, decree, or injunction or
any statute, rule or order of any domestic or foreign court, governmental
department, commission, agency or arbitrator which would have, individually or
in the aggregate, any such material adverse effect on the Surviving
Corporation.
Section 5.11 Compliance with Law. Each of F4L Holdings and its
subsidiaries is in compliance with all foreign, federal, state and local laws
and regulations applicable to its operations or with respect to which
compliance is a condition of engaging in the business thereof (including,
without limitation, all Environmental Laws), except to the extent that failure
to comply would not have a material adverse effect on the business, assets,
results of operations or financial condition of the Surviving Corporation.
Except as set forth in Schedule 5.11, to the knowledge of F4L, none of F4L
Holdings or any subsidiary has received any notice asserting a failure, or
possible failure, to comply with any such law, regulation or requirement the
subject of which notice has not been resolved as required thereby or otherwise
to the satisfaction of the party sending the notice, except to the extent that
failure to comply would not have a material adverse effect on the business,
assets, results of operation or financial condition of the Surviving
Corporation. F4L Holdings and its subsidiaries have all material permits,
licenses and franchises from governmental agencies required to conduct their
business as now being conducted and none of such permits, licenses and
franchises will be terminated as a result of the Merger or the other
transactions contemplated by this Agreement.
Section 5.12 No Undisclosed Liabilities. None of F4L Holdings or
any subsidiary has any liabilities or obligations (absolute, accrued,
contingent or otherwise) except (i) liabilities which are reflected and
reserved against in the F4L Unaudited Financial Statements as of April 2,
1994, (ii) liabilities incurred in the ordinary course of business and
consistent with past practice since April 2, 1994, (iii) liabilities arising
under Contracts, letters of credit, purchase orders, licenses, permits,
purchase agreements and other agreements, business arrangements and
commitments which would be described in Schedule 4.9 if they were Company
obligations, or of the type described in Schedule 4.9 but which do not meet
the dollar threshold or other qualifications which would have required them to
be listed in Schedule 4.9, (iv) liabilities arising in connection with the
transactions contemplated by this Agreement, including without limitation the
Financing, (v) liabilities set forth in Schedule 5.12 and (vi) other
liabilities or obligations which would not have a material adverse effect on
the business, assets, results of operations or financial condition of the
Surviving Corporation.
Section 5.13 Material Misstatements Or Omissions. No repre-
sentations or warranties by F4L or its subsidiaries in this Agreement, nor any
exhibit, statement, certificate or schedule furnished to Ralphs Supermarkets
or the Selling Stockholders or their respective agents or Affiliates pursuant
hereto, or in connection with the transactions contemplated hereby, contains
or will contain any untrue statement of a material fact, or omits or will omit
to state any material fact necessary to make the statements or facts contained
therein not misleading. There is no fact known to F4L which is not disclosed
in this Agreement or the Disclosure Schedule and which is reasonably likely to
have a material adverse effect on the business, assets, results of operations
or financial condition of the Surviving Corporation.
Section 5.14 No Additional Agreements. Neither F4L nor any of its
Affiliates has entered into any arrangement, agreement or understanding with
any person who is a Selling Stockholder on the date hereof providing for the
payment of any consideration to, or the conferring of
<PAGE>36
any benefit on, such Selling Stockholder in connection with the Merger or any
matter related thereto, other than as set forth in this Agreement and the
other agreements referred to herein, provided that F4L or its subsidiaries may
offer the opportunity to Selling Stockholders to participate in the Financing.
ARTICLE VI
Covenants of F4L, F4L Holdings, F4L Supermarkets,
Ralphs Supermarkets and the Selling Stockholders
Section 6.1 Investigation of Business; Access to Properties and
Records. (a) After the date hereof, Ralphs Supermarkets shall afford to F4L
and its representatives reasonable access to the Company's offices, plants,
properties, books and records, in each case during normal business hours, in
order that F4L may have full opportunity to make such investigations as it
desires of the records and documents relating to the affairs and assets of the
Company; provided, however, that such investigation shall not unreasonably
disrupt the personnel and operations of the Company; and provided, further,
that Ralphs Supermarkets shall not be required to provide such access to the
extent that it has been advised by outside counsel that the provision of such
access could violate the Antitrust Laws including, without limitation, any
information concerning prices charged by the Company, how such prices are
determined, or otherwise to communicate with F4L concerning price or
price-related issues, or to supply any other market-related data. All
requests by F4L or any of its representatives for access to the Company's
offices, plants, properties, books and records shall be made to such
representatives of Ralphs Supermarkets as Ralphs Supermarkets shall designate
in writing, who shall be responsible for coordinating all such requests and
all access permitted hereunder.
(b) As soon as practicable after the date hereof, F4L shall make
such inspection of the Properties as it shall deem appropriate (and which may
consist, in part, of a review by its consultants of existing Company
information and reports) in order to determine the presence of hazardous,
toxic or other substances (including asbestos) or to determine compliance with
Environmental Laws. Ralphs Supermarkets shall cooperate with F4L in effecting
such inspection, provided that such inspection shall be performed at F4L's
sole cost, and by an individual or firm reasonably acceptable to Ralphs
Supermarkets. Any invasive testing or sampling, including, without
limitation, testing of soil, ground or surface water, at any of the Properties
shall be conducted by F4L only with the prior consent of Ralphs Supermarkets
(which consent shall not be unreasonably withheld) and without any
unreasonable interference of the Company Business. The inspector, after
conducting its inspection, shall first inform F4L and Ralphs Supermarkets of
its findings orally. Any written report shall be marked "Draft" and shall be
submitted simultaneously to counsel for each party for its reasonable approval
before being distributed to any third party, the identity of which shall be
subject to the reasonable approval of the party not requesting such
distribution. The findings of all reports and investigations of the
Properties shall be treated as Evaluation Material to the extent permitted by
applicable law. If this Agreement terminates prior to Closing, F4L shall
deliver to Ralphs Supermarkets at Ralphs Supermarkets' request all originals
and copies of all such materials, and such originals and copies shall
thereupon become the exclusive property of Ralphs Supermarkets.
(c) Any information provided to F4L or its representatives pursuant
to this Agreement shall to the extent permitted by applicable law be held by
F4L and its representatives in accordance with, and shall be subject to the
terms of, the Confidentiality Agreement, which is hereby incorporated in this
Agreement as though fully set forth herein.
(d) F4L will afford to the Selling Stockholders and their
representatives reasonable access to F4L's and its subsidiaries' offices,
plants, properties, books and records, to the extent necessary or appropriate
in connection with the Selling Stockholders' valuation of the
<PAGE>37
Debentures or to comply with applicable legal requirements, on the same terms
as applicable to F4L's inspection rights under Section 6(a) above, and subject
to the same confidentiality provisions as applicable to F4L's inspection under
Section 6.1(c) and Section 12.10.
Section 6.2 Reasonable Efforts; Obtaining Consents. Prior to the
Closing Date, and subject to the terms and conditions herein provided, F4L,
F4L Holdings, F4L Supermarkets and Ralphs Supermarkets shall use all
reasonable efforts to take, or cause to be taken, all actions, and shall do,
or cause to be done, all things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, and shall cooperate with the others in connection with the
foregoing, including using its reasonable efforts (i) to obtain all waivers,
consents and approvals from other parties to material loan agreements, leases,
mortgages and other contracts necessary for the consummation of the
transactions contemplated hereby, (ii) to obtain all consents, approvals and
authorizations that are required to be obtained under any federal, state or
local law or regulation to consummate the transactions contemplated hereby,
including, without limitation, liquor licenses and any consents under
Antitrust Laws, (iii) to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties hereto to
consummate the transactions contemplated hereby, (iv) to effect all necessary
registrations and filings and submissions of information requested or required
by governmental authorities in connection with the transactions contemplated
hereby, and (v) to fulfill all conditions to this Agreement; provided,
however, that the Company shall not agree to any modification to any material
Contract or any lease of a Property which modification is reasonably likely to
have a Material Adverse Effect in order to obtain such consent without the
prior written consent of F4L, which consent shall not be unreasonably
withheld. Ralphs Supermarkets shall cooperate reasonably with F4L in
connection with the filing of permits and licenses necessary for the conduct
of the Company Business following the Closing Date. F4L and its subsidiaries,
Ralphs Supermarkets and its subsidiaries, and EJDC shall use all reasonable
efforts to prevent the issuance, entry, enactment or promulgation of any
threatened or pending preliminary or permanent injunction or other order,
decree or ruling or statute, rule, regulation or executive order that would
adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby. F4L Supermarkets shall pay all
registration, filing, license, permit or other similar fees and charges
incurred in connection with the transactions contemplated by this Agreement
and the cost of all title insurance, title reports and property surveys
obtained by F4L or F4L Supermarkets and all other reports, opinions and
certificates obtained by F4L or F4L Supermarkets in connection with the
Financing. Nothing in this Agreement shall require any Selling Stockholder to
alter the form or amount of the Merger Consideration payable to it or any
rights under the Consulting Agreement, the Put Agreement or the Registration
Rights Agreement.
Section 6.3 Antitrust. As promptly as possible, F4L and Ralphs
Supermarkets shall file or cause to be filed with the Antitrust Division of
the United States Department of Justice and the Federal Trade Commission
pursuant to the HSR Act all requisite documents and notifications in
connection with the transactions contemplated by this Agreement. Each party
hereto shall promptly inform the other of any material communication between
such party and the Federal Trade Commission, the Department of Justice or any
other government or governmental authority regarding any of the transactions
contemplated hereby. If either party or any Affiliate thereof receives a
request for additional information or documentary material from any such
government or governmental authority with respect to the transactions
contemplated hereby, then such party shall endeavor in good faith to make, or
cause to be made, as soon as reasonably practicable and after consultation
with the other party, an appropriate response in compliance with such request.
F4L and Ralphs Supermarkets will cooperate in connection with reaching any
understandings, undertakings or agreements (oral or written) involving the
Federal Trade Commission, the Department of Justice or any other governmental
authority in connection with the transactions contemplated hereby.
<PAGE>38
Section 6.4 Further Assurances. F4L, F4L Holdings, F4L
Supermarkets, Ralphs Supermarkets and the Selling Stockholders agree that,
from time to time, whether before, at or after the Closing Date, each of them
shall execute and deliver such further instruments of conveyance, and transfer
and take such other actions, as may be necessary to carry out the transactions
contemplated by this Agreement.
Section 6.5 Conduct of Business. From the date hereof through the
Closing, except as disclosed on Schedule 6.5 or otherwise provided for in, or
contemplated by this Agreement, and except as consented to or approved by F4L
in writing (which consent shall not be unreasonably withheld or delayed),
Ralphs Supermarkets shall cause the Company to use reasonable efforts to
conduct the business of the Company, in all material respects, in the ordinary
and usual course as such business has been conducted, and to use reasonable
efforts to keep intact the business organization in all material respects. In
addition, from the date hereof through the Closing or termination of this
Agreement, except as set forth in Schedule 6.5 or otherwise provided for in,
or contemplated by, this Agreement, and except as consented to or approved by
F4L (which consent shall not be unreasonably withheld or delayed), Ralphs
Supermarkets shall cause the Company not to:
(a) close any Facility, except as required by applicable law or in
the event of casualty or, as a result of the expiration of any lease
which, after reasonable efforts by the Company, is not renewed;
(b) enter into, with respect to the Facilities or Properties, any
new lease, lease termination agreement or material amendment (excluding
any extension or renewal of any lease in accordance with past practices)
of any agreement to lease real property;
(c) sell, assign or sublease any Facility or Property;
(d) sell, assign or sublease any Fixtures or Equipment or other
Assets, the aggregate sales prices and the annual rental payments of
which are $100,000 or more in the aggregate, other than in the ordinary
course of business;
(e) make or commit to make any capital expenditures in excess of
$250,000 in the aggregate beyond those identified in Schedule 6.5 other
than expenditures for: (i) maintenance and repair; or (ii) as reasonably
approved by F4L; provided, however, this clause (e) shall not obligate
the Company to make any capital expenditures (including the expenditures
set forth in Schedule 6.5);
(f) except as set forth in Section 2.6, issue, sell or agree to
issue or sell (i) any shares of capital stock of Ralphs Supermarkets or
any of its subsidiaries, or (ii) any securities convertible into, or
options with respect to, or warrants to purchase or rights to subscribe
for or otherwise acquire, any such shares;
(g) except in the ordinary course of business or as required by
law, and except for contractual obligations or other understandings or
arrangements existing on the date hereof and set forth on Schedule 6.5,
not to (i) increase in any manner the base compensation of, or enter into
any new bonus or incentive agreement or arrangement with, any directors,
officers or Affiliates of Ralphs Supermarkets or Ralphs Grocery; (ii)
enter into any new, or extend or materially alter the terms of any
existing, employment, severance, consulting, or other compensation
agreement with any existing director, officer or Affiliate of Ralphs
Supermarkets or Ralphs Grocery (including any grant of additional EARs or
any modification of the terms of the EARs or the EAR Plan); or (iii)
commit itself to any additional pension, profit-sharing, deferred
compensation, group insurance, severance pay, retirement or other
<PAGE>39
employee benefit plan, fund or similar arrangement or amend or commit
itself to amend any of such plans, funds or similar arrangements in
existence on the date hereof, other than in connection with collective
bargaining agreements;
(h) except in the ordinary course of business or pursuant to
agreements entered into prior to the date hereof and set forth in
Schedule 6.5, not to (i) other than Permitted Encumbrances, create or
permit to exist any new security interest, lien or encumbrance on its
assets, (ii) enter into any material joint venture or partnership, (iii)
purchase any material assets or securities of any persons, or (iv) incur
any indebtedness or assume, guarantee, endorse or otherwise become
responsible for obligations of any other person or entity;
(i) declare or pay any dividends, or make any distributions, on any
shares of capital stock of Ralphs Supermarkets or Ralphs Grocery, or
redeem, repurchase or retire any such shares;
(j) enter into any Contracts that would have been required to be
disclosed in Schedule 4.9, or any material amendment to or termination
agreement with respect to any Contract required to be disclosed in
Schedule 4.9;
(k) make any change in Ralphs Supermarkets' or Ralphs Grocery's
certificate of incorporation or by-laws; or
(l) make any material change in its accounting policies or any
material reclassification of assets or liabilities.
If F4L shall in good faith determine that Ralphs Supermarkets is not
in compliance with this Section 6.5, F4L shall promptly provide Ralphs
Supermarkets with written notice of such determination to permit Ralphs
Supermarkets an opportunity to cure such non-compliance.
Section 6.6 Public Announcements. Upon each of the execution
hereof and the Closing, the parties hereto shall issue mutually acceptable
press releases. Prior to the Closing Date, each of Ralphs Supermarkets and
F4L shall use all reasonable efforts to consult with the other before issuing,
or permitting any of its agents or Affiliates to issue, any other press
releases or otherwise making or permitting any of its agents or Affiliates to
make, any public statements with respect to this Agreement and the
transactions contemplated hereby.
Section 6.7 Notice of Developments. Each party shall promptly
notify the other party in writing of any events, facts and occurrences arising
or discovered subsequent to the date hereof which become known to the officers
of such party and which would result in any breach of representation or
warranty made by such party or breach of covenant applicable to such party
contained in this Agreement in any material respect.
Section 6.8 No Mergers, Consolidations, Sale of Stock, etc.
Neither EJDC nor the Company will, directly or indirectly, through officers,
employees, representatives or agents, solicit any inquiries or proposals or
enter into or continue any discussions, negotiations or agreements relating to
the sale or exchange of the Shares, the merger, reorganization or business
combination of Ralphs Supermarkets or Ralphs Grocery with, or the disposition
of a significant amount of Ralphs Supermarkets' or Ralphs Grocery's assets or
business to, any person other than F4L or its Affiliates. Neither EJDC nor
Ralphs Supermarkets will provide any information to any other party in
connection with any such possible transaction, and each will promptly
communicate to F4L the terms of any proposal which either of them may receive
in respect of any such transaction.
<PAGE>40
Section 6.9 Delivery of Financial Statements. Ralphs Supermarkets
shall cause Ralphs Grocery to deliver to F4L, to the extent such reports are
regularly prepared by Ralphs Grocery, promptly on a monthly and year to date
basis, unaudited balance sheets and statements of earnings for Ralphs Grocery.
In addition, subject to compliance with the Antitrust Laws, Ralphs
Supermarkets shall cause the Company to deliver to F4L, on a weekly and
monthly basis such internal sales reports on a store by store basis promptly
as they are prepared by the Company for each such week or month.
Section 6.10 Registration of Debentures. F4L Holdings shall (i)
cause to be filed with the SEC as soon as practicable after the date hereof a
registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement") (which Shelf Registration Statement shall
include the Indenture ) and (ii) use its best efforts to cause such Shelf
Registration Statement to become effective and for such Indenture to be
qualified under the TIA, as soon as practicable, but in no event later than
the Closing Date, all as more fully provided in the Registration Rights
Agreement. F4L, F4L Holdings and F4L Supermarkets shall use their best
efforts to keep such Shelf Registration Statement continuously effective,
supplemented and amended as required by the Registration Rights Agreement to
ensure that it is available for resales of all Debentures and to ensure that
it conforms with the requirements of this Agreement, the Registration Rights
Agreement, the Securities Act and the policies, rules and regulations of the
SEC as announced from time to time, during the time periods specified in, and
subject to the terms of, the Registration Rights Agreement. Notwithstanding
the foregoing, the Shelf Registration Statement shall not be available for,
and each Selling Stockholder agrees that it will not make, public resales of
the Debentures for a period of 90 days following the Closing Date, or
otherwise conduct marketing activities with respect to the Debentures during
such 90-day period which would impair or interfere with F4L's marketing
activities with respect to debt securities comprising any portion of the
Financing. F4L Holdings and F4L Supermarkets jointly and severally agree to
pay the liquidated damages provided in the Registration Rights Agreement under
the circumstances set forth therein. In addition, and notwithstanding the
foregoing, in the event that (i) F4L Holdings and F4L Supermarkets determine
that it is advisable to complete the Financing and the Public Debt Refinancing
in transactions which would be exempt from the registration requirements under
the Securities Act (a "Private Financing") and so advise the Selling
Stockholders in writing and (ii) EJDC, after reviewing the proposed terms and
schedule for such Financing and Public Debt Refinancing (as supplied by F4L)
and, after consulting with F4L, F4L Holdings and F4L Supermarkets, and with
its and their respective counsel and such other persons (including the SEC) as
they may collectively deem appropriate, reasonably determines that (a) the
filing of the Shelf Registration Statement would adversely affect the ability
of F4L Holdings and F4L Supermarkets to consummate the Private Financing and
(b) the failure to pursue the Private Financing would substantially delay the
Closing Date, then, EJDC, acting on behalf of (and without obligation to
provide prior notice to or obtain approval from) all Selling Stockholders, may
agree, in its sole and absolute discretion (but shall be under no obligation)
to extend the date by which the Shelf Registration Statement is required to be
filed to a date that is no later than 30 days after the Closing Date and to
extend the date by which the Shelf Registration Statement is required to be
declared effective to a date which is no later than 90 days after the Closing
Date. In the event that EJDC agrees to any such extension of the filing date
or effective date, EJDC may also agree with F4L, in its sole and absolute
discretion (but shall be under no obligation), on behalf of (and without
obligation to provide prior notice to or obtain approval from) all Selling
Stockholders, to make such modifications to the form of Registration Rights
Agreement attached hereto as they may deem reasonably necessary or appropriate
to reflect such extension(s) and to provide for such additional liquidated
damages or other rights or remedies (pro rata to all Selling Stockholders) as
EJDC and F4L mutually deem appropriate in the event that the Shelf
Registration Statement is not declared effective by the SEC on or prior to the
90th day following the Closing Date. EJDC will provide prompt notice to the
other Selling Stockholders of any agreement concerning such extension of the
filing date or effective date or of any such modifications to the Registration
Rights Agreement. EJDC agrees that,
<PAGE>41
so long as it directly or indirectly has beneficial ownership of at least a
majority in aggregate principal amount of the outstanding Debentures, it will
not vote pursuant to Section 9.2 of the Indenture in favor of any amendment to
the Indenture or the Debentures unless at least one other holder of Debentures
(excluding any Affiliate of EJDC) shall also vote in favor of such amendment;
provided, however, that nothing in this sentence shall restrict the ability of
any bona fide pledgee to vote or cause EJDC or such Affiliate to vote in favor
of any such amendment.
Section 6.11 Maintenance of Insurance and Indemnification
Provisions. F4L shall cause the Surviving Corporation to maintain for a
period of at least six years following the Closing Date indemnification
provisions in its charter documents no less favorable to its directors and
officers (except to the extent required otherwise by the GCL) than the
indemnification provisions in the charter documents of Ralphs Supermarkets as
in effect on the date hereof, and F4L shall maintain or cause the Surviving
Corporation or another Affiliate to maintain, for a period of at least three
years following the Closing Date, directors and officers liability insurance
governing all persons who were officers or directors of Ralphs Supermarkets or
Ralphs Grocery, and all occurrences, at any time since February 3, 1992, the
material terms of which insurance shall be no less favorable to such officers
and directors than that in effect on the date hereof, except that the amount
of coverage may be less than, but not less than one-half of, the amount of
coverage in effect on the date hereof.
Section 6.12 Definitive Financing Agreements. F4L and its
subsidiaries shall use their best efforts to negotiate, prepare and enter into
definitive financing agreements (the "Definitive Financing Agreements") with
the Financing Sources to provide the Financing on the terms set forth in the
Commitment Letters. F4L and its subsidiaries shall use their best efforts to,
and the Company shall use its best efforts to cooperate with F4L in order to,
satisfy on or before the Closing Date all requirements of the Definitive
Financing Agreements which are conditions to closing the transactions
constituting the Financing. Without limiting the foregoing, the Company shall
cause its auditors to deliver to such Financing Sources, if requested,
customary comfort letters and certificates, in form and substance reasonably
acceptable to F4L, which may be required in connection with the Financing.
F4L shall promptly notify Ralphs Supermarkets and EJDC of any material change
to, or revocation of, any Commitment Letter.
Section 6.13 Continuation of Certain Agreements. Each of EJDC,
Camdev Properties Inc. and Federated Department Stores, Inc. agrees that, from
and after the Effective Date, Ralphs Supermarkets and Ralphs Grocery will
continue to be entitled to the benefits of, and be bound by their obligations
under, the agreements described in Schedule 8.7, and that, upon consummation
of the Merger, the rights of Ralphs Supermarkets thereunder will inure to the
benefit of the Surviving Corporation, provided that the obligations of Ralphs
Supermarkets thereunder will thereafter bind the Surviving Corporation, until
such agreements are amended to provide otherwise or terminated.
Notwithstanding the foregoing, EJDC agrees that from and after the Closing
Date, neither the Company nor the Surviving Corporation shall have any
obligation under Sections 3 or 5 of that certain Reimbursement Agreement dated
as of January 31, 1992 between Ralphs Grocery and EJDC. Effective upon
Closing, Ralphs Supermarkets agrees, on behalf of itself and Ralphs Grocery,
that notwithstanding Section 5.3 of the Indemnification Agreement referred to
in Item 2 of Schedule 8.7, all payments by Ralphs Supermarkets or Ralphs
Grocery under such Indemnification Agreement shall be made in cash.
Section 6.14 Workers' Compensation. F4L agrees for the benefit of
EJDC that F4L shall maintain or cause the Surviving Corporation or another
Affiliate to maintain, for a period of not less than five years following the
Closing Date, (i) one or more bank letters of credit in favor of, and
acceptable to, the DIR in a face amount equal to at least 1.1 times the
Projected Losses attributable to all workers' compensation claims, whether or
not such claims are EJDC Guaranteed Claims, provided that if the proceeds of
drawings under such letters of credit are exclusively available to pay the
EJDC
<PAGE>42
Guaranteed Claims, then the face amount of such letters of credit need only be
equal to at least 1.1 times the Projected Losses attributable to the EJDC
Guaranteed Claims or (ii) other security in favor of, and acceptable to, the
DIR and having a value equal to at least 1.1 times the Projected Losses
attributable to all workers' compensation claims, whether or not such claims
are EJDC Guaranteed Claims, provided that if the proceeds of such security are
exclusively available to pay the EJDC Guaranteed Claims, then the value of
such security need only be equal to at least 1.1 times the Projected Losses
attributable to the EJDC Guaranteed Claims or (iii) insurance in favor of the
Surviving Corporation and/or Ralphs Grocery reasonably acceptable to EJDC,
and providing for coverage (net of any deductible amounts) in an amount equal
to at least 1.1 times the Projected Losses attributable to all workers'
compensation claims, whether or not such claims are EJDC Guaranteed Claims,
provided that if the proceeds of such insurance are exclusively available to
pay the EJDC Guaranteed Claims, then the net coverage provided by such
insurance need only be equal to at least 1.1 times the Projected Losses
attributable to the EJDC Guaranteed Claims. F4L agrees to indemnify EJDC
against, and to hold it harmless from, any damage, claim, liability or
expense, including without limitation, reasonable attorneys' fees and other
costs, incurred by EJDC at any time from and after the Closing under or in
respect of the EJDC Guarantee. Such indemnification obligation of F4L shall
be governed by the procedures and other terms set forth in Section 10.3. EJDC
agrees that it will, as of the Closing Date, terminate the EJDC Guarantee in
accordance with DIR procedures.
As used in the foregoing paragraph:
"DIR" shall mean the State of California Department of Industrial
Relations.
"Projected Losses" shall mean the projected losses of Ralphs
Supermarkets and its subsidiaries with respect to workers' compensation
claims, as such losses are customarily projected for purposes of DIR self-
insurance requirements.
"EJDC Guarantee" shall mean that certain Agreement of Assumption and
Guarantee of Workers' Compensation Liabilities dated January 31, 1992 between
EJDC and the DIR.
"EJDC Guaranteed Claims" shall mean all workers' compensation claims
against Ralphs Supermarkets and its subsidiaries for which EJDC has or could
have liability under the EJDC Guarantee.
Section 6.15 Purchase of Debentures. Except as otherwise
contemplated by the Ancillary Agreements, for a period of 90 days after the
Closing Date F4L Holdings will not, and will not permit any of its
subsidiaries or The Yucaipa Companies or any of its Affiliates to, directly or
indirectly acquire any Debenture, by purchase or otherwise (except as required
under the Indenture) from any Selling Stockholder except pursuant to an offer
to purchase made by F4L Holdings or such other person to purchase Debentures
on the same terms and conditions, pro rata among all Debentures tendered, and
which offer shall remain outstanding for at least ten (10) Business Days.
ARTICLE VII
Certain Tax Matters
Section 7.1 Taxes and Tax Returns. Ralphs Supermarkets hereby
represents, warrants, covenants, agrees and promises as follows:
(a) Filing of Tax Returns. To the best knowledge of Ralphs
Supermarkets, each of Ralphs Supermarkets, its subsidiaries and all members
for income Tax purposes of any affiliated or combined group of corporations
(as defined in Section 1504(a) of the Code or any analogous state, local or
foreign provision) (an "Affiliated Group") of which Ralphs Supermarkets is the
common
<PAGE>43
parent (collectively, the "Taxpayers") have filed with the appropriate taxing
or other governmental authorities all returns, reports, estimates, information
returns and statements (collectively, "Tax Returns") required to be filed on
or prior to the Closing Date. The Tax Returns filed are complete, correct and
accurate in all material respects. Except as set forth in Schedule 7.1(a),
none of the Taxpayers has requested any extension of time within which to file
such Tax Returns.
(b) Payment of Taxes. All Taxes for which any of the Taxpayers are
or may be liable or that are or may become due or payable with respect to all
taxable periods or portions thereof ending on or before the Closing Date, have
been timely paid, to the extent payable before the Closing Date, or will be
timely paid, or an adequate reserve has been or will be established therefor.
The Taxpayers have made adequate provision, in conformity with generally
accepted accounting principles, consistently applied, in accordance with
Statement of Financial Accounting Standards No. 109 for the payment of all
Taxes which may subsequently become due. All Taxes which any Taxpayer has
been required to collect or withhold have been duly collected or withheld and,
to the extent required when due, have been or will be duly paid to the proper
taxing or other governmental authorities. True and correct copies of all Tax
Returns for all open taxable years have been provided to F4L prior to the date
hereof.
(c) Audit History. Except as set forth in Schedule 7.1(c), no
material deficiencies for Taxes of any of the Taxpayers have been claimed,
proposed or assessed by any taxing or other governmental authority. Except as
set forth in Schedule 7.1(c), there are no pending or, to the best of Ralphs
Supermarkets' knowledge, threatened audits, investigations, claims or
assessments for or relating to any material liability in respect of Taxes, and
there are no matters under discussion with any taxing or other governmental
authorities with respect to Taxes that in the reasonable judgment of Ralphs
Supermarkets or any of the Taxpayers are likely to result in an additional
amount of Taxes. Audits of federal, state and local income Tax Returns by the
relevant taxing or other governmental authorities have been completed or the
statute of limitations has expired or such income Tax Returns have been
accepted as filed, except for income Tax Returns described in Schedule 7.1(c),
and, except as set forth in Schedule 7.1(c), none of the Taxpayers has been
notified that any taxing or other governmental authority intends to audit a
Tax Return for any other period. Except as set forth in Schedule 7.1(c), no
extension of a statute of limitations relating to Taxes is in effect with
respect to any of the Taxpayers.
(d) Tax Elections. All elections with respect to Taxes affecting
any of the Taxpayers as of the date hereof are set forth in Schedule 7.1(d).
No new elections with respect to Taxes, or any changes in current elections
with respect to Taxes, affecting any of the Taxpayers shall be made after the
date of this Agreement without F4L's prior written consent. None of the
Taxpayers (i) has made or will make a deemed dividend election under Treasury
Regulation Section 1.1502-32(f)(2) or a consent dividend election under
Section 565 of the Code; (ii) has consented at any time under Section
341(f)(1) of the Code to have the provisions of Section 341(f)(2) of the Code
apply to any disposition of any of the Taxpayer's assets; (iii) has agreed, or
is required, to make any adjustment under Section 481(a) of the Code by reason
of a change in accounting method or otherwise; (iv) has made an election, or
is required, to treat any asset of any Taxpayer as owned by another person
pursuant to the provisions of Section 168(f) of the Code or as tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code; or (v) has made any of the foregoing elections or is required to
apply any of the foregoing rules under any comparable state or local Tax
provision.
(e) Affiliated Groups. Except as set forth in Schedule 7.1(e),
none of the Taxpayers has ever been a member of an Affiliated Group.
<PAGE>44
(f) Tax Sharing Agreements. All Tax-sharing agreements or similar
arrangements with respect to or involving the Taxpayers are set forth in
Schedule 7.1(f). Except as set forth in Schedule 8.7, all Tax-sharing
agreements or similar arrangements with respect to or involving any of the
Taxpayers shall be terminated prior to the Closing Date, and, after the
Closing Date, none of the Taxpayers shall be bound thereby or have any
liability thereunder for amounts due in respect of periods prior to the
Closing Date.
(g) Partnerships. Except as set forth in Schedule 7.1(g), none of
the Taxpayers is subject to any joint venture, partnership, or other
arrangement or contract which is treated by the Taxpayers as a partnership for
federal income Tax purposes.
(h) FIRPTA Withholding. Ralphs Supermarkets is not, and was not at
any time during the five-year period ending on the date hereof, a "United
States real property holding corporation" as such term is defined by Section
897(b)(2) of the Code. As a result, the Shares do not constitute a "United
States real property interest" as such term is defined by Section 897(c)(1) of
the Code, and F4L will not be required to withhold any portion of the Merger
Consideration pursuant to Section 1445 of the Code. Ralphs Supermarkets
agrees to provide F4L prior to the Closing any certificate necessary to
substantiate exemption from such withholding.
Section 7.2 Books and Records. As soon as practicable after a
request by F4L, F4L Holdings, F4L Supermarkets, Ralphs Supermarkets, the
Surviving Corporation or the Selling Stockholders (the "Requesting Party"),
for a period of seven years from and after the Closing Date, the party of whom
such request is made (the "Delivering Party") shall deliver to the Requesting
Party such information and data in its possession concerning the business,
activities and assets of Ralphs Supermarkets and its subsidiaries and make
available such knowledgeable employees of the Delivering Party, or any
affiliate thereof, or any predecessor or successor of the foregoing, as the
Requesting Party may reasonably request, including providing the information
and data required by the Requesting Party's customary Tax and accounting
questionnaires, in order to enable the Requesting Party to complete and file
all Tax Returns and all other federal, state or foreign forms and reports that
it may be required to file with respect to the business, activities or assets
of any of the Taxpayers or to respond to audits by any taxing or other
governmental authorities with respect to such business, activities or assets.
The obligations of any Delivering Party under this Section 7.2 to permit
access to and review of the foregoing materials are conditioned upon the
execution by the Requesting Party of a confidentiality agreement reasonably
acceptable to the Delivering Party.
ARTICLE VIII
Conditions to F4L's, F4L Holdings' and F4L Supermarkets' Obligations to Close
F4L's, F4L Holdings' and F4L Supermarkets' obligations to consummate
the Merger are subject to the satisfaction or waiver by them on or prior to
the Closing Date of all of the following conditions:
Section 8.1 Representations, Warranties and Covenants of Seller.
The representations and warranties of Ralphs Supermarkets and the Selling
Stockholders contained in this Agreement which by their terms require an event
or condition having a Material Adverse Effect in order to be inaccurate shall
be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date, except for representations and warranties that speak as of a specific
date or time other than the Closing Date (which need only be true and correct
as of such date or time). The representations and warranties of Ralphs
Supermarkets and the Selling Stockholders contained in this Agreement which by
their terms do not require an event or condition having a Material Adverse
Effect in order to be inaccurate shall
<PAGE>45
be true and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date (except for representations and warranties that speak as of a specific
date or time other than the Closing Date which need only be true and correct
as of such date or time), except for such breaches or inaccuracies (other than
in the representations and warranties contained in Sections 4.1, 4.4, 4.15 and
4.26) that, individually or in the aggregate, would not have a Material
Adverse Effect. The covenants and agreements of Ralphs Supermarkets and the
Selling Stockholders to be performed on or before the Closing Date in
accordance with this Agreement shall have been duly performed except for such
breaches that, individually or in the aggregate, would not have a Material
Adverse Effect.
Section 8.2 Antitrust. The waiting periods under the HSR Act
applicable to the consummation of the Merger, and any extensions thereof,
shall have expired or been terminated in accordance with the provisions
thereof, and none of the Justice Department, the Federal Trade Commission or
the Attorney General of the State of California shall have taken any action to
prevent or condition consummation of this Agreement including, without
limitation, any condition that requires F4L or its subsidiaries or the
Surviving Corporation or any of its subsidiaries to sell or dispose of any of
their respective assets or to hold separate pending such sale or disposition
any particular assets or categories of assets, businesses or voting securities
of any of the foregoing or the voting securities of any of their subsidiaries,
or which prohibits or restricts the ownership or operation by any such persons
or any of their Affiliates of any portion of their respective businesses or
assets, except for any such sale, disposition, hold-separate order,
prohibition or restriction that (taken together with any consents and
approvals not obtained as contemplated by Section 8.3 hereof) would not have a
material adverse effect, from and after the Closing Date, on the business,
assets, results of operations or financial condition of the Surviving
Corporation.
Section 8.3 Regulatory Consents, Authorizations, etc. Except for
the filing of the certificate of merger with the Secretary of State of the
State of Delaware, all consents, authorizations, orders and approvals of, and
filings and registrations with, any governmental commission, board or other
regulatory body or any non-governmental third party which are required for or
in connection with the execution and delivery of this Agreement, and the
consummation by each party hereto of the transactions contemplated hereby,
shall have been obtained or made, if the failure to make such filing or
registration or to obtain such consent, authorization, order or approval would
(taken together with any sales, dispositions, orders, prohibitions or
restrictions referred to in Section 8.2 hereof) have a material adverse effect
on the Surviving Corporation and its subsidiaries, or on its ability to
conduct, after the Effective Date, its business.
Section 8.4 Injunctions. At the Effective Date there shall be no
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality outstanding or threatened
against any party hereto which seeks to prohibit, restrict or delay
consummation of the Merger or any of the conditions to the consummation of the
Merger or limit in any material respect the right of F4L to control the
Surviving Corporation or any material aspect of the business of the Surviving
Corporation after the Effective Date.
Section 8.5 Financing. F4L and its subsidiaries shall have signed
the Definitive Financing Agreements and have received the Financing on the
terms contemplated by the Commitment Letters, and shall have consummated the
Public Debt Refinancing.
Section 8.6 Title Policy. F4L shall have received a binding
written commitment from a reputable title insurance company, selected by F4L
and licensed to issue title insurance in the State of California, to issue to
F4L or the Surviving Corporation on the Effective Date and upon payment of the
required premium (which payment shall be the responsibility of F4L), an ALTA
Extended Coverage title insurance policy insuring title in the Surviving
Corporation's name to the fee
<PAGE>46
interest in the Properties set forth in Schedule 8.6, subject only to
Permitted Encumbrances and other encumbrances reasonably approved by F4L.
Section 8.7 Termination of Stockholder Agreements. All
transactions, contracts, agreements, arrangements or understandings between
Ralphs Supermarkets or Ralphs Grocery, on the one hand, and any Selling
Stockholder or Affiliate of a Selling Stockholder, on the other hand, other
than this Agreement, the agreements set forth in Schedule 8.7 and the
agreements referred to in Section 9.5, shall have been terminated. F4L shall
have received confirmation, reasonably satisfactory to it, that the agreements
set forth in Schedule 8.7 and the agreements referred to in Section 9.5 shall
continue in full force and effect following the consummation of the Merger.
Section 8.8 Material Adverse Change in Company Business or
Facilities. The Company shall not have suffered any change in its operations
or Assets since the date of this Agreement which would have a Material Adverse
Effect, and the Facilities shall not have suffered any damage which would have
a Material Adverse Effect.
Section 8.9 Cancellation of Options. F4L shall have received
confirmation that all outstanding Options have been cancelled, exercised or
surrendered as contemplated by Section 2.6 hereof, without payment of
consideration for such cancellation or surrender (or payment of Merger
Consideration with respect to any Shares acquired upon exercise thereof) in
excess of $880,000 (including the principal amount of any Debentures issued as
Merger Consideration with respect to Shares acquired upon exercise thereof).
ARTICLE IX
Conditions to Ralphs Supermarkets' and the Selling Stockholders' Obligations
to Close
Ralphs Supermarkets' and the Selling Stockholders' obligations to
consummate the Merger are subject to the satisfaction or waiver by Ralphs
Supermarkets and the Selling Stockholders on or prior to the Closing Date of
all of the following conditions:
Section 9.1 Representations, Warranties and Covenants of F4L, F4L
Holdings and F4L Supermarkets. The representations and warranties of F4L, F4L
Holdings and F4L Supermarkets contained in this Agreement which by their terms
require an event or condition having a material adverse effect on the
consummation of the transactions contemplated hereby or a material adverse
effect on the Surviving Corporation in order to be inaccurate shall be true
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, except
for representations and warranties that speak as of a specific date or time
other than the Closing Date (which need only be true and correct as of such
date or time). The representations and warranties of F4L, F4L Holdings and
F4L Supermarkets contained in this Agreement which by their terms do not
require an event or condition having a material adverse effect on the
consummation of the transactions contemplated hereby or a material adverse
effect on the Surviving Corporation in order to be inaccurate shall be true
and correct on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date (except
for representations and warranties that speak of a specific date or time other
than the Closing Date which need only be true and correct as of such date or
time), except for such breaches or inaccuracies (other than in the
representations and warranties contained in Sections 5.1, 5.4 or 5.5) that,
individually or in the aggregate, would not have a material adverse effect on
the consummation of the transactions contemplated hereby or on the business,
assets, results of operations or financial condition of the Surviving
Corporation. The covenants and agreements of F4L, F4L Holdings and F4L
Supermarkets to be performed on or before the Closing Date in accordance with
this Agreement shall have been duly performed except for such breaches that,
individually or in the
<PAGE>47
aggregate, would not have a material adverse effect on the consummation of the
transactions contemplated hereby or on the business, assets, results of
operations or financial condition of the Surviving Corporation. Any
determination by Ralphs Supermarkets or any Selling Stockholder that a
condition to its obligations under this Agreement has not been satisfied
because of a breach of a representation or warranty of F4L or its subsidiaries
(other than the representations and warranties contained in Sections 5.1, 5.4
or 5.5), or adverse change, event or other condition, relating to the
business, assets, results of operation or financial condition of F4L, the
Surviving Corporation or their respective subsidiaries, shall require the
party asserting the failure of such condition to deliver to F4L the written
opinion of a nationally recognized accounting firm, investment banking firm or
law firm, to the effect that such breach, change, event or condition would,
from and after the Closing Date, have a material adverse effect on the
business, assets, results of operations or financial condition of the
Surviving Corporation.
Section 9.2 HSR Act. The waiting periods under the HSR Act
applicable to the consummation of the Merger, and any extensions thereof,
shall have expired or been terminated in accordance with the provisions
thereof without action by the Justice Department or the Federal Trade
Commission to prevent consummation of this Agreement.
Section 9.3 Regulatory Consents, Authorizations, etc. Except for
the filing of the certificate of merger with the Secretary of State of the
State of Delaware, all consents, authorizations, orders and approvals of, and
filings and registrations with, any governmental commission, board or other
regulatory body or any non-governmental third party which are identified on
Schedule 3.3 as being required, or which are required under any public
indebtedness or institutional indebtedness (other than equipment leases) of
Ralphs Grocery, for or in connection with the execution and delivery of this
Agreement, and the consummation by Ralphs Supermarkets or the Selling
Stockholders of the transactions contemplated hereby, shall have been obtained
or made.
Section 9.4 Injunctions. At the Effective Date there shall be no
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality outstanding or threatened
against any party hereto which seeks to prohibit, restrict or delay
consummation of the Merger or any of the conditions to the consummation of the
Merger or limit any material aspect of the business of the Selling
Stockholders after the Effective Date.
Section 9.5 Ancillary Agreements. The Yucaipa Companies and The
Edward J. DeBartolo Corporation shall have entered into the Put Agreement
attached hereto as Exhibit E, F4L Supermarkets and EJDC shall have entered
into the Consulting Agreement attached hereto as Exhibit F, and F4L Holdings,
F4L Supermarkets and the Selling Stockholders shall have entered into the
Registration Rights Agreement attached hereto as Exhibit G (which agreements
are referred to collectively herein as the "Ancillary Agreements"). All
payments due under the Consulting Agreement and the Put Agreement on the
Closing Date shall have been paid in full concurrently with the Closing.
Section 9.6 Shelf Registration Statement and Indenture. The
Indenture shall have been executed by F4L Holdings, the Shelf Registration
Statement shall have become effective under the Securities Act and the
Indenture shall have been qualified under the TIA, and no stop order
suspending such effectiveness or qualification shall have been issued or
proceedings for such purpose shall have been instituted or threatened.
Section 9.7 Material Adverse Change in F4L, F4L Holdings or F4L
Supermarkets. Neither F4L, F4L Holdings or F4L Supermarkets shall have
suffered any change in their respective operations or assets since the date of
this Agreement which from and after the Closing Date would, in the written
opinion of a nationally recognized accounting firm, investment banking firm or
law firm,
<PAGE>48
have a material adverse effect on the business, assets, results of operations
or financial condition of the Surviving Corporation.
Section 9.8 Solvency Opinion. F4L shall have delivered to the
Selling Stockholders a solvency opinion from Houlihan, Lokey, Howard & Zukin
or another nationally recognized appraisal firm, with respect to the financial
condition of the Surviving Corporation, addressed to such Selling
Stockholders, and in the same form as the solvency opinion(s) delivered to
purchasers of debt securities of the Surviving Corporation or F4L Holdings in
connection with the Financings.
Section 9.9 Capital Structure. The capital structure of the
Surviving Corporation shall be within the specifications set forth in
Schedule 9.9.
Section 9.10 Cancellation of Options. The Selling Stockholders
shall have received confirmation that all outstanding Options have been
cancelled, exercised or surrendered as contemplated by Section 2.6 hereof.
Section 9.11 Reimbursement of Expenses. The Surviving Corporation
or the Company shall have made the payment required to be made to EJDC
pursuant to Section 12.4.
Section 9.12 Directors and Officers Liability Insurance. The
Surviving Corporation or an Affiliate thereof shall have been issued a binder
for the directors and officers liability insurance required by Section 6.11.
ARTICLE X
Survival; Indemnification
Section 10.1 Survival of Representations, Etc. All representations
and warranties of the parties contained in this Agreement or in any Schedule
hereto, or in any certificate, document or other instrument delivered in
connection herewith, shall be deemed to be representations and warranties by
the parties hereunder. The representations, warranties and covenants of the
Selling Stockholders, F4L, F4L Holdings and F4L Supermarkets hereunder shall
survive the Closing Date, without regard to any investigation made by any of
the parties hereto, provided, however, that no representation or warranty in
this Agreement (other than those of the Selling Stockholders set forth in
Sections 3.2 and 3.5) shall survive beyond the second anniversary of the
Closing Date. Notwithstanding the foregoing, the representations and
warranties of Ralphs Supermarkets set forth in Article IV, and the
representations and warranties of F4L, F4L Holdings and F4L Supermarkets set
forth in Sections 5.7 through 5.13, inclusive, shall not survive the Closing
Date. Each party hereto agrees that, to the extent any Shares are transferred
hereby, such transfer is made by the Selling Stockholder without recourse or
warranty of any kind, except as expressly set forth in Article III. F4L, F4L
Holdings and F4L Supermarkets each acknowledges that it has conducted its own
investigation into the business, prospects and condition (financial and other)
of the Company and that neither any Selling Stockholder nor any of its agents
or representatives has, directly or indirectly, made or shall be deemed to
have made any representation or warranty to F4L in respect thereto. No party
hereto has relied on any representations or warranty of any Selling
Stockholder other than those expressly stated herein. F4L, F4L Holdings and
F4L Supermarkets acknowledge that, except for those express obligations
undertaken in this Agreement, the Selling Stockholders have no legal
obligations whatsoever to F4L, F4L Holdings or F4L Supermarkets. To the
fullest extent permitted by law, each party hereto waives any claims, whether
known or unknown, that it may have against any Selling Stockholder in respect
of this Agreement except for the representations and warranties expressly set
forth in Article III.
<PAGE>49
Section 10.2 Indemnification. Each Selling Stockholder shall
indemnify F4L, F4L Holdings and (from and after the Effective Date) the
Surviving Corporation, and their respective employees, agents, representatives
and Affiliates, against, and hold each of them harmless from, any damage,
claim, liability or expense, including without limitation, interest, penalties
and reasonable attorneys' fees (collectively "Damages"), arising out of the
breach of any warranty, representation, covenant or agreement of such Selling
Stockholder contained in this Agreement. F4L, F4L Holdings and F4L
Supermarkets shall indemnify each Selling Stockholder and (prior to the
Effective Date) Ralphs Supermarkets, and their respective employees, agents,
representatives and Affiliates, against, and hold each of them harmless from,
any Damages arising out of the breach of any warranty, representation,
covenant or agreement of either of them contained in this Agreement. The term
"Damages" as used in this Section 10.2 is not limited to matters asserted by
third parties against F4L, F4L Holdings, F4L Supermarkets, the Surviving
Corporation, Ralphs Supermarkets or the Selling Stockholders, but includes
Damages incurred or sustained by any of them in the absence of third party
claims. The indemnification obligations of each Selling Stockholder under
this Section 10.2 shall be several, and not joint, and no Selling Stockholder
shall have any liability hereunder with respect to the warranties,
representations, covenants or agreements of any other party contained herein.
Section 10.3 Procedures for Indemnification. (a) If a claim by a
third party is made against a person or party entitled to indemnification
hereunder (an "Indemnified Party"), and if such Indemnified Party intends to
seek indemnity with respect thereto under Section 10.2, such Indemnified Party
shall promptly notify the indemnifying party (the "Indemnifying Party") of
such claims. As part of such notice, the Indemnified Party shall furnish the
Indemnifying Party with copies of any pleadings or correspondence relating
thereto that are in the Indemnified Party's possession. The Indemnified
Party's failure to promptly notify the Indemnifying Party of any such matter
shall not release the Indemnifying Party, in whole or in part, from its
obligations to indemnify under this Article X except to the extent the
Indemnified Party's failure to so notify prejudices the Indemnifying Party's
ability to defend against such claim. At such time as the Indemnifying Party
acknowledges in writing its liability under this Article X with respect to
such claim, then the Indemnifying Party shall have the sole and exclusive
right to defend against, settle or compromise such claim; provided, that the
Indemnifying Party shall proceed in good faith with respect thereto; and
provided, further, that the Indemnifying Party shall not settle such claim for
other than monetary consideration (unless the terms of any such settlement do
not in any way constrain or otherwise affect the Indemnified Party) without
the consent of the Indemnified Party, which consent will not be unreasonably
withheld; and provided, further, that the Indemnified Party may participate in
the defense of such claim at its own expense. If the Indemnifying Party does
not acknowledge to the Indemnified Party its liability hereunder prior to the
earlier of (i) 15 business days after the receipt of such Indemnified Party's
notice of a claim of indemnity hereunder and (ii) five business days prior to
the deadline for filing any pleading in connection therewith, such Indemnified
Party shall have the right to contest, settle or compromise the claim, but
shall not thereby waive any right to indemnity therefor pursuant to this
Agreement and the Indemnifying Party shall cooperate with the Indemnified
Party in connection with defending against such claim; provided, that the
Indemnifying Party shall have the right to participate, at its own expense, in
such defense. The Indemnifying Party shall not, except with the consent of
such Indemnified Party, enter into any settlement that does not include as an
unconditional term thereof the giving by the person or persons asserting such
claim to the Indemnified Parties of an unconditional release from all
liability with respect to such claim or consent to entry of any judgment.
(b) If any party becomes obligated to indemnify another party with
respect to any claim pursuant to this Article X, and the amount of liability
with respect thereto shall have been finally determined, the Indemnifying
Party shall pay such amount to the Indemnified Party in immediately available
funds within fifteen days following written demand by the Indemnified Party.
<PAGE>50
Section 10.4 No Reliance by Selling Stockholders. Each Selling
Stockholder acknowledges that it has conducted its own investigation into the
business, prospects and condition (financial and other) of the Subject
Companies and that no Selling Stockholder nor any of its agents or
representatives has, directly or indirectly, made or shall be deemed to have
made any representation or warranty to any other Selling Stockholder in
respect thereto. No Selling Stockholder has relied on any representations or
warranties of any other Selling Stockholder under this Agreement or otherwise.
To the fullest extent permitted by law, each Selling Stockholder waives any
claims, whether known or unknown, that it may have against any other Selling
Stockholder in respect of this Agreement, except for the representations and
warranties expressly set forth in Article III and under the Ralphs
Registration Rights Agreement. As used herein, the term "Subject Companies"
shall mean, individually and collectively, F4L, F4L Holdings, F4L
Supermarkets, Ralphs Supermarkets, Ralphs Grocery and the Surviving
Corporation.
ARTICLE XI
Termination
Section 11.1 Termination. This Agreement may be terminated at any
time prior to the Closing by:
(a) The mutual consent of EJDC, Ralphs Supermarkets and F4L, set
forth in a written instrument executed by all such parties; or
(b) Any of Ralphs Supermarkets, EJDC or F4L, if the Closing shall
not have occurred by the close of business on January 16, 1995, or by any
Selling Stockholder if the Closing shall not have occurred by the close
of business on March 31, 1995, and, in each case, if the failure to
consummate the Merger on or before such date did not result from the
failure by the party seeking termination of this Agreement to fulfill any
covenant provided for herein that is required to be fulfilled by it prior
to Closing; or
(c) Any of Ralphs Supermarkets, EJDC or F4L in the event that a
condition to the terminating party's obligations to close the
transactions contemplated by this Agreement shall become incapable of
satisfaction; provided that no party shall be entitled to terminate this
Agreement pursuant to this clause (c) if the failure of such condition to
be satisfied is attributable to such party's breach of this Agreement; or
(d) Ralphs Supermarkets or EJDC if (i) any Financing Source which
is party to a Commitment Letter providing for equity or bank debt
Financing shall exercise its right under such Commitment Letter to
withdraw its commitment (or shall have materially adversely modified such
commitment) as a result of any due diligence review which, according to
the terms of the original Commitment Letter, was to be completed within
30 calendar days after the date hereof or (ii) within 31 calendar days
after the date hereof (or if such date is not a business day, on the next
business day), F4L has failed to deliver to Ralphs Supermarkets and EJDC
written confirmation that neither of such Financing Sources has exercised
its right under such Commitment Letter to withdraw its commitment (or has
materially adversely modified such commitment) as a result of such due
diligence review; or
(e) F4L, if F4L has not been notified on or before the expiration
of the 30th day after the date hereof, that the approvals required by
Federated Department Stores, Inc. and Camdev Properties Inc., as
specified on Schedule 3.3 hereof, have been obtained.
<PAGE>51
Section 11.2 Procedure and Effect of Termination. In the event of
termination of this Agreement by either or both of Ralphs Supermarkets and F4L
pursuant to Section 11.1, written notice thereof shall forthwith be given by
the terminating party to all other parties hereto, and this Agreement shall
thereupon terminate and become void and have no effect, the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, and the parties hereto waive and release any claim or Action with
respect hereto, except that the provisions of Sections 12.4 and 12.10 and the
last sentence of Section 12.13 shall survive the termination of this
Agreement; provided, however, that such termination shall not relieve any
party hereto of any liability for fraud or any willful, material breach of
Sections 6.2 or 6.8 of this Agreement, which breach is not cured within
fifteen calendar days following written notice from the other party specifying
the nature of such breach in reasonable detail. If this Agreement is
terminated as provided herein, all filings, applications and other submissions
made pursuant to the terms hereof shall, to the extent practicable, be
withdrawn from the agency or other persons to which they were made.
ARTICLE XII
Miscellaneous
Section 12.1 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 12.2 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, except
with respect to matters of corporate governance, which shall be governed by
and construed in accordance with the corporate laws of the State of Delaware
(or such other jurisdiction as may be applicable), without reference in either
case to the choice of law principles of such states.
Section 12.3 Entire Agreement. Except as set forth in Section
12.10, this Agreement (including agreements incorporated herein) and the
Schedules hereto contain the entire agreement between the parties with respect
to the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth
or referred to herein. This Agreement is not intended to confer upon any
person not a party hereto (or its successors and assigns permitted by Section
12.6) any rights or remedies hereunder.
Section 12.4 Expenses. Except as set forth elsewhere in this
Agreement, whether or not the Merger is consummated, all legal and other costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses. Notwithstanding the foregoing, unless this Agreement is terminated
pursuant to Article XI, the Company or the Surviving Corporation shall pay the
cash amount of $3,000,000 to EJDC on the Closing Date in connection with
EJDC's expenses incurred in connection with the transactions contemplated
hereby; it being understood that the Company will pay the fees and expenses of
Peter J. Solomon or Peter J. Solomon Company Limited (up to a maximum of
$1,000,000 in fees, with any fees in excess thereof to be paid by EJDC) and
that such payment by the Company will not be credited against the $3,000,000
payment required to be made to EJDC. All amounts payable to any party by any
other party pursuant to this Section 12.4 shall be paid concurrently with the
Closing.
Section 12.5 Notices. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally, sent
by documented overnight delivery service or, to the extent receipt is
confirmed by the individual to whom such notice is directed,
<PAGE>52
facsimile transmission or other electronic transmission service to the
appropriate address or number as set forth below. Notices to the Selling
Stockholders shall be addressed to the addresses set forth on Exhibit H
hereto, to the attention of the person named thereon, or to such other address
and to the attention of such other person as the Selling Stockholders may
designate by written notice to Ralphs Supermarkets, F4L, F4L Holdings and F4L
Supermarkets. Notices to F4L, F4L Holdings or F4L Supermarkets, or after the
Closing Date to the Surviving Corporation, shall be addressed to:
Food 4 Less, Inc.
Food 4 Less Holdings, Inc.
Food 4 Less Supermarkets, Inc.
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attn: Mark A. Resnik, Esq.
Fax Number: (310) 789-7201
with a copy to:
Latham & Watkins
633 West 5th Street
Suite 4000
Los Angeles, CA 90071
Attn: Thomas C. Sadler, Esq.
Fax Number: (213) 891-8763
or at such other address and to the attention of such other person as F4L, F4L
Holdings or F4L Supermarkets may designate by written notice to Ralphs
Supermarkets and the Selling Stockholders.
Notices to Ralphs Supermarkets shall be addressed to:
Ralphs Supermarkets, Inc.
1100 West Artesia Boulevard
Compton, California 90220
Attn: Jan Charles Gray, Esq.
Fax Number: (310) 884-2610
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: William E. Hiller, Esq.
Fax Number: (212) 821-8111
or at such other address and to the attention of such other person as Ralphs
Supermarkets may designate by written notice to F4L, F4L Holdings, F4L
Supermarkets and the Selling Stockholders.
Section 12.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that no party hereto
shall be entitled to assign its rights or delegate its obligations under this
<PAGE>53
Agreement without the express prior written consent of the other parties
hereto, except that (i) F4L, F4L Holdings and F4L Supermarkets may assign
their respective rights and obligations hereunder to a direct or indirect
wholly owned subsidiary of either of them, provided that no such assignment
shall relieve any of them of any duty of performance, liability or other
obligation arising out of this Agreement or cause any delay in consummating
the Merger and (ii) Camdev Properties Inc. may sell, transfer or assign all or
a portion of the Shares (and its rights related thereto under this Agreement
and the other agreements referred to herein) to be transferred by it hereunder
to not more than four institutional lenders reasonably acceptable to F4L (each
a "Transferee") provided that each such sale, transfer or assignment is made
in compliance with applicable law and the Transferee agrees in advance of such
sale, transfer or assignment by written agreement to be bound by the terms and
provisions of this Agreement and the other agreements referred to herein (and
shall make, and be bound by, the same representations, warranties and
covenants made by Camdev Properties Inc.) and, until the time of Closing, the
Ralphs Registration Rights Agreement to the extent of the Shares sold,
transferred or assigned. F4L acknowledges that the four institutional lenders
identified to it prior to F4L's execution of this Agreement are acceptable to
F4L.
Section 12.7 Headings; Definition. The section and article
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such
terms.
Section 12.8 Amendments and Waivers. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed
by the party against whom enforcement of any such modification or amendment is
sought. The parties hereto may, only by an instrument in writing, waive
compliance by another party hereto with any term or provision of this
Agreement on the part of such other party hereto to be performed or complied
with. The waiver by the parties hereto of a breach of any term or provision
of this Agreement shall not be construed as a waiver of any subsequent breach.
Nothing in this Section 12.8 shall affect the rights or obligations of any
Selling Stockholder under the Ralphs Registration Rights Agreement.
Section 12.9 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 12.10 Confidentiality. In connection with the negotiation
of this Agreement and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except to advisors, consultants and
affiliates in connection with the transactions contemplated hereby and to any
lender to any Selling Stockholder so long as such lender agrees or is
otherwise required to treat such information as confidential. Notwithstanding
the foregoing, Ralphs Supermarkets and F4L shall be entitled to disclose all
information required to be disclosed pursuant to applicable laws or judicial
proceedings. In the event of the termination of this Agreement for any reason
whatsoever, each party shall return to the other all documents, work papers
and other material (including all copies thereof) obtained in connection with
the transactions contemplated hereby and will use all reasonable efforts,
including instructing its employees and other who have had access to such
information, to keep confidential and not to use any such information, unless
such information is now, or is hereafter disclosed, through no act or omission
of such party, in any manner making it available to the general public. In
addition to the foregoing, each party to the
<PAGE>54
Confidentiality Agreement shall continue to observe all terms and conditions
thereof, and this Agreement shall not be deemed to rescind or supersede the
Confidentiality Agreement in any manner.
Section 12.11 Arbitration. Any claim or controversy arising
between Ralphs Supermarkets or the Selling Stockholders (or any of them), on
the one hand, and F4L, F4L Holdings or F4L Supermarkets (each a "F4L Entity"),
on the other hand, under this Agreement may be decided by arbitration. Either
EJDC, on behalf of Ralphs Supermarkets or the Selling Stockholders, or the
applicable F4L Entity may invoke arbitration under this Section 12.11 by
notice to the other of the initial selection of an arbitrator and the filing
of such notice with the American Arbitration Association (the "AAA");
provided, however, that in no event shall such notice be given if institution
of legal or equitable proceedings based on such claim, dispute or other matter
in question would be barred by any applicable statute of limitations or by
this Agreement. Arbitration shall be held in New York City under the auspices
of the AAA pursuant to the Commercial Arbitration Rules of the AAA, and shall
be by three arbitrators independent of the parties to this Agreement selected
from a list provided by the AAA. One of the arbitrators shall be appointed by
EJDC, on behalf of Ralphs Supermarkets and the Selling Stockholders, as
applicable. One of the arbitrators shall be appointed by F4L. The third
arbitrator is to be selected by these two arbitrators before the beginning of
the arbitration. If, however, any party fails to select an arbitrator within
15 days after receiving notice under this Agreement of an initial selection
of an arbitrator by the other party, the party appointing the first arbitrator
may also appoint the second arbitrator on behalf of the party who has failed
to make the appointment. Should the two arbitrators appointed by the parties
fail to agree upon the choice of a third arbitrator within 15 days after the
appointment of the second arbitrator, the appointment shall be made by the
AAA. Each party to the arbitration shall submit its case in writing to the
arbitrators within one month of the constitution of the arbitration tribunal.
The arbitrators are empowered to determine questions both of fact and of law,
but shall to the maximum extent possible construe this Agreement strictly in
accordance with its terms and conditions and the purposes and intents evinced
thereby. Discovery shall be permitted under the same standards as set forth
in the Federal Rules of Civil Procedure. Whether a hearing shall be held or
additional evidence accepted, and the rules governing any such hearing, shall
be in the sole discretion of the arbitrators, subject to the AAA rules as they
construe them. All decisions of the arbitrators shall be by majority vote.
The arbitrators shall make their decision in writing at the earliest
convenient date. The costs of arbitration, including the fees of the
arbitrators, shall be in the discretion of the arbitrators, who may direct to
and by whom and in what manner these costs or any part thereof shall be paid.
To the maximum extent permitted by law, the decision of the
arbitration tribunal shall be final and binding on the parties to this
Agreement and not be subject to appeal. If a party against whom the
arbitration tribunal renders an award fails to abide by such award, the other
parties may bring an action to enforce the same in a court of competent
jurisdiction.
Section 12.12 Convenience of Forum; Consent to Jurisdiction. The
parties to this Agreement, acting for themselves and for their respective
successors and assigns, without regard to domicile, citizenship or residence,
hereby expressly and irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this
Agreement, and consent and subject themselves to the jurisdiction of, the
courts of the State of New York located in New York City, and/or the United
States District Court for the Southern District of New York, in respect of any
matter arising under this Agreement. Service of process, notices and demands
of such courts may be made upon any party to this Agreement by personal
service at any place where it may be found or giving notice to such party as
provided in Section 12.5.
Section 12.13 Termination of Registration Rights and Corporate
Governance Agreement.
<PAGE>55
Effective at the time of Closing, each of the Selling Stockholders, Ralphs
Supermarkets and Ralphs Grocery hereby waives the provisions of the
Registration Rights and Corporate Governance Agreement, dated as of February
3, 1992 (the "Ralphs Registration Rights Agreement"), among the Selling
Stockholders, Ralphs Supermarkets, Ralphs Grocery and Allied Stores
Corporation (now known as Federated Department Stores, Inc.) to the extent
inconsistent with this Agreement and further agrees that the Ralphs
Registration Rights Agreement shall terminate without any further action or
writing. Each Selling Stockholder and Ralphs agrees that on and after the
date hereof and whether or not the transactions contemplated by this Agreement
are consummated, Section 20(e) of the Ralphs Registration Rights Agreement is
amended by deleting the word "and" at the end of clause (v) of the second
sentence thereof and by adding at the end of such sentence the following
clause: "and (vii) on one occasion Camdev shall have the right to assign 100%
of its rights and obligations under this Agreement to no more than four
purchasers."
Section 12.14 Waiver by Selling Stockholders. Each Selling
Stockholder by executing this Agreement waives the notice of the meeting and
the meeting referred to in Section 251(c) of the GCL and consents to the
Merger and the execution of this Agreement pursuant to Section 228 of the GCL.
<PAGE>56
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf
of each of the parties as of the day first above written.
"F4L": FOOD 4 LESS, INC.
By: _________________________
Name:
Title:
"F4L HOLDINGS": FOOD 4 LESS HOLDINGS, INC.
By: _________________________
Name:
Title:
"F4L SUPERMARKETS": FOOD 4 LESS SUPERMARKETS, INC.
By: _________________________
Name:
Title:
"RALPHS SUPERMARKETS": RALPHS SUPERMARKETS, INC.
By: _________________________
Name:
Title:
"SELLING
STOCKHOLDERS": THE EDWARD J. DEBARTOLO CORPORATION
By: _________________________
Name:
Title:
CAMDEV PROPERTIES INC.
By: _________________________
Name:
Title:
<PAGE>57
BANK OF MONTREAL
By: _________________________
Name:
Title:
BANQUE PARIBAS
By: _________________________
Name:
Title:
FEDERATED DEPARTMENT STORES, INC.
By: _________________________
Name:
Title:
<PAGE>58
EXHIBIT A
FOOD 4 LESS HOLDINGS, INC.
AND
___________________________________
AS TRUSTEE
INDENTURE
Dated as of ___________ __, 1994
$100,000,000
13% Senior Subordinated Pay-in-Kind Debentures due 2006
<PAGE>59
CROSS-REFERENCE TABLE
TIA INDENTURE
Section Section
310(a)(1) . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . 7.8; 7.10; 12.2
(c) . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . 12.3
(c) . . . . . . . . . . . . . . . . . . 12.3
313(a) . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . 7.6
(c) . . . . . . . . . . . . . . . . . . 7.6; 12.2
(d) . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . 4.10; 12.2
(b) . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . 7.2; 12.4
(c)(2) . . . . . . . . . . . . . . . . . 7.2; 12.4
(c)(3) . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . 11.5
(f) . . . . . . . . . . . . . . . . . . N.A.
315(a) . . . . . . . . . . . . . . . . . . 7.1(b)
(b) . . . . . . . . . . . . . . . . . . 7.5; 12.2
(c) . . . . . . . . . . . . . . . . . . 7.1(a)
(d) . . . . . . . . . . . . . . . . . . 7.1(c)
(e) . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . 6.7
317(a)(1) . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . 12.1
(c) . . . . . . . . . . . . . . . . . . 12.1
_______________________
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose,
be deemed to be a part of the Indenture.
<PAGE>60
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Incorporation by Reference of TIA . . . . . . . . . . . . 15
Section 1.3. Rules of Construction . . . . . . . . . . . . . . . . . . 15
ARTICLE II THE SECURITIES . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.1. Form and Dating . . . . . . . . . . . . . . . . . . . . . 16
Section 2.2. Execution and Authentication . . . . . . . . . . . . . . 16
Section 2.3. Registrar and Paying Agent . . . . . . . . . . . . . . . 17
Section 2.4. Paying Agent To Hold Assets in Trust . . . . . . . . . . 18
Section 2.5. Securityholder Lists . . . . . . . . . . . . . . . . . . 18
Section 2.6. Transfer and Exchange . . . . . . . . . . . . . . . . . . 18
Section 2.7. Replacement Securities . . . . . . . . . . . . . . . . . 19
Section 2.8. Outstanding Securities . . . . . . . . . . . . . . . . . 19
Section 2.9. Treasury Securities . . . . . . . . . . . . . . . . . . . 20
Section 2.10. Temporary Securities . . . . . . . . . . . . . . . . . . 20
Section 2.11. Cancellation . . . . . . . . . . . . . . . . . . . . . . 20
Section 2.12. Defaulted Interest . . . . . . . . . . . . . . . . . . . 20
Section 2.13. CUSIP Number. . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.1. Notices to Trustee . . . . . . . . . . . . . . . . . . . 21
Section 3.2. Selection of Securities To Be Redeemed . . . . . . . . . 21
Section 3.3. Notice of Redemption . . . . . . . . . . . . . . . . . . 21
Section 3.4. Effect of Notice of Redemption . . . . . . . . . . . . . 22
Section 3.5. Deposit of Redemption Price . . . . . . . . . . . . . . . 22
Section 3.6. Securities Redeemed in Part . . . . . . . . . . . . . . . 23
ARTICLE IV COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.1. Payment of Securities . . . . . . . . . . . . . . . . . . 23
Section 4.2. Maintenance of Office or Agency . . . . . . . . . . . . . 23
Section 4.3. Limitation on Restricted Payments . . . . . . . . . . . . 24
Section 4.4. Corporate Existence . . . . . . . . . . . . . . . . . . . 25
Section 4.5. Payment of Taxes and Other Claims . . . . . . . . . . . . 25
Section 4.6. Maintenance of Properties and Insurance . . . . . . . . . 25
Section 4.7. Compliance Certificate; Notice of Default . . . . . . . . 26
Section 4.8. Compliance with Laws . . . . . . . . . . . . . . . . . . 27
Section 4.9. SEC Reports and Other Information . . . . . . . . . . . . 27
Section 4.10. Waiver of Stay, Extension or Usury Laws . . . . . . . . . 28
<PAGE>61
Section 4.11. Limitation on Transactions with Affiliates . . . . . . . 28
Section 4.12. Limitation on Incurrences of Additional Indebtedness . . 29
Section 4.13. Limitation on Liens . . . . . . . . . . . . . . . . . . . 29
Section 4.14. Limitation on Change of Control . . . . . . . . . . . . . 30
Section 4.15. Limitation on Disposition of Assets . . . . . . . . . . . 31
Section 4.16. Limitation on Senior Subordinated Indebtedness . . . . . 34
Section 4.17. Limitation on Preferred Stock of Subsidiaries . . . . . . 34
Section 4.18. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries . . . . . . . . . . . . . . . . . 34
ARTICLE V SUCCESSOR CORPORATION . . . . . . . . . . . . . . . . . . . . 35
Section 5.1. When Holdings May Merge, Etc . . . . . . . . . . . . . . 35
Section 5.2. Successor Corporation Substituted . . . . . . . . . . . . 36
ARTICLE VI DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . 36
Section 6.1. Events of Default . . . . . . . . . . . . . . . . . . . . 36
Section 6.2. Acceleration . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.3. Other Remedies . . . . . . . . . . . . . . . . . . . . . 39
Section 6.4. Waiver of Past Defaults . . . . . . . . . . . . . . . . . 39
Section 6.5. Control by Majority . . . . . . . . . . . . . . . . . . . 39
Section 6.6. Limitation on Suits . . . . . . . . . . . . . . . . . . . 39
Section 6.7. Rights of Holders To Receive Payment . . . . . . . . . . 40
Section 6.8. Collection Suit by Trustee . . . . . . . . . . . . . . . 40
Section 6.9. Trustee May File Proofs of Claim . . . . . . . . . . . . 40
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . 41
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . 41
ARTICLE VII TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.1. Duties of Trustee . . . . . . . . . . . . . . . . . . . . 42
Section 7.2. Rights of Trustee . . . . . . . . . . . . . . . . . . . . 43
Section 7.3. Individual Rights of Trustee . . . . . . . . . . . . . . 43
Section 7.4. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . 43
Section 7.5. Notice of Default . . . . . . . . . . . . . . . . . . . . 44
Section 7.6. Reports By Trustee to Holders . . . . . . . . . . . . . . 44
Section 7.7. Compensation and Indemnity . . . . . . . . . . . . . . . 44
Section 7.8. Replacement of Trustee . . . . . . . . . . . . . . . . . 45
Section 7.9. Successor Trustee by Merger, Etc . . . . . . . . . . . . 46
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . 46
Section 7.11. Preferential Collection of Claims Against Holdings . . . 46
ARTICLE VIII SATISFACTION AND DISCHARGE OF INDENTURE . . . . . . . . . 46
<PAGE>62
Section 8.1. Satisfaction and Discharge of the Indenture and Defeasance of
the Securities . . . . . . . . . . . . . . . . . . . . . 46
Section 8.2. Termination of Obligations upon Cancellation of the
Securities . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.3. Survival of Certain Obligations . . . . . . . . . . . . . 48
Section 8.4. Acknowledgment of Discharge by Trustee . . . . . . . . . 48
Section 8.5. Application of Trust Assets . . . . . . . . . . . . . . . 48
Section 8.6. Repayment to Holdings . . . . . . . . . . . . . . . . . . 49
Section 8.7. Reinstatement . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE IX AMENDMENTS, SUPPLEMENTS AND WAIVERS . . . . . . . . . . . . 49
Section 9.1. Without Consent of Holders . . . . . . . . . . . . . . . 49
Section 9.2. With Consent of Holders . . . . . . . . . . . . . . . . . 50
Section 9.3. Compliance with TIA . . . . . . . . . . . . . . . . . . . 51
Section 9.4. Revocation and Effect of Consents . . . . . . . . . . . . 51
Section 9.5. Notation on or Exchange of Securities . . . . . . . . . . 52
Section 9.6. Trustee To Sign Amendments, Etc. . . . . . . . . . . . . 52
ARTICLE X MEETINGS OF SECURITYHOLDERS . . . . . . . . . . . . . . . . . 52
Section 10.1. Purposes for Which Meetings May Be Called . . . . . . . . 52
Section 10.2. Manner of Calling Meetings . . . . . . . . . . . . . . . 53
Section 10.3. Call of Meetings by Holdings or Holders . . . . . . . . . 53
Section 10.4. Who May Attend and Vote at Meetings . . . . . . . . . . . 53
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting;
Voting Rights; Adjournment . . . . . . . . . . . . . . . 54
Section 10.6. Voting at the Meeting and Record To Be Kept . . . . . . . 54
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered
or Delayed by Call of Meeting . . . . . . . . . . . . . . 55
ARTICLE XI SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . 55
Section 11.1. Securities Subordinated to Senior Indebtedness . . . . . 55
Section 11.2. No Payment on Securities in Certain Circumstances . . . . 55
Section 11.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Holdings . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 11.4. Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . 58
Section 11.5. Obligations of Holdings Unconditional . . . . . . . . . . 59
Section 11.6. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice . . . . . . . . . . . . . . . . . . . . . . . . 59
Section 11.7. Application by Trustee of Assets Deposited with It. . . . 60
Section 11.8. Subordination Rights Not Impaired by Acts or Omissions of
Holdings or Holders of Senior Indebtedness . . . . . . . 60
Section 11.9. Holders Authorize Trustee to Effectuate Subordination of
Securities . . . . . . . . . . . . . . . . . . . . . . . 61
Section 11.10. Right of Trustee to Hold Senior Indebtedness . . . . . . 61
Section 11.11. Article Eleven Not to Prevent Events of Default . . . . . 61
<PAGE>63
Section 11.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.1. TIA Controls . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 12.3. Communications by Holders with Other Holders . . . . . . 63
Section 12.4. Certificate and Opinion as to Conditions Precedent . . . 63
Section 12.5. Statements Required in Certificate or Opinion . . . . . . 63
Section 12.6. Rules by Trustee, Paying Agent, Registrar . . . . . . . . 64
Section 12.7. Legal Holidays . . . . . . . . . . . . . . . . . . . . . 64
Section 12.8. Governing Law . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.9. No Adverse Interpretation of Other Agreements . . . . . . 64
Section 12.10. No Recourse Against Others . . . . . . . . . . . . . . . 64
Section 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . 64
Section 12.12. Duplicate Originals . . . . . . . . . . . . . . . . . . 65
Section 12.13. Severability . . . . . . . . . . . . . . . . . . . . . . 65
<PAGE>64
INTRODUCTORY NOTES TO INDENTURE
This Indenture will be executed in the form attached concurrently
with the closing of the transactions contemplated by the Merger Agreement.
Certain provisions of the Indenture will be added or modified prior to
execution in accordance with the general principles set forth below (defined
terms used below have the meanings set forth in the attached Indenture):
1. References to specific dates (i.e., 2006) assume an Issue Date
in 1994. In the event that the Issue Date occurs in 1995,
appropriate conforming changes will be made. Interest payment
dates will be semi-annual on the 1st, 15th or 30th of the
appropriate month.
2. Bracketed provisions with respect to FFL will be omitted if FFL
and Holdings are merged prior to the merger of the Company and
Ralphs Supermarkets.
3. The Indenture has not been reviewed by the Trustee or its
counsel and is subject to appropriate modification to reflect
the reasonable and customary comments of such persons.
4. The definitions of Credit Agent and Credit Agreement shall be
amended at closing, as appropriate.
5. The following numbered paragraphs correspond to marked sections
in the Indenture:
A. The definition of "Adjusted Fixed Charges" will conform to
the definition of "Fixed Charges" in the new senior
subordinated securities to be issued by the Company in
connection with the transactions contemplated by the
Merger Agreement (the "New Public Securities"); provided,
however, that for purposes of this Indenture, such
definition of Fixed Charges will exclude charges
attributable to the Securities, the Senior Discount Notes
and $25 million of other indebtedness.
B. An appropriate definition will be added to conform to the
corresponding definition contained in the New Public
Securities.
C. A new Section 4.12 will be added to conform to the
covenant in the New Public Securities, as appropriately
modified to be applicable to Holdings and its
subsidiaries. In addition, the covenant in this Indenture
will contain permitted exceptions to the limitation on
debt incurrence for (i) the Securities (including the
issuance of any Secondary Securities) and the Senior
Discount Notes and the accretion of original issue
discount related thereto, and (ii) an additional basket of
$25 million. All references to Section 4.12(b) contained
in the Indenture assume that such paragraph will contain
an Operating Coverage Ratio test for additional debt
incurrence.
D. This ratio will correspond to the initial ratio in the
debt incurrence covenant in the New Public Securities.
<PAGE>65
INDENTURE dated as of ________ __, 1994, between FOOD 4 LESS HOLDINGS, INC., a
California corporation ("Holdings"), and ________________________, a
____________ corporation, as Trustee.
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of the 13% Senior
Subordinated Pay-in-Kind Debentures due 2006:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness of a person or any of its
subsidiaries existing at the time such person becomes a Subsidiary or assumed
in connection with the acquisition of assets from such person and not incurred
by such person in connection with, or in anticipation or contemplation of,
such person becoming a Subsidiary or such acquisition.
"Adjusted Fixed Charges" [See Introductory Note 5.A]
"Affiliate" of any specified person means 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 person means the power to direct the
management and policies of such person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing. For purposes of Section 4.11, the term "Affiliate" shall
include any person who, as a result of any transaction described in
Section 4.11, would become an Affiliate.
"Affiliate Obligation" means any contractual obligation (not
constituting Indebtedness) between Holdings and any Affiliate, other than
obligations relating to the purchase or sale of goods in the ordinary course
of business made in compliance with Section 4.11 hereof.
"Affiliate Transaction" shall have the meaning provided in
Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" means, for any person, any sale, transfer or other
disposition or series of sales, transfers or other dispositions (including,
without limitation, by merger or consolidation or by exchange of assets and
whether by operation of law or otherwise), made by such person or any of its
subsidiaries to any person other than such person or one of its wholly-owned
subsidiaries (or, in the case of a sale, transfer or other disposition by a
Subsidiary, to any person other than Holdings or any wholly-owned Subsidiary)
of any assets of such person or any of its subsidiaries including, without
limitation, assets consisting of any capital stock or other securities held by
such person or any of its subsidiaries, and any capital stock issued by any
subsidiary of such person, outside of the ordinary course of business,
excluding, however, (i) any sale, transfer or other disposition, or series of
related sales, transfers or other dispositions, having a
<PAGE>66
purchase price or transaction value, as the case may be, of $1,000,000 or less
or (ii) any Investment in an Unrestricted Subsidiary not prohibited under
Section 4.3.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any person, the Board of
Directors of such person or any committee of the Board of Directors of such
person duly authorized, with respect to any particular matter, to exercise the
power of the Board of Directors of such person.
"Board Resolution" means, with respect to any person, a duly adopted
resolution of the Board of Directors of such person.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated) of
corporate stock, including each class of common stock and preferred stock of
such person, including Preferred Stock.
"Capitalized Lease Obligation" means obligations under a lease that
is required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
"Cash Equivalents" means (i) obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof, or
obligations issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America, (ii) commercial paper
rated the highest grade by Moody's Investors Service, Inc. and Standard &
Poor's Corporation and maturing not more than one year from the date of
creation thereof, (iii) time deposits with, and certificates of deposit and
banker's acceptances issued by, any bank having capital surplus and undivided
profits aggregating at least $500 million and maturing not more than one year
from the date of creation thereof, (iv) repurchase agreements that are secured
by a perfected security interest in an obligation described in clause (i) and
are with any bank described in clause (iii) and (v) readily marketable direct
obligations issued by any state of the United States of America or any
political subdivision thereof having one of the two highest rating categories
obtainable from either Moody's Investors Service, Inc. or Standard & Poor's
Corporation.
"Change of Control" means (I) the acquisition after the Issue Date,
in one or more transactions, of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) by (i) any person or entity (other than any
Permitted Holder) or (ii) any group of persons or entities (excluding any
Permitted Holders) who constitute a group (within the meaning of
Section 13(d)(3) of the Exchange Act), in either case, of any securities of
Holdings [or FFL] such that, as a result of such acquisition, such person,
entity or group beneficially owns (within the meaning of Rule 13d-3 under the
Exchange Act), directly or indirectly, 40% or more of Holdings' then
outstanding voting securities entitled to vote on a regular basis for a
majority of the Board of Directors of Holdings (but only to the extent that
such beneficial ownership is not shared with any Permitted Holder who has the
power to direct the vote thereof) and, provided
<PAGE>67
further, however, that no such Change of Control shall be deemed to have
occurred if (A) the Permitted Holders beneficially own, in the aggregate, at
such time, a greater percentage of such voting securities than such other
person, entity or group or (B) at the time of such acquisition, the Permitted
Holders (or any of them) possess the ability (by contract or otherwise) to
elect, or cause the election, of a majority of the members of Holdings' Board
of Directors; or (II) Holdings ceasing to own 100% of the outstanding voting
securities entitled to vote on a regular basis for a majority of the Board of
Directors of the Company.
"Change of Control Date" shall have the meaning provided in
Section 4.14.
"Change of Control Offer" shall have the meaning provided in
Section 4.14.
"Change of Control Payment Date" shall have the meaning provided in
Section 4.14.
"Company" means Food 4 Less Supermarkets, Inc., a Delaware
corporation, until Ralphs Supermarkets replaces it pursuant to the Merger
Agreement and thereafter means Ralphs Supermarkets.
"Consolidated Net Income," with respect to any person, for any
period, means the aggregate of the net income (or loss) of such person and its
subsidiaries for such period, on a consolidated basis, determined in
accordance with GAAP; provided that (a) the net income of (i) any Unrestricted
Subsidiary and (ii) any other person in which such person or any of its
subsidiaries has an interest (which interest, in the case of those persons
referred to in clause (ii), does not cause the net income of such other person
to be consolidated with the net income of such person and its subsidiaries in
accordance with GAAP) shall be included only to the extent of the amount of
dividends or distributions actually paid to such person or such subsidiary by
such Unrestricted Subsidiary or other person in such period; (b) the net
income of any subsidiary of such person that is subject to any Payment
Restriction shall be excluded to the extent such Payment Restriction actually
prevented the payment of an amount that otherwise could have been paid to, or
received by, such person or a subsidiary of such person not subject to any
Payment Restriction, provided, however, that with respect to the net income of
Holdings, the net income of Subsidiaries shall not be so excluded,
notwithstanding the existence of any such Payment Restriction, so long as the
terms of any such consensual Payment Restriction limiting the payment of
dividends are not materially more restrictive at the time of determination of
Consolidated Net Income than the most restrictive Payment Restriction limiting
the payment of dividends in effect on the Issue Date; and (c)(i) the net
income (or loss) of any other person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition, (ii) all
gains and losses realized on any Asset Sale, (iii) all gains realized upon or
in connection with or as a consequence of the issuance of the Capital Stock of
such person or any of its subsidiaries and any gains on pension reversions
received by such person or any of its subsidiaries, (iv) all gains and losses
realized on the purchase or other acquisition by such person or any of its
subsidiaries of any securities of such person or any of its subsidiaries, (v)
all gains and losses resulting from the cumulative effect of any accounting
change pursuant to the application of Accounting Principles Board Opinion No.
20, as amended, (vi) all other extraordinary gains and losses, and (vii) with
respect to Holdings and its Subsidiaries, all deferred financing costs written
off in connection with the early extinguishment of any Indebtedness, shall
each be excluded.
<PAGE>68
"Consolidated Net Tangible Assets" means [see Introductory Note
5.B].
"Credit Agent" means, at any time, the then-acting Administrative
Agent as defined in and under the Credit Agreement, which initially shall be
____________________. Holdings shall promptly notify the Trustee of any
change in the Credit Agent.
"Credit Agreement" means the Credit Agreement, dated as of
____________, 1994, by and among the Company, certain of its subsidiaries, the
Lenders referred to therein and ______________ as Administrative Agent,
together with the documents related thereto, as it may be amended, extended,
renewed, restated, supplemented or otherwise modified (in whole or in part,
and without limitation as to amount, terms, conditions, covenants and other
provisions) from time to time, and any agreement governing Indebtedness
incurred to refund or refinance (including by way of placement or issuance of
notes) the entirety of the borrowings and commitments then outstanding or
permitted to be outstanding under such Credit Agreement or such agreement.
Holdings shall promptly notify the Trustee of any such refunding or
refinancing of the Credit Agreement.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or passage of
time or both would be, an Event of Default.
"Disqualified Capital Stock" means, with respect to any person, any
Capital Stock of such person or its subsidiaries that, by its terms, by the
terms of any agreement related thereto or by the terms of any security into
which it is convertible, puttable or exchangeable, is, or upon the happening
of an event or the passage of time would be, required to be redeemed or
repurchased by such person or its subsidiaries, including at the option of the
holder, in whole or in part, or has, or upon the happening of an event or
passage of time would have, a redemption or similar payment due, on or prior
to the Maturity Date or any other Capital Stock of such person or its
subsidiaries designated as Disqualified Capital Stock by such person at the
time of issuance; provided, however, that if such Capital Stock is either (a)
redeemable or repurchasable solely at the option of such person or (b) issued
to employees of Holdings or its Subsidiaries or to any plan for the benefit of
such employees, such Capital Stock shall not constitute Disqualified Capital
Stock unless so designated.
"EBDIT" means [see Introductory Note 5.B].
"Event of Default" shall have the meaning provided in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the SEC thereunder.
["FFL" means Food 4 Less, Inc., a Delaware corporation, until a
successor replaces it and thereafter means such successor.]
"Foreign Exchange Agreement" means [see Introductory Note 5.B].
<PAGE>69
"Forward Period" shall have the meaning set forth in the definition
of Operating Coverage Ratio contained in this Section 1.1.
"GAAP" means generally accepted accounting principles as in effect
in the United States of America as of the date of this Indenture.
"Holder" means the person in whose name a Security is registered on
the Registrar's books.
"Holdings" means the party named as such above, until a successor
replaces it in accordance with the terms of this Indenture, and thereafter
means such successor.
"Indebtedness" means with respect to any person, without
duplication, (i) all liabilities, contingent or otherwise, of such person (a)
for borrowed money (whether or not the recourse of the lender is to the whole
of the assets of such person or only to a portion thereof), (b) evidenced by
bonds, notes, debentures, drafts accepted or similar instruments or letters of
credit or representing the balance deferred and unpaid of the purchase price
of any property (other than any such balance that represents an account
payable or any other monetary obligation to a trade creditor (whether or not
an Affiliate) created, incurred, assumed or guaranteed by such person in the
ordinary course of business of such person in connection with obtaining goods,
materials or services and due within twelve months (or such longer period for
payment as is customarily extended by such trade creditor) of the incurrence
thereof, which account is not overdue by more than 90 days, according to the
original terms of sale, unless such account payable is being contested in good
faith), or (c) for the payment of money relating to a Capitalized Lease
Obligation; (ii) the maximum fixed repurchase price of all Disqualified
Capital Stock of such person or, if there is no such maximum fixed repurchase
price, the liquidation preference of such Disqualified Capital Stock, plus
accrued but unpaid dividends; (iii) reimbursement obligations of such person
with respect to letters of credit; (iv) obligations of such person with
respect to Interest Swap Obligations and Foreign Exchange Agreements; (v) all
liabilities of others of the kind described in the preceding clause (i), (ii),
(iii) or (iv) that such person has guaranteed or that is otherwise its legal
liability; and (vi) all obligations of others secured by a Lien to which any
of the properties or assets (including, without limitation, leasehold
interests and any other tangible or intangible property rights) of such person
are subject, whether or not the obligations secured thereby shall have been
assumed by such person or shall otherwise be such person's legal liability
(provided that if the obligations so secured have not been assumed by such
person or are not otherwise such person's legal liability, such obligations
shall be deemed to be in an amount equal to the fair market value of such
properties or assets, as determined in good faith by the Board of Directors of
such person, which determination shall be evidenced by a Board Resolution).
For purposes of the preceding sentence, the "maximum fixed repurchase price"
of any Disqualified Capital Stock that does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Disqualified Capital
Stock as if such Disqualified 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 Disqualified Capital Stock (or any equity security for which it
may be exchanged or converted), such fair market value shall be determined in
good faith by the Board of Directors of such person, which determination shall
be evidenced by a Board Resolution. For purposes hereof, Indebtedness
incurred by any person that is a general partnership (other than non-recourse
Indebtedness) shall be deemed to
<PAGE>70
have been incurred by the general partners of such partnership pro rata in
accordance with their respective interests in the liabilities of such
partnership unless any such general partner shall, in the reasonable
determination of the Board of Directors of Holdings, be unable to satisfy its
pro rata share of the liabilities of the partnership, in which case the pro
rata share of any Indebtedness attributable to such partner shall be deemed to
be incurred at such time by the remaining general partners on a pro rata basis
in accordance with their interests.
"Indenture" means this Indenture, as amended or supplemented from
time to time in accordance with the terms hereof.
"Independent Financial Advisor" means a reputable accounting,
appraisal or a nationally recognized investment banking firm that is, in the
reasonable judgment of the Board of Directors of Holdings, qualified to
perform the task for which such firm has been engaged hereunder and
disinterested and independent with respect to Holdings and its Affiliates.
"Initial Public Offering" means an underwritten primary public
offering of common stock of [FFL,] Holdings or the Company at a time when
neither [FFL,] Holdings nor the Company has previously issued or sold any
equity securities in an underwritten transaction pursuant to a registration
statement filed pursuant to the Securities Act.
"Initial Public Offering Consummation Date" means the first date on
which Holdings or the Company receives any proceeds from an Initial Public
Offering.
"Interest Payment Date" means the stated maturity of an installment
of interest on the Securities.
"Interest Swap Obligation" means any obligation of any person
pursuant to any arrangement with any other person whereby, directly or
indirectly, such person is entitled to receive from time to time periodic
payments calculated by applying either a fixed or floating rate of interest on
a stated notional amount in exchange for periodic payments made by such person
calculated by applying a fixed or floating rate of interest on the same
notional amount; provided that the term "Interest Swap Obligation" shall also
include interest rate exchange, collar, cap, swap option or similar agreements
providing interest rate protection.
"Investment" by any person in any other person means any investment
by such person in such other person, share purchase, capital contribution,
loan, advance (other than reasonable loans and advances to employees for
moving and travel expenses, as salary advances, or to permit the purchase of
Qualified Capital Stock of [FFL,] Holdings or any Subsidiary and other similar
customary expenses incurred, in each case in the ordinary course of business
consistent with past practice) or similar credit extension constituting
Indebtedness of such other person, and any guarantee of Indebtedness of any
other person in each case to the extent that any of the foregoing would be
classified as an investment on a balance sheet of such person prepared in
accordance with GAAP (and also including any credit support referred to in the
definition of Non-Recourse Indebtedness). For purposes of making any
calculations under this Indenture, (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 any 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;
<PAGE>71
provided, that, in each case, the fair market value of an asset or property
shall be as determined by the Board of Directors of Holdings or the Company in
good faith.
"Issue Date" means the date of first issuance of the Securities
under this Indenture.
"Legal Holiday" shall have the meaning provided in Section 12.7.
"Lien" means any mortgage, pledge, lien, security interest or
encumbrance of any kind; provided that in no event shall an operating lease be
deemed to constitute a Lien hereunder.
"Loan Documents" means the Credit Agreement and all promissory
notes, guarantees, security agreements, pledge agreements, deeds of trust,
mortgages, letters of credit and other instruments, agreements and documents
executed pursuant thereto or in connection therewith, including all
amendments, supplements, extensions, renewals, restatements, replacements or
refinancings thereof, or other modifications (in whole or in part, and without
limitation as to amount, terms, conditions, covenants or other provisions)
thereof from time to time.
"Maturity Date" means ________ __, 2006.
"Merger Agreement" means the Merger Agreement between FFL, Holdings,
Ralphs Supermarkets, the Company and the stockholders of Ralphs Supermarkets,
dated as of September __, 1994, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof,
providing for the merger of the Company with and into Ralphs Supermarkets.
"Net Cash Proceeds" means Net Proceeds of (i) the sale of Qualified
Capital Stock of [FFL,] Holdings or the Company or (ii) any Asset Sale, in
each case, in the form of cash or Cash Equivalents.
"Net Proceeds" means (a) in the case of any Asset Sale or any
issuance and sale by any person of Qualified Capital Stock, the aggregate net
proceeds received by such person after payment of expenses, taxes, commissions
and the like incurred in connection therewith, whether such proceeds are in
cash or in property (valued at the fair market value thereof at the time of
receipt as determined in good faith by the Board of Directors of Holdings or,
if the aggregate fair market value of all noncash consideration received shall
exceed $30 million, as determined by an Independent Financial Advisor) and, in
the case of any Asset Sale, net of the amount of cash required to repay any
Indebtedness secured by the asset involved in such Asset Sale, and (b) in the
case of any conversion or exchange of any outstanding Indebtedness or
Disqualified Capital Stock of such person for or into shares of Qualified
Capital Stock of Holdings, the sum of (i) the fair market value of the
proceeds received by Holdings in connection with the issuance of such
Indebtedness or Disqualified Capital Stock on the date of such issuance and
(ii) any additional amount paid by the holder to Holdings upon such conversion
or exchange.
<PAGE>72
"Net Worth" as of any date means, with respect to any person, the
amount of the equity of the holders of Capital Stock of such person that would
appear on the balance sheet of such person as of such date, determined in
accordance with GAAP, adjusted to include the amount of any minority interest
attributed to Capital Stock held by management of Holdings or any Subsidiary
reflected on such balance sheet as of the Issue Date and to exclude (to the
extent included in such equity) the amount of equity attributable to
Disqualified Capital Stock.
"Non-Recourse Indebtedness" means Indebtedness with respect to
which, under the terms thereof or pursuant to applicable law, (i) neither
Holdings nor any Subsidiary (other than a Subsidiary being designated as an
Unrestricted Subsidiary) is directly or indirectly liable, as a guarantor,
obligor or otherwise, (ii) there is no recourse against any of the assets or
properties of Holdings or any Subsidiary (other than a Subsidiary being
designated as an Unrestricted Subsidiary), and (iii) neither Holdings nor any
Subsidiary (other than a Subsidiary being designated an Unrestricted
Subsidiary) provides, or is required to provide, any credit support (other
than any such credit support which would be permitted, and is treated at the
time provided, as an Investment in such Unrestricted Subsidiary pursuant to
Section 4.3 hereof).
"Officer" means, with respect to any person, the Chairman of the
Board, the President, any Vice President, the Chief Financial Officer, the
Controller, or the Secretary of such person.
"Officers' Certificate" means, with respect to any person, a
certificate signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of such person and otherwise complying
with the requirements of Sections 12.4 and 12.5.
"Operating Coverage Ratio" means [see Introductory Note 5.B].
"Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to the Trustee complying with the requirements of
Sections 12.4 and 12.5. Unless otherwise required by the Trustee, the legal
counsel may be an employee of or counsel to Holdings or the Trustee.
"Other Obligations" has the meaning set forth in Section 11.1
hereof.
"Pari Passu Indebtedness" means Indebtedness of Holdings that is
pari passu in right of payment to the Securities.
"Paying Agent" shall have the meaning provided in Section 2.3,
except that, for the purposes of Articles Three and Eight and Section 4.14,
the Paying Agent shall not be Holdings or any Subsidiary.
"Payment Restriction" means, with respect to a Subsidiary of any
person, any encumbrance, restriction or limitation, whether by operation of
the terms of its charter or by reason of any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation, on the ability of (i)
such subsidiary to (a) pay dividends or make other distributions on its
Capital Stock or make payments on any obligation, liability or Indebtedness
owed to such person or any other subsidiary of such person, (b) make loans or
advances to such person or any other subsidiary of such person, or (c)
transfer any of its properties or assets to such person or
<PAGE>73
any other subsidiary of such person, or (ii) such person or any other
subsidiary of such person to receive or retain any such (a) dividends,
distributions or payments, (b) loans or advances, or (c) transfer of
properties or assets.
"Permitted Guarantees" means (i) guarantees in effect on the Issue
Date and (ii) guarantees incurred in the ordinary course of business, by
Holdings or any Subsidiary, of Indebtedness of any other person.
"Permitted Holder" means (i) Food 4 Less Equity Partners, L.P., The
Yucaipa Companies or any entity controlled thereby and any partners or
employees of such persons, (ii) an employee benefit plan of Holdings, or any
participant therein or any Subsidiary, (iii) a trustee or other fiduciary
holding securities under an employee benefit plan of Holdings or any
Subsidiary or (v) any Permitted Transferee of any of the foregoing persons.
"Permitted Investment" by any person means (i) any Related Business
Investment, (ii) Investments in securities not constituting cash or Cash
Equivalents and received in connection with an Asset Sale or any other
disposition of assets not constituting an Asset Sale by reason of the
$1,000,000 threshold contained in the definition thereof, (iii) cash and Cash
Equivalents, (iv) Investments existing on the Issue Date, (v) Investments
specifically permitted by and made in accordance with Sections 4.3 and 4.11
and (vi) Investments in any Subsidiary or by any Subsidiary in Holdings or any
other Subsidiary.
"Permitted Payments" means any payment by Holdings or any Subsidiary
(i) to The Yucaipa Companies or the principals thereof for consulting,
investment banking or similar services during such period pursuant to that
certain Consulting Agreement, dated as of the Issue Date, between the Company
and The Yucaipa Companies, as in effect on the Issue Date, (ii) (a) in
connection with repurchases of outstanding shares of the Company's, Holdings'
[and FFL's] common stock following the death, disability or termination of
employment of management stockholders, and (b) of amounts required to be paid
by [FFL,] Holdings, the Company or any Subsidiaries to participants in
employee benefit plans upon any termination of employment by such
participants, as provided in the documents related thereto, in an aggregate
amount (for both clauses (a) and (b)) not to exceed $10 million in any Yearly
Period (provided that (I) any unused amounts may be carried over to any
subsequent Yearly Period subject to a maximum amount of $20 million in any
Yearly Period, and (II) with respect to the period from the Issue Date to the
last day of the Yearly Period in which the Issue Date occurs, such amount
shall be prorated for such period).
"Permitted Transferees" means, with respect to any person, (i) any
Affiliate of such person, (ii) the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any such person, and (iii)
a trust, the beneficiaries of which, or a corporation or partnership, the
stockholders or general or limited partners of which, include only such person
or his or her spouse or lineal descendants, in each case to whom such person
has transferred the beneficial ownership of any securities of [FFL,] Holdings
or the Company.
"Person" or "person" means any individual, corporation, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or government or other agency or political subdivision thereof.
<PAGE>74
"Plan of Liquidation" means, with respect to any person, a plan that
provides for, contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously, in phases or
otherwise) (i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such person otherwise than as an entirety
or substantially as an entirety and (ii) the distribution of all or
substantially all of the proceeds of such sale, lease, conveyance or other
disposition and all or substantially all of the remaining assets of such
person to holders of Capital Stock of such person.
"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 outstanding on the date
hereof or issued after the Issue Date, and including, without limitation, all
classes and series of preferred or preference stock of such person.
"principal" of any Indebtedness (including the Securities) means the
principal of such Indebtedness plus the premium, if any, on such Indebtedness.
"pro forma" means, with respect to any calculation made or required
to be made pursuant to the terms of this Indenture, a calculation in
accordance with Article 11 of Regulation S-X under the Securities Act of 1933,
as amended, as interpreted by Holdings' Board of Directors in consultation
with its independent certified public accountants.
"Pro Forma Period" shall have the meaning set forth in the
definition of Operating Coverage Ratio contained in this Section 1.1.
"Purchase Money Obligations" means [see Introductory Note 5.B].
"Qualified Capital Stock" means, with respect to any person, any
Capital Stock of such person that is not Disqualified Capital Stock.
"Ralphs Supermarkets" means Ralphs Supermarkets, Inc., a Delaware
corporation, until a successor replaces it and thereafter means such
successor.
"Record Date" means the Record Dates specified in the Securities;
provided that if any such date is a Legal Holiday, the Record Date shall be
the first day immediately preceding such specified day that is not a Legal
Holiday.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture
and the Securities.
"Redemption Price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
and the Securities.
"Refinancing Indebtedness" means [see Introductory Note 5.B].
"Registrar" shall have the meaning provided in Section 2.3.
<PAGE>75
"Registration Rights Agreement" means the registration rights
agreement dated as of the Issue Date by and among Holdings, the Company and
the stockholders of Ralphs Supermarkets with respect to the Securities.
"Related Business Investment" means (i) any Investment by a person
in any other person a majority of whose revenues are derived from the
operation of one or more retail grocery stores or supermarkets or any other
line of business engaged in by Holdings or any Subsidiary as of the Issue
Date; (ii) any Investment by such person in any cooperative or other supplier,
including, without limitation, any joint venture which is intended to supply
any product or service useful to the business of Holdings and any Subsidiary
as it is conducted as of the Issue Date and as such business may thereafter
evolve or change; and (iii) any capital expenditure or Investment, in each
case reasonably related to the business of Holdings and any Subsidiary as it
is conducted as of the Issue Date and as such business may thereafter evolve
or change; provided, however, that in the case of clauses (i), (ii) and (iii)
above, an Investment in any Unrestricted Subsidiary shall not constitute a
Related Business Investment.
"Representative" means the indenture trustee or other trustee, agent
or representative for any Senior Indebtedness.
"Restricted Debt Prepayment" means the purchase, redemption,
acquisition or retirement for value by Holdings, prior to the scheduled
maturity or prior to any scheduled repayment of principal or any sinking fund
payment in respect of any Subordinated Indebtedness.
"Restricted Payment" means any (i) Stock Payment, (ii) Investment
(including any Investment in an Unrestricted Subsidiary, but excluding any
Permitted Investment), or (iii) Restricted Debt Prepayment.
"SEC" means the Securities and Exchange Commission.
"Secondary Securities" has the meaning set forth in Section 2.2.
"Securities" means the 13% Senior Subordinated Pay-in-Kind
Debentures due 2006 of Holdings, including any Secondary Securities issued in
respect thereof, as amended or supplemented from time to time in accordance
with the terms hereof, that are issued pursuant to this Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
"Senior Discount Notes" means the 15.25% Senior Discount Notes due
2004 of Holdings, issued pursuant to an indenture dated as of December 15,
1992, as amended from time to time.
"Senior Indebtedness" means the principal of, premium, if any, and
interest on (such Senior Indebtedness being deemed to include for all purposes
of Article XI the amount required to fully secure in cash undrawn Subsidiary
Letter of Credit Obligations under the Loan Documents and such interest on
Senior Indebtedness being deemed to include for all purposes of Article XI
interest accruing after the filing of a petition initiating any proceeding
pursuant to
<PAGE>76
any Bankruptcy Law in accordance with and at the rate (including any rate
applicable upon any 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 Holdings (and, in the case of the Loan
Documents, all obligations of Holdings for fees, expenses, indemnities and
other amounts payable thereunder or in connection therewith), whether
outstanding on the Issue Date or thereafter created, incurred, assumed or
guaranteed or in effect guaranteed by Holdings (including, without limitation,
Indebtedness under the Loan Documents), unless, in the case of any particular
Indebtedness, the instrument creating or evidencing such Indebtedness
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 all obligations of every nature of Holdings from time to time owed
or guaranteed by Holdings with respect to the Credit Agreement and the Senior
Discount Notes. Notwithstanding the foregoing, "Senior Indebtedness" shall
not include (i) any Pari Passu Indebtedness or any Subordinated Indebtedness,
(ii) any Indebtedness constituting Disqualified Capital Stock, (iii)
Indebtedness of Holdings to any Subsidiary or any Unrestricted Subsidiary,
(iv) that portion of any Indebtedness which is incurred in violation of
Section 4.12 of this Indenture, (v) Indebtedness to, or guaranteed on behalf
of, any shareholder, director, officer or employee of Holdings or of any
Subsidiary (including, without limitation, amounts owed for compensation),
(vi) Indebtedness to trade creditors and other amounts incurred in connection
with obtaining goods, materials or services, and (vii) any liability for
federal, state, local or other taxes owed or owing by Holdings.
"Significant Stockholder" means, with respect to any person, any
other person who is the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of more than 10% of any class of equity securities of
such person that are entitled to vote on a regular basis for the election of
directors of such person.
"Significant Subsidiary" means each Subsidiary that is either (a) a
"significant subsidiary" as defined in Rule 1-02(v) of Regulation S-X under
the Securities Act and the Exchange Act (as such regulation is in effect on
the date hereof) or (b) material to the financial condition or results of
operations of Holdings and any Subsidiary taken as a whole.
"Stock Payment" means, with respect to any person, (a) the
declaration or payment by such person, either in cash or in property, of any
dividend on (except, in the case of Holdings, dividends payable solely in
Qualified Capital Stock of Holdings), or the making by such person or any of
its subsidiaries of any other distribution in respect of, such person's
Qualified Capital Stock or any warrants, rights or options to purchase or
acquire shares of any class of such Capital Stock (other than distributions
with respect to exchangeable or convertible Indebtedness of such person
pursuant to the terms thereof), or (b) the redemption, repurchase, retirement
or other acquisition for value by such person or any of its subsidiaries,
directly or indirectly, of such person's Qualified Capital Stock (and, in the
case of a Subsidiary, Qualified Capital Stock of Holdings) or any warrants,
rights or options to purchase or acquire shares of any class of such Capital
Stock (other than exchangeable or convertible Indebtedness of such person),
other than, in the case of Holdings, through the issuance in exchange therefor
solely of Qualified Capital Stock of Holdings; provided, however, that in the
case of a Subsidiary, the term "Stock Payment" shall not include any such pay-
ment with respect to its Capital Stock or
<PAGE>77
warrants, rights or options to purchase or acquire shares of any class of its
Capital Stock that are owned solely by Holdings or a wholly-owned Subsidiary.
"Subordinated Indebtedness" means Indebtedness of Holdings that is
subordinated in right of payment to the Securities.
"subsidiary" of any person means (i) a corporation a majority of
whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is, at the date of determination, directly or indirectly, owned by
such person, by one or more subsidiaries of such person or by such person and
one or more subsidiaries of such person or (ii) a partnership in which such
person or a subsidiary of such person is, at the date of determination, a
general partner of such partnership, but only if such person or its subsidiary
is entitled to receive more than 50% of the assets of such partnership upon
its dissolution, or (iii) any other person (other than a corporation or a
partnership) in which such person, a subsidiary of such person or such person
and one or more subsidiaries of such person, directly or indirectly, at the
date of determination, has (x) at least a majority ownership interest or (y)
the power to elect or direct the election of a majority of the directors or
other governing body of such person; provided, that an Unrestricted Subsidiary
shall not be deemed a subsidiary for purposes of this Indenture.
"Subsidiary" means any subsidiary of Holdings.
"Subsidiary Letter of Credit Obligations" means [see Introductory
Note 5.B].
"Supplementary Documents" shall have the meaning provided in the
Credit Agreement.
"The Yucaipa Companies" means The Yucaipa Companies, a California
general partnership.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
77aaa-77bbbb), as amended, as in effect on the date on which this Indenture
is qualified under the TIA, except as otherwise provided in Section 9.3.
"Transaction Date" shall have the meaning provided in the definition
of "Operating Coverage Ratio" contained in this Section 1.1.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"U.S. Government Obligations" shall have the meaning provided in
Section 8.1.
"U.S. Legal Tender" means such coin or currency of the United States
of America as at the time of payment shall be legal tender for the payment of
public and private debts.
<PAGE>78
"Unrestricted Subsidiary" means (1) any Subsidiary which at the time
of determination shall be an Unrestricted Subsidiary (as designated by the
Board of Directors of Holdings, as provided below) and (2) any subsidiary of
an Unrestricted Subsidiary. The Board of Directors of Holdings may designate
any Subsidiary (including any newly acquired or newly formed Subsidiary or a
person becoming a Subsidiary through merger or consolidation or Investment
therein) to be an Unrestricted Subsidiary only if: (A) such Subsidiary is not
liable, directly or indirectly, with respect to any Indebtedness other than
Non-Recourse Indebtedness; (B) Holdings certifies that such designation
complies with the provisions of Section 4.3 hereof; (C) no Default or Event of
Default has occurred and is continuing or results immediately after such
designation; and (D) such Subsidiary does not own any Capital Stock of a
Subsidiary. Any such designation by the Board of Directors shall be evidenced
to the Trustee by filing with the Trustee a certified copy of the resolution
of the Board of Directors giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
conditions. The Board of Directors of Holdings may designate any Unrestricted
Subsidiary to be a Subsidiary; provided that immediately after giving effect
to such designation, Holdings could incur at least $1.00 of additional
Indebtedness pursuant to Section 4.12(b) on a pro forma basis taking into
account such designation. On the Issue Date, Holdings and its Subsidiaries
will not have any Unrestricted Subsidiaries.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
principal amount of such Indebtedness.
"wholly-owned Subsidiary" means any Subsidiary all of the shares of
Capital Stock of which (other than permitted Preferred Stock and directors'
qualifying shares) are at the time directly or indirectly owned by Holdings.
"Yearly Period" means each fiscal year of Holdings; provided that
the first Yearly Period shall begin on the Issue Date and shall end on [insert
date in 1995 which is Holdings' fiscal year end].
Section 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
<PAGE>79
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means Holdings or any other
obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and
not otherwise defined herein have the meanings assigned to them therein.
Section 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) provisions apply to successive events and transactions; and
(6) "herein," "hereof" and other words of similar import refer to
this Indenture as a whole and not to any particular Article, Section or other
subdivision.
ARTICLE II
THE SECURITIES
Section 2.1. Form and Dating.
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A. The Securities may have notations,
legends or endorsements required by law, stock exchange rule or usage or as
required by the Registration Rights Agreement. Holdings and the Trustee shall
approve the form of the Securities and any notation, legend or endorsement on
them. Each Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to
the extent applicable, Holdings and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
to be bound thereby.
Section 2.2. Execution and Authentication.
<PAGE>80
An Officer or an Assistant Secretary, shall sign (either of whom
shall, in each case, have been duly authorized by all requisite corporate
actions) the Securities for Holdings by manual or facsimile signature.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
The Trustee shall authenticate Securities, excluding Secondary
Securities, for original issue in the aggregate principal amount of up to
$100,000,000 upon a written order of Holdings in the form of an Officers'
Certificate. The Officers' Certificate shall specify the amount of Securities
to be authenticated and the date on which the Securities are to be
authenticated. The aggregate principal amount of Securities outstanding at
any time may not exceed $100,000,000, except for any Securities that may be
issued pursuant to the immediately following paragraph and except as provided
in Section 2.7 and 2.8. Upon the written order of Holdings in the form of an
Officers' Certificate, the Trustee shall authenticate Securities in
substitution of Securities originally issued to reflect any name change of
Holdings.
Holdings may, on each Interest Payment Date prior to (and including)
[the Interest Payment Date five years after the Issue Date], at its option and
in its sole discretion, pay interest in additional Securities ("Secondary
Securities") in lieu of the payment in whole or in part of interest in cash on
the Securities as provided in paragraph 1 of the Securities. Holdings shall
give written notice to the Trustee of the amount of interest to be paid in
Secondary Securities not less than five Business Days prior to the relevant
Interest Payment Date, and the Trustee or an authenticating agent (upon
written order of Holdings signed by an Officer of Holdings given not less than
five nor more than 45 days prior to such Interest Payment Date) shall
authenticate for original issue (pro rata to each Holder of any Securities of
such record date) Secondary Securities in an aggregate principal amount equal
to the amount of cash interest not paid on such Interest Payment Date. Except
as set forth in the following paragraph each issuance of Secondary Securities
in lieu of the payment of interest in cash on the Securities shall be made pro
rata with respect to the outstanding Securities, and Holdings shall have the
right to aggregate amounts of interest payable in the form of Secondary
Securities to a Holder of outstanding Securities and issue to such Holder a
single Secondary Security in payment thereof. Any Secondary Securities may be
denominated a separate series if Holdings deems it necessary to do so in order
to comply with any law or other applicable regulation or requirement, with
appropriate distinguishing designations.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof except
that Secondary Securities or Securities issued upon registration of transfer
of such Secondary Securities may be in denominations of other than $1,000;
provided that Holdings may at its option pay cash in lieu of issuing Secondary
Securities in any denominations of less than $1,000.
<PAGE>81
The Trustee may appoint an authenticating agent reasonably
acceptable to Holdings to authenticate Securities. Unless otherwise provided
in the 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 an Agent to deal with Holdings and
Affiliates of Holdings.
Section 2.3. Registrar and Paying Agent.
Holdings shall maintain an office or agency in the Borough of
Manhattan, The City of New York, where (a) Securities may be presented or
surrendered for registration of transfer or for exchange ("Registrar"), (b)
Securities may be presented or surrendered for payment ("Paying Agent") and
(c) notices and demands to or upon Holdings in respect of the Securities and
this Indenture may be served. Holdings may also from time to time designate
one or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve Holdings of its obligation to maintain an office
or agency in the Borough of Manhattan, The City of New York, for such
purposes. Holdings may act as its own Registrar or Paying Agent except that
for the purposes of Articles Three and Eight and Sections 4.4 and 4.14,
neither Holdings nor any Subsidiary shall act as Paying Agent. The Registrar
shall keep a register of the Securities and of their transfer and exchange.
Holdings, upon notice to the Trustee, may have one or more co-Registrars and
one or more additional paying agents reasonably acceptable to the Trustee.
The term "Paying Agent" includes any additional paying agent. Holdings
initially appoints the Trustee as Registrar and Paying Agent until such time
as the Trustee has resigned or a successor has been appointed.
Holdings shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall implement the
provisions of this Indenture that relate to such Agent. Holdings shall notify
the Trustee, in advance, of the name and address of any such Agent. If Hold-
ings fails to maintain a Registrar or Paying Agent, the Trustee shall act as
such.
Section 2.4. Paying Agent To Hold Assets in Trust.
Holdings shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets and/or Secondary Securities held by the
Paying Agent for the payment of principal of, or interest on, the Securities
(whether such assets have been distributed to it by Holdings or any other
obligor on the Securities), and shall notify the Trustee of any Default by
Holdings (or any other obligor on the Securities) in making any such payment.
If Holdings or a Subsidiary acts as Paying Agent, it shall segregate such
assets and/or Secondary Securities and hold them as a separate trust fund.
Holdings at any time may require a Paying Agent to distribute all assets
and/or Secondary Securities held by it to the Trustee and account for any
assets disbursed and the Trustee may at any time during the continuance of any
payment Default, upon written request to a Paying Agent, require such Paying
Agent to distribute all assets and/or Secondary Securities held by it to the
Trustee and to account for any assets so distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by Holdings to the
Paying
<PAGE>82
Agent, the Paying Agent shall have no further liability for such assets and/or
Secondary Securities.
Section 2.5. Securityholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, Holdings shall furnish to the
Trustee on or before each Interest Payment Date and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Holders, which
list may be conclusively relied upon by the Trustee.
Section 2.6. Transfer and Exchange.
When a Security is presented to the Registrar or a co-registrar with
a request to register a transfer, the Registrar shall register the transfer as
requested if the requirements of the Registrar are met. The Registrar need
not transfer or exchange any Securities selected for redemption. Also, it
need not transfer or exchange any Securities for a period of 30 days before a
selection of Securities to be redeemed. When Securities are presented to the
Registrar or a co-registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations, the
Registrar shall make the exchange as requested if the requirements of the
Registrar are met. Holdings shall cooperate with the Registrar in meeting its
requirements. To permit transfers, registration and exchanges, the Trustee
shall authenticate Securities at the Registrar's request. No service charge
shall be made for any transfer, registration or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith, but not for any exchange pursuant to
Section 2.10, 3.6 or 9.5.
Section 2.7. Replacement Securities.
If a mutilated Security is surrendered to the Trustee or if the
Holder of a Security claims that the Security has been lost, destroyed or
wrongfully taken, Holdings shall issue and the Trustee shall authenticate a
replacement Security if the Trustee's requirements are met. If required by
the Trustee or Holdings, such Holder must provide an indemnity bond or other
indemnity, sufficient in the judgment of both Holdings and the Trustee, to
protect Holdings, the Trustee or any Agent from any loss which any of them may
suffer if a Security is replaced. Holdings may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Security, including rea-
sonable fees and expenses of counsel. Every replacement Security shall
constitute an additional obligation of Holdings.
Section 2.8. Outstanding Securities.
Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee, including the Secondary Securities, except
those cancelled by it, those delivered to it for cancellation and those
described in this Section as not outstanding. A Security does not cease to be
outstanding because Holdings or any of its Affiliates holds the Security.
<PAGE>83
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced
Security is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant
to Section 2.7.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than Holdings or any Subsidiary) holds U.S. Legal Tender or U.S. Government
Obligations sufficient to pay all of the principal and interest due on the
Securities payable on that date, then on and after that date such Securities
cease to be outstanding and interest on them ceases to accrue.
Section 2.9. Treasury Securities.
In determining whether the Holders of the required aggregate
principal amount of Securities have concurred in any direction, waiver or
consent, Securities owned by Holdings or any of its Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that the Trustee knows or has reason to know are so owned shall be
disregarded. Notwithstanding the foregoing and except as otherwise provided
by the TIA, a majority of Securities not owned by Holdings or any of its
Affiliates shall be sufficient to approve any such direction, waiver or
consent.
Section 2.10. Temporary Securities.
Until definitive Securities are ready for delivery, Holdings may
prepare and the Trustee shall authenticate temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that Holdings considers appropriate for temporary Securities.
Without unreasonable delay, Holdings shall prepare and the Trustee shall
authenticate definitive Securities in exchange for temporary Securities.
Section 2.11. Cancellation.
Holdings at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than Holdings or any Subsidiary), and no one else, shall cancel and, at
the written direction of Holdings, shall dispose of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.7,
Holdings may not issue new Securities to replace Securities that it has paid
or delivered to the Trustee for cancellation. If Holdings or any Subsidiary
shall acquire any of the Securities, such acquisition shall not operate as a
redemption or satisfaction of the Indebtedness represented by such Securities
unless and until the same are surrendered to the Trustee for cancellation
pursuant to this Section 2.11.
Section 2.12. Defaulted Interest.
If Holdings defaults in a payment of interest on the Securities, it
shall, unless the Trustee fixes another record date pursuant to Section 6.10,
pay the defaulted interest, plus (to the extent lawful) any interest payable
on the defaulted interest, to the persons who are Holders
<PAGE>84
on a subsequent special record date, which date shall be the fifteenth day
next preceding the date fixed by Holdings for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business
Day. At least 15 days before the subsequent special record date, Holdings
shall mail to each Holder, with a copy to the Trustee, a notice that states
the subsequent special record date, the payment date and the amount of
defaulted interest, and interest payable on such defaulted interest, if any,
to be paid.
Section 2.13. CUSIP Number.
Holdings in issuing the Securities may use a "CUSIP" number, and if
so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities.
ARTICLE III
REDEMPTION
Section 3.1. Notices to Trustee.
If Holdings elects to redeem Securities pursuant to Paragraph 5 of
the Securities it shall notify the Trustee of the Redemption Date and
aggregate principal amount of the Securities to be redeemed and whether it
wants the Trustee to give notice of redemption to the Holders (at Holdings'
expense) at least 30 days (unless a shorter notice shall be satisfactory to
the Trustee) but not more than 60 days before the Redemption Date. Any notice
given pursuant to this Section 3.1 may be cancelled at any time prior to
notice of such redemption being mailed to any Holder and shall thereby be void
and of no effect.
Section 3.2. Selection of Securities To Be Redeemed.
If fewer than all of the Securities are to be redeemed, the Trustee
shall select the Securities to be redeemed pro rata, by lot or by such other
method as the Trustee considers to be fair and appropriate and in such manner
as complies with applicable legal and stock exchange requirements, if any.
Securities in denominations of less than $1,000 shall be redeemed
first. Thereafter the Trustee shall make the selection from the Securities
outstanding and not previously called for redemption and shall promptly notify
Holdings in writing of the Securities selected for redemption and, in the case
of any Security selected for partial redemption, the aggregate principal
amount thereof to be redeemed. Securities in denominations of $1,000 or less
may be redeemed only in whole. The Trustee may select for redemption portions
(equal to $1,000 or any integral multiple thereof) of the principal of
Securities that have denominations larger than $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption.
Section 3.3. Notice of Redemption.
<PAGE>85
At least 30 days but not more than 60 days before a Redemption Date,
Holdings shall mail a notice of redemption by first class mail to each Holder
whose Securities are to be redeemed at such Holder's registered address, with
a copy to the Trustee. At Holdings' request, the Trustee shall give the
notice of redemption in Holdings' name and at Holdings' expense. Each notice
for redemption shall identify the Securities to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price;
(5) that, unless Holdings defaults in making the redemption
payment, interest on Securities called for redemption ceases to accrue on
and after the Redemption Date, and the only remaining right of the
Holders of such Securities is to receive payment of the Redemption Price
upon surrender to the Paying Agent of the Securities redeemed;
(6) if any Security is being redeemed in part, the portion of the
aggregate principal amount of such Security to be redeemed and that,
after the Redemption Date, and upon surrender of such Security, a new
Security or Securities in aggregate principal amount equal to the
unredeemed portion thereof will be issued; and
(7) if fewer than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof to be
redeemed), as well as the aggregate principal amount of Securities to be
redeemed and the aggregate principal amount of Securities to be
outstanding after such partial redemption.
Section 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.3,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price. Upon surrender to the Trustee or Paying Agent,
such Securities called for redemption shall be paid at the Redemption Price.
Section 3.5. Deposit of Redemption Price.
On or before the Redemption Date, Holdings shall deposit with the
Paying Agent U.S. Legal Tender sufficient to pay the Redemption Price of all
Securities to be redeemed on that date (other than Securities or portions
thereof called for redemption on that date which have been delivered by
Holdings to the Trustee for cancellation). The Paying Agent shall promptly
return to Holdings any U.S. Legal Tender so deposited which is not required
for that purpose upon the written request of Holdings, except with respect to
monies owed as obligations to the Trustee pursuant to Article Seven.
<PAGE>86
If Holdings complies with the preceding paragraph, then, unless
Holdings defaults in the payment of such Redemption Price, interest on the
Securities to be redeemed will cease to accrue on and after the applicable
Redemption Date, whether or not such Securities are presented for payment.
If a Security is redeemed on or after a Record Date but on or prior
to the related Interest Payment Date, then any accrued and unpaid interest
shall be paid to the Person in whose name such Security was registered at the
close of business on such Record Date. If any Security called for redemption
shall not be so paid upon surrender for redemption because of the failure of
Holdings to comply with the first paragraph of this Section 3.5, interest
shall be paid on the unpaid principal, from the redemption date until such
principal is paid, and, to the extent lawful, on any interest not paid on such
unpaid principal, in each case at the rate provided in the Securities and in
Section 4.1 hereof.
Section 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is to be redeemed in part, the
Trustee shall authenticate for the Holder a new Security or Securities equal
in principal amount to the unredeemed portion of the Security surrendered.
ARTICLE IV
COVENANTS
Section 4.1. Payment of Securities.
Holdings shall pay the principal amount of, premium, if any, and
interest on, as the case may be, the Securities on the dates and in the manner
provided in the Securities. An installment shall be considered paid on the
date it is due if the Trustee or Paying Agent (other than Holdings or a
Subsidiary) holds on that date U.S. Legal Tender and/or, to the extent
permitted by Section 2.2, Secondary Securities designated for and sufficient
to pay the installment.
Holdings shall pay interest on overdue principal (including post-
petition interest in any proceeding under any Bankruptcy Law, to the extent
allowable as a claim in any such proceeding) at the same rate borne by the
Securities and it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law, to the extent allowable as a claim in any
such proceeding) on overdue installments of interest (without regard to any
applicable grace period) at the same rate borne by the Securities, to the
extent lawful.
Section 4.2. Maintenance of Office or Agency.
Holdings shall maintain in the Borough of Manhattan, The City of New
York, the office or agency required under Section 2.3. Holdings shall give
prior notice to the Trustee of the location, and any change in the location,
of such office or agency. If at any time Holdings 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 address of the Trustee set forth in Section 12.2
<PAGE>87
Section 4.3. Limitation on Restricted Payments.
Holdings shall not, and shall cause each of its Subsidiaries not to,
directly or indirectly, make any Restricted Payment if, at the time of such
Restricted Payment, or after giving effect thereto, (a) a Default or an Event
of Default shall have occurred and be continuing, or (b) Holdings or such
Subsidiary could not incur at least $1 of Indebtedness under or pursuant to
the test set forth in Section 4.12(b) (assuming a market rate of interest with
respect thereto) calculated on a pro forma basis as if such Restricted Payment
had been made at the beginning of the Pro Forma Period, (provided, however,
that with respect to any Investment in an Unrestricted Subsidiary, the
Operating Coverage Ratio referred to in Section 4.12(b) shall never exceed
[See Introductory Note 5.D]) or (c) the aggregate amount expended for all
Restricted Payments, including such Restricted Payment (the amount of any
Restricted Payment, if other than cash, to be the fair market value thereof at
the date of payment, as determined in good faith by the Board of Directors of
Holdings, which determination shall be evidenced by a Board Resolution),
subsequent to the Issue Date, shall exceed the sum of (i) 50% of the aggregate
Consolidated Net Income (or if such Consolidated Net Income is a loss, minus
100% of such loss) of Holdings earned subsequent to the Issue Date and on or
prior to the date the Restricted Payment occurs (the "Reference Date") plus
(ii) 100% of the aggregate Net Cash Proceeds received by Holdings from any
person (other than a Subsidiary) from the issuance and sale (including upon
exchange or conversion for other securities of Holdings) subsequent to the
Issue Date and on or prior to the Reference Date of Qualified Capital Stock
(excluding (A) Qualified Capital Stock paid as a dividend on any Capital Stock
or as interest on any Indebtedness and (B) any Net Proceeds from issuances and
sales financed directly or indirectly using funds borrowed from Holdings or
any Subsidiary, until and to the extent such borrowing is repaid) plus (iii)
an amount, to the extent not otherwise included in Consolidated Net Income,
equal to the sum of (A) the net reduction in Investments in Unrestricted
Subsidiaries resulting from payments of cash dividends, repayments of loans or
advances or other transfers of assets to Holdings or any Subsidiary from
Unrestricted Subsidiaries, and (B) the portion (proportionate to Holdings'
equity interest in such Subsidiary) of the fair market value of the net assets
of an Unrestricted Subsidiary at the time such Unrestricted Subsidiary is
designated a Subsidiary; provided, however, that the foregoing sum in this
clause (iii) shall not exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Unrestricted
Subsidiary in such Unrestricted Subsidiary, which amount was treated as a
Restricted Payment plus (iv) $15 million.
Notwithstanding the foregoing, if no Default or Event of Default
shall have occurred and be continuing as a consequence thereof, the provisions
set forth in the immediately preceding paragraph will not prevent (1) the
payment of any dividend within 60 days after the date of its declaration if
the dividend would have been permitted on the date of declaration, (2) the
acquisition of any shares of Capital Stock in exchange for or solely out of
the proceeds of the substantially concurrent sale (other than to a Subsidiary)
of shares of Qualified Capital Stock, (3) the payment of dividends by Holdings
or any Subsidiary to holders of Capital Stock of Holdings or any Subsidiary,
as the case may be, following an initial public offering of such Capital
Stock, of up to six percent per annum of the Net Cash Proceeds received in
such public offering, (4) Restricted Payments in an aggregate amount not
exceeding $10 million subsequent to the Issue Date or (5) Permitted Payments;
provided that (x) the declaration of each dividend paid in accordance with
clause (1) above, each acquisition or repayment made in accordance with, or of
the type set forth in, clause (2) above and each payment described in clause
(ii) of
<PAGE>88
the definition of "Permitted Payments" shall be counted for purposes of com-
puting amounts expended pursuant to subclause (c) in the immediately preceding
paragraph, and (y) no amounts paid pursuant to clauses (3) or (4) above or
clause (i) of the definition of "Permitted Payments" shall be so counted.
Prior to making any Restricted Payment under the first paragraph of
this Section 4.3, Holdings shall deliver to the Trustee an Officers'
Certificate setting forth the computation by which the amount available for
Restricted Payments pursuant to such paragraph was determined. The Trustee
shall have no duty or responsibility to determine the accuracy or correctness
of this computation and shall be fully protected in relying on such Officers'
Certificate.
Section 4.4. Corporate Existence.
Except as otherwise permitted by Article Five, Holdings shall do or
cause to be done all things necessary to preserve and keep in full force and
effect its corporate existence and the corporate or other existence of each of
its Significant Subsidiaries in accordance with the respective organizational
documents of each such Significant Subsidiary and the rights (charter and
statutory) and franchises of Holdings and each such Significant Subsidiary;
provided, however, that Holdings shall not be required to preserve, with
respect to itself, any right or franchise, and with respect to any of its
Significant Subsidiaries, any such existence, right or franchise, if the Board
of Directors of Holdings or such Significant Subsidiary, as the case may be,
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of Holdings or any such Significant Subsidiary.
Section 4.5. Payment of Taxes and Other Claims.
Holdings shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon it or any of its Subsidiaries
or properties of it or any of its Subsidiaries and (ii) all lawful claims for
labor, materials and supplies that, if unpaid, might by law become a Lien upon
the property of it or any of its Subsidiaries; provided, however, that
Holdings shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim if either (a) the amount,
applicability or validity thereof is being contested in good faith by
appropriate proceedings and an adequate reserve has been established therefor
to the extent required by GAAP or (b) the failure to make such payment or
effect such discharge (together with all other such failures) would not have a
material adverse effect on the financial condition or results or operations of
Holdings and its Subsidiaries taken as a whole.
Section 4.6. Maintenance of Properties and Insurance.
(a) Holdings shall cause all properties used or useful to the
conduct of its business or the business of any Subsidiaries to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment and shall cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in its
judgment may be necessary, so that the business carried on in connection
therewith may be properly and advantageously conducted at all times unless the
failure to so maintain such
<PAGE>89
properties (together with all other such failures) would not have a material
adverse effect on the financial condition or results of operations of Holdings
and its Subsidiaries taken as a whole; provided, however, that nothing in this
Section 4.6 shall prevent Holdings or any Subsidiary from discontinuing the
operation or maintenance of any of such properties, or disposing of any of
them, if such discontinuance or disposal is either (i) in the ordinary course
of business, (ii) in the good faith judgment of the Board of Directors of
Holdings or the Subsidiary concerned, or of the senior officers of Holdings or
such Subsidiary, as the case may be, desirable in the conduct of the business
of Holdings or such Subsidiary, as the case may be, or (iii) is otherwise
permitted by this Indenture.
(b) Holdings shall provide or cause to be provided, for itself and
each of its Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith
opinion of Holdings, are adequate and appropriate for the conduct of the
business of Holdings and such Subsidiaries in a prudent manner, with reputable
insurers or with the government of the United States of America or an agency
or instrumentality thereof, in such amounts, with such deductibles, and by
such methods as shall be either (i) consistent with past practices of Holdings
or the applicable Subsidiary or (ii) customary, in the reasonable, good faith
opinion of Holdings, for corporations similarly situated in the industry,
unless the failure to provide such insurance (together with all other such
failures) would not have a material adverse effect on the financial condition
or results of operations of Holdings and its Subsidiaries, taken as a whole.
Section 4.7. Compliance Certificate; Notice of Default.
(a) Holdings shall deliver to the Trustee within 120 days after the
end of Holdings' fiscal year an Officers' Certificate stating that a review of
its activities and the activities of its Subsidiaries during the preceding
fiscal year has been made under the supervision of the signing Officers with a
view to determining whether it has kept, observed, performed and fulfilled its
obligations under this Indenture and further stating, as to each such Officer
signing such certificate, that to the best of his knowledge Holdings during
such preceding fiscal year has kept, observed, performed and fulfilled each
and every such covenant and no Default or Event of Default occurred during
such year or, if such signers do know of such a Default or Event of Default,
the certificate shall describe the Default or Event of Default and its status
with particularity. The Officers' Certificate shall also notify the Trustee
should Holdings elect to change the manner in which it fixes its fiscal year
end.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, Holdings shall deliver
to the Trustee within 120 days after the end of each fiscal year a written
statement by Holdings' independent certified public accountants stating (A)
that their audit examination has included a review of the terms of this
Indenture and the Securities as they relate to accounting matters, and (B)
whether, in connection with their audit examination, any Default has come to
their attention and if such a Default has come to their attention, specifying
the nature and period of existence thereof.
(c) Holdings shall, so long as the Securities are outstanding,
deliver to the Trustee, within five Business Days after any officer becomes
aware of any Default or Event of Default, an Officer's Certificate specifying
such Default or Event of Default and what action Holdings is taking or
proposes to take with respect thereto.
<PAGE>90
Section 4.8. Compliance with Laws.
Holdings shall comply, and shall cause each of its Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their
respective properties, except such as are being contested in good faith and by
appropriate proceedings and except for such noncompliances as would not in the
aggregate have a material adverse effect on the financial condition or results
of operations of Holdings and its Subsidiaries taken as a whole.
Section 4.9. SEC Reports and Other Information.
(a) To the extent permitted by applicable law or regulation,
whether or not Holdings is subject to the requirements of Section 13 or 15(d)
of the Exchange Act, Holdings shall file with the SEC all quarterly and annual
reports and such other information, documents or other reports (or copies of
such portions of any of the foregoing as the SEC may by rules and regulations
prescribe) required to be filed pursuant to such provisions of the Exchange
Act. Holdings shall file with the Trustee, within 5 days after it files the
same with the SEC, copies of the quarterly and annual reports and the
information, documents, and other reports (or copies of such portions of any
of the foregoing as the SEC may by rules and regulations prescribe) that it is
required to file with the SEC pursuant to this Section 4.9. Holdings shall
also comply with the other provisions of TIA 314(a). If Holdings is not
permitted by applicable law or regulations to file the aforementioned reports,
Holdings (at its own expense) shall file with the Trustee and mail, or cause
the Trustee to mail, to Holders at their addresses appearing in the register
of Securities maintained by the Registrar at the time of such mailing within 5
days after it would have been required to file such information with the SEC,
all information and financial statements, including any notes thereto and with
respect to annual reports, an auditors' report by an accounting firm of
established national reputation, and a "Management's Discussion and Analysis
of Financial Condition and Results of Operations," comparable to the
disclosure that Holdings would have been required to include in annual and
quarterly reports, information, documents or other reports, including, without
limitation, reports on Forms 10-K, 10-Q and 8-K, if Holdings was subject to
the requirements of such Section 13 or 15(d) of the Exchange Act.
(b) At any time when Holdings is not permitted by applicable law or
regulations to file the aforementioned reports, upon the request of a Holder
of Securities, Holdings will promptly furnish or cause to be furnished such
information as is specified pursuant to Rule 144A(d)(4) under the Securities
Act (or any successor provision thereto) to such Holder or to a prospective
purchaser of such Securities designated by such Holder, as the case may be, in
order to permit compliance by such Holder with Rule 144A under the Securities
Act.
Section 4.10. Waiver of Stay, Extension or Usury Laws.
Holdings covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury
law or other law that would prohibit or forgive Holdings from paying all or
any portion of the principal of or interest on the Securities as contemplated
herein, wherever enacted, now or at any time hereafter in force, or which may
affect the
<PAGE>91
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) Holdings 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 4.11. Limitation on Transactions with Affiliates.
(a) Neither Holdings nor any Subsidiary shall (i) sell, lease,
transfer or otherwise dispose of any of its properties or assets, or issue
securities to, (ii) purchase any property, assets or securities from, (iii)
make any Investment (other than Investments in Unrestricted Subsidiaries not
prohibited by Section 4.3) in, or (iv) enter into or suffer to exist any
contract or agreement with or for the benefit of, an Affiliate of Holdings or
any Subsidiary (an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under Section 4.11(b) and (y) Affiliate Transactions
(A) in the ordinary course of business, that are fair to Holdings or such
Subsidiary, as the case may be, and on terms at least as favorable as might
reasonably have been obtainable at such time from an unaffiliated party and
(B) with respect to any transaction or series of transactions involving
aggregate payments in excess of $1 million and less than $5 million, Holdings
or such Subsidiary, as the case may be, delivers an Officers' Certificate to
the Trustee certifying that such transaction or series of transactions
complies with clause (A) above and (C) with respect to any transaction or
series of transactions involving aggregate payments in excess of $5 million
and less than $15 million, Holdings or such Subsidiary, as the case may be,
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (A) above and that
such transaction or series of transactions has received the approval of a
majority of the disinterested directors of the Board of Directors of Holdings
or the Subsidiary, as the case may be, or, in the absence of any such approval
by the disinterested members of the Board of Directors of Holdings or the
Subsidiary, as the case may be, that an Independent Financial Advisor has
reasonably and in good faith determined that such Affiliate Transaction is
fair to Holdings or such Subsidiary, as the case may be, or is on terms at
least as favorable as might reasonably have been obtained at such time from an
unaffiliated party and (D) with respect to any transaction or series of
transactions involving aggregate payments in excess of $15 million, Holdings
or such Subsidiary, as the case may be, receives an opinion from an
Independent Financial Advisor to the effect that the financial terms of such
Affiliate Transaction are fair to Holdings or such Subsidiary or are at least
as favorable as those that might reasonably have been obtainable at the time
from an unaffiliated party. For purposes of this Section 4.11, any Affiliate
Transaction that is approved as being on the terms required by clause (A)
above by a majority of the disinterested directors of the Board of Directors
of Holdings or the Subsidiary, as the case may be, shall be deemed to be fair
to Holdings or such Subsidiary, as the case may be, and on terms at least as
favorable as those that might reasonably have been obtainable at the time from
an unaffiliated third party, and thus shall be permitted under this Section
4.11.
(b) The provisions of Section 4.11(a) shall not apply to (i) any
Permitted Payment, (ii) any Restricted Payment that is made in compliance with
the provisions of Section 4.3, (iii) reasonable and customary fees and
compensation paid to, and indemnity provided on behalf of, officers,
directors, employees or consultants of Holdings or any Subsidiary, as
determined by the Board of Directors of Holdings or any Subsidiary or the
senior management thereof in good faith, (iv) transactions exclusively between
or among Holdings, the Company
<PAGE>92
and any of their respective wholly-owned Subsidiaries or exclusively between
or among such wholly-owned Subsidiaries, provided such transactions are not
otherwise prohibited by this Indenture, (v) any agreement as in effect as of
the Issue Date or any amendment thereto or any transaction contemplated
thereby (including pursuant to any amendment thereto) so long as any such
amendment is not disadvantageous to the Holders in any material respect, (vi)
the existence of, or the performance by Holdings or any Subsidiary of its
obligations under the terms of, any stockholder agreement (including any
registration rights agreement or purchase agreement related thereto) to which
it [(or FFL)] is a party as of the Issue Date and any similar agreements which
it [(or FFL)] may enter into thereafter; provided, however, that the existence
of, or the performance by Holdings or any Subsidiary of obligations under any
future amendment to, any such existing agreement or under any similar
agreement entered into after the Issue Date shall only be permitted by this
clause (vi) to the extent that the terms of any such amendment or new
agreement are not otherwise disadvantageous to the Holders in any material
respect, (vii) transactions permitted by, and complying with, the provisions
of Section 5.1, (viii) transactions with subsidiaries or other suppliers in
the ordinary course of business (including, without limitation, pursuant to
joint venture agreements with such persons) and otherwise in compliance with
the terms of this Indenture or (ix) transactions involving the purchase or
sale of inventories in the ordinary course of business which are fair to the
Company or on terms at least as favorable as might reasonably have been
obtained at such time from an unaffiliated party, as evidenced, with respect
to transactions involving an Affiliate of The Yucaipa Companies only, by an
Officers' Certificate delivered to the Trustee on __________ and __________ of
each year.
Section 4.12. Limitation on Incurrences of Additional Indebtedness.
[See Introductory Note 5.C.]
Section 4.13. Limitation on Liens.
Holdings will not create, incur, affirm or suffer to exist any Lien
of any kind securing any Pari Passu Indebtedness, any Subordinated
Indebtedness or any Affiliate Obligation upon any property or assets of
Holdings owned on the Issue Date or acquired after the Issue Date, or any
income or profits therefrom, unless the Securities are secured equally and
ratably with (or prior to in the case of Subordinated Indebtedness) to 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
Holdings, 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 Holdings.
Section 4.14. Limitation on Change of Control.
(a) Upon the occurrence of a Change of Control (the "Change of
Control Date"), each Holder shall have the right to require the repurchase of
such Holder's Securities pursuant to the offer described in paragraph (b),
below (the "Change of Control Offer"), at a purchase price equal to 101% of
the aggregate principal amount thereof plus accrued interest, if any, to the
date of purchase. Prior to the mailing of the notice to Holders provided for
in paragraph (b) below, but in any event within 30 days following the Change
of Control Date, Holdings shall (i) repay in full all Indebtedness of Holdings
and its Subsidiaries under the Loan
<PAGE>93
Documents or offer to repay in full all such Indebtedness and repay the
Indebtedness of each lender who has accepted such offer or (ii) obtain the
requisite consent under the Loan Documents to permit the repurchase of the
Securities as provided for in this Section 4.14. Holdings shall first comply
with the covenant in the preceding sentence before it shall be required to
repurchase Securities pursuant to this Section 4.14, and any failure to so
comply shall constitute a breach of Holdings' obligations under this
Indenture. Within 10 days after any Change of Control Date requiring Holdings
to make a Change of Control Offer pursuant to this Section 4.14, Holdings
shall so notify the Trustee.
(b) The Change of Control Offer shall be made to all Holders and
the notice to the Holders shall contain all instructions and materials
necessary to enable such Holders to tender Securities pursuant to the Change
of Control Offer. Within 30 days following any Change of Control Date,
Holdings shall send, by first class mail, a notice to each Holder, with copies
to the Trustee, which notice shall govern the terms of the Change of Control
Offer. Such notice shall state:
(1) that the Change of Control Offer is being made pursuant to this
Section 4.14 and that all Securities tendered will be accepted for
payment;
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 40 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(3) that any Security not tendered will continue to accrue interest
if interest is then accruing;
(4) that, unless Holdings defaults in making payment therefor, any
Security accepted for payment pursuant to the Change of Control Offer
shall cease to accrue interest after the Change of Control Payment Date;
(5) that Holders electing to have a Security purchased pursuant to
a Change of Control Offer will be required to surrender the Security,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Security completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the Business
Day prior to the Change of Control Payment Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than two Business Days prior to the
Change of Control Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the name of the Holder, the aggregate principal
amount of the Securities the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such
Security purchased;
(7) that Holders whose Securities are being purchased only in part
will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided that each
Holder shall tender Securities, and each Security purchased and each such
new Security issued by Holdings shall be, in a principal amount
<PAGE>94
of $1,000 or integral multiples thereof (except for Secondary Securities
that were issued in denominations other than $1,000); and
(8) the circumstances and relevant facts regarding such Change of
Control, including information available to Holdings concerning the
Person or Persons acquiring control and such historical or pro forma
financial information as Holdings reasonably deems appropriate under the
circumstances.
On or before the Change of Control Payment Date, Holdings shall (i)
accept for payment Securities or portions thereof tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent U.S. Legal Tender
sufficient to pay the purchase price of all Securities so tendered and (iii)
deliver to the Trustee Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof being purchased by
Holdings. The Paying Agent shall promptly mail to the Holders of Securities
so accepted payment in an amount equal to the purchase price; provided that
each such new Security shall be in the principal amount of $1,000 or integral
multiples thereof. Holdings will publicly announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Payment Date. For purposes of this Section 4.14, the Trustee shall act as the
Paying Agent.
Section 4.15. Limitation on Disposition of Assets.
(a) Holdings will not, and will not permit any of its Subsidiaries
to, make any Asset Sale, unless (a) Holdings or the applicable Subsidiary
receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets sold or otherwise disposed of (as determined
in good faith by the Board of Directors of Holdings or, if the aggregate fair
market value of all non-cash consideration received by Holdings or such
Subsidiary, as the case may be, from any such Asset Sale shall exceed $30
million, as determined by an Independent Financial Advisor; provided that no
such determination by the Board of Directors of Holdings shall be required if
the fair market value of the assets sold or otherwise disposed of does not
exceed $10 million); and (b) the Net Cash Proceeds received by Holdings or
such Subsidiary, as the case may be, from such Asset Sale are applied in
accordance with this Section 4.15; and (c) the Net Cash Proceeds are applied
within 365 days of such Asset Sale, at the election of Holdings (i) to repay
or cause to be repaid Indebtedness of Holdings (other than Subordinated
Indebtedness except to the extent that payment of such Subordinated
Indebtedness is permitted by Section 4.3) or any Subsidiary; (ii) in a manner
that would constitute a Related Business Investment hereunder; or (iii) to the
purchase of Securities pursuant to a Net Proceeds Offer as set forth below;
provided, however, that Holdings shall not be required to satisfy the
condition specified in clause (a) above if such Asset Sale is pursuant to a
foreclosure by the Lenders under the Loan Documents or their Representative on
collateral securing Indebtedness under the Loan Documents; provided, further,
that if at any time any noncash consideration received by Holdings or any
Subsidiary in connection with any Asset Sale is converted into or sold or
otherwise disposed of for cash, then such cash shall constitute Net Cash
Proceeds for purposes of this Section 4.15 and shall be applied in accordance
with clause (c) above within 365 days of the receipt of such cash; provided,
further, that Holdings shall have the right to exclude Asset Sales subsequent
to the Issue Date, the proceeds of which in the aggregate do not exceed $20
million, from the provisions of this Section 4.15. To the extent that the Net
Cash Proceeds are not actually applied in accordance with clauses (c)(i) or
(ii) above, or after such application there remains a portion of the Net Cash
Proceeds which, when added to any other Net Cash Proceeds
<PAGE>95
remaining after such application, accumulates at least $20 million subsequent
to the previous time Holdings shall have accumulated at least such an amount
and used it in accordance with this Section 4.15, or if no such accumulation
shall previously have occurred, subsequent to the date of this Indenture,
Holdings shall make an offer as described in paragraph (b) below (the "Net
Proceeds Offer") to purchase Securities at a price equal to 100% of the
aggregate principal amount thereof, plus accrued interest to the date of
purchase pursuant to this Section 4.15, which shall in the aggregate equal the
Net Cash Proceeds required by this Section 4.15 to be used to purchase
Securities in a Net Proceeds Offer; provided, however, that Holdings may
credit against the principal amount of Securities to be acquired pursuant to
this Section 4.15 the principal amount of Securities acquired by Holdings
through purchase, optional redemption, exchange or otherwise following
consummation of the Asset Sale and surrendered for cancellation and not
previously used as a credit against any other required payment pursuant to
this Indenture provided, further, that a Net Proceeds Offer as a result of an
Asset Sale made by Holdings or one of its subsidiaries shall not be required
to be in excess of the Net Cash Proceeds of such Asset Sale less the Net Cash
Proceeds actually applied in accordance with clauses (c)(i) or (ii) above.
The Net Proceeds Offer shall remain open from the time of mailing until 5 days
(or such shorter period as may be required under applicable law) before the
Proceeds Purchase Date.
(b) Notice of a Net Proceeds Offer pursuant to this Section 4.15
shall be mailed, by first class mail, by Holdings not less than ___ days nor
more than ___ days after the relevant Asset Sale to all Holders at their last
registered addresses, with a copy to the Trustee and the Credit Agent. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Securities pursuant to the Net Proceeds Offer and shall
state the following terms:
(1) that the Net Proceeds Offer is being made pursuant to
Section 4.15 and that all Securities tendered will be accepted for
payment; provided, however, that if the aggregate principal amount of
Securities tendered in a Net Proceeds Offer plus accrued interest at the
expiration of such offer exceeds the aggregate amount of the Net Proceeds
Offer, Holdings shall select the Securities to be purchased on a pro rata
basis (with such adjustments as may be deemed appropriate by Holdings so
that only Securities in denominations of $1,000 or multiples thereof
shall be purchased, except for Secondary Securities that were issued in
denominations other than $1,000);
(2) the purchase price (including the amount of accrued interest)
and the purchase date (which shall be no earlier than 30 days nor later
than 40 days from the date such notice is mailed, other than as may be
required by law) (the "Proceeds Purchase Date");
(3) that any Security not tendered will continue to accrue interest
if interest is then accruing;
(4) that, unless Holdings defaults in making payment therefor, any
Security accepted for payment pursuant to the Net Proceeds Offer shall
cease to accrue interest after the Proceeds Purchase Date;
(5) that Holders electing to have a Security purchased pursuant to
a Net Proceeds Offer will be required to surrender the Security, with the
form entitled "Option
<PAGE>96
of Holder to Elect Purchase" on the reverse of the Security completed, to
the Paying Agent at the address specified in the notice prior to the
close of business on the Business Day prior to the Proceeds Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than two Business Days prior to the
Proceeds Purchase Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Securities the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Security purchased; and
(7) that Holders whose Securities were purchased only in part will
be issued new Securities equal in principal amount to the unpurchased
portion of the Securities surrendered.
On or before the Proceeds Purchase Date, Holdings shall (i) accept
for payment Securities or portions thereof tendered pursuant to the Net
Proceeds Offer which are to be purchased in accordance with item (b)(l) above,
(ii) deposit with the Paying Agent U.S. Legal Tender sufficient to pay the
purchase price of all Securities to be purchased and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof being purchased by Holdings. The Paying
Agent shall promptly mail to the Holders of Securities so accepted payment in
an amount equal to the purchase price. Holdings will publicly announce the
results of the Net Proceeds Offer on or as soon as practicable after the
Proceeds Purchase Date. For purposes of this Section 4.15, the Trustee shall
act as the Paying Agent.
Any amounts remaining after the purchase of Securities pursuant to a
Net Proceeds Offer shall be returned by the Trustee to Holdings.
Section 4.16. Limitation on Senior Subordinated Indebtedness.
Holdings will not incur, create, issue, assume, guarantee or
otherwise become liable for any Indebtedness that is subordinate or junior in
right of payment to any Senior Indebtedness and senior in right of payment to
the Securities.
Section 4.17. Limitation on Preferred Stock of Subsidiaries.
Holdings will not permit any of its Subsidiaries to issue any Preferred
Stock (other than to Holdings or a wholly-owned Subsidiary), or permit any
person (other than Holdings or a wholly-owned Subsidiary) to own or hold an
interest in any Preferred Stock of any such Subsidiary, unless such Subsidiary
would be entitled to incur Indebtedness in accordance with the provisions of
Section 4.12 in the aggregate principal amount equal to the aggregate
liquidation value of such Preferred Stock assuming a market rate of interest
for such Preferred Stock as of the date of issuance or transfer.
Section 4.18. Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries.
Holdings shall not, and shall not permit any Subsidiary to, directly
or indirectly, create or suffer to exist, or allow to become effective any
consensual Payment Restriction with
<PAGE>97
respect to any of its Subsidiaries, except for (a) any such restrictions
contained in (i) the Loan Documents as in effect on the Issue Date, as any
such Payment Restriction may apply to any present or future Subsidiary, (ii)
Indebtedness of a Subsidiary existing on the Issue Date, as in effect on the
Issue Date, including any Indebtedness incurred as new financing in connection
with the transactions contemplated by the Merger Agreement, (iii) this
Indenture, (iv) Indebtedness of a person existing at the time such person
becomes a Subsidiary; provided that (x) such Indebtedness is not incurred in
connection with, or in contemplation of, such person becoming a Subsidiary,
(y) such restriction is not applicable to any person, or the properties or
assets or any person, other than the person so acquired and (z) such
Indebtedness is otherwise permitted to be incurred pursuant to Section 4.12;
(v) secured Indebtedness otherwise permitted to be incurred pursuant to
Section 4.12 that limits the right of the debtor to dispose of the assets
securing such Indebtedness; and (vi) any other Indebtedness permitted to be
incurred subsequent to the Issue Date pursuant to Section 4.12 of this
Indenture, provided that any such Payment Restrictions are ordinary and
customary with respect to the type of Indebtedness being incurred (under the
relevant circumstances), as reasonably determined by an Officer of Holdings,
and, in any event, no more restrictive than the most restrictive Payment
Restrictions in effect on the Issue Date; (b) customary non-assignment
provisions restricting subletting or assignment of any lease or assignment of
any contract of any Subsidiary; (c) customary net worth provisions contained
in leases and other agreements entered into by a Subsidiary in the ordinary
course of business; (d) customary restrictions with respect to a Subsidiary
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock or assets of such
Subsidiary; (e) customary provisions in instruments or agreements relating to
a Lien created, incurred or assumed in compliance with Section 4.13
prohibiting the transfer of the property subject to such Lien; (f) customary
provisions in joint venture agreements and other similar agreements entered
into in the ordinary course of business; and (g) restrictions contained in
Indebtedness incurred to refinance, refund, extend or renew Indebtedness
referred to in clause (a) above or amendments to the Indebtedness referred to
in clause (a) above; provided that the restrictions contained therein relating
to the payment of dividends by such Subsidiaries are not more restrictive,
taken as a whole (as reasonably determined by an Officer of Holdings), than
those provided for in such Indebtedness being refinanced, refunded, extended,
renewed or amended.
ARTICLE V
SUCCESSOR CORPORATION
Section 5.1. When Holdings May Merge, Etc.
(a) Holdings shall not in a single transaction or through a series
of related transactions (i) consolidate with or merge with or into any other
person, or transfer (by lease, assignment, sale or otherwise) all or
substantially all of its properties and assets as an entirety or substantially
as an entirety to another person or group of affiliated persons or (ii) adopt
a Plan of Liquidation, unless, in either case:
(1) either Holdings shall be the continuing person, or the person
(if other than Holdings) formed by such consolidation or into which
Holdings is merged or to which all or substantially all of the properties
and assets of Holdings as an entirety or
<PAGE>98
substantially as an entirety are transferred (or, in the case of a Plan
of Liquidation, any person to which assets are transferred) (Holdings or
such other person being hereinafter referred to as the "Surviving Person")
shall be a corporation organized and validly existing under the laws of
the United States, any State thereof or the District of Columbia, and
shall expressly assume, by an indenture supplemental hereto, executed
and delivered to the Trustee, in form satisfactory to the Trustee, all
the obligations of Holdings under the Securities and this Indenture;
(2) immediately after and giving effect to such transaction and the
assumption contemplated by clause (1) above and the incurrence or
anticipated incurrence of any Indebtedness to be incurred in connection
therewith, (A) the Surviving Person shall have a Net Worth equal to or
greater than the Net Worth of Holdings immediately preceding the
transaction and (B) the Surviving Person could incur at least $1 of
Indebtedness pursuant to Section 4.12(b);
(3) immediately before and immediately after and giving effect to
such transaction and the assumption of the obligations as set forth in
clause (1) above and the incurrence or anticipated incurrence of any
Indebtedness to be incurred in connection therewith, no Default or Event
of Default shall have occurred and be continuing; and
(4) Holdings shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, transfer or adoption and such supplemental
indenture comply with this Article Five, that the Surviving Person agrees
to be bound hereby, and that all conditions precedent herein provided
relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties and assets of one
or more Subsidiaries, the Capital Stock of which constitutes all or
substantially all of the properties and assets of Holdings shall be deemed to
be the transfer of all or substantially all of the properties and assets of
Holdings.
[(c) Section 5.1(a)(2)(B) above shall not prohibit the consolidation
or merger of Holdings and FFL so long as the total amount of Indebtedness
outstanding immediately after such merger or consolidation does not exceed the
total amount of Indebtedness of Holdings immediately prior thereto.]
(d) This Article Five shall not apply to (i) the creation,
incurrence or assumption of Liens securing Indebtedness outstanding under the
Credit Agreement or (ii) any sale or other disposition of assets in connection
with an event of default and acceleration under the Credit Agreement.
Section 5.2. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer of assets in
accordance with Section 5.1, the successor person formed by such consolidation
or into which Holdings is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
Holdings under this Indenture with the same effect as if such
<PAGE>99
successor person had been named as Holdings herein. When a successor
corporation assumes all of the obligations of Holdings hereunder and under the
Securities and agrees to be bound hereby and thereby, the predecessor shall be
released from such obligations.
ARTICLE VI
DEFAULT AND REMEDIES
Section 6.1. Events of Default.
An "Event of Default" occurs if:
(1) Holdings defaults in the payment of interest on the Securities
when the same becomes due and payable and the default continues for a
period of 30 days;
(2) Holdings defaults in the payment of the principal of the
Securities when the same becomes due and payable at maturity, upon
acceleration, redemption or otherwise (including the failure to
repurchase Securities tendered pursuant to the requirements set forth in
Sections 4.14 and 4.15), whether or not such payment shall be prohibited
by the provisions of Article Eleven hereof;
(3) Holdings fails to comply with any of its other agreements or
covenants in, or provisions of, the Securities or this Indenture and the
default continues for the period and after the notice specified below;
(4) there shall be a default under any bond, debenture, or other
evidence of Indebtedness of Holdings or of any Significant Subsidiary or
under any mortgage, indenture or other instrument under which there may
be issued or by which there may be secured or evidenced any such
Indebtedness, whether such Indebtedness now exists or shall hereafter be
created, if both (A) such default either (i) results from the failure to
pay such Indebtedness at its stated final maturity (that is, the date of
the last principal installment of any installment Indebtedness under the
instrument or agreement pursuant to or under which such Indebtedness was
created or is evidenced) or (ii) relates to an obligation (including any
obligation to pay interest, to purchase such Indebtedness or to pay the
principal of such Indebtedness, other than the obligation to pay any
principal of such Indebtedness at its stated final maturity) and results
in the holder or holders of such Indebtedness causing such Indebtedness
to become due prior to its stated final maturity) and (B) the principal
amount of such Indebtedness, together with the principal amount of any
other such Indebtedness the maturity of which has been so accelerated,
aggregates $25 million or more at any one time;
(5) Holdings or any Significant Subsidiary (A) admits in writing
its inability to pay its debts generally as they become due, (B)
commences a voluntary case or proceeding under any Bankruptcy Law with
respect to itself, (C) consents to the entry of a judgment, decree or
order for relief against it in an involuntary case or proceeding under
any Bankruptcy Law, (D) consents to the appointment of a Custodian of it
or for substantially all of its property, (E) consents to or acquiesces
in the institution of a bankruptcy or an insolvency proceeding against
it, (F) makes a general assignment for
<PAGE>100
the benefit of its creditors, or (G) takes any corporate action to
authorize or effect any of the foregoing;
(6) a court of competent jurisdiction enters a judgment, decree or
order for relief in respect of Holdings or any Significant Subsidiary in
an involuntary case or proceeding under any Bankruptcy Law, which shall
(A) approve as properly filed a petition seeking reorganization,
arrangement, adjustment or composition in respect of Holdings or any
Significant Subsidiary, (B) appoint a Custodian of Holdings or any
Significant Subsidiary or for substantially all of its property or (C)
order the winding-up or liquidation of its affairs; and such judgment,
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(7) any warrant of attachment is issued against any portion of the
property of Holdings having a value of at least $25 million, which
warrant is not released within 60 days after service of process with
respect thereto, or final judgments not covered by insurance for the
payment of money which in the aggregate at any one time exceeds $25
million shall be rendered against Holdings by a court of competent
jurisdiction and shall remain undischarged for a period (during which
execution shall not be effectively stayed) of 60 days after such judgment
becomes final and nonappealable.
A Default under clause (3) above (other than in the case of any
Defaults resulting from any Default under Section 4.3, 4.14 or 5.1, which
Defaults shall be Events of Default with the notice specified in this
paragraph but without the passage of time specified in this paragraph) is not
an Event of Default until the Trustee notifies Holdings, or the Holders of at
least 25% in aggregate principal amount of the outstanding Securities notify
Holdings and the Trustee, of the Default, and Holdings does not cure the
Default within 30 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default." Such notice shall be given by the Trustee if so requested by the
Holders of at least 25% in aggregate principal amount of the Securities then
outstanding. When a Default is cured, it ceases.
Section 6.2. Acceleration.
(a) If an Event of Default (other than an Event of Default
specified in Section 6.1(5) or (6) with respect to Holdings or any Significant
Subsidiary) occurs and is continuing, the Trustee may, by notice to Holdings
(and, if any Indebtedness is outstanding under the Credit Agreement or any
Loan Documents is otherwise in effect, to the Credit Agent), or the Holders of
at least 25% in aggregate principal amount of the Securities then outstanding
may, by written notice to Holdings and the Trustee, and the Trustee shall
(with notice to the Credit Agent if any Indebtedness is outstanding under the
Credit Agreement or any Loan Document is otherwise in effect), upon the
request of such Holders, declare the aggregate principal amount of the
Securities outstanding, together with accrued but unpaid interest thereon to
the date of payment, to be due and payable and, upon any such declaration, the
same shall become and be due and payable; provided, that so long as the 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 Holdings and the Credit Agent under the Credit Agreement and only if
upon such fifth Business Day such Event of Default shall be continuing or (b)
the acceleration
<PAGE>101
of any Indebtedness under the Credit Agreement. If an Event of Default
specified in Section 6.1(5) or (6) occurs with respect to Holdings or any
Significant Subsidiary, all unpaid principal and accrued interest on the
Securities then outstanding 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. Upon payment of such principal amount, interest, and premium, if any,
all of Holdings' obligations under the Securities and this Indenture, other
than obligations under Section 7.7, shall terminate. The Holders of a
majority in aggregate principal amount of the Securities then outstanding by
notice to the Trustee may rescind an acceleration and its consequences if (i)
all existing Events of Default, other than the non-payment of the principal
and interest on the Securities which have become due solely by such
declaration of acceleration, have been cured or waived, (ii) to the extent the
payment of such interest is lawful, interest on overdue installments of inter-
est and overdue principal, which has become due otherwise than by such
declaration of acceleration, has been paid, and (iii) the rescission would not
conflict with any judgment or decree of a court of competent jurisdiction.
(b) In the event of a declaration of acceleration under this
Indenture because an Event of Default set forth in Section 6.1(4) has occurred
and is continuing, such declaration of acceleration shall be automatically
rescinded and annulled if either (i) the holders of the Indebtedness which is
the subject of such Event of Default have waived such failure to pay at
maturity or have rescinded the acceleration in respect of such Indebtedness
within 90 days of such maturity or declaration of acceleration, as the case
may be, and no other Event of Default has occurred during such 90-day period
which has not been cured or waived, or (ii) such Indebtedness shall have been
discharged or the maturity thereof shall have been extended such that it is
not then due and payable, or the underlying default has been cured (and any
acceleration based thereon of such other Indebtedness has been rescinded),
within 90 days of such maturity or declaration of acceleration, as the case
may be.
Section 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess
any of the Securities or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. No remedy
is exclusive of any other remedy. All available remedies are cumulative to
the extent permitted by law.
Section 6.4. Waiver of Past Defaults.
Subject to Sections 6.7 and 9.2, the Holders of at least a majority
in aggregate principal amount of the outstanding Securities by notice to the
Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on
any Security as specified in clauses (1) and (2) of Section 6.1. When a
Default or Event of Default is waived, it is cured and ceases.
<PAGE>102
Section 6.5. Control by Majority.
The Holders of at least a majority in aggregate principal amount of
the outstanding Securities may 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 it. Subject to Section 7.1, however, the Trustee may
refuse to follow any direction that conflicts with any law or this Indenture
that the Trustee determines may be unduly prejudicial to the rights of another
Holder, or that may involve the Trustee in personal liability; provided that
the Trustee may take any other action deemed proper by the Trustee which is
not inconsistent with such direction.
Section 6.6. Limitation on Suits.
A Holder may not pursue any remedy with respect to this Indenture or
the Securities unless:
(1) the Holder gives to the Trustee notice of a continuing Event of
Default;
(2) the Holder or Holders of at least 25% in aggregate principal
amount of the outstanding Securities make a written request to the
Trustee to pursue the remedy;
(3) such Holder or Holders offer to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense to be
incurred in compliance with such request;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer of indemnity; and
(5) during such 60-day period the Holder or Holders of at least 25%
in aggregate principal amount of the outstanding Securities do not give
the Trustee a direction which, in the opinion of the Trustee, is
inconsistent with the request.
A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over such other Holder.
Section 6.7. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on
or after the respective due dates expressed in such Security, or to bring suit
for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of the Holder.
Section 6.8. Collection Suit by Trustee.
If an Event of Default in payment of principal or interest specified
in clause (1) or (2) of Section 6.1 occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against
Holdings or any other obligor on the Securities for the whole amount of
principal and accrued interest remaining unpaid, together with interest on
overdue principal and, to the extent that payment of such interest is lawful,
interest on
<PAGE>103
overdue installments of interest, in each case at the rate per annum borne by
the Securities and 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.
Section 6.9. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and 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 the
Holders allowed in any judicial proceedings relating to Holdings or any other
obligor upon the Securities, any of their respective creditors or any of their
respective property and shall be entitled and empowered to collect and receive
any monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings 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 to the Trustee any amount due to 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 7.7. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the 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 6.10. Priorities.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
First: to the Trustee for amounts due under Section 7.7;
Second: if the Holders are forced to proceed against Holdings
directly without the Trustee, to the Holders for their collection costs;
Third: to the Holders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
Fourth: to Holdings.
The Trustee, upon prior notice to Holdings, may fix a record date
and payment date for any payment to the Holders pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
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 or omitted
by it as Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the
<PAGE>104
costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section 6.11 does not apply to a suit by the
Trustee, a suit by a Holder pursuant to Section 6.7, or a suit by a Holder or
Holders of more than 10% in aggregate principal amount of the outstanding
Securities.
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed.
Section 7.1. Duties of Trustee.
(a) If a Default or 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 its exercise
thereof as a prudent person could exercise or use under the circumstances in
the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) 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.
(2) 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. However, 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:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1.
(2) The Trustee shall not be liable for any error of judgment made
in good faith by a Trust Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts.
(3) 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 6.5.
(d) 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
<PAGE>105
hereunder or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to
the Trustee is subject to paragraphs (a), (b), (c) and (d) of this
Section 7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree with Holdings. Assets held in
trust by the Trustee need not be segregated from other assets except to the
extent required by law.
Section 7.2. Rights of Trustee.
Subject to Section 7.1:
(a) The Trustee may rely on 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.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 12.4 and 12.5. The Trustee
shall not be liable for any action it takes or omits to take in good
faith in reliance on such certificate or opinion.
(c) 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.
(d) The Trustee shall not be liable for any action that it takes or
omits to take in good faith which it believes to be authorized or within
its rights or powers.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond,
debenture, or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this
Indenture, unless such Holders shall have offered to the Trustee rea-
sonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
Section 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with Holdings, its
Subsidiaries, or their respective Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 and 7.11.
<PAGE>106
Section 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy
of this Indenture or the Securities, it shall not be accountable for Holdings'
use of the proceeds from the Securities, and it shall not be responsible for
any statement in the Securities other than the Trustee's certificate of
authentication.
Section 7.5. Notice of Default.
If a Default or an Event of Default occurs and is continuing and if
it is known to the Trustee, the Trustee shall mail to each Holder notice of
the uncured Default or Event of Default within 90 days after such Default or
Event of Default occurs. Except in the case of a Default or an Event of
Default in payment of principal of, premium, if any, or interest on, any
Security, including the failure to make payment on the Change of Control
Payment Date pursuant to a Change of Control Offer, the Trustee may withhold
the notice if and so long as its board of directors, the executive committee
of its board of directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the
interest of the Holders.
Section 7.6. Reports By Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, the Trustee shall, to the extent that any of the
events described in TIA 313(a) occurred within the previous twelve months,
but not otherwise, mail to each Holder a brief report dated as of such May 15
that complies with TIA 313(a). The Trustee also shall comply with TIA
313(b) and 313(c).
A copy of each report at the time of its mailing to Holders shall be
mailed to Holdings and filed with the SEC and each stock exchange, if any, on
which the Securities are listed.
Holdings shall notify the Trustee if the Securities become listed on
any stock exchange.
Section 7.7. Compensation and Indemnity.
Holdings shall pay to the Trustee from time to time reasonable
compensation for its services. The Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. Holdings
shall reimburse the Trustee upon request for all reasonable disbursements,
expenses and advances incurred or made by it including, without limitation,
any taxes imposed on the trust or on the income from the Securities. Such
expenses shall include the reasonable compensation, disbursements and expenses
of the Trustee's agents and counsel.
Holdings shall indemnify the Trustee for, and hold it harmless
against, any loss or liability incurred by it except for such actions to the
extent caused by any negligence or bad faith on its part, arising out of or in
connection with the administration of this trust and its rights or duties
hereunder. The Trustee shall notify Holdings promptly of any claim asserted
against
<PAGE>107
the Trustee for which it may seek indemnity. Holdings shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and Holdings shall pay the reasonable fees and expenses of such
counsel; provided that Holdings will not be required to pay such fees and
expenses if it assumes the Trustee's defense and there is no conflict of
interest between Holdings and the Trustee in connection with such defense as
reasonably determined by the Trustee. Holdings need not pay for any
settlement made without its written consent. Holdings need not reimburse any
expense or indemnify against any loss or liability to the extent incurred by
the Trustee through its negligence, bad faith or willful misconduct.
To secure Holdings' payment obligations in this Section 7.7, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal of, premium, if any, or interest on particular
Securities.
When the Trustee incurs expenses or renders services after an Event
of Default specified in Section 6.1(5) or (6) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
Section 7.8. Replacement of Trustee.
The Trustee may resign by so notifying Holdings. The Holders of a
majority in aggregate principal amount of the outstanding Securities may
remove the Trustee by so notifying Holdings and the Trustee may appoint a
successor Trustee with Holdings' consent. Holdings may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the Trustee
or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, Holdings shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after
the successor Trustee takes office, the Holders of a majority in aggregate
principal amount of the Securities may appoint a successor Trustee to replace
the successor Trustee appointed by Holdings.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Holdings. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.7, the res-
ignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. A successor Trustee shall mail notice of its succession
to each Holder.
<PAGE>108
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, Holdings or the
Holders of at least 10% in aggregate principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appoint-
ment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, Holdings' obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.
Section 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA 310(a)(1) and 310(a)(5). The Trustee shall have a
combined capital and surplus of at least $100,000,000 as set forth in its most
recent published annual report of condition. The Trustee shall comply with
TIA 310(b); provided, however, that there shall be excluded from the
operation of TIA 310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other securities,
of Holdings are outstanding, if the requirements for such exclusion set forth
in TIA 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against Holdings.
The Trustee shall comply with TIA 311(a), excluding any creditor
relationship listed in TIA 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Sec. 311(a) to the extent indicated.
ARTICLE VIII
SATISFACTION AND DISCHARGE OF INDENTURE
Section 8.1. Satisfaction and Discharge of the Indenture and Defeasance of
the Securities.
Holdings shall be deemed to have paid and discharged the entire
Indebtedness on the Securities and the provisions of this Indenture (subject
to Section 8.3), if:
(1) A period of 91 days has elapsed after Holdings shall have
irrevocably deposited in trust with the Trustee pursuant to an
irrevocable trust and security agreement in form and substance reasonably
satisfactory to the Trustee, U.S. Legal Tender or direct non-callable
obligations of, or non-callable obligations guaranteed by, the United
States
<PAGE>109
of America for the payment of which obligation or guarantee the full faith
and credit of the United States of America is pledged ("U.S.
Government Obligations") maturing as to principal and interest in such
amounts and at such times as are sufficient, without consideration of
the reinvestment of such interest and after payment of all federal, state
and local taxes or other charges or assessments in respect thereof
payable by the Trustee, in the opinion of the Chief Financial Officer
of Holdings expressed in a written certification thereof (in form and
substance reasonably satisfactory to the Trustee) delivered to the
Trustee, to pay the principal of and interest on the outstanding
Securities on the dates on which any such payments are due and payable
in accordance with the terms of the Indenture and of the Securities;
(2) Such deposits shall not cause the Trustee to have a conflicting
interest as defined in and for purposes of the TIA;
(3) No Default or Event of Default (i) shall have occurred or be
continuing on the date of such deposit or (ii) shall occur on or before
the 91st day after the date of such deposit;
(4) Such deposit will not result in a Default under this Indenture
or a breach or violation of, or constitute a default under, any other
instrument or agreement to which Holdings or any Subsidiary is a party or
by which it or its property is bound;
(5) Holdings shall deliver to the Trustee an Opinion of Counsel, in
form and substance reasonably satisfactory to the Trustee, to the effect
that Holders of the Securities will not recognize income, gain or loss
for federal income tax purposes as a result of such deposit and the
defeasance contemplated hereby and will be subject to federal income tax
in the same amounts and in the same manner and at the same times as would
have been the case if such deposit and defeasance had not occurred;
(6) The deposit shall not result in Holdings, the Trustee or the
trust becoming or being deemed to be an "investment company" under the
Investment Company Act of 1940;
(7) The Holders shall have a perfected security interest under
applicable law in the U.S. Legal Tender or U.S. Government Obligations
deposited pursuant to Section 8.1(1) above; and
(8) Holdings has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
specified herein relating to the defeasance contemplated by this
Section 8.1 have been complied with.
In the event all or any portion of the Securities are to be redeemed
through such irrevocable trust, Holdings must make arrangements satisfactory
to the Trustee, at the time of such deposit, for the giving of the notice of
such redemption or redemptions by the Trustee in the name and at the expense
of Holdings.
<PAGE>110
Section 8.2. Termination of Obligations upon Cancellation of the Securities.
In addition to Holdings' rights under Section 8.1, Holdings may
terminate all of its obligations under this Indenture (subject to Section 8.3)
when:
(1) all Securities theretofore authenticated and delivered (other
than Securities which have been destroyed, lost or stolen and which have
been replaced or paid as provided in Section 2.7) have been delivered to
the Trustee for cancellation;
(2) Holdings has paid or caused to be paid all other sums payable
hereunder and under the Securities by Holdings; and
(3) Holdings has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that all conditions precedent
specified herein relating to the satisfaction and discharge of this
Indenture have been complied with.
Section 8.3. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this Indenture and
of the Securities referred to in Section 8.1 or 8.2, the respective
obligations of Holdings and the Trustee under Sections 2.2, 2.3, 2.4, 2.5,
2.6, 2.7, 2.13, 4.1, 4.2, 6.7, 7.7, 7.8, 8.5, 8.6, 8.7, 12.4 and 12.5 shall
survive until the Securities are no longer outstanding, and thereafter the
obligations of Holdings and the Trustee under Sections 7.7, 8.5, 8.6 and 8.7
shall survive. Nothing contained in this Article Eight shall abrogate any of
the obligations or duties of the Trustee under this Indenture.
Section 8.4. Acknowledgment of Discharge by Trustee.
Subject to Section 8.7, after (i) the conditions of Section 8.1 or
8.2 have been satisfied, (ii) Holdings has paid or caused to be paid all other
sums payable hereunder by Holdings and (iii) Holdings has delivered to the
Trustee an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent referred to in clause (i) above relating to the
satisfaction and discharge of this Indenture have been complied with, the
Trustee upon request shall acknowledge in writing the discharge of Holdings'
obligations under this Indenture except for those surviving obligations
specified in Section 8.3.
Section 8.5. Application of Trust Assets.
The Trustee shall hold any U.S. Legal Tender or U.S. Government
Obligations deposited with it in the irrevocable trust established pursuant to
Section 8.1. The Trustee shall apply the deposited U.S. Legal Tender or the
U.S. Government Obligations, together with earnings thereon, through the
Paying Agent (other than Holdings or any Subsidiary), in accordance with this
Indenture and the terms of the irrevocable trust agreement, to the payment of
principal of and interest on the Securities. The U.S. Legal Tender or U.S.
Government Obligations so held in trust and deposited with the Trustee in com-
pliance with Section 8.1 shall not be part of the trust estate under this
Indenture, but shall constitute a separate trust fund for the benefit of all
Holders entitled thereto.
<PAGE>111
Section 8.6. Repayment to Holdings.
Upon termination of the trust established pursuant to Section 8.1,
the Trustee and the Paying Agent shall promptly pay to Holdings upon request
any excess U.S. Legal Tender or U.S. Government Obligations held by them.
The Trustee and the Paying Agent shall pay to Holdings upon request,
and, if applicable, in accordance with the irrevocable trust established
pursuant to Section 8.1 or 8.2, any U.S. Legal Tender or U.S. Government
Obligations held by them for the payment of principal of or interest on the
Securities that remain unclaimed for one year after the date on which such
payment shall have become due. After payment to Holdings, Holders entitled to
such payment must look to Holdings for such payment as general creditors
unless an applicable abandoned property law designates another person.
Section 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any U.S. Legal
Tender or U.S. Government Obligations in accordance with Section 8.1 or 8.2 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, Holdings' obligations under this Indenture and
the Securities shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.1 or 8.2 until such time as the Trustee or
Paying Agent is permitted to apply all such U.S. Legal Tender or U.S.
Government Obligations in accordance with Section 8.1 or 8.2
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 9.1. Without Consent of Holders.
Holdings, when authorized by a Board Resolution, and the Trustee,
together, may amend or supplement this Indenture or the Securities without
notice to or consent of any Holder:
(1) to cure any ambiguity, defect or inconsistency; provided that
such amendment or supplement does not adversely affect the rights of any
Holder;
(2) to comply with Article Five;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Internal Revenue Code of 1986, as from time to time
amended, or in a manner such that the uncertificated Securities are
described in Section 163(f)(2)(B) of the Internal Revenue Code of 1986,
as from time to time amended;
(4) to make any other change that does not adversely affect the
rights of any Holders; or
<PAGE>112
(5) to comply with any requirements of the SEC in connection with
the qualification of this Indenture under the TIA;
provided that Holdings has delivered to the Trustee an Opinion of Counsel
stating that such amendment or supplement complies with the provisions of this
Section 9.1.
Section 9.2. With Consent of Holders.
Subject to Section 6.7, Holdings, when authorized by a Board
Resolution, and the Trustee, together, with the written consent of the Holder
or Holders of at least fifty-one percent in aggregate principal amount of the
outstanding Securities, may amend or supplement this Indenture or the
Securities, without notice to any other Holders. Subject to Section 6.7, the
Holder or Holders of at least fifty-one percent in aggregate principal amount
of the outstanding Securities may waive compliance by Holdings with any
provision of this Indenture or the Securities without notice to any other
Holder. Without the consent of each Holder affected, however, no amendment,
supplement or waiver, including a waiver pursuant to Section 6.4, may:
(1) change the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver of any provision of this
Indenture or the Securities;
(2) reduce the rate or extend the time for payment of interest on
any Security;
(3) reduce the principal amount of any Security;
(4) change the Maturity Date of any Security, or alter the
redemption provisions contained in paragraph 5 of the Securities in a
manner adverse to any Holder;
(5) make any changes in the provisions concerning waivers of
Defaults or Events of Default by Holders of the Securities or the rights
of Holders to recover the principal of, interest on, or redemption
payment with respect to, any Security;
(6) make any changes in Section 6.4, 6.7 or this third sentence of
this Section 9.2; or
(7) make the principal of, or the interest on any Security payable
with anything or in any manner other than as provided for in the
Indenture and the Securities as in effect on the date hereof.
Without the consent of the Holder or Holders of at least 66 % of the
aggregate principal amount of the outstanding Securities, no change may be
made to the provisions of Article Eleven that adversely affects the rights of
any Holder under Article Eleven.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
<PAGE>113
After an amendment, supplement or waiver under this Section becomes
effective, Holdings shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of
Holdings to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
In connection with any amendment, supplement or waiver under this
Article Nine, Holdings may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or
waiver.
Holdings agrees that no amendment, supplement or waiver under this
Article Nine may make any change that adversely affects the rights under
Article Eleven of any holders of Senior Indebtedness unless the holders of
such Senior Indebtedness consent to the change.
Section 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the
Securities shall comply with the TIA as then in effect.
Section 9.4. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security, even if notation of the consent
is not made on any Security. However, any such Holder or subsequent Holder
may revoke the consent as to his Security or portion of his Security by notice
to the Trustee or Holdings received before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Securities have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.
Holdings may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be at least 30 days prior to the
first solicitation of such consent. If a record date is fixed, then
notwithstanding the last sentence of the immediately preceding paragraph,
those persons who were Holders at such record date (or their duly designated
proxies), and only those persons, shall be entitled to revoke any consent
previously given, whether or not such persons continue to be Holders after
such record date. No such consent shall be valid or effective for more than
90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (1)
through (7) of Section 9.2, in which case, the amendment, supplement or waiver
shall bind only each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal of and interest on a Security, on or after the respective due dates
expressed in such Security, or to bring suit for the enforcement of any such
payment on or after such respective dates without the consent of such Holder.
<PAGE>114
Section 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms of a
Security, the Trustee may require the Holder of the Security to deliver it to
the Trustee. The Trustee may place an appropriate notation on the Security
about the changed terms and return it to the Holder. Alternatively, if
Holdings or the Trustee so determines, Holdings in exchange for the Security
shall issue and the Trustee shall authenticate a new Security that reflects
the changed terms.
Section 9.6. Trustee To Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this Inden-
ture. The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Nine is
authorized or permitted by this Indenture.
ARTICLE X
MEETINGS OF SECURITYHOLDERS
Section 10.1. Purposes for Which Meetings May Be Called.
A meeting of Holders may be called at any time and from time to time
pursuant to the provisions of this Article Ten for any of the following
purposes:
(a) to give any notice to Holdings or to the Trustee, or to give
any directions to the Trustee, or to waive or to consent to the waiving
of any Default or Event of Default hereunder and its consequences, or to
take any other action authorized to be taken by Holders pursuant to any
of the provisions of Article Six;
(b) to remove the Trustee or appoint a successor Trustee pursuant
to the provisions of Article Seven;
(c) to consent to an amendment, supplement or waiver pursuant to
the provisions of Section 9.2; or
(d) to take any other action (i) authorized to be taken by or on
behalf of the Holders of any specified aggregate principal amount of the
Securities under any other provision of this Indenture, or authorized or
permitted by law or (ii) which the Trustee deems necessary or appropriate
in connection with the administration of this Indenture.
Section 10.2. Manner of Calling Meetings.
The Trustee may at any time call a meeting of Holders to take any
action specified in Section 10.1, to be held at such time and at such place in
New York, New York or elsewhere
<PAGE>115
as the Trustee shall determine. Notice of every meeting of Holders, setting
forth the time and place of such meeting and in general terms the action
proposed to be taken at such meeting, shall be mailed by the Trustee,
first-class postage prepaid, to Holdings and to the Holders at their last
addresses as they shall appear on the registration books of the Registrar not
less than 10 nor more than 60 days prior to the date fixed for a meeting.
Any meeting of Holders shall be valid without notice if the Holders
of all Securities then outstanding are present in person or by proxy, or if
notice is waived before or after the meeting by the Holders of all Securities
outstanding, and if Holdings, any Subsidiary and the Trustee are either
present by duly authorized representatives or have, before or after the
meeting, waived notice.
Section 10.3. Call of Meetings by Holdings or Holders.
In case at any time Holdings, pursuant to a Board Resolution, or the
Holders of not less than 10% in aggregate principal amount of the Securities
then outstanding shall have requested the Trustee to call a meeting of Holders
to take any action specified in Section 10.1, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the notice of such meeting within 20 days after
receipt of such request, then Holdings or the Holders in the amount above
specified may determine the time and place in New York, New York or elsewhere
for such meeting and may call such meeting for the purpose of taking such
action, by mailing or causing to be mailed notice thereof as provided in
Section 10.2, or by causing notice thereof to be published at least once in
each of two successive calendar weeks (on any Business Day during such week)
in a newspaper or newspapers printed in the English language, customarily
published at least five days a week of a general circulation in New York,
New York, the first such publication to be not less than 10 nor more than 60
days prior to the date fixed for the meeting.
Section 10.4. Who May Attend and Vote at Meetings.
To be entitled to vote at any meeting of Holders, a person shall (a)
be a registered Holder of one or more Securities, or (b) be a person appointed
by an instrument in writing as proxy for the registered Holder or Holders of
Securities. The only persons who shall be entitled to be present or to speak
at any meeting of Holders shall be the persons entitled to vote at such
meeting and their counsel and any representatives of the Trustee and its
counsel and any representatives of Holdings and its counsel.
Section 10.5. Regulations May Be Made by Trustee; Conduct of the Meeting;
Voting Rights; Adjournment.
Notwithstanding any other provision of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any action
by or any meeting of Holders, in regard to proof of the holding of Securities
and of the appointment of proxies, and in regard to the appointment and duties
of inspectors of votes, and submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think appropriate. Such
regulations may fix a record date and time for determining the Holders of
record of Securities entitled to vote at such meeting, in which case those and
only those persons who are Holders of Securities at the record date and
<PAGE>116
time so fixed, or their proxies, shall be entitled to vote at such meeting
whether or not they shall be such Holders at the time of the meeting.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by Holdings
or by Holders as provided in Section 10.3, in which case Holdings or the
Holders calling the meeting, as the case may be, shall in like manner appoint
a temporary chairman. A permanent chairman and a permanent secretary of the
meeting shall be elected by vote of the Holders of a majority in aggregate
principal amount of the Securities represented at the meeting and entitled to
vote.
At any meeting each Holder or proxy shall be entitled to one vote
for each $1,000 principal amount of Securities held or represented by him;
provided, however, that no vote shall be cast or counted at any meeting in
respect of any Securities challenged as not outstanding and ruled by the
chairman of the meeting to be not outstanding. The chairman may adjourn any
such meeting if he is unable to determine whether any Holder or proxy shall be
entitled to vote at such meeting. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments in
writing as aforesaid duly designating him as the proxy to vote on behalf of
other Holders. Any meeting of Holders duly called pursuant to the provisions
of Section 10.2 or Section 10.3 may be adjourned from time to time by vote of
the Holders of a majority in aggregate principal amount of the Securities
represented at the meeting and entitled to vote, and the meeting may be held
as so adjourned without further notice.
Section 10.6. Voting at the Meeting and Record To Be Kept.
The vote upon any resolution submitted to any meeting of Holders
shall be by written ballots on which shall be subscribed the signatures of the
Holders of Securities or of their representatives by proxy and the principal
amount of the Securities voted by the ballot. The permanent chairman of the
meeting shall appoint two inspectors of votes, who shall count all votes cast
at the meeting for or against any resolution and who shall make and file with
the secretary of the meeting their verified written reports in duplicate of
all votes cast at the meeting. A record in duplicate of the proceedings of
each meeting of Holders shall be prepared by the secretary of the meeting and
there shall be attached to such record the original reports of the inspectors
of votes on any vote by ballot taken thereat and affidavits by one or more
persons having knowledge of the facts, setting forth a copy of the notice of
the meeting and showing that such notice was mailed as provided in
Section 10.2 or published as provided in Section 10.3. The record shall be
signed and verified by the affidavits of the permanent chairman and the
secretary of the meeting and one of the duplicates shall be delivered to
Holdings and the other to the Trustee to be preserved by the Trustee, the
latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
Section 10.7. Exercise of Rights of Trustee or Holders May Not Be Hindered or
Delayed by Call of Meeting.
Nothing contained in this Article Ten shall be deemed or construed
to authorize or permit, by reason of any call of a meeting of Holders or any
rights expressly or impliedly
<PAGE>117
conferred hereunder to make such call, any hindrance or delay in the exercise
of any right or rights conferred upon or reserved to the Trustee or to the
Holders under any of the provisions of this Indenture or of the Securities.
ARTICLE XI
SUBORDINATION
Section 11.1. Securities Subordinated to Senior Indebtedness.
Anything herein to the contrary notwithstanding, Holdings, for
itself and its successors, and each Holder, by accepting a Security, agrees,
that the payment of the principal of and interest on and premiums, penalties,
fees and other liabilities (including, without limitation, liabilities in
respect of any indemnity, reimbursement, compensation or contribution
obligations, the occurrence of a Change of Control, any liquidated damage
provision, any breach of representation or warranty, or any rights of redemp-
tion or rescission under this Indenture, the Merger Agreement and the
Registration Rights Agreement or by law or otherwise) ("Other Obligations")
with respect to the Securities is subordinated, to the extent and in the
manner provided in this Article Eleven, to the prior payment in full in cash
of all Senior Indebtedness.
This Article Eleven 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 11.2. No Payment on Securities in Certain Circumstances.
(a) No direct or indirect payment or distribution shall be made by
or on behalf of Holdings (other than a payment in Secondary Securities) on
account of principal of or interest on or Other Obligations with respect to
the Securities or to acquire, repurchase, redeem, retire or defease any of the
Securities or on account of the redemption provisions of the Securities (i)
upon the maturity of any Senior Indebtedness by lapse of time, acceleration or
otherwise, unless and until all principal thereof and interest thereon shall
first be paid in full in cash or (ii) upon the happening of any default in
payment of any principal of or interest on any Senior Indebtedness when the
same becomes due and payable (a "Payment Default"), unless and until such
default shall have been cured or waived or shall have ceased to exist.
(b) Without limiting the effect of Section 11.2(a), upon the
happening of a default or event of default (other than a Payment Default)
(including any event which, with the giving of notice or lapse of time, or
both, would become an event of default and including any default or event of
default that would result upon any payment with respect to the Securities)
with respect to any Senior Indebtedness, as such default or event of default
is defined therein or in the instrument or agreement under which it is
outstanding, and upon written notice thereof given to Holdings and the Trustee
by any holders of such Senior Indebtedness or their Representative specifying
an intent to effect a Payment Blockage Period hereunder ("Payment Notice"),
then, unless and until such default or event of default shall have been cured
or waived or shall have ceased to exist, no direct or indirect payment or
distribution (other than of
<PAGE>118
Secondary Securities) shall be made by or on behalf of Holdings on account of
principal of or interest on or Other Obligations with respect to the
Securities or to acquire, repurchase, redeem, retire or defease any of the
Securities or on account of the redemption provisions of the Securities;
provided, however, that this paragraph (b) shall not prevent the making of any
payment for a period of (a "Payment Blockage Period") of more than 179 days
after a Payment Notice shall have been given (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and
Holdings from the Credit Agent or the Representative which gave such Payment
Notice, (ii) repayment in full of such Senior Indebtedness or (iii) because
the default specified in the Payment Notice is no longer continuing). Subject
to the provisions contained in Section 11.2(a) above, Holdings may resume
payments on the Securities after such Payment Blockage Period expires.
Notwithstanding the foregoing, (i) not more than one Payment Notice shall be
given within a period of 360 consecutive days, and (ii) a Payment Notice may
only be given (A) if Senior Indebtedness is outstanding under the Credit
Agreement at the time of such notice, by the Credit Agent and (B) if no Senior
Indebtedness is outstanding under the Credit Agreement at the time of such
notice, by a holder or holders (or the Representative of holders) of at least
$35,000,000 principal amount of such Senior Indebtedness. For purposes of
this Section, no default or event of default which existed or was continuing
on the date of the commencement of any Payment Blockage Period with respect to
the Senior Indebtedness initiating such Payment Blockage Period shall be, or
be made, the basis of the commencement of a subsequent Payment Blockage Period
by the Representative of such Senior Indebtedness whether or not within a
period of 360 consecutive days unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
(c) In furtherance of the provisions of Section 11.1, if,
notwithstanding the foregoing provisions of this Section 11.2, any direct or
indirect payment or distribution other than Secondary Securities on account of
principal of or interest on or Other Obligations with respect to the
Securities or to acquire, repurchase, redeem, retire or defease any of the
Securities or on account of the redemption provisions of the Securities shall
be made by or on behalf of Holdings and received by the Trustee, by any Holder
or by any Paying Agent (or, if Holdings or any Subsidiary or Affiliate of
Holdings is acting as Paying Agent, money for any such payment or distribution
shall be segregated and held in trust), at a time when such payment or
distribution was prohibited by the provisions of this Section 11.2, then,
unless and until such payment or distribution is no longer prohibited by this
Section 11.2, such payment or distribution (subject to the provisions of
Sections 11.6 and 11.7) shall be received, segregated from other funds, and
held in trust by the Trustee or such Holder or Paying Agent, as the case may
be, for the benefit of, and shall be immediately paid over to, the holders of
Senior Indebtedness or their Representative, ratably according to the
respective amounts of Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full in cash of all Senior Indebtedness
remaining unpaid, after giving effect to all concurrent payments and
distributions to or for the holders of Senior Indebtedness. Holdings shall
give prompt notice to the Trustee of any default or event of default or any
acceleration under any Senior Indebtedness or under any agreement pursuant to
which Senior Indebtedness may have been issued. Failure to give such notice
shall not affect the subordination of the Securities to Senior Indebtedness
provided in this Article Eleven. Notwithstanding anything to the contrary
contained herein, in the absence of its gross negligence or willful
misconduct, the Trustee shall have no duty to collect or retrieve monies
previously paid by it in good faith; provided that this sentence shall not
affect the obligation of any other party receiving such payment to hold such
payment for the benefit of, and to pay such payment over to, the holders of
Senior Indebtedness or their Representative.
<PAGE>119
Section 11.3. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization of
Holdings.
Upon any payment or distribution of assets or securities of Holdings
of any kind or character, whether in cash, property or securities, upon any
dissolution, winding-up, total or partial liquidation or total or partial
reorganization of Holdings (including, without limitation, in bankruptcy,
insolvency or receivership proceedings or upon any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of Holdings
and whether voluntary or involuntary):
(a) the holders of all Senior Indebtedness shall first be entitled
to receive payments in full in cash of the principal thereof and interest
thereon before the Holders are entitled to receive any payment on account
of the principal of or interest on or Other Obligations with respect to
the Securities (whether by payment, acquisition, retirement, defeasance,
redemption or otherwise) or any other payment or distribution of assets
or securities by or on behalf of Holdings;
(b) any payment or distribution of assets or securities of Holdings
of any kind or character, whether in cash, property or securities, to
which the Holders or the Trustee on behalf of the Holders would be
entitled except for the provisions of this Article Eleven, including any
such payment or distribution that is payable or deliverable by reason of
the payment of any other Indebtedness of Holdings being subordinated to
the payment of the Securities (except 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, (y) of securities that (i) are unsecured, (ii)
have a Weighted Average Life to Maturity and final maturity that are no
shorter than the Weighted Average Life to Maturity of the Securities or
any securities issued to the holders of Senior Indebtedness under the
Loan Documents pursuant to a plan of reorganization or readjustment and
(iii) are subordinated, to at least the same extent as the Securities, to
the payment of all Senior Indebtedness then outstanding or (z) of Capital
Stock), shall be paid by the liquidating trustee or agent or other person
making such a payment or distribution, directly to the holders of Senior
Indebtedness or their Representative, ratably according to the respective
amounts of Senior Indebtedness held or represented by each, until all
Senior Indebtedness remaining unpaid shall have been paid in full in
cash, after giving effect to all concurrent payments and distributions to
or for the holders of such Senior Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment
or distribution of assets or securities of Holdings of any kind or
character, whether in cash, property or securities, shall be received by
the Trustee or the Holders or any Paying Agent (or, if Holdings or any
Subsidiary or Affiliate of Holdings is acting as Paying Agent, money,
assets or securities of any kind or character for any such payment or
distribution shall be segregated or held in trust) on account of
principal of or interest on or Other Obligations with respect to the
Securities before all Senior Indebtedness is paid in full in cash, such
payment or distribution (subject to the provisions of Sections 11.6 and
11.7) shall be received, segregated from other funds, and held in trust
by the Trustee
<PAGE>119
or such Holder or Paying Agent for the benefit of, and shall
immediately be paid over to, the holders of Senior Indebtedness or
their Representative, ratably according to the respective amounts of
Senior Indebtedness held or represented by each, until all Senior
Indebtedness remaining unpaid shall have been paid in full in cash, after
giving effect to all concurrent payments and distributions to or for
the holders of Senior Indebtedness. Notwithstanding anything to the
contrary contained herein, in the absence of its gross negligence or
wilful misconduct, the Trustee shall have no duty to collect or retrieve
monies previously paid by it in good faith; provided that this
sentence shall not affect the obligation of any other party receiving
such payment to hold such payment for the benefit of, and to pay over
such payment over to, the holders of Senior Indebtedness or their
Representatives.
Holdings shall give prompt notice to the Trustee prior to any
dissolution, winding-up, total or partial liquidation or total or partial
reorganization of Holdings or assignment for the benefit of creditors by
Holdings.
Section 11.4. Holders to Be Subrogated to Rights of Holders of Senior
Indebtedness.
Subject to the payment in full in cash of all Senior Indebtedness,
the Holders of Securities shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments or distributions of assets of Holdings
applicable to the Senior Indebtedness until all amounts owing on the
Securities shall be paid in full in cash, and for the purpose of such
subrogation no payments or distributions to the holders of Senior Indebtedness
by or on behalf of Holdings, or by or on behalf of the Holders by virtue of
this Article Eleven, which otherwise would have been made to the Holders,
shall, as between Holdings and the Holders, be deemed to be payment by
Holdings to or on account of the Senior Indebtedness, it being understood that
the provisions of this Article Eleven are and are intended solely for the
purpose of defining the relative rights of the Holders, on the one hand, and
the holders of Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article Eleven shall have
been applied, pursuant to the provisions of this Article Eleven, to the
payment of all amounts payable under the Senior Indebtedness, then the Holders
shall be entitled to receive from the holders of such Senior Indebtedness any
payments or distributions received by such holders of Senior Indebtedness in
excess of the amount sufficient to pay all amounts payable under or in respect
of the Senior Indebtedness in full in cash.
Section 11.5. Obligations of Holdings Unconditional.
Nothing contained in this Article Eleven or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as between
Holdings and the Holders, the obligation of Holdings, which is absolute and
unconditional, to pay to the Holders the principal of and interest on and
Other Obligations in respect of the Securities as and when the same shall
become due and payable in accordance with their terms, or is intended to or
shall affect the relative rights of the Holders and creditors of Holdings
other than the holders of the Senior Indebtedness, nor shall anything herein
or therein prevent the Trustee or any Holder from exercising all remedies
otherwise permitted by applicable law upon default under this Indenture,
subject to the
<PAGE>120
rights, if any, under this Article Eleven, of the holders of Senior
Indebtedness in respect of cash, property or securities of Holdings received
upon the exercise of any such remedy. Upon any payment or distribution of
assets or securities of Holdings referred to in this Article Eleven, the
Trustee, subject to the provisions of Sections 7.1 and 7.2, and the Holders
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which any dissolution, winding-up, liquidation or
reorganization proceedings are pending, or a certificate of the receiver,
trustee in bankruptcy, liquidating trustee or agent or other person making any
payment or distribution to the Trustee or to the Holders for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other Indebtedness of
Holdings, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
Eleven. Nothing in this Section 11.5 shall apply to the claims of, or
payments to, the Trustee under or pursuant to Section 7.7.
Section 11.6. Trustee Entitled to Assume Payments Not Prohibited in Absence
of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts that would prohibit the making of any payment to or by
the Trustee unless and until the Trustee or any Paying Agent shall have
received written notice thereof from Holdings or from one or more holders of
Senior Indebtedness or from any Representative therefor and, prior to the
receipt of any such notice, the Trustee, subject to the provisions of Sections
7.1 and 7.2, shall be entitled in all respects conclusively to assume that no
such fact exists.
Section 11.7. Application by Trustee of Assets Deposited with It.
U.S. Legal Tender or U.S. Government Obligations deposited in trust
with the Trustee pursuant to and in accordance with Section 8.1 (including,
without limitation, clause (4) thereof) shall be for the sole benefit of
Holders and, to the extent allocated for the payment of Securities, shall not
be subject to the subordination provisions of this Article Eleven. Otherwise,
any deposit of assets or securities by or on behalf of Holdings with the
Trustee or any Paying Agent (whether or not in trust) for the payment of
principal of or interest on or Other Obligations with respect to any Securi-
ties shall be subject to the provisions of this Article Eleven; provided that
if prior to the second Business Day preceding the date on which by the terms
of this Indenture any such assets may become distributable for any purpose
(including, without limitation, the payment of either principal of or interest
on any Security) the Trustee or such Paying Agent shall not have received with
respect to such assets the notice provided for in Section 11.6, then the
Trustee or such Paying Agent shall have full power and authority to receive
such assets and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary received by it on or
after such date. The foregoing shall not apply to the Paying Agent if
Holdings or any Subsidiary or Affiliate of Holdings is acting as Paying Agent.
Nothing contained in this Section 11.7 (except the first sentence of this
Section 11.7) shall limit the right of the holders of Senior Indebtedness to
recover payments as contemplated by this Article Eleven.
Section 11.8. Subordination Rights Not Impaired by Acts or Omissions of
Holdings or Holders of Senior Indebtedness.
<PAGE>121
No right of any present or future holders of any Senior Indebtedness
to enforce the subordination provisions contained in this Article Eleven shall
at any time in any way be prejudiced or impaired by any act or failure to act
on the part of Holdings or by any act or failure to act, in good faith, by any
such holder, or by any noncompliance by Holdings with the terms of this
Indenture, regardless of any knowledge thereof that any such holder may have
or be otherwise charged with. The holders of Senior Indebtedness may extend,
renew, restate, supplement, modify or amend the terms of the Senior
Indebtedness or any security therefor and release, sell or exchange such
security and otherwise deal freely with Holdings and its Subsidiaries all
without affecting the liabilities and obligations of the parties to this
Indenture or the Holders. No provision in any supplemental indenture that
affects the subordination of the Securities or other provisions of this
Article Eleven shall be effective against the holders of the Senior
Indebtedness who have not consented thereto.
Each Holder by accepting a Security agrees that the Representative
of any Senior Indebtedness (including without limitation, the Credit Agent),
in its discretion, without notice or demand and without affecting any rights
of any holder of Senior Indebtedness under this Article Eleven, may foreclose
any mortgage or deed of trust covering interests in real property secured
thereby, by judicial or nonjudicial sale; and such Holder hereby waives any
defense to the enforcement by the Representative (including without
limitation, the Credit Agent) of any Senior Indebtedness or by any holder of
any Senior Indebtedness against such Holder of this Article Eleven after a
judicial or nonjudicial sale or other disposition of its interests in real
property secured by such mortgage or deed of trust; and such Holder expressly
waives any defense or benefits that may be derived from California Civil Code
2808, 2809, 2810, 2819, 2845, 2849 or 2850, or California Code of Civil
Procedure 580a, 580d or 726, or comparable provisions of the laws of any
other jurisdiction or any similar statute in effect in any other jurisdiction.
Section 11.9. Holders Authorize Trustee to Effectuate Subordination of
Securities.
Each Holder by accepting a Security authorizes and expressly directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effect the subordination provisions contained in this Article
Eleven, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of Holdings (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the benefit of creditors or any other
marshalling of assets and liabilities of Holdings) tending towards liquidation
or reorganization of the business and assets of Holdings, the immediate filing
of a claim for the unpaid balance of its or his Securities and Other
Obligations in the form required in said proceedings and cause said claim to
be approved. If the Trustee does not file a proper claim or proof of debt in
the form required in such proceeding prior to 30 days before the expiration of
the time to file such claim or claims, then the holders of the Senior
Indebtedness or their Representative is hereby authorized to file an
appropriate claim for and on behalf of the Holders of said Securities.
Nothing herein contained shall be deemed to authorize the Trustee or the
holders of Senior Indebtedness or their Representative to authorize or consent
to or accept or adopt on behalf of any Holder any plan of reorganization,
arrangement, adjustment or composition affecting the Securities or the rights
of any Holder thereof, or to authorize the Trustee or the holders of Senior
Indebtedness or their Representative to vote in respect of the claim of any
Holder in any such proceeding.
<PAGE>122
Section 11.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article Eleven in respect of any Senior Indebtedness at any time held by it to
the same extent as any other holder of Senior Indebtedness, and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights
as such holder.
Section 11.11. Article Eleven Not to Prevent Events of Default.
The failure to make a payment on account of principal of or interest
on the Securities by reason of any provision of this Article Eleven shall not
be construed as preventing the occurrence of a Default or an Event of Default
under Section 6.1.
Section 11.12. No Fiduciary Duty of Trustee to Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or gross negligence) if it shall in
good faith mistakenly pay over or deliver to the Holders of Securities or
Holdings or any other person, money or assets to which any holders of Senior
Indebtedness shall be entitled by virtue of this Article Eleven or otherwise.
Nothing in this Section 11.12 shall affect the obligation of any person other
than the Trustee to hold such payment for the benefit of, and to pay such
payment over to, the holders of Senior Indebtedness or their Representative.
ARTICLE XII
MISCELLANEOUS
Section 12.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts
with the duties imposed by operation of 3.18(c) of the TIA, the imposed
duties shall control.
Section 12.2. Notices.
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
<PAGE>123
if to Holdings:
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mark A. Resnik
if to the Trustee:
____________________________________
____________________________________
____________________________________
____________________________________
Attention: Corporate Trust Administration
Each of Holdings and the Trustee by written notice to each other
such person may designate additional or different addresses for notices to
such person. Any notice or communication to Holdings and the Trustee shall be
deemed to have been given or made as of the date so delivered if personally
delivered; when answered back, if telexed; when receipt is acknowledged, if
telecopied; and five (5) calendar days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address
shall not be deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Holder shall be mailed to
him by first class mail or other equivalent means at his address as it appears
on the registration books of the Registrar and shall be sufficiently given to
him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect
in it shall not affect its sufficiency with respect to other Holders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 12.3. Communications by Holders with Other Holders.
Holders may communicate pursuant to TIA 312(b) with other Holders
with respect to their rights under this Indenture or the Securities.
Holdings, the Trustee, the Registrar and any other person shall have the
protection of TIA 312(c).
Section 12.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by Holdings to the Trustee to take
any action under this Indenture, Holdings shall furnish to the Trustee:
(1) an Officers' Certificate stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with; and
<PAGE>124
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
Section 12.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture, other than the Officers'
Certificate required by Section 4.7, shall include:
(1) a statement that the person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each such
person, such condition or covenant has been complied with; provided,
however, that with respect to matters of fact an Opinion of Counsel may
rely on an Officers' Certificate or certificates of public officials.
Section 12.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.
Section 12.7. Legal Holidays.
A "Legal Holiday" used with respect to a particular place of payment
is a Saturday, a Sunday or a day on which banking institutions in New York,
New York, Los Angeles, California or at such place of payment are not required
to be open. If a payment date is a Legal Holiday at such place, payment may
be made at such place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
Section 12.8. Governing Law.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Indenture.
<PAGE>125
Section 12.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan
or debt agreement of any of Holdings or any Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
Section 12.10. No Recourse Against Others.
A director, officer, employee, stockholder or incorporator, as such,
of Holdings shall not have any liability for any obligations of Holdings under
the Securities or the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creations. Each Holder by accepting a
Security waives and releases all such liability. Such waiver and release are
part of the consideration for the issuance of the Securities.
Section 12.11. Successors.
All agreements of Holdings in this Indenture and the Securities
shall bind their respective successors. All agreements of the Trustee in this
Indenture shall bind its successor.
Section 12.12. Duplicate Originals.
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
Section 12.13. Severability.
In case any one or more of the provisions in this Indenture or in
the Securities shall be held invalid, illegal or unenforceable, in any respect
for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
<PAGE>126
SIGNATURES
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 date first written above.
Dated: ________ __, 1994
[SEAL] FOOD 4 LESS HOLDINGS, INC.
Attest: By:
Name: Mark A. Resnik
Title: Vice President
____________________________
Dated: ________ __, 1994
[SEAL] __________________________
__________________________
as Trustee
Attest: By:
Name:
Title:
____________________________
<PAGE>127
EXHIBIT A
PURSUANT TO PROVISIONS OF THE INTERNAL REVENUE CODE OF 1986 RELATING TO
ORIGINAL ISSUE DISCOUNT AND TREASURY REGULATIONS PROMULGATED THEREUNDER WITH
RESPECT TO DEBT INSTRUMENTS ISSUED ON OR AFTER APRIL 4, 1994, THE FOLLOWING
INFORMATION IS PROVIDED: (1) THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE
DISCOUNT IN THE AMOUNT OF $____ PER FACE AMOUNT; (2) THE ISSUE PRICE OF THIS
SECURITY IS $___ PER FACE AMOUNT; (3) THE ISSUE DATE OF THIS SECURITY IS
______ __, ____; AND (4) THE YIELD TO MATURITY OF THIS SECURITY IS __%.
FOOD 4 LESS HOLDINGS, INC.
13% Senior Subordinated Pay-in-Kind Debentures
due ________ __, 2006
No. $
Food 4 Less Holdings, Inc., a California corporation ("Holdings," which term
includes any successor entity), for value received promises to pay to
or registered assigns, the principal sum of
dollars, on ________ __, 2006.
Interest payment dates: ________________ and _______________
commencing ________ __, ____.
Record dates: _________ and _________.
Reference is made to the further provisions of this security
contained herein, which will for all purposes have the same effect as if set
forth at this place.
IN WITNESS WHEREOF, Holdings has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated: ________ __, 199__
FOOD 4 LESS HOLDINGS, INC.
By:
Name:
Title:
This is one of the Securities described in the within-mentioned
Indenture.
Dated: ________ __, 199__
__________________________________
as Trustee
By:
Title:
<PAGE>128
FOOD 4 LESS HOLDINGS, INC.
13% Senior Subordinated Pay-in-Kind Debenture
due ________ __, 2006
1. Interest.
FOOD 4 LESS HOLDINGS, INC., a California corporation ("Holdings"),
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Holdings may, in its sole discretion, issue additional
Securities ("Secondary Securities") in lieu of a cash payment of any or all of
the interest due on any Interest Payment Date occurring on or prior to [the
Interest Payment Date five years after the Issue Date]. If Holdings issues
Secondary Securities in lieu of cash payment, in whole or in part, of interest
due on any Interest Payment Date occurring on or prior to [the Interest
Payment Date five years after the Issue Date], pursuant to this paragraph, it
shall give notice to the Trustee not less than 5 Business Days prior to the
relevant Interest Payment Date, and shall instruct the Trustee (upon written
order of Holdings signed by an Officer of Holdings given not less than 5 nor
more than 45 days prior to such Interest Payment Date) to authenticate a
Secondary Security, dated such Interest Payment Date, in a principal amount
equal to the amount of interest not paid in cash in respect of this Security
on such Interest Payment Date. Each issuance of Secondary Securities in lieu
of cash payments of interest on the Securities shall be made pro rata with
respect to the outstanding Securities. Any such Secondary Securities shall be
governed by the Indenture and shall be subject to the same terms (including
the maturity date and the rate of interest from time to time payable thereon)
as this Security (except, as the case may be, with respect to the title,
issuance date and aggregate principal amount). The term Securities shall
include the Secondary Securities that may be issued under the Indenture.
Holdings will pay interest semi-annually in arrears on ___________
and _________ of each year (the "Interest Payment Date"), commencing
___________, ____. Interest on this Security will accrue from the date of
issuance or from the most recent date to which interest has been paid.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months and actual number of days elapsed.
Holdings shall pay interest on overdue principal and interest on
overdue installments of interest, to the extent lawful, at the rate per annum
borne by the Securities.
2. Method of Payment.
Holdings shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Record Date immediately preceding the Interest Payment Date
even if the Securities are cancelled on registration of transfer or
registration of exchange after such Record Date. Holders must surrender
Securities to a Paying Agent to collect principal payments. Holdings shall
pay principal and interest in money of the United States that at the time of
payment is legal tender for payment of public and private debts ("U.S. Legal
Tender") (or, pursuant to
<PAGE>129
Paragraph 1 hereof, in Secondary Securities). However, Holdings may pay
principal and interest by its check payable in such U.S. Legal Tender or by
wire transfer of federal funds
(or, pursuant to Paragraph 1 hereof, in Secondary Securities). Holdings may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.
3. Paying Agent and Registrar.
Initially, _____________________________________ (the "Trustee"),
will act as Paying Agent and Registrar. Holdings may change any Paying Agent,
Registrar or co-Registrar without notice to the Holders. Holdings or any
Subsidiary may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
Holdings issued the Securities under an Indenture, dated as of
________ __, 1994 (the "Indenture"), between Holdings and the Trustee. This
Security is one of a duly authorized issue of Securities of Holdings
designated as its 13% Senior Subordinated Pay-in-Kind Debentures due 2006.
Capitalized terms herein are used as defined in the Indenture unless otherwise
defined herein. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) (the "TIA"), as in effect
on the date of the Indenture until such time as the Indenture is qualified
under the TIA, and thereafter as in effect on the date on which the Indenture
is qualified under the TIA. Notwithstanding anything to the contrary herein,
the Securities are subject to all such terms, and Holders of Securities are
referred to the Indenture and said Act for a statement of them. The Secu-
rities are general unsecured obligations of Holdings limited in aggregate
principal amount to $100,000,000, except for Secondary Securities and except
as otherwise provided in the Indenture.
5. Optional Redemption.
The Securities may not be redeemed at the option of Holdings prior
to ________ __, 1999. Thereafter, upon at least 30 days' but not more than 60
days' notice to the Holders, Holdings may redeem all or any of the Securities
at any time at redemption prices equal to the applicable percentage of the
principal amount thereof set forth below, plus accrued interest, if any, to
the Redemption Date (as defined in the Indenture) if
redeemed during the 12-month period beginning ________ __ of the years
indicated below:
<TABLE> <CAPTION>
Applicable
Year Percentage
<S> <C> <C>
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.500%
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104.875%
2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.250%
2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101.625%
2003 and thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.000%
</TABLE>
Notwithstanding the foregoing, prior to ________ __, 1997, Holdings
may use the Net Proceeds (as defined in the Indenture) of an Initial Public
Offering (as defined in the
<PAGE>130
Indenture) of Holdings or the Company [(or of Food 4 Less, Inc., to the extent
Net Proceeds thereof are contributed as a capital contribution in exchange for
Common Stock of Holdings)] to redeem up to 35% of the Securities at a
redemption price equal to 110% of the principal amount thereof plus accrued
interest, if any, to the date of redemption.
In order to effect the foregoing redemption, Holdings shall send the
notice required by Section 3.3 of the Indenture not later than 30 days after
the Initial Public Offering Consummation Date (as defined in the Indenture).
6. Notice of Redemption.
Notice of redemption will be mailed at least 30 days but not more
than 60 days before the Redemption Date to each Holder of Securities to be
redeemed at such Holder's registered address. Securities in denominations
larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Securities called for redemption
shall have been deposited with the Paying Agent for redemption on such
Redemption Date, then, unless Holdings defaults in the payment of such
Redemption Price, the Securities called for redemption will cease to bear
interest and the only right of the Holders of such Securities will be to
receive payment of the Redemption Price.
7. Change of Control Offer.
In the event of a Change of Control, upon the satisfaction of the
conditions set forth in the Indenture, Holdings shall be required to offer to
purchase all of the then outstanding Securities pursuant to a Change of
Control Offer at a purchase price equal to 101% of the aggregate principal
amount thereof plus accrued interest, if any, to the date of purchase.
Holders of Securities which are the subject of such an offer to repurchase
shall receive an offer to repurchase and may elect to have such Securities
repurchased in accordance with the provisions of the Indenture pursuant to and
in accordance with the terms of the Indenture.
8. Limitation on Disposition of Assets.
Under certain circumstances Holdings is required to apply the net
proceeds from Asset Sales to the repayment of Indebtedness of Holdings or any
Subsidiary, to make Related Business Investments or to purchase in a Net
Proceeds Offer at a price equal to 100% of the aggregate principal amount
thereof, plus accrued interest, if any, to the date of purchase, which shall
in the aggregate equal the net proceeds required to be applied thereto.
Holdings may credit against the principal amount of Securities to be acquired
in a Net Proceeds Offer 100% of the principal amount of Securities acquired by
Holdings through purchase, optional redemption, exchange or otherwise
following consummation of the Asset Sale and surrendered for cancellation and
not previously used as a credit against any other required payment pursuant to
the Indenture.
<PAGE>131
9. Subordination. The Securities are subordinated in right of payment, in
the manner and to the extent set forth in the Indenture, to the prior payment
in full of Senior Indebtedness of Holdings whether outstanding on the date of
the Indenture or thereafter created, incurred, assumed or guaranteed. Each
Holder, by accepting a Security, agrees to such subordination and authorizes
the Trustee to give it effect.
10. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000 (other than Secondary
Securities which may be in denominations of less than $1,000). A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities or portions thereof selected for redemption. No
service charge shall be made for any transfer, registration or exchange, but
Holdings may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith, but not for any exchange
pursuant to Section 2.10, 3.6 or 9.5 of the Indenture.
11. Persons Deemed Owners.
The registered Holder of a Security shall be treated as the owner of
it for all purposes.
12. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for one year, the Trustee and the Paying Agents will pay the money back to
Holdings at its request. After that, all liability of the Trustee and such
Paying Agents with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity.
If Holdings at any time deposits with the Trustee U.S. Legal Tender
or U.S. Government Obligations sufficient to pay the principal of and interest
on the Securities to redemption or maturity and complies with the other
provisions of the Indenture relating thereto, Holdings will be discharged from
certain provisions of the Indenture and the Securities (including the
financial covenants, but excluding its obligation to pay the principal of and
interest on the Securities).
14. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may
be amended or supplemented with the written consent of the Holders of at least
a majority in aggregate principal amount of the Securities then outstanding,
and any existing Default or Event of Default or compliance with any provision
may be waived with the consent of the Holders of
<PAGE>132
a majority in aggregate principal amount, as the case may be, of the
Securities then outstanding. Without notice to or consent of any Holder, the
parties thereto may amend or supplement the Indenture or the Securities to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Securities in addition to or in place of certificated
Securities, comply with Article Five of the Indenture or comply with any
requirements of the SEC in connection with the qualification of the Indenture
under the TIA, or make any other change that does not adversely affect the
rights of any Holder of a Security. An amendment may not make any change that
adversely affects the rights under Article 11 of the Indenture of any holders
of Senior Indebtedness unless the holders of Senior Indebtedness consent to
the change.
15. Successors.
When a successor assumes all the obligations of its predecessor
under the Securities and the Indenture, the predecessor will be released from
those obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable in the
manner, at the time and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture or the Securities except as provided
in the Indenture. The Trustee is not obligated to enforce the Indenture or
the Securities unless it has received indemnity satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of
a majority in aggregate principal amount of the Securities then outstanding to
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Holders of Securities notice of any continuing Default or Event
of Default (except a Default in payment of principal or interest) if it
determines that withholding notice is in their interest.
17. Trustee Dealings with Holdings.
The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with Holdings, its Subsidiaries or their respective Affiliates as if it were
not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer, employee or incorporator, as
such, of Holdings shall have any liability for any obligation of Holdings
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of, such obligations or their creation. Each Holder of a
Security by accepting a Security waives and releases all such liability. The
waiver and release are part of the consideration for the issuance of the
Securities.
<PAGE>133
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent manually signs the certificate of authentication on this Security.
20. Governing Law.
The Laws of the State of New York shall govern this Security and the
Indenture.
21. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security 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).
22. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, Holdings will cause CUSIP numbers to be
printed on the Securities immediately prior to the qualification of the
Indenture under the TIA as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
23. Indenture.
Each Holder, by accepting a Security, agrees to be bound by all of
the terms and provisions of the Indenture, as the same may be amended from
time to time.
Holdings will furnish to any Holder of a Security upon written
request and without charge a copy of the Indenture. Requests may be made to:
FOOD 4 LESS HOLDINGS, INC., c/o The Yucaipa Companies, 10000 Santa Monica
Boulevard, Fifth Floor, Los Angeles, California 90067, Attn: Mark A. Resnik.
24. Certain Information Obligations.
To the extent permitted by applicable law or regulation, whether or
not Holdings is subject to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"), Holdings shall file with
the SEC all quarterly and annual reports and such other information, documents
or other reports (or copies of such portions of any of the foregoing as the
SEC may by rules and regulations prescribe) required to be filed pursuant to
such provisions of the Exchange Act. Holdings shall file with the Trustee
copies of the quarterly and annual reports and the information, documents, and
other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) that it is required to file with the
SEC pursuant to the Indenture. At any time when
<PAGE>134
Holdings is not permitted by applicable law or regulations to file the
aforementioned reports, Holdings shall furnish the Trustee and the Holders
with the information that Holdings would have had to provide to the SEC if
Holdings had been subject to Section 13 or 15(d) of the Exchange Act.
25. Holdings Indebtedness.
Each Holder acknowledges that Holdings is the sole obligor of the
Securities and no Subsidiary of Holdings is a co-obligor or a guarantor of the
Securities.
<PAGE>135
[FORM OF ASSIGNMENT]
I or we assign this Security to
______________________________________________________________________________
______________________________________________________________________________
______________________________________________________________________________
(Print or type name, address and zip code of assignee)
Please insert Social Security or other
identifying number of assignee
_____________________________________________________
and irrevocably appoint_________________ agent to transfer this
Security on the books of Holdings. The agent may substitute another to act
for him.
Dated:______________ Signed:_______________________
______________________________________________________________________________
(Sign exactly as your name appears on the front of this Security)
Signature Guarantee:__________________________________________
<PAGE>136
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Security purchased by Holdings
pursuant to Section 4.14 or Section 4.15 of the Indenture, check the box:
Section 4.14 [ ] Section 4.15 [ ]
If you want to elect to have only part of this Security purchased by
Holdings pursuant to Section 4.14 or Section 4.15 of the Indenture, state the
amount:
$
Date:____________________ Signature:_____________________________________
(Sign exactly as your name appears on the
front of this Security)
Signature Guarantee: ________________________________________________________
<PAGE>137---------------------------------------------------
Exhibit B
Matters to be Covered in
Opinion of Counsel to Ralphs Supermarkets
and EJDC
1. Each of Ralphs Supermarkets and EJDC has been duly incorporated
and is validly existing and in good standing under the laws of its respective
state of incorporation. Each of Ralphs Supermarkets and EJDC has corporate
power and authority to own, lease and operate its properties, to conduct its
business as presently conducted and to enter into the Agreement and (in the
case of EJDC) the Registration Rights Agreement and perform its obligations
thereunder, including without limitation, to consummate the Merger. Based
solely on certificates from public officials, such counsel confirms that
Ralphs Supermarkets is qualified to do business in the State of California.
2. The execution, delivery and performance of the Agreement and
the consummation of the Merger have been duly authorized by all necessary
corporate action of Ralphs Supermarkets and EJDC, and the Agreement has been
duly executed and delivered by each of them. The execution, delivery and
performance of the Registration Rights Agreement has been duly authorized by
all necessary corporate action of EJDC, and the Registration Rights Agreement
has been duly executed and delivered by EJDC.
3. The Agreement constitutes a legally valid and binding
obligation of Ralphs Supermarkets and EJDC, enforceable against each of them
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
or by general principles of equity, and subject to other customary exceptions
and qualifications. The Registration Rights Agreement constitutes a legally
valid and binding obligation of EJDC, enforceable against EJDC in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally or by
general principles of equity, and subject to other customary exceptions and
qualifications.
4. The execution and delivery of the Agreement by each of Ralphs
Supermarkets and EJDC, the execution and delivery of the Registration Rights
Agreement by EJDC, and the consummation of the Merger, do not, except as set
forth in the Agreement or the schedules thereto: (i) to the knowledge of such
counsel, without any independent investigation, violate any federal, state or
local statute, rule or regulation applicable to either of them, (ii) violate
the provisions of their respective Certificates of Incorporation or By-laws,
(iii) result in the breach of or a default under any indenture, note, loan
agreement, mortgage, deed of trust, security agreement or other written
agreement or instrument creating, evidencing or securing indebtedness of
either of them for borrowed money, identified to such counsel by an officer of
each of them as a material agreement (the "Material Agreements"), or under any
court or administrative order, writ, judgment or decree specifically directed
to either of them and identified to such counsel by an officer of each of them
as material (the "Court Orders"), or (iv) to the knowledge of such counsel,
without any independent investigation, require any consents, approvals,
authorizations, registrations, declarations or filings by either of them under
any federal, state or local statute, rule or regulation applicable to either
of them, except where the failure to obtain such consents, approvals or
authorizations, or to make such registrations, declarations or filings, would
not have a material adverse effect on the business, assets, results of
operation or financial condition of Ralphs Supermarkets and its subsidiaries,
taken as a whole, or on the consummation of the Merger or the other
transactions contemplated by the Agreement or the Registration Rights
Agreement. No opinion is expressed herein as to the application of any
antifraud laws, antitrust or trade regulation laws, federal or state
securities laws, or the application for, or the transfer of, licenses or
permits regarding the sale of alcoholic beverages,
<PAGE>138
pharmaceutical products, lottery tickets, workers compensation self-insurance,
food stamps, or WIC vouchers.
5. To the knowledge of such counsel, without any independent
investigation, no action, suit or proceeding is pending or threatened against
Ralphs Supermarkets or EJDC seeking to prevent or delay the transactions
contemplated by the Agreement or challenging any of the terms or provisions of
the Agreement or seeking material damages in connection therewith.
6. Upon the filing of the certificate of merger referred to in the
Agreement with the Secretary of State of the State of Delaware, the Merger
will become effective in accordance with the Agreement and the GCL, and each
issued and outstanding share of capital stock of Ralphs Supermarkets will be
converted into the right to receive the Merger Consideration. Shareholders of
Ralphs Supermarkets prior to the Effective Date are not entitled to, or have
waived, any appraisal rights under the GCL.
7. Based solely on a review of the books and records of Ralphs
Supermarkets and its subsidiaries, the authorized capital stock of Ralphs
Supermarkets consists of 50,000,000 shares of common stock, par value $1.00
per share, of which 25,587,279.88971 shares are issued and outstanding
immediately prior to the Effective Date, and except as set forth in the
Agreement or the schedules thereto, to the knowledge of such counsel, without
any independent investigation, there are no outstanding options, warrants,
calls, subscriptions, convertible securities or other securities, or any other
rights of any kind to acquire, or obligations to issue, shares of capital
stock of any class of, or other equity interests in, Ralphs Supermarkets or
any subsidiary of Ralphs Supermarkets.
8. No facts have come to such counsel's attention which lead it to
believe that the information with respect to EJDC contained in the Shelf
Registration Statement or the related Prospectus (except for the financial
information, financial statements, financial schedules and other financial or
statistical data contained therein, as to which such counsel may express no
opinion), on the date such Shelf Registration Statement became effective under
the Securities Act, or on the date of the Prospectus, contained any 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, in light of the
circumstances under which they were made, not misleading.
9. Upon consummation of the Merger and the other transactions
contemplated by the Agreement to occur on the Closing Date, Ralphs
Supermarkets and Ralphs Grocery will continue to be entitled to the benefits
of the agreements described in Schedule 8.7 to the Agreement without the
consent of the other parties thereto.
In addition, the following opinion will be delivered by Milbank,
Tweed, Hadley & McCloy, special tax counsel to Ralphs:
10. The formation of Ralphs Supermarkets by Federated Stores, Inc.
("FSI"), the acquisition of the stock of Ralphs Grocery by Ralphs Supermarkets
and the subsequent distribution of the Ralphs Supermarkets stock to the
creditors of FSI pursuant to a plan of reorganization confirmed by the United
States Bankruptcy Court for the Southern District of Ohio, Western Division on
January 10, 1992, was a "qualified stock purchase" of the Ralphs Grocery stock
for purposes of Section 338(d)(3) of the Code. FSI as the consolidated
selling group and Ralphs Supermarkets made valid elections under
Section 338(h)(10) of the Code with respect to Ralphs Grocery and the
acquisition of the Ralphs Supermarkets stock by the creditors of FSI pursuant
to the FSI plan.
<PAGE>139
The foregoing opinions will be limited to matters of federal law,
New York law and California law, and the corporate law of the respective
states of incorporation of Ralphs Supermarkets and EJDC.
<PAGE>140
Exhibit C
Matters to be Covered in
Opinion of Counsel to Selling Stockholders
Other than EJDC
1. The Selling Stockholder has been duly incorporated and is
validly existing and in good standing under the laws of its state of
incorporation. The Selling Stockholder has corporate power and authority to
enter into the Agreement and the Registration Rights Agreement and perform its
obligations thereunder.
2. The execution, delivery and performance of the Agreement and
the Registration Rights Agreement and the consummation of the Merger have been
duly authorized by all necessary corporate action of the Selling Stockholder,
and the Agreement and the Registration Rights Agreement have been duly
executed and delivered by the Selling Stockholder.
3. The Agreement and the Registration Rights Agreement constitute
legally valid and binding obligations of the Selling Stockholder, enforceable
against the Selling Stockholder in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally or by general principles of equity,
and subject to other customary exceptions and qualifications.
4. To the knowledge of such counsel, without any independent
investigation, no action, suit or proceeding is pending or threatened against
the Selling Stockholder seeking to prevent or delay the transactions
contemplated by the Agreement or challenging any of the terms or provisions of
the Agreement or seeking material damages in connection therewith.
5. The Selling Stockholder is not entitled to, or has waived prior
to the Effective Date, any appraisal rights under the GCL.
<PAGE>141
Exhibit D
Matters to be Covered in
Opinion of Counsel to F4L, F4L Holdings
and F4L Supermarkets
1. Each of F4L, F4L Holdings and F4L Supermarkets has been duly
incorporated and is validly existing and in good standing under the laws of
its state of incorporation. Each of F4L, F4L Holdings and F4L Supermarkets
has corporate power and authority to enter into the Agreement and perform its
obligations thereunder, including without limitation, in the case of F4L
Supermarkets, to consummate the Merger and to enter into the Registration
Rights Agreement and the Consulting Agreement, and in the case of F4L
Holdings, to enter into the Indenture and the Registration Rights Agreement
and to issue the Debentures.
2. The execution, delivery and performance of the Agreement and
the consummation of the Merger have been duly authorized by all necessary
corporate action of F4L, F4L Holdings and F4L Supermarkets, and the Agreement
has been duly executed and delivered by each of them. The execution, delivery
and performance of the Indenture and the Registration Rights Agreement and the
issuance of the Debentures have been duly authorized by all necessary
corporate action of F4L Holdings, and the Indenture and the Registration
Rights Agreement have been duly executed and delivered by F4L Holdings. The
execution, delivery and performance of the Registration Rights Agreement and
the Consulting Agreement have been duly authorized by all necessary corporate
action of F4L Supermarkets, and the Registration Rights Agreement and the
Consulting Agreement have been duly executed and delivered by F4L
Supermarkets.
3. The Agreement constitutes a legally valid and binding
obligation of F4L, F4L Holdings and F4L Supermarkets, enforceable against each
of them in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
or by general principles of equity, and subject to other customary exceptions
and qualifications. The Indenture, the Registration Rights Agreement and the
Debentures constitute legally valid and binding obligations of F4L Holdings,
enforceable against F4L Holdings in accordance with their respective terms,
except as may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally or by general principles of equity,
and subject to other customary exceptions and qualifications. The
Registration Rights Agreement and the Consulting Agreement constitute legally
valid and binding obligations of F4L Supermarkets, enforceable against F4L
Supermarkets in accordance with their respective terms, except as may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally or by general principles of equity, and subject to
other customary exceptions and qualifications.
4. The execution and delivery of the Agreement by each of F4L, F4L
Holdings and F4L Supermarkets, and the consummation of the Merger, do not,
except as set forth in the Agreement or the schedules thereto: (i) to the
knowledge of such counsel, without any independent investigation, violate any
federal, state or local statute, rule or regulation applicable to any of them,
(ii) violate the provisions of their respective Certificates of Incorporation
or By-laws, (iii) result in the breach of or a default under any indenture,
note, loan agreement, mortgage, deed of trust, security agreement or other
written agreement or instrument creating, evidencing or securing indebtedness
of any of them for borrowed money, identified to such counsel by an officer of
each of them as a material agreement (the "Material Agreements"), or under any
court or administrative order, writ, judgment or decree specifically directed
to any of them and identified to such counsel by an officer of
<PAGE>142
each of them as material (the "Court Orders"), or (iv) to the knowledge of
such counsel, without any independent investigation, require any consents,
approvals, authorizations, registrations, declarations or filings by any of
them under any federal, state or local statute, rule or regulation applicable
to any of them.
5. The execution and delivery of the Indenture and the
Registration Rights Agreement and the issuance of the Debentures by F4L
Holdings do not, except as set forth in the Agreement or the schedules
thereto: (a) to the knowledge of such counsel, without any independent
investigation, violate any federal, state or local statute, rule or regulation
applicable to F4L Holdings, (b) violate the provisions of the Certificate of
Incorporation or By-laws of F4L Holdings, (c) result in the breach of or a
default under any Material Agreement of, or Court Order applicable to, F4L
Holdings, or (d) to the knowledge of such counsel, without any independent
investigation, require any consents, approvals, authorizations, registrations,
declarations or filings by F4L Holdings under any federal, state or local
statute, rule or regulation applicable to F4L Holdings.
6. The execution and delivery of the Registration Rights Agreement
and the Consulting Agreement by F4L Supermarkets do not, except as set forth
in the Agreement or the schedules thereto: (a) to the knowledge of such
counsel, without any independent investigation, violate any federal, state or
local statute, rule or regulation applicable to F4L Supermarkets, (b) violate
the provisions of the Certificate of Incorporation or By-laws of F4L
Supermarkets, (c) result in the breach of or a default under any Material
Agreement of, or Court Order applicable to, F4L Supermarkets, or (d) to the
knowledge of such counsel, without any independent investigation, require any
consents, approvals, authorizations, registrations, declarations or filings by
F4L Supermarkets under any federal, state or local statute, rule or regulation
applicable to F4L Supermarkets.
7. The Yucaipa Companies has been duly formed and is validly
existing and in good standing under the laws of the State of California. The
Yucaipa Companies has partnership power and authority to enter into the
Consulting Agreement and perform its obligations thereunder. The execution,
delivery and performance of the Consulting Agreement have been duly authorized
by all necessary partnership action of The Yucaipa Companies, and the
Consulting Agreement has been duly executed and delivered by The Yucaipa
Companies. The Consulting Agreement constitutes a legally valid and binding
obligation of The Yucaipa Companies, enforceable against The Yucaipa Companies
in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally
or by general principles of equity, and subject to other customary exceptions
and qualifications.
8. To the knowledge of such counsel, without any independent
investigation, no action, suit or proceeding is pending or threatened against
F4L, F4L Holdings or F4L Supermarkets seeking to prevent or delay the
transactions contemplated by the Agreement or challenging any of the terms or
provisions of the Agreement or seeking material damages in connection
therewith.
9. The Shelf Registration Statement has become effective under the
Securities Act and, to the best knowledge of such counsel, no stop order
suspending the effectiveness of the Shelf Registration Statement has been
issued and no proceedings for that purpose have been instituted or threatened.
The Indenture has been qualified under the TIA.
10. Such counsel has participated in conferences with officers and
other representatives of F4L Holdings, and representatives of the independent
public accountants for F4L Holdings, at which the contents of the Shelf
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel is not passing upon, and does not assume any
<PAGE>143
responsibility for, the accuracy, completeness or fairness of the statements
contained in the Shelf Registration Statement or the Prospectus and has not
made any independent check or verification thereof, during the course of such
participation (relying as to materiality to a large extent upon the statements
of officers and other representatives of F4L Holdings), no facts came to such
counsel's attention that caused such counsel to believe that the information
with respect to F4L Holdings contained in the Shelf Registration Statement, at
the time such Shelf Registration Statement became effective under the
Securities Act, 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 that the Prospectus, as of its date,
contained an untrue statement of a material fact or omitted to state a
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel expresses no belief with respect to the financial
statements, schedules and other financial and statistical data included in the
Shelf Registration Statement or the Prospectus or incorporated therein or with
respect to the Form T-1.
No opinion is expressed herein as to the application of any
antifraud laws, antitrust or trade regulation laws, federal or state
securities laws, or the application for, or the transfer of, licenses or
permits regarding the sale of alcoholic beverages, pharmaceutical products,
lottery tickets, workers compensation self-insurance, food stamps, or WIC
vouchers.
The foregoing opinions will be limited to matters of federal law,
New York law, California law and the Delaware GCL. Notwithstanding the fact
that such counsel is opining as to the internal laws of the State of
California, such counsel need express no opinion as to the enforceability
under California law of provisions of any agreement selecting the law of
another state to govern; however, if California law were to apply to the
Indenture and the Debentures, the Indenture and the Debentures would not
violate the usury laws of the State of California.
<PAGE>144
EXHIBIT E
SENIOR SUBORDINATED PAY-IN-KIND
DEBENTURES PUT AGREEMENT
SENIOR SUBORDINATED PAY-IN-KIND DEBENTURES PUT AGREEMENT (the
"Agreement"), dated as of ___________ __, 1994, by and between THE EDWARD J.
DEBARTOLO CORPORATION, an Ohio corporation (the "Seller"), and THE YUCAIPA
COMPANIES, a California general partnership (the "Buyer").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Agreement and Plan of Merger, dated
as of September __, 1994 (the "Merger Agreement"), by and among Ralphs
Supermarkets, Inc., a Delaware corporation ("Ralphs Supermarkets"), Food 4
Less, Inc., a Delaware corporation ("F4L"), Food 4 Less Holdings, Inc., a
California corporation ("F4L Holdings"), Food 4 Less Supermarkets, Inc., a
Delaware corporation ("F4L Supermarkets"), the Seller and the other
stockholders of Ralphs Supermarkets, F4L Supermarkets will merge (the
"Merger") with and into Ralphs Supermarkets and, as a result thereof, Ralphs
Supermarkets will become a wholly owned subsidiary of F4L Holdings; and
WHEREAS, the Seller is a shareholder of Ralphs Supermarkets and,
pursuant to the Merger Agreement, will receive as a part of the consideration
payable thereunder, $60,346,000 aggregate principal amount of 13% Senior
Subordinated Pay-In-Kind Debentures Due 2006 (the "Debentures") issued by F4L
Holdings;
WHEREAS, the Buyer is directly or indirectly a principal investor in
F4L Supermarkets and F4L Holdings and will derive a material benefit from the
Merger;
WHEREAS, as an inducement to the Seller to consent to the transactions
contemplated by the Merger Agreement, including the Merger, the Buyer is
willing to purchase on the date of the consummation of the Merger (the "Merger
Closing Date") up to $10,000,000 aggregate principal amount of Debentures from
the Seller at a purchase price equal to 100% of the principal amount of the
Debentures purchased plus accrued interest, if any, thereon to the Closing
Date (as defined below); and
WHEREAS, the Merger Agreement provides that the consummation of any
purchase required hereunder of Debentures by the Buyer is a condition to the
consummation of the Merger.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other agreements set forth herein, the parties hereto hereby agree as follows:
<PAGE>145
ARTICLE I
SALE AND PURCHASE
SECTION 1.1. Agreement to Purchase.
On the Closing Date and upon the terms and subject to the conditions
set forth in this Agreement, the Buyer (or such other purchaser as the Buyer
shall designate in accordance with Section 5.3 hereof) will purchase from the
Seller $10,000,000 aggregate principal amount of Debentures (such Debentures
or such lesser amount set forth in the Purchase Notice being herein called the
"Subject Debentures"); provided, however, that in a written notice (the
"Purchase Notice") given to the Buyer at least one day prior to the Closing
Date the Seller may indicate that the Seller (i) will not sell the Debentures
on the Closing Date or (ii) will sell less than $10,000,000 aggregate
principal amount of Debentures; and provided, further, that the Buyer shall
not, under any circumstances, be obligated to purchase more than $10,000,000
aggregate principal amount of Debentures. On the Closing Date, the Seller
shall sell, assign, transfer, convey and deliver to the Buyer the aggregate
principal amount of Subject Debentures.
SECTION 1.2. Closing.
The closing of such sale and purchase (the "Closing") shall take place
at 10:00 A.M., Los Angeles time, on the Merger Closing Date, or at such other
time and date as the parties hereto shall agree in writing (the "Closing
Date"), at the offices of Latham & Watkins, 633 West Fifth Street, Los
Angeles, California 90071, or at such other place as the parties hereto shall
agree in writing. At the Closing, the Seller shall deliver to the Buyer
certificates representing the Subject Debentures accompanied by appropriate
bond powers duly executed in blank. In full consideration and exchange for
the Subject Debentures, the Buyer shall thereupon pay to the Seller the
Purchase Price as provided in Section 1.3 hereof. The sale of the Subject
Debentures hereunder is made without recourse or warranty of any kind (except
as expressly provided in Article II).
SECTION 1.3. Purchase Price.
The purchase price for the sale and transfer of the Subject Debentures
shall be 100% of the aggregate principal amount thereof plus any accrued and
unpaid interest, if any, on the Subject Debentures to the Closing Date in cash
(the "Purchase Price"), which price is payable and deliverable in accordance
with Section 1.4.
SECTION 1.4. Payment of Purchase Price.
In payment for the Subject Debentures, the Buyer will pay to the Seller
on the Closing Date the Purchase Price by wire transfer of immediately
available Federal Funds to such account of the Seller as are set forth on
Schedule I hereto.
<PAGE>146
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer:
SECTION 2.1. Corporate Organization.
The Seller is a corporation validly existing and in good standing under
the laws of its jurisdiction of incorporation, and has all requisite corporate
power and authority to enter into and perform its obligations under this
Agreement.
SECTION 2.2. Title to the Subject Debentures.
The Seller will have at the Closing valid title to all the Subject
Debentures to be sold by it, free and clear of any liens, claims, charges,
security interests or other legal or equitable encumbrances, limitations or
restrictions.
SECTION 2.3. Authorization and Validity of Agreements.
The execution and delivery of this Agreement and the performance of the
Seller's obligations hereunder have been duly authorized by all necessary
corporate action by the Board of Directors and, if required, the stockholders
of the Seller, and no other corporate proceedings on the part of the Seller
are necessary to authorize such execution, delivery and performance. This
Agreement has been duly executed by the Seller and constitutes the valid and
binding obligation of such Seller enforceable against it in accordance with
its terms, subject, as to enforceability, to applicable bankruptcy, insolvency
and other similar laws affecting the enforcement of creditors' rights
generally and to general principles of equity.
SECTION 2.4. No Conflict or Violation.
The execution, delivery and performance by the Seller of this Agreement
do not and will not violate or conflict with any provision of the Certificate
of Incorporation or by-laws (or equivalent documents) of the Seller and do not
and will not violate any provision of law, or any order, judgment or decree of
any court or other governmental or regulatory authority, nor violate nor will
result in a breach of or constitute (with due notice or lapse of time or both)
a default under any material contract, lease, loan agreement, mortgage,
security agreement, trust indenture or other agreement or instrument to which
the Seller is a party or by which it is bound or to which any of its
properties or assets is subject.
SECTION 2.5. Consents and Approvals.
The execution, delivery and performance of this Agreement on behalf of
the Seller does not require the consent or approval of, or filing with, any
government, governmental body or agency or other entity or person which will
not have been made or obtained by the Closing Date.
<PAGE>147
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents, warrants and agrees as follows:
SECTION 3.1. Partnership Organization.
The Buyer is a partnership duly formed, validly existing and in good
standing under the laws of the State of California, and has all requisite
partnership power and authority to enter into and perform its obligations
under this Agreement.
SECTION 3.2. Authorization and Validity of Agreement.
The execution and delivery of this Agreement and the performance of the
Buyer's obligations hereunder have been duly authorized by all necessary
partnership action of the Buyer, and no other partnership proceedings on the
part of the Buyer are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by the Buyer and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, subject, as to enforceability, to applicable
bankruptcy, insolvency and other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity.
SECTION 3.3. No Conflict or Violation.
The execution, delivery and performance by the Buyer of this Agreement
do not and will not violate or conflict with any provision of the partnership
agreement (or equivalent documents) of the Buyer and do not and will not
violate any provision of law, or any order, judgment or decree of any court or
other governmental or regulatory authority, nor violate nor will result in a
breach of or constitute (with due notice or lapse of time or both) a default
under any material contract, lease, loan agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to which the Buyer
is a party or by which it is bound or to which any of its properties or assets
is subject.
SECTION 3.4. Consents and Approvals.
The execution, delivery and performance of this Agreement on behalf of
the Buyer does not require the consent or approval of, or filing with, any
government, governmental body or agency or other entity or person which will
not have been made or obtained on or before the Closing Date.
SECTION 3.5. Availability of Funds.
The Buyer will have funds to enable the Buyer to consummate the
transactions consummated hereby.
SECTION 3.6 Investment Intent.
The Buyer has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its
acquisition of the Subject Debentures. The Buyer had the opportunity to ask
questions of the officers and management employees of F4L and Ralphs
Supermarkets and to acquire additional information about the business, assets
and financial condition of F4L and Ralphs Supermarkets. The Buyer confirms
that it is not acquiring the Subject Debentures
<PAGE>148
with a view toward any distribution thereof or with any present intention of
selling any Subject Debentures in a transaction that would violate the
Securities Act of 1933, as amended (the "Securities Act") or the securities
laws of any state or other applicable jurisdiction. The Buyer acknowledges
and agrees that the Subject Debentures may not be sold, transferred, offered
for sale, pledged, hypothecated or otherwise disposed of without registration
under the Securities Act except pursuant to an exemption from such
registration available under the Securities Act. The Buyer is an "accredited
investor" as such term is defined under the Securities Act and the regulations
thereunder.
SECTION 3.7 No Additional Agreements.
Neither the Buyer nor any of its affiliates has entered into any
arrangement, agreement or understanding with any stockholder of Ralphs
Supermarkets providing for the payment of any consideration to, or the
conferring of any benefit on, such stockholder in connection with the Merger
or any matter related thereto, other than as set forth in the Merger Agreement
and the other agreements referred to therein, provided that F4L or its
subsidiaries may offer the opportunity to stockholders of Ralphs Supermarkets
to participate in the Financing (as defined in the Merger Agreement).
ARTICLE IV
TERMINATION AND ABANDONMENT
SECTION 4.1. Methods of Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time before the Closing:
(a) by the mutual written consent of the Buyer and the Seller;
(b) automatically upon the termination of the Merger Agreement in
accordance with its terms; or
(c) by the Seller at any time upon notice to the Buyer.
SECTION 4.2. Procedure Upon Termination.
If this Agreement is terminated as provided herein, no party to this
Agreement shall have any liability or further obligation to any other party to
this Agreement except as provided in Sections 5.2, 5.4, 5.5, 5.12, 5.13, 5.14
and 5.15.
<PAGE>149
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Survival of Provisions; Limitation of Claims Against
Seller.
The respective representations and warranties and covenants of each of
the parties to this Agreement shall survive the Closing Date for the maximum
period permitted by applicable law. In the event of a breach of any of such
representations or warranties, the party to whom such representations or
warranties have been made shall have all rights and remedies for such breach
available to it under the provisions of this Agreement or otherwise, whether
at law or in equity, regardless of any disclosure to, or investigation made by
or on behalf of such party on or before the Closing Date.
The Buyer agrees that it is purchasing the Subject Debentures without
recourse or warranty of any kind, except as expressly set forth in
Article II hereof. The Buyer acknowledges that it has conducted its
own investigation into the value of the Debentures or the business,
prospects and condition (financial and other) of Ralphs Supermarkets,
Ralphs Grocery Company, a Delaware corporation ("Ralphs Grocery"), F4L,
F4L Supermarkets and F4L Holdings, and neither the Seller nor any of
its agents or representatives has, directly or indirectly made and
shall not be deemed to have made, any representation or warranty to the
Buyer in respect thereto. The Buyer has not relied on any
representation or warranty of the Seller other than those expressly
stated herein. The Buyer acknowledges that, except for those expressly
undertaken in this Agreement, the Seller has no legal obligation
whatsoever to the Buyer. To the fullest extent permitted by law, the
Buyer hereby waives any claims, whether known or unknown, that it may
have against the Seller in respect of this Agreement and the sale of
the Subject Debentures except for the representations and warranties
expressly set forth in Article II.
SECTION 5.2. Publicity.
Except as required by law, neither the Seller nor the Buyer shall, or
shall permit any of its subsidiaries to, issue or cause the publication of any
press release or other announcement with respect to this Agreement or the
transactions contemplated hereby without the consent of the other parties
hereto, which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, in the event any such press release or announcement is required by
law to be made by the party proposing to issue the same, such party shall use
its best efforts to consult in good faith with the other parties hereto prior
to the issuance of any such press release or announcement.
SECTION 5.3. Successors and Assigns; No Third-Party
Beneficiaries.
This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective successors and assigns. The Buyer may
designate another person or entity to purchase the Debentures from Seller as
contemplated herein; provided, however, that any such assignment or delegation
by the Buyer of any of its obligations created under this Agreement shall not
relieve the Buyer of its obligations hereunder without the prior written
consent of the Seller. Nothing in this Agreement shall confer upon any person
or entity not a party to this Agreement (except for its
<PAGE>150
successors and assigns), or the legal representatives of such person or
entity, any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement.
SECTION 5.4. Investment Bankers, Financial Advisors, Brokers and
Finders.
(a) The Seller represents and warrants to the Buyer that, except for
Morgan Stanley & Co. Incorporated, it has not employed the services of a
broker or finder in connection with this Agreement or any of the transactions
contemplated hereby (it being understood that Ralphs Grocery and Ralphs
Supermarkets have retained Peter J. Solomon & Company). The Seller agrees to
indemnify and to defend and hold the Buyer harmless against and in respect of
all claims, losses, liabilities and expenses which may be asserted against the
Buyer by any broker or other person who claims to be entitled to an investment
banker's, financial advisor's, broker's, finder's or similar fee or commission
in respect of the execution of this Agreement, or the consummation of the
transactions contemplated hereby, by reason of his acting at the request of
the Seller.
(b) The Buyer represents and warrants to the Seller that it has not
employed the services of an investment banker, financial advisor, broker or
finder in connection with this Agreement or any of the transactions
contemplated hereby. The Buyer agrees to indemnify and to defend and hold the
Seller harmless against and in respect of all claims, losses, liabilities,
fees, costs and expenses which may be asserted against the Seller by any
broker or other person who claims to be entitled to an investment banker's,
financial advisor's, broker's, finder's or similar fee or commission in
respect of the execution of this Agreement or the consummation of the
transactions contemplated hereby, by reason of his acting at the request of
the Buyer.
SECTION 5.5. Fees and Expenses.
Except as otherwise expressly provided in this Agreement, all legal and
other fees, costs and expenses of any nature whatsoever incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such fees, costs or expenses.
SECTION 5.6. Notices.
All notices and other communications given or made pursuant hereto
shall be in writing and shall be deemed to have been given or made if in
writing and delivered personally, by facsimile transmission or sent by
registered or certified mail (postage prepaid, return receipt requested) to
the parties at the following addresses:
(a) If to the Buyer, to:
The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mr. Mark A. Resnik
Telephone: (310) 789-7200
Telecopy: (310) 789-7201
<PAGE>151
with a copy to:
Latham & Watkins
633 West Fifth Street
Los Angeles, California 90067
Attn: Thomas C. Sadler, Esq.
Telephone: (213) 485-1234
Telecopy: (213) 891-8763
(b) If to the Seller, at its address set forth on Schedule I hereto,
with a copy to such person, if any, set forth on Schedule I hereto, or to such
other persons or at such other addresses as shall be furnished by the parties
hereto by notice in accordance with the terms of this Section, and such notice
or communication shall be deemed to have been given or made as of the date so
delivered, faxed or mailed. No change in any of such addresses shall be
effective insofar as notices under this Section 5.6 are concerned unless such
changed address is located in the United States of America and notice of such
change shall have been given to such other party hereto as provided in this
Section 5.6.
SECTION 5.7. Entire Agreement.
This Agreement represents the entire agreement and understanding of the
parties with reference to the transactions set forth herein and no
representations, warranties or covenants have been made in connection with
this Agreement other than those expressly set forth herein or in the documents
delivered in accordance herewith. This Agreement supersedes all prior
negotiations, discussions, correspondence, communications, understandings and
agreements between the parties relating to the subject matter of this
Agreement and all prior drafts of this Agreement.
SECTION 5.8. Waivers and Amendments.
This Agreement may be amended, modified or supplemented only by a
written instrument executed by the parties hereto.
SECTION 5.9. Severability.
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision,
the parties hereto intend that there shall be added as a part of this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be possible and be valid and enforceable.
SECTION 5.10. Titles and Headings.
The Article and Section headings contained in this Agreement are solely
for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
<PAGE>152
SECTION 5.11. Counterparts.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall be
considered one and the same Agreement.
SECTION 5.12. Arbitration.
Any claim or controversy arising between the Seller and the Buyer under
this Agreement may be decided by arbitration. Either the Seller or the Buyer
may invoke arbitration under this Section 5.12 by notice to the other of the
initial selection of an arbitrator and the filing of such notice with the
American Arbitration Association (the "AAA"); provided, however, that in no
event shall such notice be given if institution of legal or equitable
proceedings based on such claim, dispute or other matter in question would be
barred by any applicable statute of limitations or by this Agreement.
Arbitration shall be held in New York City under the auspices of the AAA
pursuant to the Commercial Arbitration Rules of the AAA, and shall be by three
arbitrators independent of the parties to this Agreement selected from a list
provided by the AAA. One of the arbitrators shall be appointed by the Seller.
One of the arbitrators shall be appointed by the Buyer. The third arbitrator
is to be selected by these two arbitrators before the beginning of the
arbitration. If, however, any party fails to select an arbitrator within 15
days after receiving notice under this Agreement of an initial selection of an
arbitrator by the other party, the party appointing the first arbitrator may
also appoint the second arbitrator on behalf of the party who has failed to
make the appointment. Should the two arbitrators appointed by the parties
fail to agree upon the choice of a third arbitrator within 15 days after the
appointment of a second arbitrator, the appointment shall be made by the AAA.
Each party shall submit its case in writing to the arbitrators within one
month of the constitution of the arbitration tribunal. The arbitrators are
empowered to determine questions both of fact and of law, but shall to the
maximum extent possible construe this Agreement strictly in accordance with
its terms and conditions and the purposes and intents evinced thereby.
Discovery shall be permitted under the same standards set forth in the Federal
Rules of Civil Procedure. Whether a hearing shall be held or additional
evidence accepted, and the rules governing any such hearing, shall be in the
sole discretion of the arbitrators, subject to the AAA rules as they construe
them. All decisions of the arbitrators shall be by majority vote. The
arbitrators shall make their decision in writing at the earliest convenient
date. The costs of arbitration, including the fees of the arbitrators, shall
be in the discretion of the arbitrators, who may direct to and by whom and in
what manner these costs or any part thereof shall be paid.
To the maximum extent permitted by law, the decision of the arbitration
tribunal shall be final and binding on the parties to this Agreement and not
be subject to appeal. If a party against whom the arbitration tribunal
renders an award fails to abide by such award, the other parties may bring an
action to enforce the same in a court of competent jurisdiction.
SECTION 5.13. Convenience of Forum; Consent to Jurisdiction.
The parties to this Agreement, acting for themselves and for their
respective successors and assigns, without regard to domicile, citizenship or
residence, hereby expressly and irrevocably elect as the sole judicial forum
for the adjudication of any matters arising under or in connection with this
Agreement, and consent and subject themselves to the jurisdiction of, the
courts of the State of New York located in New York City, and/or the United
States District Court for the Southern District of New York, in respect of any
matter arising under this Agreement. Service of process, notices and demands
of such courts may be made upon any party to this Agreement by personal
service at any place where it may be found or giving notice to such party as
provided in Section 5.6.
<PAGE>153
SECTION 5.14. Enforcement of the Agreement.
The parties hereto agree that irreparable damage would occur if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereto,
this being in addition to any other remedy to which they are entitled at law
or in equity.
SECTION 5.15. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (including Section 5-1401 of the General
Obligations Law) without giving effect to the choice-of-law provisions
thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE EDWARD J. DEBARTOLO CORPORATION
By:________________________________
Name:
Title:
By:________________________________
Name:
Title:
THE YUCAIPA COMPANIES
By:_______________________________
Name:
Title:
<PAGE>154
SCHEDULE I
SELLER
ADDRESS AND ACCOUNT FOR PAYMENT
THE EDWARD J. DEBARTOLO CORPORATION
Bank Name: ________________________
ABA Number: _______________________
Account Number: ___________________
Address:
The Edward J. DeBartolo Corporation,
7620 Market Street
Youngstown, Ohio 44512
Attention: Mr. Tony Liberati
Telephone: (216) 758-7292
Telecopy: (216) 752-3598
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022-4677
Attention: William E. Hiller, Esq.
Telephone: (212) 821-8000
Telecopy: (212) 821-8111
<PAGE>155
EXHIBIT F
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made
this ____ day of ________, 1994 between Food 4 Less Supermarkets, Inc., a
Delaware corporation (the "Company") and The Edward J. DeBartolo Corporation,
an Ohio corporation (the "Consultant").
R E C I T A L S:
WHEREAS, pursuant to that certain Agreement and
Plan of Merger, dated as of _______, 1994 (the "Merger Agreement"), by and
among the Company, Food 4 Less, Inc., a Delaware corporation, Food 4 Less
Holdings, Inc., a California corporation, Ralphs Supermarkets, Inc., a
Delaware corporation ("Supermarkets") and the stockholders of Supermarkets,
the Company will merge with and into Supermarkets (the "Merger");
WHEREAS, as a result of the Merger, Supermarkets
will assume all of the liabilities of the Company, including the liabilities
of the Company hereunder; and
WHEREAS, the Company wishes to obtain the technical
and advisory services of the Consultant as more particularly described below
and the Consultant is willing to provide such services on the terms and for
the consideration set out below.
NOW, THEREFORE, in consideration of the foregoing
premises, and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, it is hereby agreed as follows:
SECTION 1. Appointment. The Company hereby
appoints (the "Appointment") the Consultant and the Consultant hereby agrees
to serve the Company in the capacity of a consultant to the business of the
Company. The Appointment shall be deemed to commence on the Effective Date
(as defined in Section 9 hereof) and shall terminate on _________, 1999 [five
years from the Effective Date] (the "Term").
SECTION 2. Duties. During the Term, the
Consultant shall, as and when reasonably requested by the Company from time to
time, act as a consultant and render its assistance and participation, giving
the full benefit of the knowledge and expertise of its employees and agents in
the real estate and general commercial matters described on Schedule I hereto.
The Consultant shall have sole discretion to select which of its employees or
agents shall render services hereunder (any such employees or agents so
selected are referred to herein as the "representatives"). Nothing in this
Agreement shall obligate the Consultant (or its representatives) to provide
any services which are in conflict with the obligations of the Consultant (or
its representatives) under any non-competition agreement between the
Consultant (or its representatives) and DeBartolo Realty Corporation, an Ohio
corporation ("DRC"). In no event shall the Consultant (or any of its
representatives) be deemed, or be obligated to perform duties as, an employee,
a manager, executive or director of the Company or any of its subsidiaries,
and the services of each of the Consultant and its representatives shall at
all times be performed as an independent contractor pursuant to this
Agreement. In the event that the attendance by representatives of the
Consultant at
<PAGE>156
any meeting is desired by the Company, the Company shall furnish such
representatives with reasonable advance notice. The Company acknowledges that
the Consultant's representatives will take vacation at various times and that
certain of such representatives are officer(s) or director(s) of the
Consultant, DRC, DeBartolo, Inc., an Ohio corporation and other corporations
and partnerships, which will require advance scheduling of such
representatives' attendance at meetings.
SECTION 3. Time Spent. At the reasonable request
of the Company, the Consultant's representatives shall devote a reasonable
amount of time to serve the Company in the capacity of consultant, as shall be
determined by mutual agreement of the parties and in a manner which will not
conflict with such representatives' other activities described in the last
sentence of Section 2(a), provided that in no event shall any representatives
of the Consultant be required to devote more than fifteen (15) hours per month
(in the aggregate for all such representatives) in service to the Company
hereunder.
SECTION 4. Compensation. (a) In consideration for
the services of Consultant hereunder, the Company shall pay the Consultant a
fee of $12,500,000 (the "Consulting Fee"). Except as otherwise provided in
paragraph (b) of this Section 4, the Consulting Fee shall be payable as
follows: (i) on the Effective Date, the Company shall pay the Consultant
$2,500,000, and (ii) on each anniversary of the Effective Date, commencing on
the first anniversary of the Effective Date and through and including the
fourth anniversary of the Effective Date, the Company shall pay, on each such
anniversary date, the Consultant $2,500,000 per annum.
(b) Notwithstanding the provisions of Section 4(a)
above, the Consulting Fee, at the election of the Consultant or the Company
made at or prior to the Effective Date, shall be entirely due and payable to
the Consultant on the Effective Date in an amount equal to $9,000,000.
(c) No portion of the Consulting Fee shall be
treated by the Company as subject to wage withholding or other taxes on
withholdings imposed on compensation paid to employees.
SECTION 5. Expenses. The Consultant shall be
reimbursed for all reasonable out-of-pocket expenses incurred or paid by the
Consultant or its representatives during the Term and in the performance of
the Consultant's services under this Agreement. Such expenses shall be
reimbursed promptly following receipt by the Company of expense reports with
accompanying supporting documentation in detail reasonably acceptable to the
Company.
SECTION 6. Termination. The Consultant shall have
the right to terminate the Consultant's retention hereunder upon thirty (30)
days' prior written notice to the Company. Upon termination hereunder, the
Consultant shall be entitled to receive (i) reimbursement under this Agreement
for expenses incurred prior to the date of termination and (ii) any Consulting
Fee earned and accrued under this Agreement.
SECTION 7. Relationship Between the Parties.
Nothing in this Agreement shall be taken to imply any relationship of
partnership, agency or employer and employee between the Company and the
Consultant.
SECTION 8. General. This Agreement is further
governed by the following provisions:
<PAGE>157
(a) Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, sent by facsimile transmission or, if mailed, three
business days after the date of deposit in the United States mails as follows:
To the Consultant:
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44513
Attention: Secretary
Telephone: (216) 758-7292
Telecopier: (216) 758-3598
To the Company:
Food 4 Less Supermarkets, Inc.
c/o The Yucaipa Companies
10000 Santa Monica Boulevard
Fifth Floor
Los Angeles, California 90067
Attention: Mark A. Resnik, Esq.
Telephone: (310) 789-7200
Telecopier: (310) 789-7201
or to such other address or to such other person as the Company or the
Consultant shall have last designated by notice to the other party.
(b) Parties in Interest. This Agreement shall be
non-delegable and non-assignable, binding upon, and inure to the benefit of
the Consultant, and it shall be binding upon and inure to the benefit of the
Company and any corporation succeeding to all or substantially all of the
business or assets of the Company by merger, consolidation, purchase of assets
or otherwise.
(c) Entire Agreement. This Agreement contains the
entire agreement between the parties hereto with respect to the subject matter
hereof and no representation, promise, inducement or statement of intention
relating to the relationship contemplated by this Agreement has been made by
any party which is not set forth in this Agreement.
(d) Governing Law. This Agreement shall be
governed by and construed and enforced in accordance with the laws of the
State of New York without giving effect to the conflicts of law principles
thereof. In interpreting the provisions of this Agreement, no presumption
shall attach against the party responsible for preparing and drafting this
Agreement.
(e) Severability. In the event that any term or
condition contained in this Agreement shall for any reason be held by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not
<PAGE>158
affect any other term or condition of this Agreement, but this Agreement shall
be construed as if such invalid or illegal or unenforceable term or condition
had never been contained herein.
(f) Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.
(g) Section Headings. The section headings in
this Agreement are for convenience of reference only and shall not be deemed
to alter or affect any provision thereof.
(h) Waivers and Amendments. This Agreement may be
amended, superseded, cancelled, renewed or extended, and the terms hereof may
be waived, only by a written instrument signed by the parties or, in the case
of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such
right, power or privilege nor any single or partial exercise of any such
right, power or privilege, preclude any other or further exercise thereof or
the exercise of any other such right, power or privilege.
(i) Arbitration. Any claim or controversy arising
between the Company and the Consultant under this Agreement may be decided by
arbitration. Either the Company or the Consultant may invoke arbitration
under this Section 8(i) by notice to the other of the initial selection of an
arbitrator and the filing of such notice with the American Arbitration
Association (the "AAA"); provided, however, that in no event shall such notice
be given if institution of legal or equitable proceedings based on such claim,
dispute or other matter in question would be barred by any applicable statute
of limitations or by this Agreement. Arbitration shall be held in New York
City under the auspices of the AAA pursuant to the Commercial Arbitration
Rules of the AAA, and shall be by three arbitrators independent of the parties
to this Agreement selected from a list provided by the AAA. One of the
arbitrators shall be appointed by the Company. One of the arbitrators shall
be appointed by the Consultant. The third arbitrator is to be selected by
these two arbitrators before the beginning of the arbitration. If, however,
any party fails to select an arbitrator within 15 days after receiving notice
under this Agreement of an initial selection of an arbitrator by the other
party, the party appointing the first arbitrator may also appoint the second
arbitrator on behalf of the party who has failed to make the appointment.
Should the two arbitrators appointed by the parties fail to agree upon the
choice of a third arbitrator within 15 days after the appointment of a second
arbitrator, the appointment shall be made by the AAA. Each party shall submit
its case in writing to the arbitrators within one month of the constitution of
the arbitration tribunal. The arbitrators are empowered to determine
questions both of fact and of law, but shall to the maximum extent possible
construe this Agreement strictly in accordance with its terms and conditions
and the purposes and intents evinced thereby. Discovery shall be permitted
under the same standards set forth in the Federal Rules of Civil Procedure.
Whether a hearing shall be held or additional evidence accepted, and the rules
governing any such hearing, shall be in the sole discretion of the
arbitrators, subject to the AAA rules as they construe them. All decisions of
the arbitrators shall be by majority vote. The arbitrators shall make their
decision in writing at the earliest convenient date. The costs of
arbitration, including the fees of the arbitrators, shall be in the discretion
of the arbitrators, who may direct to and by whom and in what manner these
costs or any part thereof shall be paid.
To the maximum extent permitted by law, the
decision of the arbitration tribunal shall be final and binding on the parties
to this Agreement and not be subject
<PAGE>159
to appeal. If a party against whom the arbitration tribunal renders an award
fails to abide by such award, the other parties may bring an action to enforce
the same in a court of competent jurisdiction.
(j)Consent to Jurisdiction. The parties to this
Agreement, acting for themselves and for their respective successors and
assigns, without regard to domicile, citizenship or residence, hereby
expressly and irrevocably elect as the sole judicial forum for the
adjudication of any matters arising under or in connection with this
Agreement, and consent and subject themselves to the jurisdiction of, the
courts of the State of New York located in New York City, and/or the United
States District Court for the Southern District of New York, in respect of any
matter arising under this Agreement. Service of process, notices and demands
of such courts may be made upon any party to this Agreement by personal
service at any place where it may be found or giving notice to such party as
provided in Section 8(a).
SECTION 9. Effective Date. This Agreement shall
become effective upon consummation (the "Effective Date") of the Merger. In
the event that the Effective Date shall not occur, this Agreement shall be of
no force or effect.
IN WITNESS WHEREOF, the undersigned have executed
this Agreement on the day and year first above written.
FOOD 4 LESS SUPERMARKETS, INC.
By:_____________________
Name:
Title:
THE EDWARD J. DEBARTOLO CORPORATION
By:_____________________
Name:
Title:
<PAGE>160
SCHEDULE I
Description of Services
<PAGE>161
Exhibit G
REGISTRATION RIGHTS AGREEMENT
Dated as of _____ __, 1994
by and among
FOOD 4 LESS HOLDINGS, INC.
FOOD 4 LESS SUPERMARKETS, INC.
and
THE HOLDERS OF THE 13% SENIOR SUBORDINATED
PAY-IN-KIND DEBENTURES DUE 2006
OF FOOD 4 LESS HOLDINGS, INC.
<PAGE>162
TABLE OF CONTENTS
Page
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Legends . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Shelf Registration . . . . . . . . . . . . . . . . . . . . . 4
4. Liquidated Damages. . . . . . . . . . . . . . . . . . . . . 5
5. Hold-Back Agreements . . . . . . . . . . . . . . . . . . . . 6
6. Representations and Warranties of Selling
Debentureholders, the Company and F4L Supermarkets . . . . . 7
7. Registration Procedures . . . . . . . . . . . . . . . . . . 9
8. Registration Expenses . . . . . . . . . . . . . . . . . . . 15
9. Indemnification . . . . . . . . . . . . . . . . . . . . . . 16
10. Rule 144 . . . . . . . . . . . . . . . . . . . . . . . . . . 19
11. Participation in Underwritten Registrations . . . . . . . . 19
12. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 20
<PAGE>163
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of _______ __, 1994, by and among Food 4 Less Holdings, Inc.,
a California corporation (the "Company"), Food 4 Less Supermarkets, Inc., a
Delaware corporation ("F4L Supermarkets") and the holders of the Company's 13%
Senior Subordinated Pay-in-Kind Debentures due 2006 identified in the
signature pages hereto (the "Selling Debentureholders").
This Agreement is made pursuant to the Merger Agreement, dated as of
September __, 1994 (the "Merger Agreement"), by and among the Company, the
Selling Debentureholders, Food 4 Less, Inc., a Delaware corporation ("Food 4
Less"), F4L Supermarkets and Ralphs Supermarkets, Inc., a Delaware
corporation, pursuant to which the Company has agreed to provide the
registration rights set forth in this Agreement. The execution and delivery
of this Agreement is a condition to the Closing under the Merger Agreement.
As a result of the Merger contemplated by the Merger Agreement, F4L
Supermarkets will merge into Ralphs Supermarkets, Inc. which will assume all
of the liabilities of F4L Supermarkets, including the liabilities of F4L
Supermarkets hereunder.
The parties hereby agree as follows:
1. Definitions
Capitalized terms used herein without definition shall have the
meanings set forth in the Merger Agreement. As used in this Agreement, the
following capitalized terms shall have the following meanings:
Advice: As defined in the last paragraph of Section 7 hereof.
Business Day: A day that is not a Saturday, a Sunday or a day on
which banking institutions in New York, New York or Los Angeles, California
are not required to be open (a "Legal Holiday"). If a payment date is a Legal
Holiday, payment may be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
Company: As defined in the preamble hereto.
Damages Payment Date: Each ________________ and ________________, or,
if any such day is not a Business Day, on the next succeeding Business Day.
Debentures: The 13% Senior Subordinated Pay-in-Kind Debentures due
2006 being issued pursuant to the Indenture and sold pursuant to the Merger
Agreement in an initial aggregate principal amount of $100,000,000, and any
Secondary Securities issued pursuant to the Indenture, as the Debentures may
be amended or supplemented from time to time in accordance with the terms of
the Indenture, and any debt securities issued in exchange or substitution for
the Debentures.
Effectiveness Period: As defined in Section 3(a).
<PAGE>164
Exchange Act: The Securities Exchange Act of 1934, as amended from
time to time.
F4L Supermarkets: As defined in the preamble hereto.
Holder or holder: Any Person that owns any Registrable Securities.
Indenture: The Indenture dated as of ___________, 1994 between the
Company and _______, as trustee, pursuant to which the Debentures are being
issued, as the same may be amended from time to time in accordance with the
terms thereof.
Initial Shelf Registration Statement: As defined in Section 3(a)
hereof.
Lender: As defined in Section 12(e).
Liquidated Damages Amount Due: As defined in Section 4(b).
Merger Agreement: As defined in the preamble hereto.
NASD: National Association of Securities Dealers, Inc.
90-Day Periods: As defined in Section 5(c).
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political
subdivision thereof.
Prospectus: The prospectus included in the Shelf Registration
Statement, as amended or supplemented by any prospectus supplement with
respect to the terms of the offering of any portion of the Registrable
Securities covered by such Shelf Registration Statement and by all other
amendments and supplements to the prospectus, including post-effective
amendments and all material incorporated by reference in such prospectus.
Registrable Securities: All Debentures originally issued to the
Selling Debentureholders; provided that a Debenture ceases to be a Registrable
Security when it is no longer a Transfer Restricted Security.
Registration Default: As defined in Section 4(a) hereof.
Registration Expenses: As defined in Section 8 hereof.
SEC: The Securities and Exchange Commission.
Secondary Securities: Additional Debentures issued pursuant to the
terms of the Indenture for the payment of interest on the Debentures.
Securities Act: The Securities Act of 1933, as amended from time to
time.
<PAGE>165
Selling Debentureholder: As defined in the preamble hereto.
Shelf Registration Statement: The Initial Shelf Registration
Statement and any Subsequent Shelf Registration Statement, including the
Prospectus, amendments and supplements to any such Shelf Registration
Statement, any post-effective amendments, all exhibits and all material
incorporated by reference in any such Shelf Registration Statement.
Subsequent Shelf Registration Statement: As defined in Section 3(b).
Transfer Restricted Securities: The Debentures until distributed to
the public pursuant to an effective registration statement or distributed to
the public pursuant to Rule 144 under the Securities Act; provided that a
security that has ceased to be a Transfer Restricted Security cannot
thereafter become a Transfer Restricted Security.
underwritten registration or underwritten offering: A registration in
which securities of the Company are sold to an underwriter for reoffering to
the public.
2. Legends
Upon original issuance thereof, and until such time as the same is no
longer a Transfer Restricted Security, each certificate evidencing the
Debentures (and all securities issued in exchange therefor or substitution
thereof) shall bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR QUALIFIED UNDER STATE SECURITIES LAWS
AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, AND IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, OR (B) IF THE COMPANY HAS BEEN
FURNISHED WITH A WRITTEN OPINION OF COUNSEL THAT SUCH TRANSFER, SALE,
ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT FROM THE
PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND REGULATIONS IN EFFECT
THEREUNDER AND ANY APPLICABLE STATE SECURITIES LAWS."
If any Selling Debentureholder desires to offer, sell or otherwise
transfer, pledge or hypothecate all or any part of the Debentures (other than
pursuant to an effective registration statement under the Securities Act),
such Selling Debentureholder shall deliver to the Company a written opinion of
counsel (who may be in-house or special counsel), reasonably satisfactory in
form and substance to the Company, that an exemption from the registration
requirements of the Securities Act and applicable state securities laws is
available.
<PAGE>166
3. Shelf Registration
(a) Initial Shelf Registration Statement. The Company has filed a
"shelf" registration statement on Form S-1 (No. 33-_____) pursuant to Rule 415
under the Securities Act (the "Initial Shelf Registration Statement") relating
to the resale by the Holders of all the Transfer Restricted Securities. The
Initial Shelf Registration Statement was declared effective by the SEC on
_________, 1994 and the Indenture has been qualified under the Trust Indenture
Act. The Company agrees to use its best efforts to keep the Initial Shelf
Registration Statement continuously effective for a period of three years
following the Closing Date, as such period may be extended pursuant to the
terms of this Agreement or such shorter period (in either case, the
"Effectiveness Period") which will terminate (i) when all the Registrable
Securities covered by the Initial Shelf Registration Statement have been sold
pursuant thereto; or (ii) at the Company's election on any date on or after
January 1, 1997 if, as of such date, less than $5,000,000 aggregate principal
amount of Debentures remain outstanding as Transfer Restricted Securities,
provided that the Company shall deliver 60 days advance written notice to each
Holder of any such election to terminate early the Effectiveness Period under
this clause (ii); or (iii) when a Subsequent Shelf Registration Statement
covering all of the Registrable Securities has been declared effective under
the Securities Act and all of the Registrable Securities have been sold
pursuant thereto.
(b) Subsequent Shelf Registration Statement. If the Initial Shelf
Registration Statement ceases to be effective for any reason at any time
during the Effectiveness Period (other than at the request of the Company or
because of the sale of all of the securities registered thereunder), the
Company shall use its best efforts to obtain the prompt withdrawal of any
order suspending the effectiveness thereof, and in any event shall within 30
days of such cessation of effectiveness amend the Initial Shelf Registration
Statement in a manner reasonably expected to obtain the withdrawal of the
order suspending the effectiveness thereof, or file an additional registration
statement pursuant to Rule 415 covering all of the Registrable Securities (a
"Subsequent Shelf Registration Statement"). If a Subsequent Shelf
Registration Statement is filed, the Company shall use its best efforts to
cause it to be declared effective as soon as practicable after such filing and
to keep it continuously effective for a period equal to the Effectiveness
Period less the aggregate number of days during which the Initial Shelf
Registration Statement or any Subsequent Shelf Registration Statement was
previously effective.
(c) Supplements and Amendments. The Company shall supplement and
amend any Initial or Subsequent Shelf Registration Statement if required by
the policies, rules, regulations or instructions applicable to the
registration form used by the Company, if required by the Securities Act, or
if reasonably requested by the Holders of a majority in aggregate principal
amount of the Registrable Securities covered by such Shelf Registration
Statement or by any underwriter of such Registrable Securities.
4. Liquidated Damages.
(a) Each of the Company and the Selling Debentureholders acknowledge
that the Holders of Registrable Securities will suffer damages if the
effectiveness of the
<PAGE>167
Shelf Registration Statement is not maintained during the Effectiveness
Period. Accordingly, if (i) prior to the end of the Effectiveness Period, the
SEC shall have issued a stop order suspending the effectiveness of the Shelf
Registration Statement or the Shelf Registration Statement shall cease to be
effective or (ii) the Company notifies or is required to notify the selling
Holders of Registrable Securities pursuant to Section 7(b)(6) (provided that
there shall be excluded for purposes of this clause (a)(ii): a notice under
Section 7(b)(6) if (A) the Company has delivered a supplemented or amended
Prospectus contemplated by Section 7(k) hereof or an Advice within ten
Business Days after receipt of such notice or after such requirement arises or
(B) such notice under Section 7(b)(6) relates solely to a transaction of the
type described in Section 5(c) hereof) (any of the events described in the
foregoing clauses (i) or (ii) being referred to herein as a "Registration
Default"), then the Company hereby agrees to pay liquidated damages to each
Holder of Registrable Securities with respect to the first 90-day period
immediately following the occurrence of such Registration Default, in an
amount equal to $.05 per week per $1,000 principal amount of Registrable
Securities held by such Holder for each week or portion thereof that the
Registration Default continues. The amount of the liquidated damages shall
increase by an additional $.05 per week per $1,000 in principal amount of
Registrable Securities with respect to each subsequent 90-day period up to a
maximum amount of liquidated damages of $.50 per week per $1,000 principal
amount of Registrable Securities; provided, however, that such liquidated
damages will cease to accrue on the date on which (A) the applicable Shelf
Registration Statement is no longer subject to an order suspending the
effectiveness thereof or a new Subsequent Shelf Registration Statement is
declared effective, with respect to liquidated damages for the failure to
remain effective or (B) a notice issued, or required to be issued, pursuant to
Section 7(b)(6) is no longer effective or required to be effective with
respect to liquidated damages payable pursuant to clause (ii) above.
(b) The Company shall notify the Indenture trustee within five
business days after any Registration Default. The Company shall pay the
liquidated damages amount due on the Registrable Securities (the "Liquidated
Damages Amount Due") by depositing with the Indenture trustee, in trust, for
the benefit of the Holders thereof, on or before the applicable Damages
Payment Date, immediately available funds in sums sufficient to pay the
Liquidated Damages Amount Due. The Liquidated Damages Amount Due shall be
payable on the Damages Payment Date, to the Persons who are registered Holders
of Debentures at the close of business on the _______ or _______ preceding
each Damages Payment Date, by federal funds check mailed to such holders'
registered address or by wire transfer of immediately available funds. Each
obligation to pay liquidated damages shall be deemed to accrue on the date of
the Registration Default. The parties hereto agree that the liquidated
damages provided for in this Section 4 constitute a reasonable estimate of the
damages that may be incurred by Holders of Registrable Securities by reason of
the failure of a Shelf Registration Statement to remain effective in
accordance with this Section 4. Liquidated damages will be computed on the
basis of a 360-day year of twelve 30-day months.
All obligations of the Company set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
(although such obligations shall
<PAGE>168
not continue to accrue) until such time as all such obligations with respect
to such security shall have been satisfied in full.
5. Hold-Back Agreements.
(a) Each Holder of Registrable Securities whose Registrable
Securities are covered by the Shelf Registration Statement agrees not to (i)
effect any public sale or distribution of the Debentures pursuant to the Shelf
Registration Statement or (ii) otherwise conduct marketing activities with
respect to the Debentures which marketing activities would impair or interfere
with F4L Supermarkets' marketing activities with respect to debt securities
comprising any portion of the Financing, in either case during the period
commencing on the Closing Date and ending on the 90th day following the
Closing Date.
(b) Each Holder whose Transfer Restricted Securities are covered by a
Shelf Registration Statement agrees, if requested by the managing underwriters
in an underwritten offering, not to effect any public sale or distribution of
the Debentures or any other securities of any issue being registered or a
similar security or any securities convertible or exchangeable or exercisable
for such securities including a sale pursuant to Rule 144 or Rule 144A (except
as part of such underwritten registration), during the 10-day period prior to,
and ending 30 days after, the closing date of each underwritten offering made
pursuant to such Shelf Registration Statement, to the extent timely notified
in writing by the Company or the managing underwriters.
(c) Each Holder agrees, upon a request of the Company made after
June 30, 1996 (which date shall be extended by each day for which liquidated
damages are payable pursuant to Section 4 hereof) in writing and delivered
with at least five days' prior notice, not to effect any public sale or
distribution of the Debentures or otherwise conduct marketing activities with
respect to the Debentures for a period not to exceed 90 days (the "90-Day
Period") if the Company, Food 4 Less, or any subsidiary proposes to make a
securities offering, material acquisition or engage in any other material
corporate transaction not in the ordinary course of business, if the Board of
Directors of the Company determines in good faith as evidenced by a resolution
of the Board of Directors that the continuation of public sales or a
distribution or other marketing activities would adversely affect the
Company's ability to complete such other transactions. Holders will be
subject to the requirements of this subparagraph only during the period
commencing on June 30, 1996 (as so extended, if applicable) and ending on the
last day of the Effectiveness Period, provided, however, that the Company
shall not be permitted to designate more than two such 90-Day Periods and the
Effectiveness Period will be extended by such number of days equal to the
number of days the Holders were subject to the requirements of this
subparagraph.
(d) Subject to the Company's prior request to Holders pursuant to
Section 5(c), the Company agrees, if requested by the managing underwriters in
an underwritten offering, not to effect any public sale or distribution of
securities of any of the issue being registered or a similar security or any
securities convertible or exchangeable or exercisable for such securities
(other than bank borrowings, obligations of the Company with respect to trade
debt and other debt incurred by the Company in the ordinary course of
business),
<PAGE>169
during the 10-day period prior to, and ending 30 days after, the closing date
of each underwritten offering made pursuant to a Shelf Registration Statement,
to the extent timely requested in writing by the managing underwriters (except
as part of such underwritten registration or pursuant to registrations on
Forms S-4 or S-8 or any successor form to such Forms).
(e) Nothing in this Section shall prohibit any pledge, transfer or
assignment permitted by Section 12(e).
6. Representations and Warranties of Selling Debentureholders, the
Company and F4L Supermarkets
(a) Each Selling Debentureholder hereby represents and warrants,
severally and not jointly, to the Company and F4L Supermarkets (in each case
only as to such Selling Debentureholder and not as to any other Selling
Debentureholder) as follows:
(i) Such Selling Debentureholder is duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation. The execution and delivery of this Agreement, the
performance of such Selling Debentureholder's obligations hereunder, and
the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of such Selling Debentureholder.
This Agreement has been duly executed and delivered by such Selling
Debentureholder, and, assuming the due execution hereof by each other party
hereto, this Agreement constitutes the legal, valid and binding obligation
of such Selling Debentureholder, enforceable against such Selling
Debentureholder in accordance with its terms, subject in each case to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
now or hereafter in effect relating to or affecting creditors' rights
generally and to general equitable principles (regardless of whether
enforcement is sought in equity or at law); and
(ii) Such Selling Debentureholder is purchasing the Debentures
for its own account (or on behalf of managed accounts that are purchasing
for their own accounts) in the ordinary course of business for investment,
and with no intention or agreement or understanding with any Person to
distribute or resell said Debentures or any part thereof or to participate
in any such distribution or resale in any transaction that would be in
violation of the securities laws of the United States of America or any
state thereof, without prejudice, however, to their right at all times to
sell or otherwise dispose of all or any part of said Debentures pursuant to
an effective registration statement under the Securities Act and applicable
state securities laws, or under an exemption from such registration
available under the Securities Act and other applicable state securities
laws and subject, nevertheless, to the disposition of such holder's being
at all times within such Person's control.
(b) Each of the Company and F4L Supermarkets hereby represents and
warrants to the Selling Debentureholders as follows:
<PAGE>170
(i) Each of the Company and F4L Supermarkets is duly
incorporated, validly existing and in good standing under the laws of its
state of incorporation. The execution and delivery of this Agreement, the
performance of the Company's or F4L Supermarkets' obligations hereunder and
the transactions contemplated hereby have been duly authorized by the board
of directors of each of the Company and F4L Supermarkets. This Agreement
has been duly executed and delivered by each of the Company and F4L
Supermarkets, and, assuming the due execution hereof by each other party
hereto, this Agreement constitutes the legal, valid and binding obligation
of each of the Company and F4L Supermarkets, enforceable against the
Company and F4L Supermarkets in accordance with its terms, subject in each
case to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws now or hereafter in effect relating to or affecting creditors'
rights generally and to general equitable principles (regardless of whether
enforcement is sought in equity or at law).
7. Registration Procedures
In connection with the Company's Shelf Registration Statement
obligations pursuant to Section 4 hereof, the Company will use its best
efforts to effect such registration to permit the sale of Registrable
Securities in accordance with the intended method or methods of distribution
thereof, and pursuant thereto and in connection therewith the Company will:
(a) prepare and file with the SEC such post-effective amendments to
the Shelf Registration Statement as may be necessary to keep the Shelf
Registration Statement effective during the Effectiveness Period; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Shelf Registration Statement
during the applicable period in accordance with the intended method or methods
of distribution by the sellers thereof set forth in such Shelf Registration
Statement or supplement to the Prospectus;
(b) notify the selling holders of Registrable Securities and the
managing underwriters, if any, promptly (but in any event within five Business
Days), and (if requested by any such Person) confirm such advice in writing,
(1) when any Prospectus supplement or post-effective amendment has been filed,
and, with respect to or any post-effective amendment, when the same has become
effective, (2) of any request by the SEC for amendments or supplements to the
Shelf Registration Statement or the Prospectus or for additional information,
(3) of the issuance by the SEC of any stop order suspending the effectiveness
of the Shelf Registration Statement or the initiation of any proceedings for
that purpose, (4) if at any time when a prospectus is required by the
Securities Act to be delivered in connection with sales of the Registrable
Securities the representations and warranties of the Company contained in any
agreement contemplated by paragraph (n) below cease to be true and correct in
all material respects, (5) of the receipt by the Company of any notification
with respect to the suspension of the qualification or exemption from
qualification of the Registrable Securities for sale in any jurisdiction or
the initiation or threatening of any proceeding for such purpose and (6) of
the happening
<PAGE>171
of any event which makes any statement made in the Shelf Registration
Statement, the Prospectus or any document incorporated therein by reference
untrue in any material respect or which requires the making of any changes in
the Shelf Registration Statement, the Prospectus or any document incorporated
therein by reference so that, in the case of such Shelf Registration
Statement, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading, and that in the case of the Prospectus,
it will not contain any untrue statement of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(c) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness or the qualification or exemption from
qualification of the Shelf Registration Statement or the Registrable
Securities at the earliest possible moment;
(d) at least three Business Days prior to the filing of the same with
the SEC, furnish to each underwriter, if any, and each of the selling Holders
who beneficially own more than five percent (in principal amount) of the
outstanding Debentures, copies of any Shelf Registration Statement or any
Prospectus included therein or any amendments or supplements to any such Shelf
Registration Statement or Prospectus (including, upon request, all documents
incorporated by reference into such Shelf Registration Statement), other than
any amendment or supplement which differs from the Shelf Registration
Statement or Prospectus amended or supplemented thereby only in that it
contains additions to, or changes in, the listing of Holders of Transfer
Restricted Securities which are selling securities thereunder, or contains
updated financial statements and related information (provided that copies of
such amended or supplemented Shelf Registration Statement or Prospectus shall
be furnished to such selling Holders of more than five percent (in principal
amount) of the outstanding Debentures), which documents will be subject to the
review and comment of such Holders and underwriter, if any, and make the
Company's and F4L's representatives available for discussion of such documents
and other customary due diligence matters; and the Company will not file any
such Shelf Registration Statement or Prospectus or any amendment or supplement
to any such Shelf Registration Statement or Prospectus (including all such
documents incorporated by reference) to which the Holders of a majority in
principal amount of the Registrable Securities or the underwriter, if any,
shall reasonably object within two Business Days after the receipt thereof,
except for such amendments or supplements which counsel for the Company shall
advise are required to be filed to comply with applicable law. The objection
of the selling Holders or underwriter, if any, shall be deemed reasonable if
such Shelf Registration Statement, amendment, Prospectus or supplement, as
applicable, as proposed to be filed, contains a material misstatement or
omission or fails to comply with the applicable requirements of the Securities
Act. Notwithstanding anything to the contrary contained herein, no
Registration Default shall be deemed to have occurred under Section 4(a)(ii)
hereof if the Company has complied or been prepared to comply with all
deadlines set forth therein, but has been prevented from filing any amendment
or supplement solely because of a good faith disagreement between the Company
and a majority of the selling Holders or the underwriter, if any, under this
subsection (d) regarding the existence of a material misstatement or omission
or failure to comply with the Securities Act;
<PAGE>172
(e) if requested by the managing underwriter or underwriters or the
holders of a majority in aggregate principal amount of Registrable Securities
being sold in connection with an underwritten offering, promptly incorporate
in a Prospectus supplement or post-effective amendment such information as the
managing underwriters or such holders request should be included therein
relating to the plan of distribution with respect to such Registrable
Securities, including, without limitation, information with respect to the
principal amount of Registrable Securities being sold to such underwriters,
the purchase price being paid therefor by such underwriters and with respect
to any other terms of the underwritten (or best efforts underwritten) offering
of the Registrable Securities to be sold in such offering; and make all
required filings of such Prospectus supplement or post-effective amendment as
soon as practicable after receiving notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment;
provided, however, that the Company shall not be required to take any actions
under this Section 7(e) that are not, in the opinion of counsel for the
Company, in compliance with applicable law;
(f) furnish to each selling holder of Registrable Securities who so
requests and each managing underwriter, if any, without charge, one conformed
copy of the Shelf Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, and shall furnish only
to the counsel of such holders and each managing underwriter, without change,
one copy of all documents incorporated therein by reference and all exhibits;
(g) deliver to each selling holder of Registrable Securities and the
underwriter, if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons may reasonably request; and, subject to the
penultimate paragraph of this Section 7, the Company consents to the use of
the Prospectus or any amendment or supplement thereto by each of the selling
holders of Registrable Securities and the underwriters, if any, in connection
with the offering and sale of the Registrable Securities covered by the
Prospectus or any amendment or supplement thereto;
(h) prior to any public offering of Registrable Securities, to use
its best efforts to register or qualify or cooperate with the selling holders
of Registrable Securities, the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption
from such registration or qualification) of such Registrable Securities for
offer and sale under the securities or blue sky laws of such jurisdictions as
any selling holder or managing underwriter reasonably requests in writing and
use its best efforts to do any and all other acts or things necessary or
advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Shelf Registration Statement; provided that the
Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which
would subject it to general service of process in any such jurisdiction where
it is not then so subject;
(i) cooperate with the selling holders of Registrable Securities and
the managing underwriters, if any, to facilitate the timely preparation and
delivery of
<PAGE>173
certificates representing Registrable Securities to be sold and not bearing
any restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
in a firm commitment underwritten public offering, or at least five business
days prior to any other such sale;
(j) use its best efforts to cause the Registrable Securities covered
by the applicable Shelf Registration Statement to be registered with or
approved by such other governmental agencies or authorities within the United
States as may be necessary to enable the seller or sellers thereof or the
underwriters, if any, to consummate the disposition of such Registrable
Securities except as may be required solely as a consequence of the nature of
such selling holder's business, in which case the Company will cooperate in
all reasonable respects with the filing of such Shelf Registration Statement
and the granting of such approvals;
(k) upon the occurrence of any event contemplated by paragraph (b)(6)
above, as promptly as practicable prepare a supplement or post-effective
amendment to the Shelf Registration Statement or the related Prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of the Registrable
Securities, the Prospectus will not contain an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading;
(l) cause all Registrable Securities covered by the Shelf
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Company are then listed;
(m) cause the Registrable Securities covered by the Shelf
Registration Statement to be rated with the appropriate rating agencies, if so
requested by the holders of a majority in aggregate principal amount of such
Registrable Securities or the managing underwriters, if any;
(n) not later than the effective date of the Shelf Registration
Statement, provide a CUSIP number for all Registrable Securities and provide
the Indenture trustee with printed certificates for the Registerable
Securities which are in a form eligible for deposit with the Depository Trust
Company;
(o) in connection with not more than two underwritten offerings of
Registrable Securities pursuant to a Shelf Registration Statement, enter into
an underwriting agreement in form, scope and substance as is customary in
underwritten offerings and take all such other actions as are reasonably
requested by the managing underwriter in order to expedite or facilitate the
disposition of such Registrable Securities and in such connection (1) make
such representations and warranties to the underwriters in form, substance and
scope as are customarily made by issuers to underwriters in primary underwrit-
ten offerings with respect to the business of the Company and the Shelf
Registration Statement; (2) obtain opinions of counsel to the Company and
updates thereof
<PAGE>174
(which counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to the managing underwriters addressed to the underwriters
covering the matters customarily covered in opinions requested in underwritten
offerings and such other matters as may be reasonably requested by under-
writers); (3) obtain "cold comfort" letters and updates thereof from the
Company's independent certified public accountants addressed to the under-
writers such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters by underwriters in connection
with primary underwritten offerings; (4) if an underwriting agreement is
entered into, the same shall set forth in full the indemnification provisions
and procedures of Section 9 hereof with respect to all parties to be indem-
nified pursuant to said Section; and (5) the Company shall deliver such docu-
ments and certificates as may be requested by the managing underwriters to
evidence compliance with clause (h) above and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Company. The above shall be done at each closing under such underwriting or
similar agreement (subject to the Holders' agreement that the Company not be
required to assist in more than two such underwritings), as and to the extent
required thereunder, and if at any time the representations and warranties of
the Company contemplated in clause (o)(1) above cease to be true and correct,
the Company shall so advise the underwriter(s), if any, and each selling
Holder promptly and, if requested by such Persons, shall confirm such advice
in writing;
(p) make available for inspection by a representative of the holders
of the Registrable Securities being sold (such representative to be selected
by the holders of a majority in principal amount of the Registrable Securities
being sold), any underwriter participating in any disposition pursuant to such
Shelf Registration Statement, and any attorney or accountant retained by such
representative or underwriter, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Shelf Registration Statement; provided that any records,
information or documents that are designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such Persons unless disclosure of such records, information or
documents is required by court or administrative order or such information has
otherwise become public, and without limiting the foregoing, no such
information shall be used by such Person as the basis for any market
transactions in securities of the Company or its subsidiaries in violation of
law;
(q) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to its security
holders, earnings statements satisfying the provisions of Section 11(a) of the
Securities Act, no later than 45 days after the end of any 12-month period (or
90 days, if such period is a fiscal year) (1) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm or best efforts underwritten offering, or (2) if not sold to underwriters
in such an offering, beginning with the first month of the Company's first
fiscal quarter commencing after the effective date of the Shelf Registration
Statement, which statements shall cover said 12-month periods;
<PAGE>175
(r) cooperate with the trustee under the Indenture and the holders of
the Registrable Securities to effect such changes to the Indenture as may be
required for the Indenture to continue to be qualified in accordance with the
terms of the Trust Indenture Act and execute, and use its best efforts to
cause the trustee to execute, all documents as may be required to effect such
changes and all other forms and documents required to be filed with the SEC to
enable the Indenture to continue to be so qualified in a timely manner; and
(s) make its appropriate representatives of management available,
upon the reasonable request of the Holders of a majority of the Registrable
Securities, but in no event upon less than 30 days' notice (or 15 days' notice
if at least 30 days' notice of a possible need to make management available
shall have been given), for a period not to exceed five days for a road show
in connection with the placement or underwritten offering of the Registrable
Securities by an underwriter. The Company will only be obligated under this
Section 7(s) with respect to one actual road show. The Company will also make
representatives of management available for conference calls in connection
with any public offering upon reasonable advance notice.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Sections 7(b)(3), 7(b)(5)
or 7(b)(6) hereof, such holder will forthwith discontinue disposition of
Registrable Securities pursuant to such Shelf Registration Statement until
such holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 7(k) hereof, or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the Prospectus, and, if so directed by
the Company, such holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. In the event the Company shall give any
such notice, the Effectiveness Period shall be extended by the number of days
during the period from and including the date of the giving of such notice to
and including the date when each seller of Registrable Securities covered by
such Shelf Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 7(k) hereof or the
Advice.
8. Registration Expenses
(a) All expenses incident to the Company's and F4L Supermarkets'
performance of or compliance with this Agreement, including without limitation
all registration and filing fees, fees and expenses associated with filings
required to be made with the NASD (including, if applicable, the fees and
expenses of any "qualified independent
<PAGE>176
underwriter" and its counsel that may be required by the rules and regulations
of the NASD), fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of counsel for the underwriters or selling
holders in connection with blue sky qualifications of the Registrable Securi-
ties and determination of their eligibility for investment under the laws of
such jurisdictions as the managing underwriters or holders of a majority in
aggregate principal amount of the Registrable Securities being sold may
designate), printing expenses (including expenses of printing certificates for
the Registrable Securities in a form eligible for deposit with Depository
Trust Company and of printing prospectuses), messenger, telephone and delivery
expenses, and fees and disbursements of counsel for the Company and for the
sellers of the Registrable Securities (subject to the provisions of Sec-
tion 8(b) hereof) and of all independent certified public accountants of the
Company (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), underwriters (excluding
discounts, commissions or fees of underwriters, selling brokers, dealer
managers or similar securities industry professionals relating to the
distribution of the Registrable Securities or legal expenses of any Person
other than the Company and the Selling Debentureholders), securities acts
liability insurance if the Company so desires and fees and expenses of other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses") will be borne by the Company, regardless of whether
the Shelf Registration Statement becomes effective. The Company will, in any
event, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit, the fees and expenses incurred in
connection with the listing of the securities to be registered on each
securities exchange on which similar securities issued by the Company are then
listed, rating agency fees and the fees and expenses of any Person, including
special experts, retained by the Company.
(b) In connection with the Shelf Registration Statement hereunder,
the Company will reimburse the holders of Registrable Securities being
registered in such registration for the reasonable fees and disbursements of
not more than one firm of counsel for all holders of Registrable Securities
chosen by the holders of a majority in principal amount of such Registrable
Securities.
9. Indemnification
(a) Indemnification by Company. The Company agrees to indemnify and
hold harmless, to the full extent permitted by law, each Holder of Registrable
Securities, the officers, directors and employees of each of them and each
Person who controls each such Holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act), the partners,
representatives, agents, officers, directors and employees of each such
controlling person, and any underwriters participating in the distribution
against all losses, claims, damages, liabilities and reasonable expenses
(including reasonable attorneys' fees (and, any other expenses reasonably
incurred by any underwriter or any such controlling person in connection with
defending or investigating any action or claim)) arising out of or based upon
any untrue or alleged untrue statement of a material fact contained in the
Shelf Registration Statement, Prospectus or preliminary Prospectus or any
omission or alleged omission to state therein a material fact required to be
stated therein
<PAGE>177
or necessary to make the statements therein not misleading, except insofar as
the same arise out of or are based upon information furnished in writing to
the Company by such indemnified party or the related Holder of Registrable
Securities expressly for use therein; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any such preliminary Prospectus if (a) such indemnified party or the related
Holder of Registrable Securities failed to deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such
Person to the Person asserting such loss, claim, damage, liability or expense
and (b) the Prospectus would have corrected such untrue statement or alleged
untrue statement or omission or alleged omission; and provided, further, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
in the Prospectus, if (a) such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in an amendment or supplement to the
Prospectus delivered to the indemnified party prior to the sale of Registrable
Securities and (b) such indemnified party or the related Holder of Registrable
Securities thereafter failed to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of the Registrable
Securities to the Person asserting such loss, claim, damage, liability or
expense; and provided further, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage, liability or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission in the Prospectus, if (a) such
untrue statement or alleged untrue statement, omission or alleged omission is
contained in a Prospectus or an amendment or supplement thereto which is the
subject of a notice delivered by the Company pursuant to, and in accordance
with, Sections 7(b)(3), 7(b)(5) or 7(b)(6), and (b) to the extent that such
losses arise out of the breach by such indemnified party or the related Holder
of Registrable Securities of the obligations of such indemnified party or the
related Holder of Registrable Securities contained in the penultimate
paragraph of Section 7.
(b) Indemnification by Holder of Registrable Securities. In
connection with each Shelf Registration Statement in which a Holder of
Registrable Securities is participating, an authorized officer of such Holder
of Registrable Securities will furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with any Shelf Registration Statement or Prospectus and each such
Holder agrees to indemnify and hold harmless, to the full extent permitted by
law, the Company and its directors, officers and employees and each Person who
controls the Company (within the meaning of Section 15 of the Securities Act
and Section 20 of the Exchange Act), the directors, officers and employees of
such controlling persons and any underwriters participating in the
distribution against all losses, claims, damages, liabilities and reasonable
expenses (including reasonable attorneys' fees) arising out of or based upon
any untrue or alleged untrue statement of a material fact or any omission or
alleged omission of a material fact required to be stated in the Shelf
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
so furnished in writing by such Holder to the Company
<PAGE>178
specifically for use in such Shelf Registration Statement or Prospectus. In
no event shall the liability of any selling Holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the proceeds received
by such Holder upon the sale of the Registrable Securities giving rise to such
indemnification obligation. The Company shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the
same extent as provided above with respect to information so furnished in
writing by such Persons specifically for inclusion in any Prospectus or Shelf
Registration Statement.
(c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying
party of any claim with respect to which it seeks indemnification and
(ii) permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party; provided, however,
that any Person entitled to indemnification hereunder shall have the right to
employ separate counsel and to participate in the defense of such claim, but
the fees and expenses of such counsel shall be at the expense of such Person
unless (a) the indemnifying party has agreed to pay such fees or expenses, or
(b) the indemnifying party shall have failed to assume the defense of such
claim and employ counsel reasonably satisfactory to such Person or (c) in the
reasonable judgment of any such Person, based upon advice of its counsel, a
conflict of interest may exist between such Person and the indemnifying party
with respect to such claims (in which case, if the Person notifies the
indemnifying party in writing that such Person elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall
not have the right to assume the defense of such claim on behalf of such
Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably
withheld). The indemnifying party shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is a party and indemnity could have been sought hereunder by
such indemnified party, unless such settlement includes an unconditional
release of such indemnified party from all liability on claims that are the
subject matter of such proceeding. An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim will not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional counsel or counsels.
(d) Contribution. If the indemnification provided for in this
Section 9 is unavailable to an indemnified party or is insufficient to hold
such indemnified party harmless for any losses in respect of which this
Section 9 would otherwise apply by its terms, then each applicable
indemnifying party, in lieu of indemnifying such indemnified
<PAGE>179
party, shall have a joint and several obligation to contribute to the amount
paid or payable by such indemnified party as a result of such losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on
the other hand, shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been taken by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any
such action, statement or omission. The amount paid or payable by a party as
a result of any losses shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any proceeding, to the
extent such party would have been indemnified for such expenses if the
indemnification provided for in Section 9(a) or 9(b) was available to such
party.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 9(d) were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provision of this Section 9(d), an
indemnifying party that is a selling Holder of Registrable Securities shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities sold by such indemnifying
party and distributed to the public were offered to the public exceeds the
amount of any damages that such indemnifying party has otherwise been required
to pay by reasons of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity, contribution and expense reimbursement obligations
under this Section 9 shall be in addition to any liability each indemnifying
party may otherwise have; provided that any payment made by the Company which
results in the indemnified party receiving from any source(s) indemnification,
contribution or reimbursement for an amount in excess of the actual loss,
liability or expense incurred by such indemnified party, shall be refunded to
the Company by the indemnified party receiving such excess payment.
10. Rule 144
The Company covenants that it will file the reports required to be
filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (as if the Company were subject to
the reporting requirements of Section 13 or Section 15(d) of the Exchange Act
whether or not it is so subject) and it will take such further action as any
holder of Registrable Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Registrable
<PAGE>180
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the SEC. Upon the request of any holder of Registrable
Securities, the Company will deliver to such holder a written statement as to
whether it has complied with such information and requirements.
11. Participation in Underwritten Registrations
If any of the Registrable Securities covered by the Shelf Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the holders of a majority in aggregate principal amount of
such Registrable Securities included in such offering; provided that such
investment bankers and managers must be reasonably satisfactory to the
Company.
In the event any Debentureholder proposes to sell Registrable
Securities covered by the Shelf Registration Statement in an underwritten
offering, it will so notify the Company and provide the Company with the
information to be included in the notice to be given by the Company
hereinafter set forth. Promptly (and in any event within two (2) Business
Days) after receipt of such notice, the Company will give written notice to
each other Holder of Registrable Securities of (i) the name of the proposing
Holder, (ii) the principal amount of Registrable Securities proposed to be
sold by such proposing Holder, and (iii) the right of each other Holder to
elect to have all or a portion of the Registrable Securities owned by such
Holder included in such underwritten offering by notifying the Company and the
proposing Holder of such election (and specifying the principal amount of
Registrable Securities to be so included) within ten (10) Business Days after
receipt of such notice from the Company. A Holder making such an election on
a timely basis shall be entitled to have the aggregate principal amount of
Registrable Securities specified in such election included in the underwritten
offering; provided, however, that, if the managing underwriter advises the
participating Holders in writing that marketing factors require a limitation
of the principal amount of Registrable Securities to be underwritten, the
amount of Registrable Securities that may be included in the underwriting
shall be so limited and shall be allocated among the participating Holders pro
rata in accordance with the aggregate principal amount of Registrable
Securities proposed to be included in the underwritten offering by the
participating Holders.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
Nothing in this Section 11 shall be construed to create any additional rights
regarding the registration of Registrable Securities in any Person otherwise
than as set forth herein.
<PAGE>181
12. Miscellaneous
(a) Remedies. Each Holder, in addition to being entitled to exercise
all rights provided herein, in the Indenture or granted by law, including
recovery of liquidated or other damages, will be entitled to specific
performance of its rights under this Agreement. The Company and F4L
Supermarkets agree that monetary damages (including the liquidated damages
contemplated hereby) would not be adequate compensation for any loss incurred
by reason of a breach by them of the provisions of this Agreement and hereby
agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not on or after the
date of this Agreement enter into any agreement with respect to its securities
which is inconsistent with the rights granted to the Holders of Registrable
Securities in this Agreement or otherwise conflicts with the provisions
hereof. The Company has not previously entered into any agreement with
respect to its securities granting any registration rights to any Person,
except as disclosed in the Merger Agreement or as may be required in
connection with the Financing (as defined in the Merger Agreement). The
rights granted to the Holders of Registrable Securities hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Company's securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given unless the Company has obtained the written consent of
holders of at least a majority of the principal amount of the outstanding
Registrable Securities.
(d) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(i) if to a holder of Registrable Securities, at the most current
address given by such holder to the Company in accordance with the
provisions of this Section 12(d), which address initially is, with respect
to each Selling Debentureholder, the address set forth next to such Selling
Debentureholder's name on the signature pages of the Merger Agreement, with
a copy to Willkie Farr & Gallagher, One Citicorp Center, 153 East 53rd
Street, New York, New York 10022, Attention: William E. Hiller, Esq.; and
(ii) if to the Company, initially at its address set forth in the
Merger Agreement and thereafter at such other address, notice of which is
given in accordance with the provisions of this Section 12(d), with a copy
to Latham & Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, CA
90071, Attention: Thomas C. Sadler, Esq.
<PAGE>182
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on
the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the trustee under the
Indenture at the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent holders of Registrable Securities. Any Holder may
transfer, pledge or assign its rights hereunder (including indemnification
rights) to any lender (a "Lender"), subject to compliance with the provisions
of Section 2 hereof. Upon notice to the Company by such Lender that the
Lender has become authorized to exercise rights hereunder, no further written
instrument shall be required under this Agreement provided the Lender provides
the Company at the time the Lender exercises any rights on behalf of a Holder
with such indemnifications and certifications as are reasonably satisfactory
to the Company in form and substance as to the Lender's authorization to
exercise such rights.
(f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(h) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(j) Joint and Several Obligations. F4L Supermarkets will have joint
and several obligations for all of the obligations of the Company hereunder.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein with respect to the registration rights granted by
<PAGE>183
the Company with respect to the securities sold pursuant to the Merger
Agreement. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(l) Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
<PAGE>184
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FOOD 4 LESS HOLDINGS, INC.
By: _________________________
Title: ______________________
FOOD 4 LESS SUPERMARKETS, INC.
By: _________________________
Title: ______________________
Selling Debentureholder:
By: _________________________
Title: ______________________
<PAGE>185
Exhibit H
Address for Notices
The Edward J. DeBartolo Corporation
7620 Market Street
Youngstown, Ohio 44513
Attn: Secretary
Fax Number: (216) 758-3598
with a copy to:
Willkie Farr & Gallagher
One Citicorp Center
153 East 53rd Street
New York, New York 10022
Attn: William E. Hiller, Esq.
Fax Number: (212) 821-8111
Camdev Properties Inc.
c/o Camdev Corporation
40 King Street West,
Suite 2700
Toronto, Ontario M5H 3Y2
Attn: Mr. Stanley H. Hartt
Fax Number: (416) 365-2510
Bank of Montreal
700 Louisiana, Suite 4400
Houston, TX 77002
Attn: Mr. E. J. D. Pinker
Fax Number: (713) 223-5551
Banque Paribas
The Equitable Tower
787 Seventh Avenue, 32nd Floor
New York, NY 10019
Attn: Mr. Jeffrey J. Youle
Fax Number: (212) 841-2146
Federated Department Stores, Inc.
c/o Federated Realty Associates, Ltd.
7 West Seventh Street
Cincinnati, OH 45202
Attn: Mr. Ronald W. Tysoe
Fax Number: (513) 579-7462
